JAKARTA (TheInsiderStories) – The Asian Development Bank (ADB) announced the first drawdown of funds under a private sector financing package totaling more than US$305 million invested in Jawa-1, an Indonesia’ largest combined-cycle gas turbine (CCGT) power plant. The power plant will supply energy to PT Perusahaan Listrik Negara (PLN), state-owned power producer.
“This project will support the country’s efforts to strengthen the liquefied natural gas (LNG) supply chain and increase energy security, while helping to reduce power generation costs,” said Michael Barrow, Director General for ADB’s Private Sector Operations Department in written statement today (04/29).
The project comprises a 1,760-megawatt CCGT power plant and ancillary infrastructure in Cilamaya, Karawang, West Java. ADB’ financing package includes a direct loan of $185 million, and a parallel loan of $120 million provided by the Leading Asia’s Private Infrastructure Fund (LEAP), which is administered by ADB.
Jawa-1 will be one of the first and largest projects in Indonesia using LNG, demonstrating of the government’ commitment to reduce dependency on coal and diesel fuel in favor of cleaner domestic energy sources such as natural gas. The project is expected to help Indonesia avoid 1.77 million tons of carbon dioxide emissions.
ADB’ support for Indonesia’s natural gas value chain dates back to a 2005 loan of $350 million for the greenfield development of Tangguh natural gas liquefaction facility, which was followed by a $400 million loan for the plant’s expansion in 2016. The Tangguh natural gas liquefaction facility is a likely source of LNG for the project.
Jawa-1 is expected to power 11 million Indonesian households from 2021, supporting the country’ 100 percent electrification target by 2024. The project will create about 4,800 jobs during construction and 125 jobs when the plant is operational.
LEAP is one of ADB’ co-financing vehicles dedicated to private sector infrastructure in Asia and the Pacific. Japan International Cooperation Agency supports the fund, launched in August 2016, through a $1.5 billion equity commitment.
Combined with ADB’ owned capital and that of commercial partners, the fund is expected to provide financing of at least $6 billion and enables to boost support for quality and sustainable infrastructure.
ADB estimates that Indonesia needs infrastructure investment of $1.1 trillion for 2016–2030, and $1.3 trillion over that period if climate adaptation measures are included. Accelerating investment in affordable and sustainable energy is critical to achieve the country’s economic and social development goals.
In 2018, ADB made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.
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