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Singapore, April 2015
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Indonesia Infrastructure Development
MINISTRY OF FINANCE THE REPUBLIC OF INDONESIA
Presented by: Freddy R. Saragih
Director of Government Support and Infrastructure Financing Management Ministry of Finance
The Republic of Indonesia
Click to edit Master title style Outline
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PPP Projects Development
Non-PPP Infrastructure Projects and Policies
PPP Project Development
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Gov’t and Local
Budget
Financing Gap
SOE (22.23%)
Private (36.52%)
+ USD 145.92 billion
Alternative
Financing
Scheme
Strategic
Infrastructure
Investment
USD 399.97
billion
+ USD 88.83 billion
Gov’t and Local
Budget
(41.25%)
+ USD 164.83 billion
GOI needs alternative financing scheme for infrastructure development. PPP offers a reasonable answer.
Estimated Funding Source for Infrastructure Development (2015-2019)
*) source : Ministry of Planning, 2015
Click to edit Master title style PPP in Indonesia
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• The Government of Indonesia (GoI) considers PPP as an option to support infrastructure development;
• To support such PPP policy, the GoI has made certain facilities for PPP Projects and established PPP Unit within Ministry of Finance.
• Currently, GoI has a new PPP regulation, called Presidential Regulation (PR) number 38/2015, which accommodate some main issues on government’s infrastructure development policies , such as :
Broaden the PPP infrastructure sector to social infrastructure sector
Provide availability payment scheme to ensure the availability of infrastructure services
• On the other hand, the new business process is defined for infrastructure priority projects regulating in Presidential Regulation (PR) number 75/2014.
Click to edit Master title style PPP Unit Business Process
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KPPIP/IAC
OBC FBC
Pre-Qualification
PPP Unit
Strategic Funding Decision
Preparing Tender Document
*Note: OBC= Outline Business Case FBC= Final Business Case IAC = Infrastructure Acceleration Committee
Contract Signing
Project Prioritization
• Identifying the PPP Project Proposal
• Analysing VfM and PSC • Analysing the need of VGF
and guarantee • Analysing the need of
project preparation • Setting up the standard
document for PPP Co. procurement process
Providing Project Development Fund (PDF) for PPP Project Preparation
Processing Guarantee Application
Processing VGF Application
Providing PDF for Transaction Advisory
Controlling, Evaluating, and Documenting the Implementation of Government Support
RFP
Click to edit Master title style The Establishment of PPP Unit
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Become the champion for project preparation and enabling
environment to accelerate the PPP Agenda Broad Objective
Additional
mandates
Provide Input for PPP Policy Devt. and Regulations
Core Mandates
Improve quality of project selection under KKPPI – OBC
criteria
Support the Project Preparation through PDF support use a
high quality Transaction Advisor
coordinate all public finance instruments so project has a
single financing/ guarantee support package from VGF,
IIGF, SMI, PIP
Act on behalf Minister of Finance in providing Govt support
approvals for projects in particular stages in bidding
process. Monitor contract implementation for VGF
Implement capacity building program to GCA
One stop shop for PPP promotion & Information
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Project Development Facility (PDF): To enhance project bankability (implemented by PT SMI assignment);
Viability Gap Fund (VGF): To increase the financial viability of PPP project ;
Indonesia Infrastructure Guarantee Fund (IIGF): To guarantee for infrastructure risks;
Infrastructure Fund: To offer long term financing for infrastructure projects;
Availability Payment (AP) : Currently, MOF structuring the operationalization of this scheme to ensure the
availability of infrastructure service that provided by PPP Co.
Fiscal Supports for PPP Infrastructure Project
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MOF
PDF Guarantee (IIGF)
Infrastructure Fund (SMI/IIF)
Preparation Bidding Construction Operation
Viability Gap Fund AP
Project Preparation Demand Risk
Project Financing
Policy Risk Construction Cost
Contribution
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Objectives of VGF (MOF Regulation Number 223/2012 ):
1. To increase the financial viability of the project;
2. To increase certainty of infrastructure project provision in accordance to the designed quality and timing; 3. To enhance the public services provision through the infrastructure with affordable tariff.
