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NGOS ACCUSE ADB OF FUNDING INDONESIA COAL PLANTS DESPITE CLEAN ENERGY PROMISES

Jakarta (AFP) – Green NGOs have accused the Asian Development Bank of indirectly
financing coal plants in Indonesia through a $600 million loan despite promises
to no longer fund projects tied to the fossil fuel, according to a new report.

Issued on: 25/04/2024 - 10:45Modified: 25/04/2024 - 13:55

2 min

NGOs allege the loan is financing the Suralaya coal plant, which is being
expanded to ten units © BAY ISMOYO / AFP/File

The report by four NGOs alleges the ADB loan given in 2021 to Indonesia's state
power company to fund its ten-year business plan and "promote the use of clean
energy" has no clause blocking spending on new coal facilities.

The Perusahaan Listrik Negara (PLN) plan contains more than a dozen new coal
projects, including an expansion at Java island's Suralaya, one of the biggest
coal-fired plants in Southeast Asia, which will add two generating units to
eight in operation.

"ADB's loan agreement doesn't just fail to exclude coal. It actually allows PLN
to use ADB funding for coal-fired power plants," said Dustin Roasa, research
director at Inclusive Development International, which published the report
Wednesday.

"The loan's eligible expenditures expressly cover anything in PLN's 10-year
plan, which does not shy away from new coal."

The report gives locals' accounts of how a previous expansion at Suralaya in
Banten province neighbouring capital Jakarta "displaced families, reduced fish
stocks... and sickened their children".

The impact of pollution from Suralaya costs Indonesia $1 billion every year
because of preventable deaths, work absences and medical costs, a study
published last year by the Europe-based Centre for Research on Energy and Clean
Air (CREA) said.

"Publicly funded institutions like the Asian Development Bank must include
robust coal exclusions in contracts... in order to end coal finance for good,"
said Daniel Willis, finance campaigner at NGO Recourse.

The report said the loan entered PLN's general bank account and was not put into
a separate account that could be monitored, allowing it to be spent however PLN
wants. It did not claim the loan was directly used to fund Suralaya.

An ADB spokesperson said the loan agreement does "not include support for
coal-fired power plants," adding that it was a results-based loans in which the
borrower must achieve certain targets including promoting clean energy before
the loan tranches are disbursed.

"The loan does not violate ADB's energy policy," the spokesperson said.

PLN did not respond to an AFP request for comment about the report, which was
released ahead of ADB's annual meeting in Georgia next week.

The bank provides loans and grants for projects in the poorest countries in the
Asia-Pacific region and has pledged to not fund "new coal-based capacity for
power and heat".

The ADB has a financing scheme for Asian governments to retire coal plants and
in December agreed on a deal with the owners of the Cirebon-1 coal-fired power
plant in Indonesia to shut it down seven years early.

© 2024 AFP


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