JAKARTA, Aug 7 (Reuters) - Indonesia has relaxed rules requiring electricity projects financed by foreign investors to include locally-made parts in an effort to unlock concessional loans from international development banks, a government official said on Wednesday.

Indonesia has pledged to boost the proportion of renewables in its energy mix and foreign lenders have promised to provide funding, including more than $20 billion under the Just Energy Transition Partnership (JETP) led by the Group of Seven countries.

But the disbursement of funding for renewable power projects in the country has remained limited, which analysts have blamed partly on the mandatory local content rules.

Under a new regulation just announced, Jakarta will exempt projects that receive at least 50% funding from foreign multilateral or bilateral lenders from the local content rules, Rachmat Kaimuddin, deputy minister of maritime affairs and investment, said.

"If we're using funds from development financing agencies that have different procurement rules, in which we are a member, we can follow an agreement that we set," Rachmat said, referring to the move to relax the local content rules, in a briefing for the electrical industry.

"The reason we're doing this is we want concessionality from development financial institutions."

The new regime will also allow solar power plant projects to use imported panels, provided the project operator obtains a ministerial approval, signs a power purchase agreement before the end of 2024 and the plant operates by the first half of 2026.

The solar panels must also come from companies that commit to investing in a production facility in Indonesia.

Under the previous rules, the minimum local content for solar power plants was 60%.

Rachmat said more details on local content requirements will be announced soon, with thresholds varying for different power plants or projects.

Indonesia's state utility Perusahaan Listrik Negara has a plan to expand renewables-sourced power capacity by 20.9 gigawatts between 2021 to 2030, according to its current business plan. That plan is under review and PLN has said it wants to further invest in renewables.

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https://www.reuters.com/sustainability/indonesia-eases-local-content-rules-access-foreign-cash-renewable-power-projects-2024-08-07/