Speech by Ahmed M. Saeed, ADB Vice-President, Operations 2, at the PLN Green Day Sustainable Financing Framework Launching Ceremony, 2 November 2020
Honorable Ibu Sri Mulyani Indrawati, Minister of Finance;
Dear Bapak Amien Sunaryadi, President Commissioner,
Dear Bapak Suahasil Nazara, Deputy President Commissioner and Deputy Minister of Finance,
Dear Bapak Zulkifli Zaini, President Director, PLN,
Dear Bapak Darmawan Prasodjo, Deputy President Director,
Distinguished Guests, Ladies and Gentlemen:
Good morning.
Let me start by extending belated 75th anniversary wishes to PLN’s President Director, its Board of Commissioners and Directors, and all of PLN’s staff with whom we have been privileged to work with toward the delivery of reliable, affordable, and sustainable electricity to all corners of Indonesia.
ADB is still a bit younger than PLN. We are 54 years old, and it was around 50 years ago that the Asian Development Bank provided its first loan to PLN. (It was a loan for electricity transmission and distribution in Pontianak, West Kalimantan.) The mission then and now was at its core to increase electricity access to improve the life of the Indonesian people and support the development of modern industry and manufacturing.
Indonesia and PLN have come a long way since. ADB is proud to have supported PLN and the government to expand access to electricity, with a total of 32 sovereign loans totaling $4.2 billion to PLN, and other loans in the sector to support policy and regulatory development as well as private sector loans to IPPs. We are especially pleased about an ever-closer partnership with PLN under the current Joko Widodo administration, and in particular with this Board of Directors and Commissioners. Outside the Ministry of Finance, PLN is ADB’s single largest client in Indonesia and, indeed, one of our larger clients in Asia.
Indonesia, as an upper middle-income country, has embarked on the next step on its development journey—towards high income levels by 2045, the Republic of Indonesia’s centennial. To advance in its development trajectory, Indonesia needs electricity. It is therefore only appropriate that we have come together today to focus on the key energy issues of our time -- the sustainable transformation of the energy sector, harnessing the abundant clean and renewable energy sources Indonesia is endowed with. This will ultimately help decrease costs, improve local air quality, and contribute to the national and global goals to mitigate climate change.
The rapid decline in renewable costs is remarkable. We’ve seen in the past 3 years grid connected solar below 2 cents per kilo-watt hour (kWh) in the Middle East, Europe, and South America. In Southeast Asia, ADB supported a reverse auction in Cambodia for a 60 MW grid connected solar plant with a winning price of 3.88 cents per kWh. These cost reductions in the global market will certainly help PLN bring down the cost of production, and boost sustainability.
ADB’s corporate Strategy 2030 commits ADB to green, sustainable, inclusive, and resilient infrastructure investments; toward this end, we have committed $80 billion in climate finance for the Asia-Pacific region from ADB’s own resources until 2030. In this context, we noted that Indonesia already committed to decreasing greenhouse gas emissions by at least 29% in 2009. The government translated this into a target of 23% renewable energy in the energy mix by 2025 and 30% by 2030. This has already led to a shift towards more renewable energy over the last few years driven by private sector investments. ADB is proud be associated with these efforts. We have provided financing representing 25% of all solar and geothermal generation and 50% of all wind generation in Indonesia, and are increasingly engaged in terms of supporting public private partnerships for waste-to-energy.
PLN’s new corporate strategy and its focus on clean energy and green financing represent a sea change in the electricity sector in Indonesia. I would like to congratulate Pak Zulkifli and the Board of Directors on this transformative strategy! I like to commit here and now ADB’s strong support to PLN in implementing this strategy over the coming years.
The Sustainable Financing Framework, launched by Pak Zulkifli this morning, shows how PLN is turning words into action. It represents a strong commitment to moving from conventional financing and projects - to green financing for clean and sustainable energy projects.
I should also mention in this context that ADB has been privileged to assist PLN on its first sustainable transition bond planned for 2021. This is an exciting initiative, and will further strengthen PLN’s ability to raise capital at competitive prices and reduce its carbon footprint.
Going forward, ADB will continue its support to PLN with project and program financing for distribution and generation, and help PLN innovate new concepts to contract least cost renewable energy from independent power producers.
Despite the many challenges facing the economy and the sector, these are exciting times for Indonesia’s electricity sector in terms of supporting the green recovery post-COVID with innovative approaches. It will present opportunities for PLN to thrive. ADB is proud to be associated with PLN as a committed partner, and we look forward to continuing and further deepening the partnership moving forward – toward greater prosperity for all Indonesians.
Thank you and terima kasih.