ADB okays USD-500m policy loan to aid Indonesia's energy shift

The Asian Development Bank (ADB) on Friday announced approval for a USD-500-million (EUR 448m) policy-based loan to support Indonesia in accelerating its energy transition.

ADB’s Affordable and Sustainable Energy Transition Programme will aim to establish a solid policy and regulatory framework for clean energy transition, strengthen sector governance and financial sustainability, and promote a just transition. A key component is the development of a Comprehensive Investment and Policy Plan (CIPP), backed by the Indonesia Just Energy Transition Partnership. Other measures include regulatory improvements to boost renewable energy capacity.

The programme is cofinanced by Agence Francaise de Developpement (AFD) and German Development Cooperation through KfW.

Indonesia’s significant increase in electricity generation capacity has addressed much of its power supply constraints, but the country remains reliant on fossil-fuel-based power sources, the bank said.

“Indonesia is at a critical juncture in its energy transition journey,” commented ADB country director for Indonesia Jiro Tominaga. “This policy-based loan programme supports Indonesia’s foundational and collaborative policy development to identify and address the sector’s complex challenges to accelerate its shift towards sustainable and clean energy.”

The initiative will help Indonesia achieve its enhanced nationally determined contribution (NDC) and net-zero power emission targets by 2050.

(USD 1 = EUR 0.896)

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