Sri Mulyani: Indonesia Needs To Accelerate Transition To New And Renewable Energy

Minister of Finance Sri Mulyani. (Photo: Maria Trisnawati/VOI)

JAKARTA – Minister of Finance Sri Mulyani Indrawati is said to have witnessed the signing of a Letter of Intent (LoI) between the Asian Infrastructure Investment Bank (AIIB), State Electricity Company (PLN), and PT Sarana Multi Infrastruktur (PT SMI).

According to her, the LoI is an important milestone related to cooperation to support the achievement of the energy transition in Indonesia.

"This is a real step in realizing Nationally Determined Contribution (NDC) by 2030 and net-zero emissions by 2060 or sooner, so Indonesia needs to accelerate the transition process from dirty energy to new and renewable energy", she said in an official statement, quoted Wednesday, September 27.

The Minister of Finance explained that AIIB support would help in a number of areas. First, providing financial support for Indonesia's energy transition process, including the development of transmission and distribution networks for renewable energy; supporting renewable energy and transition fuel projects, as well as promoting electric vehicles and charging infrastructure.

"Secondly, operate the Indonesian Energy Transition Mechanism (ETM) state platform which was produced during the 2022 Indonesian G20 Presidency, through the provision of long-term financing that complements and connects with other existing national and multilateral efforts, such as the Just Energy Transition Partnership/Transition Platform "Just Energy (JETP) Indonesia", she said.

Third, exploring collaboration related to the energy transition in Indonesia which includes project preparation, knowledge sharing, capacity development and technical assistance. Finally, establish a liaison mechanism for implementing operational cooperation.

"By signing the LoI, AIIB is committed to providing much-needed financing, technical assistance and capacity development support to accelerate Indonesia's energy transition, including financing for the transmission system in Sumatra, with an estimated cost of US$ 657 million for 2024-2026 and "an additional 213 million US dollars in 2023", she explained.

Meanwhile, one of the important elements in implementing the LoI is the urgency of realizing financing and starting projects in the field by all parties involved in the near future.

It is hoped that this will be able to help Indonesia reduce dependence on fossil fuels, create jobs and new economic opportunities, as well as improve the environment for society and contribute to the global climate change agenda.

Sri Mulyani added that Indonesia's cooperation with AIIB has a total previously approved development financing fund of 3.1 billion US dollars and projects that are already in the preparation stage with a total value of 4.3 billion US dollars.

"We all hope that this LoI will play an important role in helping Indonesia achieve its energy transition goals", she said.

For your information, the signing of the LoI was carried out by the President Director of PT PLN and the President Director of PT SMI with representatives of AIIB, during the series of AIIB 8th Annual Meeting events in Sharm El Seikh, Egypt earlier this week.