KEMENTERIAN KEUANGANDIREKTORAT JENDERAL PENGELOLAAN PEMBIAYAAN DAN RISIKO

EXECUTING AND DEVELOPING PPP PROJECTS:AN INDONESIAN EXPERIENCE

Freddy R. Saragih

DIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENT

MINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

Director of Indonesia PPP Unit

Ungasan Bay View Hotel & Convention Bali10 October 2018

Huge infrastructure needs vs limited fiscal capacity

� Indonesia has a huge task to close its infrastructure gap, which has been lacking partly due to severe financial crisis in the 1990s.

� The need of financing the development of infrastructure has been limited by low tax collection as well as constitutional restriction on maximum deficit (3% of GDP) and public debt (60% of GDP).

� Private involvement in infrastructure financing is seen as possible solution, not only for its additionality but also it promises to deliver more efficient and reliable services.

� Hence PPP scheme is considered as a promising alternative.

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Indonesian PPP ProcessA tested and workable arrangement in reference to international best practice

Planning Preparation Transaction

Identification and screening

Preliminary study

Pre-Feasibility Study

Tender Documents and Agreements

Construction and Operation

PQ, RfP, Bid Submission, Bidding, PPP award, FC

Legal technical financial due diligence, government support identification, etc Contract management

Supported by MoF’s Project Development Facility [PDF]

Performance Monitoring

Stages

Activities

Deliveries

§ Comprehensive frameworks [legal as well as institutional] have been in place to produce more standardized PPP process to deliver credible projects offered to private sectors.

§ Such arrangement has shown real products as many projects have reached financial close.

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PPP Infrastructure Sectors in Indonesia

SOCIALInfrastructure

ECONOMICInfrastructure

Education

Tourism

Prisons

Health

Public Housing

Sport, Art, Culture

Transportation

Road

Bulk Water and Irigation

Drinking Water

Liquid Waste Management

Solid Waste Management

Energy and Electricity

Energy Conservation

City Facilities

Communication

Economic AreaMostly are marginally feasible

and not covered by user payment

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Government Support and Facilities

MOF Regulation

No. 73/2018

MOF Regulation

No. 223/2012

MOF

Regulation

No. 8/2016

MOF Regulation

No. 260/2016

More integrated supports are provided for the increasingly incoming PPP proposals

Project Development Facility (PDF)

Viability Gap Fund (VGF)

Government Guarantee

Availability

Payment

Assistance to GCAs to develop pre-feasibility studies, bidding documents and

to manage projects during transaction phase to reach financial close

Government financial contribution to parts of PPP projects construction cost to

increase project financial viability as well as to ensure tariffs affordable for users

Government guarantees given on GCAs’ financial obligations based on risk

allocation in PPP Agreement to increase projects bankability. The guarantee can be

provided through the Indonesia Infrastructure Guarantee Fund (IIGF) or through the

Ministry of Finance

A scheme of payment made by GCAs to PPP Companies based on services delivery

as specified in the PPP Agreement

Development of PPP Policy

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Progress on PDF PolicyProject preparation as the key for PPP progress

GCAs [Ministries and Local

Govts)

MoF

International Agencies SOEs

Other govt

agencies

§ PDF is not seen as ‘business as usual’, a specific policy framework needs to be set up to deliver credible project preparation.

§ Involvement of international agencies (MDBs etc) is crucial to attain international standards and also SOEs to make the approach more private oriented.

§ Integration with other process of government support provision as well as with other government agencies.

3,10 5,10

12,21

2,62 1,27

-

5,00

10,00

15,00

2017 2018 2019

Project Development Fund:Allocation and Realization (USD mil)

Allocation Realization

*) Until Semester 1 2018

1

2

6

5

0

1

2

3

4

5

6

7

2015 2016 2017 2018

Number of Projects developed by PDF

*

*

*) Until August 2018

Consistently increasing budget allocation for PDF, showing more commitment from the government….

Increasing number of PPP projects assisted by PDF, driving the policy into real progress….

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2018 PPP Projects – Proven and Tested Experience

KA / Makassar Pare-pare

985 M

RSUDKrian

351 M

LRT MEDAN

20 T

SPAMSEMARANGBARAT

0,48 T

JEMBATANSURAMADU

0,32 T*

(O&M)

SERANG –PANIMBANG TOLL ROAD

7,29 T

JALAN TOLKALENDER

9,12 T

SPAM KOTAPEKANBARU

0,48 T

RSUD PIRNGADI

546 M

SPAM KOTABANDARLAMPUNG

0,9 T

PALAPA RINGPAKET BARAT1980 KM

1,28 T

PALAPA RINGPAKET TENGAH2647 KM

1,38 T

RSPTNUNSRAT

206 MPALAPA RINGPAKET TIMUR8454 KM

5,1 T

SPAMUMBULAN

2,1 T

RS kankerDarmais

700 M

JALAN TOLJAPEK II

16,4 T

Jalintim

2,1 TPLTUBATANG

40 T

SKSTN

1,45 T

CISUMDAWUTOLL ROAD

8,21 T

Construction PDF Operation

Satelit Multi Fungsi

8,5 TLAPAS CIANGIR

1,22 T

Trans Papua

6,4 T*

(O&M)

Bandara

Hang

Nadim

2,28 T

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Indonesian PPP Project – Project Awarded and Signed

