Support Energy Transition, ADB Loans 500 Million US Dollars To RI

ADB (Photo: Antara)

JAKARTA - The Asian Development Bank (ADB) approved a policy-based loan worth 500 million US dollars to support Indonesia to accelerate its energy transition.

The Affordable and Sustainable Energy Transition Program will support various Indonesian policy steps in achieving nationally determined contributions (NDC) and zero net emissions targets from power generation by 2050, one of the two subprograms in the program.

"Indonesia is at a very important crossroads in the course of its energy transition," said Director of ADB for Indonesia Jiro Tominaga quoting Antara.

The rapid growth in power generation capacity has helped Indonesia overcome most of its electrical supply constraints, but has resulted in large electricity dependence on fossil fuel-based resources such as coal, gas, and diesel.

"This policy-based loan program supports the development of Indonesia's basic and collaborative policies to identify and answer complex challenges in this sector in accelerating its shift to sustainable and clean energy," said Jiro.

The program focuses on building a strong policy and regulatory framework for the clean energy transition, strengthening sector governance and financial sustainability, and ensuring a just and inclusive transition.

One of the important steps is the development of a Comprehensive Investment and Policy Plan (CIPP), with the support of the Indonesian Fair Energy Transitional Partnership, which identifies investment requirements and opportunities to achieve a fair energy transition.

Other important steps include improving regulations to increase the scale of renewable energy capacity, and initiatives to strengthen the capacity and governance of state-owned enterprises in the energy sector, including increasing gender equality.

The program is a joint effort from ADB and its joint financing partners, namely the French Development Institute (AFD/Agency Fran raise de D\"evelopement) and German Development Cooperation through Creditstalt f\"ur Wiederaufbau (KfW) to support government leadership in the energy transition.

ADB provides support for the initial stages of developing energy transition regulations by the government, with comprehensive support through the Energy Transition Mechanism, infrastructure financing guaranteed by the government and what is not guaranteed by the government, as well as a wide series of technical assistance projects.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, and continues its efforts to eradicate extreme poverty. Founded in 1966, ADB was owned by 68 members, with 49 of them in Asia and the Pacific region.