General Public – Private Partnership Scheme for Infrastructure in Indonesia

Sri Bagus GuritnoDirector of Public Private Partnership and Financial Engineering

Ministry of National Development Planning / Bappenas

Presented at Market Sounding of PPP Project Singkawang AirportJakarta, 7 Oktober 2019

Infrastructure Development Framework 2020-2024…Connecting infrastructure with economic sectors…

Infrastructure to Support Economic Sector Urban Infrastructure

Connectivity Leading Sector

Sea Toll Intermodal

Regional Development/

Growth Center

Regional

Development/Growth

CenterOverseas Highway

Developed Areas Rural AreasSeaport Seaport

Agriculture-Plantation-Marine

Fisheries

Manufacturing

Industry

Services

and Tourism

Energy and Electricity Development (Trilema)

Multipurpose Dam and Irrigation Modernization

Rural Areas Accessibility

+

ICT for Digital Transformation

Gender Equality

Good GovernanceMainstreaming

Sustainable Energy for Urban Area

Urban Public Transport Development

Infrastructure for Basic Services

Safe and Decent Housing Access

Secure and Safe

Transportation

Disaster Resilient

Infrastructure

Management for safe and sustainable groundwater, raw water, drinking water

Infrastructure and UrbanICT Ecosystem

Safe Drinking Water and

Sanitation (waste and

sewarage) in Cities

Safe and affordable Housing

in Big and Metropolitan Cities

Decent and Safe Sanitation Access (Wastewater and Domestic Waste)

Green Infrastructure

Capital and Social Culture

Digital Transformation

Disaster Resilient2

3Source: President Reg No 79/2017 (RKP 2018)

Private:Rp 2.707 T

(USD 180,5 Bn)(42%)

Total Infrastructure Investment2020-2024:

Rp 6.445 T(USD 429.7 Bn)

SOE’s:Rp 1.353 T

(USD 90,2 Bn)(21%)

Government:Rp 2.385 T

(USD 159 Bn)(37%)

source: Bappenas analysist (2019)

• To increase infrastructure stock from 43% GDP(2017) to 50% GDP (2024), Rp 6.445T (6.1%GDP) is required for infrastructure investment,or increase 34,3% from 2015-2019infrastructure investment (Rp 4.796,2T)

“government encourages the involvement of the private sector in infrastructure development”

PRIVATE

PPP

SOEs

JV SOEs (brownfield)

JV SOEs (greenfield)

PINA

Source: Presidential Decree 79 year 2017

Projects that provide value for money for the government so the development will be on-budget, schedule and on-service.

• Licensing • Incentive

PPP Opportunity by President Regulation 38/2015

• Special Purpose Company (SPC) was formed for Operational Projects

• Divested SPC Shares• Enhancing SOE Expansion Capability without State

Investment

• SPC was formed for under preparation projects• Collaboration with Private Sector in the SPC• Enhancing SOE Expansion Capability without State

Investment

Assignment to State Owned Enterprises

State Budget (APBN/D)

Inte

rnal

Rat

e o

f R

etu

rn (

IRR

)lo

wh

igh

New Paradigm in Infrastructure Investment Framework

4

Financing vs Funding

Infrastructure

Projects

Financing – upfront investment Funding – where the money comes from to

payback the financing

Central

Government

Local

Government

SOEs

Private Sector

Central

Government

Local

Government

User

Fees

Tax

Citizens

Institutions that pays the upfront investment:

Flow of money to payback the upfront investment

Financing source:

Banks

Capital

market

Foreign

Investors

MDBs

Funding source:

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CAPEX

OPEX

PROFIT

COST OF FUND

State Budget

Foreign Loan/Grant

Government IslamicBond

EQUITY

DEBT

PROJECT CASHFLOW

Financing Project

Government Support• VGF• Special Allocation Fund• Sector Support• Others

Project Revenue

Funding

PPP – User Charge

State Budget

Local Budget

Business Entity- PPP

Infrastructure Facility

U

S

E

R

Government/Contracting AgencyTax/Government Revenue

User Charge

6

PPP-Availability Payment

CAPEX

OPEX

PROFIT

COST OF FUND

State Budget

Foreign Loan/Grant

Government Islamic Bond

EQUITY

DEBT

PROJECT CASHFLOW

Financing Project

Government Support• VGF (Local Project)• Special Allocation Fund• Sector Support• Others