No. PROJECT NAME PROJECT COST (IDR) FINANCIAL FACILITY FROM MOF STATUS

1. Central Java Power Plant Project 40 T Guarantee (MoF and IIGF) Construction process (targeted COD 2019)

2. Umbulan Water Project 2.1 T PDF, VGF and IIGF Guarantee Construction process (targeted COD 2019)

3. Palapa Ring Project – West Package 1.28 T PDF, IIGF Guarantee and AP Construction process (targeted COD 2018)

4. Palapa Ring Project – Central Package 1.38 T PDF, IIGF Guarantee and AP Construction process (targeted COD 2018)

5. Palapa Ring Project – East Package 5.13 T PDF, IIGF Guarantee and AP Construction process (targeted COD 2018)

6. Batang – Semarang Toll Road Project 11 T IIGF Guarantee Construction process (targeted COD 2019)

7. Manado – Bitung Toll Road Project 5.1 T IIGF Guarantee Construction process (targeted COD 2019)

8. Balikpapan – Samarinda Toll Road Project 9.9 T IIGF Guarantee Construction process (targeted COD 2019)

9. Pandaan – Malang Toll Road Project 5.9 T IIGF Guarantee Construction process (targeted COD 2019)

10. Serpong—Balaraja Toll Road Project 6T IIGF Guarantee Construction process (targeted COD 2019)

11. Jakarta-Cikampek Toll Road Project 16 T Co guarantee (IIGF and MoF) Construction preparation

12. Krian-Legundi-Bunder-Manyar Toll Road Project 12.2 T Co guarantee (IIGF and MoF) Construction preparation

13. Serang-Panimbang Toll Road 5.33 T Co guarantee (IIGF and MoF) Land Acquisition

14. Cileunyi Sumedang-Dawuan Toll Road 8.21 T Co guarantee (IIGF and MoF) Land Acquisition

15. Probolinggo-Banyuwangi Toll Road 21 T Co guarantee (IIGF and MoF) PPP Agreement signed on 29th Dec 2017

16. Jakarta-Cikampek II South Side Toll Road 13,38 T Co guarantee (IIGF and MoF) PPP Agreement signed on 29th Dec 2017

17. Bandar Lampung Water Project 1.1 T PDF, VGF and IIGF Guarantee PPP Agreement will be signed on 14th Feb 2018

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Indonesian PPP Project – Preparation Stage

No. PROJECT NAMEPROJECT

COST (IDR)

FINANCIAL FACILITY FROM MOF STATUS

1. Public Transportation of Medan City (LRT Project) 6.4T PDF, VGF and IIGF Guarantee PDF Facility had been proceeding since June 2017

2. Sam Ratulangi University’s Hospital 387B PDF, IIGF Guarantee and AP Preparation of Master Agreement Signing

3. Sidoarjo Regional Hospital 250B PDF Preparation of Facility Implementation Agreement

4. Pekanbaru Water Supply Project 484B PDF Preparation of Facility Implementation Agreement

5. Suramadu Bridge 324B PDF Preparation of Master Agreement Signing

6. Makassar Pare-Pare Railway 1,2T AP, PDF, and Guarantee Preparation of RfP

7. Hang Nadim Airport 2.28T AP, PDF, and Guarantee Preparation of PDF Agreement

8. Sumatera East Line National Road 3.19T AP, PDF, and Guarantee Preparation of RfP

9. Dharmais Cancer Hospital 2.0T AP, PDF, and Guarantee Preparation of PQ

10 Pirngadi Hospital Medan 950B PDF Preparation of PQ

11. Multifunction Satellite 7.9T AP and Guarantee Preparation of AP Confirmation

12. Integrated Social Security System 1.14T AP, PDF, and Guarantee Preparation of PDF application

13. West Semarang Water Supply Project N/A PDF and VGF Preparation of Facility Implementation Agreement

14. Serang Panimbang Toll Road (Section Cileleng-Panimbang) N/A AP Initial Confirmation Letter had been issued

15. Nusakambangan Prison Clarification to the Government Contracting Agency (GCA)

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Indonesia PPP Moving Forward

Expanding PDF Capacity

PDF capacity will be expanded to involve

more parties in funding and delivering

project preparation

PDF will be delivered through a number of different schemes

In the longer future, a pooling PDF funds will be established

Strengthening PPP Regulation

Regulations need to be strengthened and harmonized

to support to PPP implementation in wider

sectors

A higher and more fundamental level of

regulation can be contemplated

Developing Link Between PPP and

Capital Market

Providing more options for financing PPP projects and looking forward for more

competitive rate

Utilizing PPP financing as an element to enhance the

domestic financial deepening

§ Dissemination of more detailed and standardized information on Indonesia PPP projects pipeline to international investors to attract their interests in PPP-project bidding.

§ Integration of PPP process into single platform that can be easily accessed and followed by Indonesia PPP stakeholders as well as potential investors.§ Both challenges can be

potentially addressed by utilizing some platforms of project pipeline developed by international agencies.

Future Main Agendas:

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Thank YouPPP Unit of Ministry of Finance of IndonesiaFrans Seda Building 1st Floor, Jl. Wahidin No.1 JakartaIndonesiaT: +62213505052F: +62213510730E: pppindonesia@kemenkeu.go.id

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