Sustainable and Inclusive Energy Program (SIEP) – Subprogram II

completed

As part of the project, the Indonesian government will be provided with a promotional loan of EUR 200 million to support its efforts to structurally improve the sectoral framework conditions in the energy sector. Specifically, the second phase of SIEP aims to consolidate and further develop the reform measures initiated in the first phase. This is intended to contribute to improving security of supply and access to energy and to promoting an ecologically sustainable energy supply. The main focuses of the reform measures in the second phase are - improving the fiscal sustainability and management of the energy sector, e.g. introducing cost-covering tariffs for electricity, improving the financial and service provision of state-owned companies in the energy sector; - improving the investment climate and increasing the participation of private sector players in the energy sector, e.g. simplifying and reducing the approval steps for private sector activities, granting state guarantees for private investments to expand generation capacity; - Improving the sectoral framework conditions for increased access to clean energy, e.g. introduction of tariff and non-tariff incentive mechanisms to promote investments in renewable energy and energy efficiency, legal establishment of so-called Energy Services Companies (ESCO) and introduction of energy consumption labels, development of an electrification program. The program is co-financed with the Asian Development Bank (ADB) and the Agence Francaise de Developpement (AFD).