Singapore: Funding for energy infrastructure projects in Asia will get more expensive as banks tighten credit lines, but it is unlikely to stop Asian countries from pursuing expansion plans, a senior banker said on Tuesday.

A snowballing credit crisis has crumpled major financial markets in recent weeks as defaults on US subprime mortgages choked demand for risky, high-yield loan derivatives. This plunged some hedge funds into deep financial trouble and prompted banks to tighten loan standards, threatening economic growth.

Development track: A container ship awaits loading at a port in Tokyo. Japan, China and India are among the key players in infrastructure investments in the Asian region.

But demand from Asian countries will not be dented by this, Rusli added, ahead of the Association of South-East Asian Nations’ Energy Business Forum starting on Wednesday in Singapore.

“The demand for infrastructure is too important for Asian economies," Rusli said. “Thus potentially higher funding costs in the near term will not stop Asian companies and governments from continuing to promote and implement critical infrastructure projects."

In mid-2006, the International Energy Agency (IEA) estimated that Asia would need about $5 trillion (Rs206 trillion) in energy infrastructure investments over the next 15 years.

Key players involved in infrastructure investments in Asia, such as port projects, power plants and petrochemicals development as well as in the steel industries, include Japan, China and India, he said.

“There is a lot of regional activity from the more cash-rich companies from Japan, while international money is moving into China, while Chinese money itself is starting to look for resources in South-East Asia," Rusli said.

The Asian Development Bank’s East Asia Energy Division said Asia needed about $4.5 trillion in clean energy investments alone between 2000 and 2030.

Asian oil demand growth in 2007 is estimated at 657,000 barrels per day (bpd), the IEA said.

That demand will grow by 869,000bpd in 2008, according the Paris-based intergovernmental energy policy adviser, which was founded during the oil crisis of 1973-74.

Close