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Publish Date : 01-Apr-2014

Construction of a 320-megawatt geothermal power plant in North Sumatra, Indonesia, has received a US$350 million loan from The Asian Development Bank (ADB).

Out of the total amount, US$250 million will come from the bank's ordinary capital resources, US$80 million from the Clean Technology Fund and the balance of US$20 million from the Canadian Climate Fund for Private Sector in Asia.

The Sarulla Geothermal Power development project is in need of a total loan of US$1.17 billion. The loan package will be co-financed by six commercial banks while the ADB and the Japan Bank for International Cooperation would act as lead structuring banks. Itochu Corp., Kyushu Electric Power Co., Ormat International and Medco Power Indonesia are the proponents of the project which will be developed and implemented under a 30-year energy sales contract with Perusahaan Listrik Negara, the national electricity utility firm, a 30-year joint operating contract with Pertamina Geothermal Energy, and a 20-year guarantee from Indonesia's Ministry of Finance.

The project would likely provide clean power to an Indonesian grid which is presently dominated by aging coal and oil-fired power plants. Once the project is complete in 2018, it would likely reduce 1.3 million tonnes of carbon dioxide emissions annually.

At present, Indonesia uses coal and oil to produce 65 percent of its electricity to fuel its economic growth.

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