Thursday, February 6, 2025

Indonesia’s JETP faces criticism over delayed funding

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Julian Isaac

Journalist

Editor

Interview

Hashim Sujono Djojohadikusumo, the President’s Special Envoy for Climate and Energy, has assessed the Just Energy Transition Partnership (JETP) as a failed program because there has not been a single fund disbursed by the U.S. Government through the program.

By the end of 2022, Indonesia is promised to receive green financing through JETP worth US$20 billion from developed countries that are members of the International Partners Group (IPG). This initiative aims to accelerate the energy transition in the electricity sector and increase the mix of renewable energy in the electricity system and achieve peak emissions of 290 million tons of CO2 in 2030.

Through the initiative, Indonesia would receive funds worth US$20 billion (Rp327 trillion) promised by the U.S. government. According to Hashim, it will definitely be removed by the Donald Trump administration.

“A lot of talk, it turns out. The US$5 billion grant in the US$20 billion apparently doesn’t exist,” Hashim said on Friday, January 31, 2025.

The Institute for Essential Services Reform (IESR) criticized Hashim’s statement that JETP financing was a failed program because no funds were disbursed.

Fabby Tumiwa, Executive Director of IESR, said the statement was wrong and not based on data. According to him, JETP is not given in the form of direct cash assistance, but through various schemes from each IPG country such as grants, technical assistance, equity and financing through bilateral and multilateral cooperation as well as commercial financing on projects.

Based on information from IESR, donor countries in the IPG have disbursed grants and technical assistance of US$230 million for 44 programs until December 2024. Meanwhile, US$97 million for 11 programs is still in the approval process.

Funds allocation

So far, IPG has allocated US$1 billion for equity investment and loans in 8 approved projects. Such as the financing of the Ijen Geothermal Power Plant (PLTP) of US$126 million from the International Development Finance Corporation (DFC) from the U.S.

Meanwhile, the total funding of US$5.2-6.1 billion allocated for 19 projects is still in the form of project guarantees from the UK and the U.S. Project guarantee instruments are very important to reduce project risks and loan interest rates.

“The JETP agreement does not rely solely on the U.S. government, because the IPG consists of many countries and international funding institutions, which remain committed to supporting funding for the energy transition in Indonesia through this initiative,” Fabby said on Monday, February 3, 2025.

Julian Isaac

Journalist

 

Editor

 

Interview

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