Availability Payment

Funding

State Budget

Local Budget

Business Entity- PPP

Infrastructure Facility

U

S

E

R

Pemerintah/PJPKTax/Government Revenue

Project Revenue(if possible)

State Budget

Local Budget

7

PPP Definition

Provision of InfrastructureProvision of Infrastructure

PARADIGM

CHANGE

ASSET ESTABLISHMENT

(Government)

SERVICE TO THE SOCIETY

Conventional

ASSET ESTABLISHMENT

SUBMITTED AFTER END

CONCESSION PERIOD

Government Obligation

to Serve the Society

Government Obligation

to Serve the Society

• On schedule, on budget, on service• Continuity of planning, construction, operation and

maintenance.

• Overcome the limitations of implementation

capacity.

• With the same funds, you can leverage more projects

PPP Benefit :

PPP Scheme

• Not privatization but

asset management

through concessions

• Can be in the form of

activities that: have

income stream

(palapa ring), do not

have income (jalintim)

Government PPPPrivateSector

Service to the Society

Principal Understanding of PPP

Cooperation Between

Government And Business

Entities

Public Interest

Specifications have been

determined by the GCA

Resources Partially Or

Entirely From Business Entities

Risk Alocations

8

Public-Private Partnership Regulations in Infrastructure Provision

GOVERNMENT GUARANTEE• Presidential Regulation Number 78/2010

• Minister of Finance Regulation Number 260/PMK.011/2010 jo. Ministerof Finance Regulation Number 8/PMK.08/2016

GOVERNMENT SUPPORTMinister of Finance Regulation Number 223/PMK.11/2012 (VGF)

Ministry of National Development Planning Regulation

Number 4/2015 regarding PPP General Guidelines

Provision of Business EntityHead of Government Procurement of Goods and Services Agency

Regulation Number 19/2015

Procurement of Goods and Services Agency Regulation Number 29/2018

Minister of Finance Regulation Number 260 /PMK.08/2016

Minister of Home Affairs Regulation Number

96/2016

AVAILABILITY PAYMENT;

Aspects Regulation

Subject of

partnership

Government

1. Minister

2. Head of Institution

3. Head of Region

4. SOE/ROE (mandatory

by sector regulation)

Business Entity

1. SOE/ROE

2. Foreign Business Entity

3. Limited Liability Company

4. Cooperation

Object of

PartnershipEconomic and Social Infrastructures (19 sectors of

infrastructure)

Government

Contribution

1. Government in kind

2. Government support {i.e. Viability Gap Fund)

3. Government guarantee

Investment

Return for

Business Entity

1. User charge (payment by user in the form of tariff)

2. Availability payment (payment of service availability)

3. Other forms as long as it doesn’t contravene with the

law

Phases 1. Planning phase

2. Preparation phase

3. Transaction phase

Subject matter of Presidential Regulation Number 38/2015

Presidential Regulation Number 28/2018 regarding Local

Government partnership

Presidential Regulation Number 38/2015

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19 Sectors Covered for PPP in Indonesia

CONNECTIVITYRoad▪ Toll Roads▪ Toll Bridges▪ Roads

URBAN INFRASTRUCTURE

SOCIAL INFRASTRUCTURE

Transportation▪ Seaports▪ Airports▪ Railways▪ Road transportation

Electricity▪ Power plants▪ Transmission

Energy conservation▪ Street lighting

Telecommunication & Informatics▪ Fiber optics▪ E-government▪ Satellite

Water supply

Waste management system

Water resources & irrigation

Localized waste water management

Centralized waste water management

Public housing

Urban facility▪ Traditional market

Tourism

Education facilities

Sports, art & culture facilities

Health

Zone/ Estates

Penintentiary

Oil, Gas, and

Renewable energy

9

GCAPPP Project

Special Purpose Company (SPC)

Equity Sponsor

Financier

DEBT EQUITY

USERService

PPP Agreement

• Viability Gap Fund• Government

Guarantee• Government In-kind

Support

Govt Facilities

• Tariff (User Fee)• Availability Payment• Legitimate form of

payment

Investment Return Scheme

IIGFRecourse agreement

Agreement signing

General Structure of PPP

10

PT PII carries out a government guarantee process

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Stages of the PPP Process and Division of Tasks in a Joint Office... Solicited ...

