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Economy in brief: New push for renewable energy investment

The Financial Services Authority (OJK) has signed an agreement with the Energy and Mineral Resources Ministry to boost the development of new-renewable energy across the country.

In the memorandum of understanding, the OJK has committed to gradually endorsing financial services firms, such as insurers and pension funds, to invest at least Rp 1 trillion (US$72.4 million) in the new-renewable energy sector.

“We will prepare at least Rp 1 trillion for the first phase, but we will increase this to Rp 3 trillion in the following years,” OJK chairman Muliaman D. Hadad said after the agreement at the OJK’s headquarters.

OJK deputy commissioner for non-banking supervision Dumoly F. Pardede said the investment in the new-renewable energy sector would be in the form of a limited participation mutual fund (RDPT) managed by asset management companies. The RDPT is a mutual fund product designed to gather funds to be used to finance projects in the real sector, such as housing, road construction and infrastructure.

Dumoly said at least three state-owned insurance firms, namely Asabri, Jiwasraya and Jamkrindo, had already committed to taking part in the investment, and he expected pension funds to join soon as well.

For the first phase, Dumoly said the funds would be used to finance the construction of solar-powered electricity generators in a number of regions, such as Jakarta and Kalimantan, which could generate at least 100 megawatts (MW) of power.

“We are aiming to increase to 500 MW in the future if the first phase is successful. Afterward, we can invite foreign investors to join,” he said.

Also on Wednesday, Energy Minister Sudirman Said said the agreement was part of the ministry’s efforts to meet the government’s new-renewable energy target of 23 percent of power generation in the next 10 years, from 6.8 percent currently.

“In order to develop new-renewable energy and its conservation, we need investment of around Rp 1.3 quadrillion to Rp 1.6 quadrillion by 2025,” Sudirman said, adding that the government only had an average of Rp 2 trillion allocated per year in the state budget for the sector.

Source: www.thejakartapost.com, 4 February 2016