Bandar Lampung City PPP Conference - 21 May 2013-1

8/9/2019 Bandar Lampung City PPP Conference - 21 May 2013-1

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PPP Project Profile Presentation:Operation and Service Management PPP for the

Distribution of 41MLD Bulk Water Supply in Bandar

Lampung CityBKPM Auditorium, Jakarta

Tuesday, 21 May 2013

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Agenda

1. Introduction

2. Project Background

3. Project Scope

4. Proposed Commercial Structure

5. Procurement Process and Timeline

6. Pre-Qualification Bid Assessment

7. Q&A


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Section 1: Introduction

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Introduction

Tender Committee - PDAM Way Rilau, Municipal

Government of Bandar Lampung ("MGBL")

Indonesia Infrastructure Guarantee Fund ("IIGF")

Hogan Lovells Lee & Lee (International Legal Counsel)

Castalia (Financial / Technical Adviser)

4


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Section 2: Project Background

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Project Background

Municipality of Bandar Lampung

Objectives of the Project

Overall Lampung Project Structure (PPP1 and PPP2)

Illustration of Project Scheme

Interaction between PPP1 and PPP2

Importance of the Project


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Municipality of Bandar Lampung

Municipality of Bandar Lampung, the capital of

Lampung Province, is located in a strategic territory at

the entrance to the island of Sumatra and is a 45-

minute flight away from Jakarta. With a total area of 200 km2, Bandar Lampung is

administratively divided into 20 Districts and 126 Sub-

Districts.

Municipality of Bandar Lampung has a population of

over 1 million and an average population growth rate

of approximately 1.6 % per year.

Residential and commercial areas are growing rapidly

and reflects a need for critical infrastructure.

Main economic activities include trade, construction,

retail, manufacturing and provision of public services.

Development of critical infrastructure, such as water supply facilities, will be

crucial to Bandar Lampungs socio-economic development.

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Objectives of the Project

Support the city's economic growth especially in the provision of

clean water to the public.

Increasing the capacity of drinking water services in the

Municipality of Bandar Lampung.

Ensuring an experienced operator can be incentivised to

appropriately assess demand for water distribution and to operate

and maintain a newly constructed distribution network utilising

best practices.


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Overall Lampung Project Structure (PPP1 and

PPP2)

PPP2

PPP2 is a project for the management,

operation and maintenance of the

Distribution System constructed under

PPP1.

Three phases:

Pre-Operation Period demand /

design input

First Phase Operation Period for

20.5MLD output

Second Phase Operation Period -

for full 41MLD output

PPP1

PPP1 comprises two main components:

1. Design, Build Finance and Operation

of a 41 MLD bulk water supplysystem ("BWSS"); and

2. Build and Finance of a secondary

and tertiary water distribution pipe

network ("Distribution System")

Two Project Phases:

Phase 1 to be operational 2 years fromcooperation agreement financial close

with a required net output capacity of

20.5MLD Phase 2 to be operational 5 years (or

earlier) from cooperation agreement

financial close with a total net output

capacity of 41MLD

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Main

Transmission

Pipeline

Secondary &

Tertiary

Distribution

Pipeline

Last Mile

Connection to End

Users

Illustration of Project Scheme - Construction

LEGEND

PPP1


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Illustration of Project Scheme - Operation

Main

Transmission

Pipeline

Secondary &

Tertiary

Distribution

Pipeline

Last Mile

Connection to End

Users

PPP1

LEGEND

PPP2

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Illustration of Project Scheme - Geographical

Intake for 500LPS fromRiver Way

Sekampung

Reservoir

Bulk Supply /TransmissionPipeline

Operation ofDistributionNetwork toConsumers

PPP1

PPP2


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Illustration of Zones that Distribution System will

Supply

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PPP1 and PPP2 Key Information

Capacity delivered to the Bulk

Water Meter

41MLD Estimated length of the

Bulk Supply /

Transmission Pipeline

28 km

Water quality Potable to

specified

standard

Estimated length of the

secondary mains

40 kms

Estimated operations

commencement

2015/2016 Estimated length of the

tertiary mains

340 kms

Number of existing

connections (2010)

7,000 Duration of PPP1 27 years

Estimated number of peak

connections (4 years after

COD)

