ADB gives US$140m loan to RI's power sector

The Asian Development Bank has extended a US$140 million loan to Indonesia to help improve the country's electricity generation network, the Manila-based bank said in a statement on Thursday.

The loan will fund the purchase of equipment to help make the electricity grid on the main island of Java and Bali function more efficiently, the statement said as quoted by Dow Jones newswire.

"We are funding the hardware and software to create a competitive market that will result in efficiency gains and bring down electricity prices for consumers," said Anil Terway, an ADB energy specialist.

The ADB loan will carry a 25-year term, including a grace period of five years. The interest will be determined in accordance with ADB's London interbank offered rate-based lending facility.

Indonesia is facing an electricity crisis with generating capacity expected to fall short of demand by 2005 unless state-owned electricity company PT Perusahaan Listrik Negara, or PLN, increases capacity, and scales back growing demand.

Technical problems with the transmission of electricity via the Jakarta grid cause regular power shortages. Jakarta is especially vulnerable: In September, much of the city was plunged into darkness for five hours after a break in a transmission line from a nearby power station.

PLN is planning to issue up to Rp 900 billion (US$1=Rp.8,895) in bonds in the first quarter of 2003 to help fund further development of the grid and build power stations.(*)