The Japan Bank for International Cooperation (JBIC) has signed an umbrella note of mutual understanding (UNMU) with the Indonesian ministry of finance. The UNMU is aimed at promoting independent power producer (IPP) projects in Indonesia.


The UNMU states that the government of Indonesia should recognise the importance of power projects and should provide the appropriate financial support for Indonesia’s electricity supplier, PT Perusahaan Listrik Negara (PLN).


JBIC and the Indonesian government are to consult each other regarding the support necessary for enabling PLN to fulfil their long-term contracts.


JBIC has been active in advancing power generation projects in Indonesia through its loan and guarantee operations. The signing of this UNMU is part of this effort.


PLN incurred chronic deficits after the Asian crisis, and there has been a lag in financing and investment for the formulation of power generation projects. Therefore they require support and investment to be able to supply electricity to meet the demand. Indonesia’s peak demand for power will grow by an average of 7.2% annually.