The Asian Development Bank's new ASEAN Infrastructure Fund (AIF) has granted its inaugural loan to an Indonesian electricity project.
The US$25 million loan will go towards developing power links and expanding transmission networks from Java to Bali. Improvements are needed to solve widespread power outages and blackouts that are negatively impacting Indonesia's tourism-reliant economy.
The Indonesian government is aiming to achieve a 90% electrification ratio by 2020 from a current electrification ratio of approximately 67%. The growing economy's need for energy across all sectors has necessitated fast-track generation programs intended to bring Indonesia's infrastructure up to speed.
According to the Asia Development Bank (ADB), the Java-Bali 500-Kilovolt Power Transmission Crossing Project will help transmit power from Java to Bali using 220 kilometers of extra high voltage lines with the capacity to transmit 1,500 megawatts of power and extend, construct and upgrade substations along its path.
The AIF is the largest ASEAN-led initiative in the association's history. With a total initial equity contribution of US$485 million, Malaysia is the largest ASEAN contributor to the fund with a US$150 million equity investment, followed by Indonesia with US$120 million. Additional shareholders include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, the Philippines, Singapore, Thailand, Viet Nam, and ADB.