World Bank Provides Support for Geothermal Sector to Develop Clean Renewable Energy in Indonesia

July 26, 2011

Cooperation with Pertamina Geothermal Energy to develop 150 MW of clean renewable energy in Sumatra and Sulawesi islands, and displace coal-based power

Washington DC, July 26, 2011 – The World Bank is set to help Indonesia meet its growing energy needs in a clean and climate-friendly way, through a project to scale up capacity for geothermal power generation. The World Bank will be working with Pertamina Geothermal Energy (PGE) – a subsidiary of state-owned company Pertamina – to boost power generation capacity by up to 150 MW in geothermal fields in Ulubelu, South Sumatra and Lahendong, North Sulawesi.

Geothermal is currently the only technology capable of displacing coal-based power. Upon completion of the project, by 2015, there will be approximate additions of 110 MW at Ulubelu in South Sumatra and 40 MW at Lehendong (Tompaso) in North Sulawesi.  This will displace an equivalent capacity of coal-based power generation, which will reduce local and global environmental pollution.

 “We appreciate the World Bank's support to PGE to contribute to efforts to utilize clean energy in meeting Indonesia’s growing power demand," said Abadi Poernomo, President Director of PGE. "This assistance will contribute to PGE's goal of becoming a world class geothermal company"

“The World Bank is pleased to be able to support Indonesia’s efforts to positively impact global climate change. This important project is the first approved Clean Technology Fund operation in the East Asia Region,” said Stefan Koeberle, World Bank Country Director for Indonesia.

The project will be financed by a US$300 million in loans that were approved today by the World Bank’s board of executive directors. The financing package is made up of a US$175 million loan from the International Bank for Reconstruction and Development – the World Bank’s lending arm for middle-income countries – and US$125 million concessional loan (lower interest rates and longer grace periods than normal) from the Clean Technology Fund on the basis of the project’s positive impact on climate change.

“PGE has rapidly prepared a quality project that meets industry and international standards, and is well positioned to be successfully implemented,” noted Migara Jayawardena, Senior Infrastructure Specialist of the World Bank and project team leader. “The concessional financing enables the project to be financially viable. It also helps reduce the additional burden that would have otherwise been placed on electricity consumers and the government budget.”

Preparation for the geothermal project was financed by a grant from the Government of The Netherlands that was administered by the World Bank. 



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