The World Bank has approved a $2.128bn blended finance package for Indonesia to support its financial sector reforms and accelerate investment in clean energy, it announced on 16 June.
Indonesia will channel $1.5bn of the package into strengthening its financial services sector by expanding the use of digital financial tools and removing credit infrastructure constraints. It will also help remove obstacles in obtaining renewable energy technologies by reducing local content requirements.
The remaining $628mn in funding — comprising a $600mn loan from the International Bank for Reconstruction and Development (IBRD), $12mn from the IBRD surplus-funded liveable planet fund, and $16mn from partners under the Sustainable Renewables Risk Mitigation Initiative — is aimed at enabling greater energy access.
This blended finance programme aims to generate 540MW of solar and wind power. It is also expected to reduce power generation costs by 8pc and cut greenhouse gas emissions by 10pc, particularly in Kalimantan and Sumatra, the World Bank said.
This energy programme is the first to use the World Bank's step-up loan product, which has a repayment scheme designed to attract long-term private investments, with incentives including lower interest rates during the implementation phase and further reductions if projects are refinanced after completion.
