Energy programme: Women sit on a hill overlooking the Suralaya coal power plant in Cilegon. The financing structure offers Indonesia favourable interest rates for nine years with built-in incentives to attract private capital over time. — AP
JAKARTA: The World Bank has announced a US$2.1bil blended finance package spanning over two different projects, which it says are the first approved in support of the Indonesian government’s goal of reaching high-income status by 2045.
The bank wrote in a statement on Monday that the packages were intended to create jobs, boost economic growth and improve clean energy access across Indonesia.
The instruments would allow the World Bank and its partners to mobilise an additional US$345mil of private investment to finance solar and wind projects.
“The reforms and investments we are supporting with this blended finance package of over US$2bil will help implement key government priorities and advance the bank’s own goals to create jobs and advance energy access in one of the largest and most dynamic economies,” said World Bank East Asia and the Pacific vice-president Manuela V. Ferro in the statement.
The first package was a US$1.5bil loan for policy reform intended to expand the use of digital financial services, removing credit infrastructure constraints and expanding capital markets, alongside “adjusting to climate and natural disaster risks”, read the statement.
The financing aims to remove obstacles in renewable energy technologies procurement by reducing local content requirements.
The programme also sought Indonesia to align its industrial estates policies with international good practice standards on environment and climate.
The Office of Coordinating Economic Minister will be the one responsible for implementing the financing, according to the World Bank’s separate webpage.
The government likely will apply for disbursement by the end of December 2026.
The other package totals US$628mil and is reserved for a programme the World Bank calls Indonesia Sustainable Least-cost Electrification-2, with state-run electricity firm PT PLN as the implementing agency and the company must apply for its disbursement by April 29, 2032.
Comprising this package was a US$600mil loan from the International Bank for Reconstruction and Development (IBRD), US$12mil grants from the IBRD Surplus-Funded Livable Planet Fund and US$16mil in grants from partners mobilised under the Sustainable Renewables Risk Mitigation Initiative. — The Jakarta Post/ANN