“VGF is the government fiscal policy to support the infrastructure provision through the PPP scheme”
Viability Gap Fund
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Legal Context
Presidential Regulation (PR) No. 56/2011 as a second revision of PR No. 67/2005
concerning the Infrastructure Provision through Public-Private Partnership
In PR No.56/2011, Government is allowed to provide government support and guarantee
Section 17A (4) PR No. 56/2011: Minister of Finance may approve the provision of Government
support in the form of tax incentives and/or financial contribution based on the proposal from the
Government Contracting Agency (Minister/Head of Institution/Head of Local Government)
Minister of Finance Regulation Number 223/2012 concerning Construction Cost
Contribution for PPP Project.
Click to edit Master title style Infrastructure Guarantee Scheme
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NOTE : B exists on if A exists, i.e. if A is part of the guarantee structure provides to the Investor/Lenders
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List of PPP Project PROJECT TOTAL PROJECT (IDR) UPDATED STATUS
POWER SECTOR
Central Java Power Plant 40 trillion Finalizing the rest of land acquisition (handled by PLN)
Mine Mouth 9-10, South Sumatera 54 trillion Final tender documents has been issued on Des 2014 and GCA
will hold Bid submission on Mei 2015
Oil Refinery, Bontang Approx. 60 trillion Minister of MEMR has informally pointed Pertamina as CA
WATER SECTOR
Umbulan Water Supply 2 trillion Processing VGF proposal
Lampung Water Supply 1 trillion Waiting for VGF nominal approval from MOF
West Semarang Water Supply 765 billion Waiting for VGF “in principle” approval from MOF
TRANSPORTATION
Airport Railway-Soekarno Hatta International Airport
24 trillion
Completing PQ’s documents (VGF proposal)
Manado-Bitung Toll Road 4.3 trillion Determined as PPP Project
Balikpapan-Samarinda Toll Road 11.4 trillion Determined as PPP Project
List of PPP Project
Non-PPP Infrastructure Projects and Policies
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Click to edit Master title style Trans Sumatera
• Trans Sumatera Toll Road is MP3EI priority project with high strategic and economic importance. However, the project is financially not bankable, thus private sector involvement is considered to be not a feasible solution.
• As mandated by Government Regulations No.43/2013, in the event that the toll road is economically feasible but not financially feasible, the government funding for toll road concession is limited, and to accelerate regional development, GoI may appoint SOE (wholly state-owned) to deliver the toll road project.
• Hutama Karya (HK) is assigned by Government to develop the Trans Sumatera project. To deliver the project, HK sees that timing is crucial, thus the commencement of Phase I construction and land acquisition must be kick start in 2014.
• HK will transform itself from Construction SOE into BUJT (Badan Usaha Jalan Tol). HK will then transfer all its existing assets to its subsidiary HK Konstruksi.
• On financing strategy, HK will leverage the equity injection by GoI through PMN. In addition, HK is expected in utilizing cheap funding sources that is eligible backed up by GoI guarantee and bringing equity partners to share the risks.
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Click to edit Master title style Direct Lending to SOE
• GoI has committed to accelerate infrastructure development and stipulated this agenda as a national priority development agenda in 2015-2019.
• To enable this agenda, GoI support direct financing from Multilateral Development Banks (MDBs) to SOE.
• This strategy has been considered to speed up the decision making process and it relatively has lower risk than SLA mechanism because the lender could directly scrutinize the SOE’s disbursement planning.
• GoI through MoF will provide guarantee for SOE with some certain eligible criteria.
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Click to edit Master title style Government Guarantee on Power Sector
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According to the Presidential Decree Number 4/2010, the Government through the Ministry of Finance provides Business Viability Guarantee to PT PLN (Persero) in developing the 2nd Fast Track Programs.
The guarantee states a commitment of the Government that is stipulated in MoF Regulation Number 173/2014 to ensure that PT PLN (Persero) will be able to fulfill its financial obligations under related PPA.
The guarantee is eligible only to the projects as listed in the Ministry of Energy and Mineral Resource Regulation No. 15/2010 jo. Ministry of Energy and Mineral Resource Regulation No. 01/2012.
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Thank You
DIRECTORATE OF GOVERNMENT SUPPORT AND INFRASTRUCTURE FINANCING MANAGEMENT DIRECTORAT GENERAL OF FINANCING AND RISK MANAGEMENT MINISTRY OF FINANCE , GOVERNMENT OF INDONESIA
Frans Seda building 1st floor Dr. Wahidin 1, Jakarta 10710 Phone (+6221) 3510722; Fax (+6221) 3447386 www.risiko.fiskal.depkeu.go.id
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