Financing announced for Indonesian geothermal project

The Asian Development Bank (ADB) signed a new US$109 million financing package for the Muara Laboh geothermal power generation project in western Indonesia.

The financing, which was approved in December 2016, is part of ADB's efforts to scale up private sector-led infrastructure development in Asia and the Pacific and boost support for clean energy.

The project will be one of the first transactions to receive funding from ADB’s newly established Leading Asia’s Private Infrastructure Fund (LEAP).The Fund is capitalized by US$1.5 billion in equity from Japan International Cooperation Agency (JICA), and is managed by ADB's Private Sector Operations Department. With the Muara Laboh approval and other recent LEAP financings, over US$200 million of LEAP funds have been allocated.

On completion, the Muara Laboh geothermal facilities, located in West Sumatra, will generate 80 MW of electricity. Indonesia contains about 40% of the world’s geothermal reserves, making it an important resource for the country to achieve its commitments to reduce carbon dioxide emissions by 29% by 2030.

The assistance is funded by a US$70 million loan from ADB’s own capital and a US$19 million participation from the Clean Technology Fund (CTF), which provides middle-income countries with concessional resources for the demonstration, deployment and transfer of low-carbon technologies. ADB administers over US$1.1 billion of CTF, one of the four programs comprising the Climate Investment Funds. 

The project brings together an important set of geothermal project developers and financiers. The project company, PT Supreme Energy Muara Laboh, is a joint venture consisting of the Indonesian geothermal power developer, PT Supreme Energy; the Japanese trading and investment company, Sumitomo Corporation; and global energy leader ENGIE. In addition to ADB, financing is being provided by the Japan Bank for International Cooperation and a set of commercial banks under a guarantee from Nippon Export and Investment Insurance.

Yuichiro Yoi, Senior Investment Specialist in ADB’s Private Sector Operations Department said:

“This project demonstrates Indonesia’s commitment to meet increasing demand for electricity and support the development of renewable energy. This transaction proves that the private sector will play a critical role in helping the country achieve both of these targets.”