ADB supports energy financing in Indonesia

ADB is extending $200 million in loans partly to assist Indonesia embark on major energy efficiency improvements in export industries.

The ADB Board of Directors today approved the funding for Indonesia Eximbank - a quasi-sovereign institution, and the country's official export credit agency which provides financing, insurance and guarantees, and advisory services to exporters. It includes a direct A-loan of $100 million, and a B-loan of $100-million from commercial banks with ADB acting as lender of record. Technical assistance grants of $1.45 million, administered by ADB, are also being extended to support the project.

"These investments are expected to mitigate the foreign currency financing gap currently constraining Indonesian exporters, and they will also fund a pioneering financing mechanism for energy efficiency improvements," said Kunio Senga, Director General of ADB's South East Asia Regional Department.

"This pilot investment in energy efficiency will demonstrate to local commercial banks the viability of investing in projects with paybacks within five years, and will help pave the way for future replication," said Madeleine Varkay, Project Team Leader.

The technical assistance, which will support trade finance product development, staff training, and capacity building for risk sharing with commercial banks, includes a grant of $1.1 million from the Asian Clean Energy
Fund under the Clean Energy Financing Partnership Facility, and $350,000 from the Financial Sector Development Partnership Fund.