In Article 26 of Perpres 38/2015, planning, preparation and transactions are prepared by K / L / D

Prepared by GCA (K/L/Pemda)Accompanied by Bappenas

Prepared by K/LMinistry of Finance as a PDF facility provider

K / L starts AP payment

LKPP acts as a transaction probity

BKPM ensures the feasibility of investors and the market sounding process

Ministry of Home AffairsConsideration of KPDBU activity plan related to AP

Capacity Building is carried out by the Joint Office of the PPP with the lead of Bappenas

Bappenas secures allocations for Government Support and AP

Project Identification

Preliminary Studies

Outline Business Case (OBC)

Final Business Case (FBC)

PQ Request forProposal

Bid AwardAgreement

SigningFinancial

Close

PLANNING PREPARATION TRANSACTION

INIT

IATE

D B

Y G

OV

ERN

MEN

T(S

OLI

CIT

ED) Operation

End Contract

AssetSubmission

Construction

CONCESSION PERIODCONSTRUCTION

PPP Book -Bappenas

PINA -Bappenas

• Ministry of Finance VGF

• DAK• Partial

construction support

Example: UmbulanWater Supply

PPP Structure Selection

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PPP with Tariff

PPP with AP

PPP with Infrastructure Utilization

PPP Structure

Rigorous selection and planning of PPP projects

The result is bankable and commercially viable project

Labuan Bajo AirportMakassar-Parepare Railways

Multifunction Satellites

Road projects

+ Social Infrastructures

Achievement

To develop more comprehensive and selective supporting tool for project preparation with standardised template and strong project database (supported by the Sectors)

Bappenas publishes PPP Book annually to disseminate PPP Projects

information that includes the details of Government Contracting Agency,

PPP Structure, Investment Value and other useful information for potential

investors, lenders, and contractors

PPP Book

Need

Analysis

Compliance

Analysis

Value for Money

Analysis

Fiscal

Affordability

Assesment

PPP Structure

(Risk Allocation)

Analysis Needed in Implementing The PPP Scheme

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Preliminary Study (Planning Stage) Pre-Feasibility Study (Preparation Stage)

Need Analysis Compliance Criteria

Value for Money Analysis

Project Financing Scheme and Potential Revenue Analysis

Recommendation and Follow-up Plan

Legal & Institutional Study

Technical Study Economic & Commercial Study

Social & Environmental Study

PPP Structure Analysis

Risk Management Study

Government Support and Guarantee Need

Outstanding Issues

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20. Badung South Ringroad21. BBBPT laboratory & Building22. Merangin Dam23. BPWS Tourism zone24. Cisaranten Public Housing25. Anggrek Port

1. Yogya - Bawen Toll Road 2. Jatibarang Waste to Energy3. Tangerang Selatan Waste to Energy 4. Relocation of Salemba correctional

facility5. Nusakambangan Industrial

Correctional Facility6. West Papua Ferry Port7. LRT Semarang8. LRT Bandung Raya9. Lahat-Tarahan Railway10. Cibungur-Tanjungrasa Shortcut

Railway11. LRT Cibubur-Bogor 12. Motor Vehicle Weighing

Implementation Unit (UPPKB)13. Singkawang Airport14. Ciputat Market15. Bintuni Industrial Zone16. Central Kalimantan Provincial Hospital17. Sumatera and Sumapapua Hazardous

Waste Treatment Facilities18. Jogja Agro Techno Park19. Land Registration Information system

1. South Sumatera Non-Toll Road

2. Labuan Bajo Airport

TOTAL: USD 1,856M

TOTAL: USD 8,857 M

Solicited PPP Project Pipeline5 under operation project, 11 under construction projects, and 55 on progress projects

