Ecobiz.asia — The Japan International Cooperation Agency (JICA) has signed two Japanese ODA loan agreements with Indonesia to support geothermal power development and improve the country’s investment and trade environment.
The agreements, signed in Jakarta on March 30, 2026, cover the Hululais Geothermal Power Plant Project and the Competitiveness, Industrial Modernization and Trade Acceleration Program (Subprogram 3).
The signing was carried out by Suminto, Director General of Budget Financing and Risk Management at Indonesia’s Ministry of Finance, and JICA Indonesia Chief Representative Takeda Sachiko.
The Hululais geothermal project, located in Bengkulu Province, aims to strengthen power supply capacity in the Sumatra grid while supporting regional economic growth and improving living standards. The project will also contribute to climate change mitigation by expanding renewable energy use and reducing greenhouse gas emissions compared to fossil fuel-based generation.
The project includes the construction of two geothermal power plants, along with transmission, substation, and distribution facilities, as well as consulting services covering design, procurement, construction supervision, and environmental and social safeguards.
JICA has committed a maximum loan of ¥29.16 billion (approximately $190 million), with an interest rate of 0.3% for the main project and 0.01% for consulting services. The loan has a 30-year repayment period, including a 10-year grace period. The project is scheduled for completion in 2030 and will be implemented by state utility PT Perusahaan Listrik Negara (PLN).
The geothermal development is aligned with Indonesia’s climate targets and supports global initiatives such as the Asia Zero Emission Community (AZEC) and the Just Energy Transition Partnership (JETP), while contributing to Sustainable Development Goals (SDGs) on clean energy and climate action.
Meanwhile, the second facility—a policy-based loan worth up to ¥50 billion—will support reforms to enhance Indonesia’s investment climate, trade facilitation, and industrial competitiveness.
The program focuses on three key areas: improving the business environment, reducing trade barriers, and promoting corporate growth and expansion. It aims to boost private-sector investment and support economic stability and development.
The loan carries an interest rate of 2.2%, with a 15-year repayment period and a five-year grace period. The Coordinating Ministry for Economic Affairs will serve as the executing agency, with the program expected to be completed by May 2026 upon full disbursement.
JICA is co-financing the program alongside the Asian Development Bank (ADB), which is providing $500 million, and Germany’s KfW development bank, contributing €400 million.
Japan has been a longstanding development partner for Indonesia, supporting sustainable growth and socio-economic stability through its Official Development Assistance framework.
The agency noted that Indonesia remains a key partner in ASEAN, with more than 1,600 Japanese companies currently operating in the country, making it one of the largest Japanese business bases in the region.
The latest agreements underscore continued bilateral cooperation in addressing global challenges, including energy transition and economic reform, while supporting Indonesia’s long-term development agenda. ***
