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State budget commitment may give credence to Indonesia’s JETP investment
Jakarta’s decision to commit state funds to energy transition projects may get donor countries to make good on pledges to provide US$20 billion under the Just Energy Transition Partnership (JETP).
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Finance Minister Sri Mulyani Indrawati (second left) and Asian Development Bank (ADB) president Masatsugu Asakawa (second right) hold a press conference after launching the Energy Transition Mechanism Country Platform in Jimbaran, Bali, ahead of the Group of 20 Summit on Nov. 14, 2022. (Antara/Genta Tenri Mawangi)
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akarta’s decision to commit state funds to energy transition projects may convince donor countries to make good on pledges to provide US$20 billion under the Just Energy Transition Partnership (JETP), expert says.
Earlier this month, the government allowed the use of state budget funds to expedite energy transition projects amid doubt about the willingness of the International Partners Group (IPG), a coalition of developed economies co-led by the United States and Japan, to bankroll the early retirement of coal-fired power plants in Indonesia.
A stalling of the coal phaseout plan would constitute a major setback in the country’s efforts to reduce carbon emissions.
Putra Adhiguna, an energy analyst at the Institute of Energy Economics and Financial Analysis (IEEFA), expected that committing state budget funds to the energy transition would improve external donors’ confidence in providing loans and grants under the JETP.
“Funding [from the budget] will help construct a more competitive refinancing option, enabling investors to get their return on investment faster,” he told The Jakarta Post on Thursday.
“The regulation only construes a concept the government has been planning all along, to provide a financing flow option,” he said, referring to Finance Ministry Regulation No. 103/2023 on the provision of fiscal support via financial frameworks to accelerate the energy transition in the electricity sector.
Read also: Donor countries' aversion to coal retirement could render JETP 'meaningless'
