Japan Terminates Funding for Coal Power Plants in Indonesia and Bangladesh

Smoke rises from a coal-fired power plant in Romeoville, Ill., on Feb. 1, 2019. (Scott Olson/Getty Images)

Japan will stop providing loans for two key coal-fired power plant projects in Indonesia and Bangladesh, citing its commitment to phase out coal power plants in line with the Group of Seven (G–7) nations.

The two projects involved the Indramayu coal plant in Indonesia and the Matarbari coal plant in Bangladesh.

Japan’s Foreign Ministry Press Secretary Hikariko Ono said on June 22 that Japan has decided to stop financing the Indramayu coal plant due to the Indonesian government’s decision to abandon the project.

Indonesian state-owned electricity company PLN, which operates the Indramayu power station, said that it would cancel the project to meet the country’s goal of becoming carbon neutral by 2060.

“PLN took the initiative to stop borrowing [funds for the project] as part of PLN’s efforts to reach [our] carbon-neutral goal by 2060,” Gregorious Adi Trianto, PLN vice president of corporate communications, told The Jakarta Post.

As for the Matarbari coal power plant Phase-2, Japan said it decided to terminate funding for the project owing to international discussions on coal-fired power generation.

The project had aimed to build a 1,200-megawatt power plant in the southeastern region of Bangladesh.

“At the G–7 summit in June 2021, Japan agreed to end new international direct support for coal-fired power generation facilities for which emission reduction measures have not been taken by the end of 2021,” Ono said.

Following that, Bangladesh’s Energy Minister Nasrul Hamid said the government had decided to scrap the Matarbari Phase-2 project and build an alternative power plant instead.

The construction of Matarbari Phase-1 began in 2018 and was set to become operational by 2024.

“We have already canceled the Matarbari phase-2 project. We plan to build a liquified natural gas (LNG)-based power plant. The plant will be interconnected with the LNG terminal,” Hamid said, according to The Daily Star.