T

he World Bank Group’s International Finance Corporation (IFC) is allocating about US$200 million of investment in Indonesia’s infrastructure projects this fiscal year, one of the agency’s officials said.

 “We are committed to investing in infrastructure because the lack of infrastructure remains Indonesia’s greatest challenge to boosting its economic growth,” IFC’s communications officer, Novita Patricia Wund, said in Jakarta on Wednesday.

Infrastructure bottlenecks rank high among the constraints hindering the local economy from delivering its maximum potential.

The National Development Planning Ministry (Bappenas) estimated that Rp 1,923.7 trillion ($225 billion) worth of infrastructure was needed by 2013 to clear the bottlenecks.

“Our investment is aimed at private-sector projects that are in line with government priorities,” Novita added.

She said that at present, most of the IFC’s infrastructure investment was aimed at toll roads and water sanitation across the country.

Based on recent data from research and consultancy firm, the Oxford Business Group (OBG), Indonesia will need to spend $70 billion a year on infrastructure for the next five years in order to keep economic growth at an annual rate of 6 to 7 percent or higher.

In addition, the IFC has also agreed to provide a $75 million loan to PT Bank Permata Tbk this year to finance renewable-energy projects.

IFC’s investment officer, Lamtiurida Hutabarat, said that both parties were currently discussing the details of the loan. “We are still discussing the financing; whether this will be a risk-sharing project or whether we will provide the whole loan to Permata Bank,” Lamtiurida told reporters on Wednesday.

Developing the finance sector for renewable-energy projects in the country has become one of the IFC’s main goals in the country starting this year.

The IFC’s operating officer for access to finance, Nyoman Yogi, said developing the sector has become increasingly important in order to reduce Indonesia’s heavy reliance on fossil fuels.

“The potential of [financing] renewable energy in Indonesia remains huge because not many people are aware of the importance of energy efficiency,” Yogi told reporters.

He said that similar projects have been successfully implemented in other countries, such as the Philippines, China and India.

Bank of the Philippine Islands’ (BPI) senior vice president, Alberto Pascual, said he had seen the benefits of energy efficiency in his office building after entering into partnership with the IFC in the Sustainable Energy Finance (SEF) program.

“We saved up to 30 percent of energy in our office after we changed the chillers,” Alberto said.

He said the past three years of partnership between the BPI and the IFC had delivered a green-financing portfolio beyond the BPI’s expectations.

The energy efficiency and renewable-energy projects that the BPI and the IFC financed have resulted in 142,087 megawatts (MW) of energy saved, 208,206 MW of clean energy produced, and a 716,744 ton reduction in carbon emissions.

The partnership has strengthened BPI’s SEF program by financing innovative programs, such as green mortgages, energy-performance contracting and clean-development mechanisms, he said. (nfo)