ADB will provide $70m for the Riau Natural Gas Power Project, while IFC will offer $50m. The power plant, which will be built with a total estimated cost of $293m, will be located in Riau province in central Sumatra.

The power project will receive a $82m loan from Sumitomo Mitsui Banking Corporation and MUFG Bank, with ADB providing a partial risk guarantee (PRG).

ADB will also provide $20m loan from the Leading Asia’s Private Sector Infrastructure Fund (LEAP), supported by the Japan International Cooperation Agency.  The project is being developed by PT. Medco Ratch Power Riau, a special purpose vehicle which is partially owned by PT. Medco Power Indonesia and Ratchaburi Electricity Generating Holding Public Company Limited from Thailand.

When complete, the plant is expected to generate 1445GWh of stable and reliable power to the domestic grid, annually.

ADB private sector operations department infrastructure finance division director for Southeast Asia, East Asia, and the Pacific Jackie B. Surtani said: “ADB’s involvement in the project has helped secure long-term commercial bank financing necessary for any large-scale infrastructure investment, which has remained a challenge in Indonesia.

“ADB’s role as a lender and provider of PRG to the project’s B loan lenders will enable the project to mobilize a significant amount of long-term debt.”

In Indonesia, about 20 million people or 7% of the population has no access to electricity. A growth rate of 9% per year, underscores the demand for electricity in the country.

The Riau power project will generate and sell electricity to PT Perusahaan Listrik Negara (Persero), which will boost the supply of electricity needed to sustain economic growth in the Riau Province.

IFC Indonesia, Malaysia and Timor Leste country manager Azam Khan said: “IFC finances electricity generation, transmission, and distribution upgrades in developing countries, with a particular focus on natural gas and renewable energy such as solar, wind, and hydropower.

“Attracting commercial finance and private expertise is becoming more critical in developing vital projects such as the Riau gas IPP project. IFC is pleased to support MRPR, which serves as a model for other projects in Indonesia’s 35GW power development program.”