Indonesia's PLN to get $200m fund from Japan for renewable energy

Banks in Japan are going to lend $200 million to Perusahaan Listrik Negara (PLN), Indonesian state-owned power company, as part of Tokyo-backed effort for boosting the transition from coal to renewable energy. PLN is aiming to develop no new coal-fired power plants and replace existing ones with renewable energy sources like geothermal and solar by 2025. A memorandum of understanding will be signed by the Japanese-government-owned Nippon Export and Investment Insurance (NEXI) with PLN today, 3 March. The corporation is going to utilise the loans provided by Japan to purchase electricity from renewable producers, strengthen its grid and provide support to research and development.

The memorandum will be inked today at a meeting to build on Japanese Prime Minister Fumio Kishida’s Asia Zero Emission Community initiative. Participating banks, both domestic and foreign lenders with offices in Japan, are being selected, and the loan will be insured by NEXI.

NEXI had signed a memorandum of understanding on financial assistance with PLN in April 2022. Last November, an agreement of insuring up to $500 million in bank financing was reached. It has not been decided yet how the remaining $300 million will be utilised.

The Asia Zero Emission Community initiative strives to help Southeast Asian nations in dealing with challenges of powering industrialisation and economic growth while decreasing greenhouse gas emissions. Japan’s Ministry of Economy, Trade and Industry is organising the public-private investment forum.

NEXI is also signing a memorandum with the Cambodian Ministry of Mines and Energy today. Cambodia is intending to form a road map by 2025 leading to decarbonisation by 2050.

The core business of PLN involves the supply of electricity, particularly in generation, transmission, and distribution. As per the official website of PLN, the company strives to offer electricity for the public interest in an adequate quantity and quality. It also aims at fostering profits and holding business activities that are environmentally sound. The firm carries out the government’s assignment in the electricity sector for supporting development by applying the principles of Limited Liability Company. The Indonesia-based firm intends to become the leading electricity company in Southeast Asia.