Indonesia draws down first tranche of renewable transition finance

Out-Law News | 23 Mar 2023 | 12:10 pm |

Indonesia’s state-owned electricity company Perusahaan Listrik Negara (PLN) has signed terms to withdraw US$200 million in funding for its renewables transition from Japan’s Nippon Export and Investment Insurance (NEXI).

Renewables expert John Yeap at Pinsent Masons said: “Indonesia is showing tremendous leadership in the region with a focussed agenda to decarbonise. With its fleet of coal plants and a domestic coal industry, switching off coal power generation will be a challenge and one the nation seems determined to address.  It’s access to abundant renewable energy sources will undoubtedly ease that transition and the use of technology in the manner envisaged by this NEXI loan will help facilitate that transition.”

The agreement has confirmed the loan terms and conditions and how to use the loan. It is the amendment of the agreement which they signed in 2022 on NEXI’s loan at US$500m at maximum to Indonesia to speed up Indonesia’s decarbonisation via introducing relevant technologies developed by Japanese companies.

According to a report by IJGlobal, another agreement for a US$300m loan between PLN and NEXI “will follow”.

PLN targeted to get its minimum US$750m green loan in the third week of March. According to another report, the loan would be the “first syndicated green loan of PLN and any Indonesian state-owned enterprise”.

Indonesia has set its goal to achieve net zero emissions by 2060. In November 2022, it introduced three options to retire coal-fired power plants earlier than planned.

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