OJK: Downstream Energy Sector Financing by Banks Must Be Healthy and Measured

The government plans to require the banking sector and non-bank financial institutions to participate in financing downstream projects. The Chief Executive of Banking Supervision at the Financial Services Authority ("OJK"), Dian Ediana Rae, stated that the government’s program presents a significant opportunity for the banking sector.

However, Dian continued, the execution will heavily depend on each bank’s capacity and its risk tolerance limit (Appetite).

“It is important to note that banks are different from regular companies. Banks are financial intermediaries whose funds mostly come from public deposits. Therefore, credit diversification, risk management, and prudential regulations such as the Maximum Credit Provision Limit ("BMPK") must be considered when financing downstream government projects,” Dian told Hukumonline.com.

He emphasized that the government needs to formulate an appropriate policy so that banks can conduct healthy business practices while contributing optimally and sustainably to economic development.

Minister of Energy and Mineral Resources ("ESDM"), Bahlil Lahadalia, plans to require banks and non-bank financial institutions to contribute to financing downstream projects. This plan aligns with the establishment of the Task Force for Downstream Acceleration and National Energy Resilience, as stated in Presidential Decree No. 1 of 2025 on the Task Force for Downstream Acceleration and National Energy Resilience ("Keppres 1/2025").