Power Plant, Maritime Infrastructure Projects To Be Financed By AIIB

Beijing (Antara Bali) - Indonesian Finance Minister Bambang Brodjonegoro said power plant and maritime infrastructure projects would be the first to be financed with fund from Asian Infrastructure Investment Bank (AIIB) after the new multilateral financial agency comes on stream by the end of 2015 or early 2016.

"The projects we will build with fund from AIIB  could be power generating plants  and maritime infrastructure such as seaports," Bambang told Antara news agency here on Monday night after the signing of the AIIB establishment  and series of bilateral talks.  

He did not rule out other projects "as we need a lot  and have been identified  to accelerate infrastructure development to support economic development."

Indonesia together with 56 founding members of AIIB led by China signed chapters on association of the establishment of the new financial agency at the People Supreme Hall here on Monday.

The initiative for the establishment of AIIB was conveyed by Chinese President Xi Jinping at the meeting of the Asia Pacific Economic Cooperation (APEC) forum in Bali in October , 2013.

AIIB is a Multilateral Development Bank designed to provide financial support for infrastructure  development in Asia both for the government  and private sectors.

Indonesia took part with an investment of US$672.1 million to be paid in five years making it the 8th largest shareholder of the bank.  

AIIB is expected to start operation with a capital of  US$100 billion with  paid-in-capital of 20 percent. It is expected to start operation in early 2016.  

A series of meetings between chief negotiators would take place before the end of this year to prepare the operation of the bank.

AIIB is expected to be able to help cope with financial difficulty faced by Indonesia in carrying out its massive infrastructure projects.

For Indonesia, AIIB will provide an alternative source of fund to finance its infrastructure development program, Bambang said.

"We need to accelerate development of out infrastructure to support economic development in general," he said.

AIIB is a special lender for big commercial infrastructure projects such as highways, toll roads, seaports  and airports, he said.

The World Bank and Asian Development Bank offer financial support for wide range of sectors including education, health as well as infrastructure but allocation for infrastructure is relatively small.  

In addition, there is no allocation of  funds from the two multilateral banks for the private sector, and they would not provide funds for the development of coal-fired power plants, Bambang said.

AIIB offers funds for the private sector  and for coal fired power generating projects, he said, adding,"certainly the coal is to be processed with environmentally friendly technology."

"We have projects to build power plants with a total capacity of 35,000 MW  in five years. Some of them could be financed with funds from the World Bank or the ADB, but there are some that have to be financed with fund from AIIB. Therefore we have to maximize our participation in AIIB," he said. (WDY)