Out-Law / Your Daily Need-To-Know

Asian Infrastructure Investment Bank (AIIB) has approved $310 million loan to Indonesian government-owned electricity company Perusahaan Listrik Negara (PLN) for a power distribution project in the east Java and Bali.

The project, which will cost $1.2 billion, includes 17,000km of power lines and will involve installing additional medium voltage lines, low voltage lines and distribution transformers. AIIB will finance $151m, $57.68m and $101.32m for the three parts respectively. The PLN will be responsible for financing $895.23m.

AIIB's loan is a 20-year sovereign loan to the Indonesian government. The term of the loan is until December 2025.

Infrastructure expert John Yeap at Pinsent Masons, the law firm behind Out-Law, said: “Improvements to the transmission and distribution network across much of Asia requires significant upgrade to address not just capacity additions, but the increasing proportion of non-firm intermittent power generation. This investment by the AIIB into PLN’s T&D network is reflective of the need for investment and upgrade so as to improve system availability and reliability.” 

AIIB completed its final review in February 2020 and had its financing approval in January, with a cut by $190m from its initial $500m loan proposed by Indonesia on the project in 2019.

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