Ungasan Bay View Hotel & Convention Bali 10 October 2018 KEMENTERIAN KEUANGAN DIREKTORAT JENDERAL PENGELOLAAN PEMBIAYAAN DAN RISIKO DIRECTORATE GENERAL OF BUDGET FINANCING AND RISK MANAGEMENT MINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA EXECUTING AND DEVELOPING PPP PROJECTS: AN INDONESIAN EXPERIENCE Freddy R. Saragih Director of Indonesia PPP Unit
Huge infrastructure needs vs limited fiscal capacity 2 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.
Indonesian PPP Process 3 A tested and workable arrangement in reference to international best practice Stages Planning Preparation Transaction Construction and Operation Activities Identification and screening Legal technical financial due diligence, government support identification, etc PQ, RfP, Bid Submission, Bidding, PPP award, FC Contract management Deliveries Preliminary study Pre-Feasibility Study Tender Documents and Agreements Performance Monitoring Supported by MoF s Project Development Facility [PDF] 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.
PPP Infrastructure Sectors in Indonesia 4 Transportation Road Bulk Water and Irigation Drinking Water Liquid Waste Management Solid Waste Management Energy and Electricity Energy Conservation City Facilities Communication Economic Area ECONOMIC Infrastructure SOCIAL Infrastructure Education Tourism Prisons Health Public Housing Sport, Art, Culture Mostly are marginally feasible and not covered by user payment
Government Support and Facilities More integrated supports are provided for the increasinglyincoming PPP proposals 5 Project Development Facility (PDF) Assistance to GCAs to develop pre-feasibility studies, bidding documents and to manage projects during transaction phase to reach financial close MOF Regulation No. 73/2018 Viability Gap Fund (VGF) Government financial contribution to parts of PPP projects construction cost to increase project financial viability as well as to ensure tariffs affordable for users MOF Regulation No. 223/2012 Government Guarantee 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 MOF Regulation No. 8/2016 Availability Payment A scheme of payment made by GCAs to PPP Companies based on services delivery as specified in the PPP Agreement MOF Regulation No. 260/2016 Development of PPP Policy
Progress on PDF Policy Project preparation as the key for PPP progress Increasing number of PPP projects assisted by PDF, driving the policy into real progress. Number of Projects developed by PDF 6 Internationa l Agencies GCAs [Ministries and Local Govts) MoF SOEs Other govt agencies 7 6 5 4 3 2 1 0 1 *) Until August 2018 2 2015 2016 2017 2018 Consistently increasing budget allocation for PDF, showing more commitment from the government. 6 * 5 Project Development Fund: Allocation and Realization (USD mil) 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. 15,00 10,00 5,00-12,21 5,10 3,10 2,62 1,27 * 2017 2018 2019 Allocation Realization *) Until Semester 1 2018
2018 PPP Projects Proven and Tested Experience 7 Bandara Hang Nadim 2,28 T LRT MEDAN 20 T SPAM KOTA PEKANBARU 0,48 T PALAPA RING PAKET BARAT 1980 KM 1,28 T PALAPA RING PAKET TENGAH 2647 KM 1,38 T KA / Makassar Pare-pare 985 M RSPTN UNSRAT 206 M PALAPA RING PAKET TIMUR 8454 KM 5,1 T RSUD PIRNGADI 546 M SKSTN SPAM KOTA BANDAR LAMPUNG 0,9 T SPAM SEMARANG BARAT 0,48 T RSUD Krian 351 M JALAN TOL KALENDER 9,12 T 1,45 T JEMBATAN SURAMADU 0,32 T* (O&M) Jalintim Satelit Multi Fungsi 2,1 T SERANG PANIMBAN G TOLL ROAD RS kanker Darmais JALAN TOL JAPEK II CISUMDAWU TOLL ROAD LAPAS CIANGIR PLTU BATANG SPAM UMBULAN 8,5 T Trans Papua 7,29 T 700 M 16,4 T 8,21 T 1,22 T 40 T 2,1 T 6,4 T* (O&M) Construction PDF Operation
Indonesian PPP Project Project Awarded and Signed 8 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
Indonesian PPP Project Preparation Stage 9 No. PROJECT NAME PROJECT 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)
Indonesia PPP Moving Forward 10 Future Main Agendas: 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.
11 Thank You PPP Unit of Ministry of Finance of Indonesia Frans Seda Building 1 st Floor, Jl. Wahidin No.1 Jakarta Indonesia T: +62213505052 F: +62213510730 E: pppindonesia@kemenkeu.go.id