44,000 Duration of PPP2 Pre-COD: 2 years

Post-COD: 8 - 10

years


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Signing of

PPP1

Cooperation

Agreement

Financial Close

Phase 1

Commercial

Operation

P

Com

Op

n of

d

of

GBL

Concess

PPP1 - Timeline

Period to financial close Phase 1 Construction Phase 2 Construction Operation Period

2013 2014 2016 2019 2041

LEGEND

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Signing of the

Cooperation

Agreement

CP SatisfactionDate

Phase 1

Commercial

Operation

PhCom

Ope

PPP2 - Timeline

Period to CP Satisfaction(short period anticipated)

Pre-Operation Period First Phase Operation Period

Second Phase Operation Period

econd

rationd

Termination

of the

agreement

Renewal Term (if agreed)

LEGEND

2013 2013/14 2016 2019 2024-26

Optional

renewal period


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Interaction between PPP1 and PPP2

Design, Build and

Finance

Managing Network

Services

Operation

Design, Build and

Finance

Design input

(based on demand

analysis)

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Interaction between PPP1 and PPP2 (contd)

Fee

Product WaterProduct Water

Payment

Fee

Raw Water


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Small capex investment but important long term role in a growing

industry.

Foothold in Lampung (which also has an existing network) and potential

for expansion of role. This Project together with existing PDAM capacity

will supply 38% of the existing population.

May be a model replicated in other regions of Indonesia.

Opportunity to become a key player in Indonesia's growing water

distribution industry.

Involvement in Indonesia's first PPP in the water sector.

Pathfinder project representing a new approach to enhancing publicservices.

Opportunity for Operator to demonstrate the benefit of private sector

involvement in the maintenance of the Indonesian water distribution

system.

Importance of the PPP2 Project

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Section 3: PPP2 Project Scope


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PPP2 Project Scope

Design input

Assist and advise on the

Distribution System design

and location so as to

ensure appropriate

optimisation of the system

to predicted demand.

New Connections

Promote connection to the

Distribution System

Build and maintain a Customer

Database.

Sign up new Customers.

Operate and maintain the

Distribution System

Operating the water system

from (and including) the outlet

of the reservoir to the

customers' meter.

Ensure Customers receive

water meeting specified levels

of service (e.g. continuity,

pressure, quality and response

times).

Measurement

Recording of customer

meters.

Read, maintain or replace

water meters.

Assisting PDAM on billing.

Despatch instructions

Assist in the authorisation of

despatch from the bulk treated

water reservoir.

Asset management

Set up and maintain an asset

database and produce rolling assetmanagement plans setting out how

the distribution system will be

expanded, operated and

maintained.

Develop the systems and plan

to manage Distribution System

Build and maintain

Management InformationSystem

Prepare standard operatingprocedures / manual

SCADA system

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Section 4: Proposed Commercial Structure


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Proposed Commercial Structure

Contract Structure

High Level Risk Allocation

Payment Mechanism

Escrow Arrangement

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Contract Structure

Project structure developed in conjunction with market

consultations. Project is being progressed as a PPP under

Indonesia's PPP Regulations in parallel with PPP1.

Private sector will enter into the Cooperation Agreement withMGBL as the Government Contracting Agency.

Project commences on signing and will expire 8-10 years

from handover of Phase 1 Distribution System (subject to

MGBL's right to extend).

Cooperation Agreement will follow internationally accepted

water distribution O&M services agreements as well asrelevant Indonesian regulations.


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High Level Risk Allocation

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Key Risks: Allocated to:

Government PPP2 Co

Land/ site access risk

Delay in construction of

Distribution System

Management of non-revenue

water

Physical water losses

Illegal connections

Network construction defects

Collection / revenue risk

Insufficient Product Water Supply

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High Level Risk Allocation (contd)

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Key Risks: Allocated to:

Government PPP2 Co

Default by the PPP1 Contractor

Inadequate Product Water Quality

Force majeure risk

Change in law risk

Operating and lifecycle risk

Financing risk (if applicable)

Optimal Risk Al location between Government and Private Sector


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Payment Mechanism

The Payment Mechanism is being developed by MGBL / PDAM.

The following is the indicative view for the payment terms:

Pre-Operation Period Fee Fee to cover demand analysis, design input, marketing.

Fixed Fee

Fee to cover regular cost of operations.

Subject to meeting technical (NRW, water quality, pressure, etc.) and

commercial (e.g. number of connections, volume sold, etc.) targets.

