Indonesia to borrow $750 mln from World Bank for power plant

Forbes, 10.21.09, 07:06 AM EDT

JAKARTA, Oct 21 (Reuters) - Indonesia will get a $750 million loan from the World Bank to fund a hydro-electric power plant in West Java, a senior ministry official said on Wednesday, a move aimed at easing crippling power shortages.

Years of under-investment in infrastructure, including the power sector, means that Indonesia suffers from frequent blackouts, while many remote parts of the 17,000-island archipelago are not even connected to the national grid.

'We hope to sign the loan agreement with the World Bank in December,' said Dedy Supriadi Priatna, deputy for infrastructure at the planning ministry.

The 2x500 MW hydro-electric plant is expected to cost about $850 million, Priatna said, and will allow state power distributor PT Perusahaan Listrik Negara (PLN) to produce cheaper electricity.

'The new (pump storage) system will help PLN produce cheap power, about 200 rupiah ($0.213) per kwh compared with about 3,000 rupiah per kwh for diesel power plants, particularly during peak hours,' Priatna said.

Officials estimate that Indonesia needs to invest about 1,600 trillion rupiah ($170.4 billion) in infrastructure over the next five years in order to meet its growth target of 6-7 percent a year, but the state budget can only cover some 30 percent of it.