THE ASIAN Development Bank (ADB) and the United States Agency for International Development (USAID) signed Tuesday an agreement to mobilize about $7 billion worth of investment for energy projects in Asia and the Pacific.
USAID Asia Bureau Acting Assistant Administrator Gloria Steele said with the targeted investment, the agencies hope to increase the capacity of deployed energy systems by six gigawatts, and increase regional energy trade by 10% over the next five years.
“What we would like to do is to use the resources to get the private sector to engage in the energy sector in their region. And through their engagement, we want to mobilize investments from the private sector, from businesses,” Ms. Steele said during the news conference Tuesday at the ADB office in Ortigas Center.
Director General of ADB’s Strategy, Policy, and Review Department Tomoyuki Kimura said the projects to be funded will “focus on clean energy, renewable energy and also energy access for all.”
For the Philippines, among other priority countries in the Indo-Pacific region, this would mean an expansion of renewable energy projects.
Asked if the ADB has found prospective investors here, Yongping Zhai, chief of the Energy Sector Group under the ADB’s Sustainable Development and Climate Change Department, replied positively, adding: “We are looking at expanding clean energy and renewable energy in the Philippines.”
Mr. Zhai added that liquefied natural gas remains a viable option for the country to diversify its power mix.
“LNG and gas will be important to make the process clean; otherwise the share of coal will increase,” Mr. Zhai told reporters yesterday.
Mr. Zhai said the financing will be tapped via partnerships with the private sector.
These investments, in turn, will help mobilize other sources of finance. The ADB will focus on providing technical assistance.
“ADB will continue using our resources but with this additional resources from USAID, we will expand and strengthen the design of our projects, institution-side and capacity-side,” Mr. Zhai added.
Mr. Kimura noted that the deal will serve as a “useful instrument” for ADB to achieve its commitment in its Strategy 2030 to mobilize private sector financing, particularly for infrastructure intended for various sectors.
“We have actually a commitment to achieve a leverage range of 2.5, which means whenever we provide $1 of our money, we mobilize $2.5 particularly from the private sector,” Mr. Kimura added.
The initiative was launched yesterday and will be given five years to achieve the objectives under the agreement.
In 2018, ADB made commitments of new loans and grants amounting to $21.6 billion.
For the energy sector, ADB’s annual funding averages around $5 billion, according to Mr. Zhai, noting that half is allocated for clean and renewable energy while the remaining half is for putting up transmission lines and execution systems. — Janina C. Lim