ADB approves $300 mln loan for Indonesia geothermal

JAKARTA, May 28 (Reuters) - The Asian Development Bank (ADB) has approved a $300 million loan for Indonesian state-owned company PT Geo Dipa Energi (GDE) for its geothermal power plant expansion, the lender said on Thursday.

The fund will help finance expansion of power generation capacity by 110 megawatts in two geothermal plants at Dieng and Patuha in Indonesia’s most populated island Java.

Indonesia has the world’s largest geothermal potential, with an estimated 29 gigawatts (GW), according to the ADB. But development of projects has been slow, partly due to expensive exploration costs.

“The project will provide environmentally friendly base-load electricity to the Java–Bali electricity grid, reducing CO2 emissions by more than 700,000 tonnes per year,” Riki Ibrahim, GDE President Director, said in the ADB statement.

The Southeast Asian country currently has 2.1 GW installed geothermal capacity, the second largest in the world.

Indonesia may require an estimated $15 billion in investment, officials have said, to meet its target of reaching 7.2 GW of geothermal power capacity by 2025. (Reporting by Bernadette Christina Munthe; Editing by Fransiska Nangoy and Martin Petty)