U.S. eyes geothermal for Exim Bank's $1 bln Indonesia credit

JAKARTA (Reuters) - Part of a $1 billion credit facility backed by the Export-Import Bank of the United States (Exim Bank) for Indonesia should be used to help develop clean energy projects such as geothermal power, a senior U.S. official said on Monday.

The U.S. Exim Bank announced in late June it had pre-approved 11 Indonesian banks to receive funds under the scheme, which aims to make credit available to public and private sector businesses under low or fixed-interest rates.

“Indonesia must continue on its growth path and if it does, business as usual is not a viable option,” Walter North, mission director for USAID in Indonesia, told a Jakarta conference of clean energy developers and investors.

“The US Export Import bank, for example, is going to provide financial support of over $1 billion for credit facilities in Indonesia, including for geothermal.”

He told Reuters the fund was meant to boost U.S. investment in Southeast Asia’s largest economy and that he would like to see geothermal project developers take advantage of the credit facility.

“My sense is that it was an eligible use and one we would like to see used to extent possible,” he said.

Indonesia and the U.S. in April signed a new agreement broadening the types of protection offered to U.S. overseas investors by the Overseas Private Investment Corp (OPIC), which insures against certain risks, including political risk.

U.S. companies currently have $18 billion worth of investment in Indonesia, which boasts the potential to produce an estimated 27,000 megawatts of electricity from geothermal sources.

U.S. energy major Chevron Corp is among firms that have bid for a geothermal power project in Indonesia, as the country seeks to boost erratic power supply and cut its greenhouse gas emissions.

However, geothermal energy production is expensive and struggles to compete in Indonesia, where fossil fuels are heavily subsidized.

Reporting by Sunanda Creagh; Editing by Neil Chatterjee