Financing green infrastructure in Indonesia

In 2015, AFD financed its first project with its Indonesian counterpart, PT SMI. The objective was to promote investment in green infrastructure, especially renewable energy, in order to promote low carbon growth and contribute to the fight against climate change. Now that the programme has come to an end, it is time for evaluation.

Indonesia is lagging far behind in terms of infrastructure, especially in the energy sector. This is one of the consequences of the 1997 Asian financial crisis and the resulting drastic reduction in investment.

The government has made strong commitments towards catching up, while at the same time seeking to preserve the country’s natural environment. A 15-year action plan was laid out in 2011. With Indonesia being the fifth-largest emitter of greenhouse gas, the government also committed to a policy of reducing its impact on the climate. Developing the country’s huge renewable energy potential (more than 160 GW) was identified as a priority.

With this in mind, in 2015, Agence Française de Développement (AFD) and the British Department for International Development (DfID) began supporting the efforts of the public financial institution PT Sarana Multi Infrastruktur (PT SMI) in financing infrastructure projects which contribute to reducing climate change and adapting to its effects.

• 158,000 people in the region of Cilegon, on the island of Java, have better access to drinking water thanks to the construction of a water treatment plant near the city.
• 18,000 t CO2e/year is being avoided through the extension of a hydroelectric power station in the Bengkulu province, on the island of Sumatra.
• 102 GWh of electricity will be generated each year by two newly-constructed biomass plants, equivalent to the consumption of a city of 20,000 inhabitants in France. The majority of this electricity will be used to supply two sugar processing plants in the east of the island of Java, with the remainder being sold on to the local electricity company.

Original source: AFD
Published on 29 April 2019