Connection Fee (to be determined) Incentive Payment

Sharing of upside revenue.

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Payment Mechanism (contd)

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Operation Year New

connections

per year

Number of

connection at

beginning yearof operation

1 7,000 *) 7,000

2 7,000 14,000

3 10,000 24,000

4 10,000 34,000

5 10,000 44,000

*) Conversion from existing connections to new ones

Example: Commercial Target - Required

Connections


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Payment Mechanism (contd)

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Operation Year NRW Tolerance

Year 0 5.0%

Year 1 7.00%

Year 2 9.00%

Year 3 11.00%

Year 4 13.00%

Year 5 15.00%

Year 6 15.25%

Year 7 15.50%

Year 8 15.75%

Year 9 16.00%

Year 10 16.25%

Example: Technical Target - NRW

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Escrow Arrangement

All collections from End-Users to be paid into an Escrow Account.

Payment to the Operator to be made from the Escrow Account.

Escrow Agent to be a reputable Indonesian bank.

Mitigates credit and payment delay risk.


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Section 5: Procurement Process and Timeline

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Procurement Process 2 stage process

Objective of the pre-qualification

(PQ) stage is to establish and pre-

qualify PQ Applicants who havedemonstrated, among other things,

the financial capability and technicalexpertise to execute the Project.

PQ Applicants will be pre-qualified in

accordance with the criteria set out

in the pre-qualification document.

Applicants who have been selected

pursuant to the pre-qualification

process will be invited to participatein the invitation to tender process.

Draft invitation to tender (ITT)

documents will be issued to

shortlisted PQ Applicants forcomments and clarification.

Interactive clarification sessions willbe held to gather feedback from

shortlisted PQ Applicants on the

draft ITT documents.

Final ITT documents will be issued

to shortlisted PQ Applicants with

submissions to be evaluated based

on pre-determined set of criteria setout in the ITT documents.


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Procurement Process Indicative Timeline

PQdocuments

made

available forcollection by

interested

investors

24 April

2013

4 June

2013

PQsubmission

4 June 18

June 2013

Evaluation ofbidders

Bidders to be

shortlisted

Oct 2013

ITT bid

submission

Nov 2013

Appointment

of preferred

bidder

Nov/Dec 2013

Cooperation

Agreementsigned

21 May

2013

PQConference

25 May

2013

Deadline forsubmission

of questions

on PQD

18 June

2013

Announcementof PQ results

Objectionperiod

18 June

25 June

2013

July 2013

Release of

draft ITT

documents to

shortlisted

bidders

Aug 2013

Consultation

with shortlisted

bidders on draft

ITT documents

Sept 2013

Release of final

ITT documents

to shortlisted

bidders

ontd

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Section 6: Pre-Qualification Bid Assessment


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General Evaluation Criteria for PQ stage

1. Financial strength of the Applicant and if applicable, each

member of the JV / Consortium.

2. Technical track record / experience including: General experience in water sector O&M;

Specific experience in contracts that are similar to the Services;

Specific experience in the following: implementation of marketing programs

and management of new connections; implementation of leakage

management programs; meter installation and tamper-proofing; network

planning and optimisation; and water distribution network maintenance.

3. Personnel including: Resident project manager with at lease 3 years' experience working in

similar market conditions in such a position; and

Indonesian recruited management staff with at least 10 years experience in

water distribution network O&M.

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PQ Evaluation Assessment

The Tender Committee assisted by the PQ Working Group will evaluate

the PQ submissions.

Assessment method for all criteria will be on a "Pass / Fail" basis.

Criteria to be considered achievable for appropriately qualified

Indonesian and / or international entities and partnering is permitted.


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Pre-Qualification Documents will be provided to interested parties upon:

o a written expression of interest to the Tender Committee; and

o

payment of IDR 5,000,000 and proof of payment. Payment details for the Pre-Qualification Documents will be provided

upon the receipt of a written expression of interest.

Expression of interest to be submitted by email or writing to the

following address:

Panitia Lelang KPS2

Jln. Pangeran Emir M. Noor No. 11A

Kota Bandar Lampung 35215, IndonesiaContact Person : Ibu Gunarti Kumarasari, ST

Phone : +62721 483855 484611

Email : [email protected],

cc: [email protected]

Pre-Qualification Document

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Questions and Answers


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