Jayanty Nada Shofa, Jakarta – The International Partners Group – a coalition of rich nations – should provide grants worth about $1.5 billion in the Just Energy Transition Partnership (JETP) climate finance package, according to think tank IESR.
The IPG – co-led by the US and Japan – comprises Canada, Denmark, the European Union (EU), France, Germany, Italy, Norway, and the UK.
Last year, the IPG promised to mobilize $10 billion of public money over a period of three to five years as part of the JETP scheme to get Indonesia off coal power. Financial institutions that are part of the Glasgow Financial Alliance for Net Zero (Gfanz) also pledged to chip in $10 billion. This brings the total JETP funding to be worth $20 billion.
However, the Energy Ministry recently revealed that Indonesia would get around $160 million in grants from JETP. This is a ridiculously small amount compared to the entire JETP package. About half of the promised $20 billion is expected to come from commercial loans.
"We cannot take on debt for our energy programs and coal retirement. Even if we have to, it should be concessional finance with an [interest rate] of below 3 percent," IESR executive director Fabby Tumiwa told reporters in Jakarta on Tuesday.
"I doubt we can expect some grants from Gfanz because they will [most likely provide] commercial finance. The IPG, however, is providing public money. Hopefully, at least 10 percent of what the IPG gives us [under the JETP scheme] will be grants. But ideally, grants should account for 15 percent of what the IPG offers. So that is between $1 billion and $1.5 billion," Fabby said.
Indonesia is currently drafting a comprehensive investment plan on the JETP program. This document is set for launch in mid-August.
"Indonesia would need to negotiate with the IPG if it wants more grants. The comprehensive investment plan can be the basis for us to negotiate. The document will lay down the components of how many coal-fired power plants we would have to retire, etc.," Fabby said.
Source: https://jakartaglobe.id/news/indonesia-needs-immediate-15b-ipg-grants-for-coal-phaseout-ies