Financial Service Industry to Fund Renewable Energy Projects

TEMPO.CO, Jakarta - The Financial Services Authority (OJK) and the Ministry of Energy and Mineral Resources on Wednesday, February 3, 2016 signed a Memorandum of Understanding (MoU), allowing non-bank financial services to fund new renewable energy projects.

Insurers and pension fund managers will be able to invest up to Rp1.5 trillion in private equity funds (RDPT) with new renewable energy projects. The OJK and the Energy Ministry initiated this policy in a bid the increase non-bank contributions to the renewable energy sector.

The Energy Minstry needs about Rp1,600 trillion to build Indonesia's new renewable sector until 2019. The fund will be sourced gradually.

The MoU, through which Rp1 trillion has been collected, the financial services industry will have a long-term plan to support the renewable energy sector, said Energy Minister Sudirman Said.

"The prospective investors are pension fund managers and insurance firms. This means that funding sustainability will be safer," th minister said yesterday.

To date, Indonesia has an installed electricity capacity of 53,000 MW, whereas the potential reaches 300,000 MW.

Sudirman said that in the last 57 years, Indonesia' renewably energy sector remained undeveloped, whereas by 2025 the portion of the sector is estimated to reach 23 percent.

As of right now, Indonesia's renewable energy portion is only 6.8 percent.

Without finding new energy sources, Sudirman said, Indonesia's oil reserves will be gone in 12-15 years. Gas will be fully depleted in 30 years, and coal will be gone in 60.

OJk chief Muliaman Hadad said that the Rp1 trillion commitment will increase to Rp3 trillion by 2017. "I believe that the financial services industry has faith in this sector," Hadad said.

TEMPO