T

he Japan Bank for International Cooperation (JBIC) said Tuesday it was ready to finance two power plants in Central Java and North Sumatra with a total value of more than US$1 billion.

JBIC executive director Fumio Hoshi told reporters project funding negotiations had reached the final stage and he expected the tender process would complete in the near future.

“Presently there is a tender for Central Java’s super critical coal-fired power plant project. [The winner will be announced next month]. We are also working on the Salula geothermal power plant in North Sumatra,” he said at the Indonesia International Infrastructure Conference and Exhibition 2011.

JBIC might also finance other geothermal power plant projects in Sumatra, Hoshi revealed.

“I know that two Japanese companies have identified four geothermal areas. They will be independent power producers and [state electricity utility] PLN will be the off taker,” he said, declining to mention the companies’ name and the location of the geothermal fields.

Hoshi said in his presentation that the potential to use geothermal energy was great, not only due to its abundant reserves but also because of its low emissions production.

Indonesia possesses 40 percent of the world’s geothermal reserves of around 28,543 megawatts, but geothermal project development is far below expectation. The country began developing geothermal power projects 30 years ago, but, as of today, only 1,189 megawatts or 4 percent of the total potential has been produced.

In a bid to boost geothermal project investment, the Energy and Mineral Resources Ministry announced last month that this year it had set aside Rp 350 billion (US$40.48 million) to compensate exploration work failure.

JBIC, Hoshi claimed, would fully support the country’s efforts “to reconcile its economic growth with environmental preservation”.

He revealed that the bank had also been discussing the possibility of financing the development of small- and medium-scale natural gas and liquefied natural gas (LNG) terminals across the country to address gas shortfalls.

“I think that will help Indonesian people tackle the problems of gas supply that have occurred recently. It is better than building a new pipeline from Bontang [LNG plant in East Kalimantan] to Java,” he said.

Hoshi also said the bank was interested in financing projects in other sectors such as public transportation (monorails and highways) and railways for coal transportation, adding it was ready to channel “unlimited” funds into those projects.

Coordinating Minister for the Economy Hatta Rajasa said to accelerate the development of infrastructure, the government would use every available fund source, including loans from foreign banks such as JBIC.

“Infrastructure development is the prime priority of the government’s development policy,” he said.