A syndicate of Asian banks have signed a loan agreement of US$2.6bn,15.25 years loan to build the massive polluting Jawa 9 and 10 project in Banten, Indonesia. Sponsors of the project are Indonesia’s state utility, PLN, and private Indonesian company, Barito Pacific, as well as the Korea Electric Power Company (KEPCO).

Today, several environmental and civil society organisations in Canberra, Australia, and Cilegon, Indonesia have condemned KEPCO investment in the Jawa 9 and 10 power plant project in Banten. In Cilegon, Banten, the province where the dirty industrial project will be built, they unfurled a banner that read “Moon Jae-In: Your Dirty New Deal Starts Here”.

A recent report from financial think tank Carbon Tracker finds it is already cheaper in Indonesia to invest in new solar PV than new coal. Furthermore, due to COVID-19 slowdown, Indonesia’s electricity demand may fall by 9.7%. The Jawa-Bali grid, where proposed Jawa 9 and 10 coal power plant project is located, is projected to be oversupplied by up to 41.5% in 2020.

“Now, Banten is in a pollution emergency. And even the Banten coastline has been snatched away, the livelihoods and lives have begun to be driven out through the Regional Zoning Plan of Coastal Areas and Small Islands (RZWP3K). This regulation itself is forced while the community is not involved. Add to this the syndicated decision of the banks which funded the construction of the Java 9-10 power plant will create a pollution-filled future for Banten residents. The choice of energy investment should not be on dirty sources, but it’s time we share the space of life with clean energy, ” said Madhaer Efendi, Coordinator of the Pena Masyarakat.

In its pre-feasibility study for Jawa 9 and 10, the Korea Development Institute (KDI) estimated that the project would have negative profitability of USD 43.58M. The value of the cash flow investment that enters the power plant project is greater than the projected revenue until the power plant’s operation is finished.

“Nothing about this project is positive,” said Binbin Mariana, Market Forces’ Jakarta-based Energy Finance Campaigner. “It will lose project sponsors and their investors’ money, it will add to the horrible degradation of air quality and sustainable livelihoods in local Indonesian communities, and will invite catastrophic climate change.

There have been reports about the horrendous air pollution and the associated respiratory and skin diseases in the Banten province and surrounding area where Jawa 9 and 10 is located. Health impact modelling conducted for Jawa 9 and 10 estimates it would cause over 4,700 premature deaths over its operating lifetime.

“Indonesia does not need more coal. We have suffered from coal that affects our health and livelihoods. Jawa 9 and 10 will add to the serious health risk in the Banten province area where it is already saturated with other coal power plants”, said Yuyun Indradi, executive director of Indonesia-based organisation, Trend Asia. “Korea and other developed countries in Asia should help Indonesia shift from coal to renewable energy, instead of financing a massive polluting coal power plant.”

Significant support for the project is being provided by Korean public financial institutions. Besides KEPCO, Korean Development Bank (KDB) and The Export-Import Bank of Korea (KEXIM) are also known as lenders who join credit syndication for Java 9 & 10 power plant project.

“Fund disbursement for the Jawa 9 and 10 coal power plant project is an embarrassing step taken by the Korean government. It shows that the only thing they care about is profit. Meanwhile, this decision has the potential to cause ecological impacts not only in Indonesia but also for the rest of the world, ranging from the threat of worsening air quality to the global climate crisis, just like what we’re facing today. History will record the decision of the Korean government took today would become an ecological time bomb for the earth and humans in the future,” said Didit Wicaksono, Climate and Energy Campaigner for Greenpeace Indonesia.

“These projects will only damage Korea’s overseas reputation and have led to people questioning whether Korea’s Green New Deal is a farce because carbon emissions from this project will effectively nullify the emission reduction achieved through the initiative.” said Sejong Youn, director at South Korea-based climate policy group Solutions for Our Climate (SFOC). “ . Moreover, this project is expected to bring significant economic loss to the public institutions involved, and it will interfere with the long-needed transition out of fossil fuel-based industry for the Korean companies.”

The other banks in the syndicate are financial adviser DBS (Singapore), Malaysian banks CIMB and Maybank, Bank of China, and Indonesian banks’ Bank Mandiri, Bank Negara Indonesia and Exim Bank of Indonesia.

“DBS’ hypocrisy is also on display as the arranging bank. In its 2019 coal policy, DBS claimed to recognise the need to urgently tackle climate change and said that it would no longer finance new coal power stations,” said Mariana. “But in signing this 15-year loan agreement to fund Jawa 9 and 10, it has just burdened itself, our climate and Indonesian communities with a massive new 2000 MW coal project. This flies in the face of expert advice that we can’t afford to build any more CO2 emitting infrastructure if we want to have any hope of meeting the climate goals of the Paris Agreement.”