Lenders led by Japanese financiers have extended US$440mn to a geothermal power project in Indonesia.

The co-financing was led by the Japan Bank for International Co-operation (JBIC), which has contributed US$198mn from its own book. The Asian Development Bank (ADB) then led a syndicate of commercial banks on the rest of the financing.

The syndicate was composed of BTMU, Mizuho and SMBC, with the commercial portion of the debt being covered by Nippon Export and Investment Insurance (Nexi), a Japanese government-owned agency.

The finance will fund the Muara Laboh geothermal power project, being built by Supreme Energy Muara Laboh (SEML), an Indonesian subsidiary of Engie, the French power company. The project is in the South Solok area of West Sumatra. It will eventually have a generating capacity of 80MW, which will be sold to the state-owned power utility PT PLN over a 30-year period.

SEML will be joined in a consortium by Japanese industrial giant Sumitomo Corporation on the construction of the project, which explains the involvement of Japan’s export credit agency (ECA), JBIC.

Muara Laboh will power 120,000 homes in Indonesia, the world’s highest-populated Muslim nation and Southeast Asia’s largest economy. The power will be emissions-free and is a key part of the Indonesian government’s drive to reduce carbon emissions by 29% by 2030.

Indonesia has some of the world’s largest geothermal energy potential, and the government has been actively promoting the sector’s development since introducing a new law in 2014 that allows international companies to access the resources.

“I am proud of our teams who succeeded in confirming our expertise in such projects, from the underground exploration to the construction and operation of geothermal power plants. Those technologies are key for countries like Indonesia to provide their population with efficient low-carbon power generation sources,” says Isabelle Kocher, CEO of Engie.