Home News ADB Approves Loan Facility US$300M for Geo Dipa Energi

ADB Approves Loan Facility US$300M for Geo Dipa Energi

The Asian Development Bank (ADB) has approved a US$300 million loan to help PT Geo Dipa Energi, an Indonesian state-owned company, expand its geothermal power generation capacity by 110 megawatts in Java, said the agency today (05/28) - Photo by CMMA Office

JAKARTA (TheInsiderStories) — The Asian Development Bank (ADB) has approved a US$300 million loan to help PT Geo Dipa Energi, an Indonesian state-owned company, expand its geothermal power generation capacity by 110 megawatts in Java, said the agency today (05/28). The Fund will also manage a $35 million loan from the Clean Technology Fund for the project.

“Our support is aligned with Indonesia’s long-term goals for economic growth and energy, including maximizing the use of indigenous energy resources, diversifying the fuel mix, and ensuring environmental sustainability,” said ADB’ country director for Indonesia, Winfried F. Wicklein in a press statement.

Indonesia has the world’ largest geothermal potential, with an estimated 29 gigawatt (GW), and the world’ second-largest installed geothermal capacity of 2.1 GW. ADB, through its private sector finance operations, has had a long-standing interest in some geothermal sector in the country, like Muara Laboh, Rantau Dedap, and Sarulla.

According to him, the development of geothermal power remains slow in Indonesia, largely because the exploration phase is costly, lengthy, and high risk. He asserted, the Geothermal Power Generation Project will support the construction and commissioning of two geothermal plants at Dieng in Central Java and Patuha in West Java by Geo Dipa.

“The project, recognized as a National Strategic Project by the government, will provide environmentally friendly base-load electricity to the Java–Bali electricity grid, reducing CO2 emissions by more than 700,000 tons per year,” said Geo Dipa’ president director, Riki Ibrahim.

He continued, the project will build critical geothermal experience in Indonesia and contribute to the government’s efforts to attract private-sector investment in the sector by reducing early-stage project development risk. Geo Dipa plans to build the second Patuha geothermal power plant located in the Ciwidey region of West Java. The new turbine is projected to produce an additional power by 55 megawatts (MW) in 2023 and needs an investment of $197 million.

The director at the energy and mineral resources (EMR) ministry, Ida Nuryatin Finahari said, Patuha and other projects Dieng in Central Java, holds tremendous geothermal potential that can be converted into a 400 MW power plant. Currently, the two projects has installed capacity 60 MW, respectively.

“We want to install again with the same capacity at the two wells to reach the government’ targets produce 150 MW by 2023. To that, we plans to drill again in July 2020,” added by Ibrahim

Beside the two projects, there are potential three new wells in five locations at eastern Indonesia. The site located in Waisano and Nage, East Nusa Tenggara and Jenolo in Halmahera, North Maluku, also Bituang in Southeast Sulawesi. Others, he said, still waiting for government approvals. The three wells have potential resources of 30 MW.

According to director of state assets at the finance ministry, Meirijal Nur, Geo Dipa, PT Sarana Multi Infrastruktur (SMI) and PT Penjamin Infrastruktur Indonesia (PII) has obligation to run the “government drilling program”. Through the program, the government wants to help the investors to invest in Indonesia’ geothermal projects.

Jointly, the third parties will explore the potential geothermal projects around the archipelago starting an early process to obtained proven resources. So far, he adds, not many investors are interested in geothermal projects because the exploration costs very expensive.

Based on World Bank data, Geothermal Resource Risk Mitigation project need costs $465 million and ready to disburse if Indonesia needed. The official added, combined with SMI loans, guaranteed by PII and implemented by Geo Dipa it will help to realize the program.

Indonesia is committed to providing clean energy that is able to reduce gas emissions by 29 percent in 2030. The government is targeting geothermal energy to contribute 7,241.5 MW in 2025 to support the achievement of new and renewable energy by 23 percent.

In addition to Geo Dipa, the government has assigned two state-owned enterprises, PT Pertamina and PT Perusahaan Listrik Negara to explore new and renewable energy in the country. At present, the total installed capacity of the three companies around 744.5 MW or 38.2 percent of the total installed capacity.

Geo Dipa itself has completed and operates the Patuha 1 Geothermal Electricity Project with an installed capacity of 735 MW. The company is currently developing Candradimuka, Umbul Telomoyo Temple, and Arjuno Welirang in Central Java.

The ADB estimates that the project requires $475 million and to be funded from company equity and a soft loan from the agency. The groundbreaking of the project was carried out by finance minister Sri Mulyani Indrawati in April 2019 and is expected to start operating in 2023.

Written by Staff Editor, Email: theinsiderstories@gmail.com