KfW supports reform of Indonesian energy sector
Saturday, November 14 2015 - 03:48 AM WIB
Germany?s KfW signed Wednesday a promotional loan agreement with Indonesia for US$200 million on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).
The lender said in a statement that the loan will finance the sectoral program, "Sustainable and Inclusive Energy Program (SIEP)" by means of which the Indonesian government will implement numerous individual reforms in the energy sector.
"The implementation of the capacity-building reform agenda in the Indonesian energy sector is intended to help improve security of supply and promote an ecologically sustainable energy supply", stated Norbert Kloppenburg, Member of the Executive Board of KfW Group.
The reform package comprises a variety of measures, mainly reforms to improve the investment climate in the energy sector, promote renewable energies and energy efficiency, and provide Indonesia's population with better access to energy. The measures include an adjustment of the fuel and electricity tariffs (higher tariff cost coverage, thus encouraging energy saving), an improvement in the conditions for promoting renewables (introduction of special feed-in tariffs for geothermal power and other forms of renewable energies) and introducing standards for demand-side energy efficiency, as well as plans to expand rural electrification.
Parallel to this, the Asian Development Bank (ADB) and World Bank are each granting loans of US$500 million for phase I of the SIEP, while the French Agence Francaise de D?veloppement (AfD) is planning a contribution of $150 million. The funds made available by KfW, the ADB, AfD and the World Bank will not be disbursed until the reform package agreed with the Indonesian government has been implemented.
Since 2013, KfW Development Bank has provided around 840 million euro (budget funds of approx. 40 million euro and KfW's own funds of around 620 million euro) for projects, especially in the focal areas of climate change, energy and pro-poor growth, on behalf of the German Federal Government.
Editing by Reiner Simanjuntak