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TOTAL: USD 1,717 M + 1

Projects Under

Calculation

1. Manado - Bitung Toll Road

2. Balikpapan - Samarinda Toll Road

3. Serpong - Balaraja Toll Road

4. Cisumdawu Toll Road5. Serang -Panimbang Toll

Road 6. Jakarta -Cikampek

South Toll Road7. Umbulan Water Supply8. Bandar Lampung Water

Supply9. Nambo Regional Waste

Management10. Central Java Power

Plant11. West Semarang Water

Supply

1. Riau Non-Toll Road 2. Medan Municipal Transport

(LRT)3. Baubau Port4. Proving Ground BPLJSKPB5. Legok Nangka Regional

Waste Treatment 6. University of Sam Ratulangi

Teaching Hospital7. Pirngadi Hospital8. Indonesia National Cancer

Center Dharmais Hospital9. Surakarta Street Lighting10. Kamijoro Water Supply

Preliminary study

Outline Business Case(OBC)

Final Business Case(FBC)

PQ Request forProposal

Bid AwardPPP Agreement

SigningFinancial Close

TenderPreparation

TOTAL: USD 7,731 M + 2 Under calculation TOTAL: USD 4,317 M

PLANNING PREPARATION TRANSACTION

CONSTRUCTION OPERATION

Included in PPP Book 2019National Strategic Project (PSN)

Data per 01/10/2019

1. Hang Nadim Airport

2. Sidoarjo General Hospital

3. Gorontalo Hospital

4. Pekanbaru Water Supply

5. Zainoel Abidin Regional Hospital

1. Road and Bridge in Central and Western Sumatera Road Corridor

2. Bridges in Trans Java Main Corridor

3. Tarakan Airport4. North Bali Airport5. Piyungan Sanitary

Landfill6. Tanjung Adikarto

Fishery Zone7. Bakung waste

management8. LIPI Ocean

Researchfacility9. Badung Utliity ducting10. Hasan Sadikin

Hospital

1. Makassar –Parepare Railway

2. MultifunctionSatellite

3. Probowangi TollRoad

4. Semarang –Demak Toll Road

1. West Palapa Ring

2. Central Palapa Ring

3. Batang -Semarang Toll Road

4. Pandaan -Malang Toll Road

5. East Palapa Ring

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Unsolicited* PPP Project Pipeline2 under construction projects and 14 on progress projects

.

Financial Close

Construction

2 Toll Road Projects

1. Krian-Legundi-Bunder-Manyar(US$ 940.0 million)

2. Jakarta – Cikampek Elevated II(US$ 1,718 million)

2,658 Million USD

Construction

1. Jatiluhur I Water Supply (US$ 133.1 million)

2. Balikpapan – Penajam Paser Utara Toll Bridge(US$ 1,099 million)

1. Tanjung Jabung Bridge (US$ 12.0 million)2. Karian Water Supply (under calculation)3. Patimban Subang Regional Water Supply

(US$ 27.8 million)

Project proponent submitsa proposal and pre-FS

document to GCA

Pre-FS document evaluationto get pre-FS approval

Business Entity

submits FS FS evaluationProcurement

PPP

Agreement

Signing

Issuing approval

letter

Data per 01/10/2019

1. Karimun Bridge (US$ 11.9 million)

2. TOD Poris Plawad(US$ 115.6 million)

Include in PPP Book 2018National Strategic Project (PSN)

1. Semanan – Balaraja Toll Road2. Kamal – Teluknaga – Rajeg Toll

Road3. Patimban Port Access Toll Road4. Gedebage – Tasikmalaya – Cilacap

Toll Road5. Solo – Yogyakarta – NYIA Kulon

Progo Toll RoadTotal: US$ 8,084 million

1. Dumai Water Supply (US$ 36.22 million)

1. Marine Observation and Modeling (US$ 95.9 million)

Coordination PPP Joint Office Republic of IndonesiaPT Penjaminan Infrastruktur Indonesia (Persero)Capital Place, 7th & 8th FloorJl. Jenderal Gatot Subroto Kav. 18,Jakarta 12710 - Indonesia

email: info.pppindonesia@gmail.com

Facilitation

Capacity Building

Accelerating PPP Implementationin Indonesia

Coordination and Facilitation According to Authority:

• Ministry of National Development and Planning / Bappenas: Project selection and identification

• Ministry of Finance / Kementerian Keuangan: Fiscal facilitation

• National Public Procurement Agency / LKPP: Procurement – transaction probity

• Indonesia’s Investment Coordinating Board / BKPM: Market sounding and market value

• Ministry of Home Affairs / Kementerian Dalam Negeri: Advisory in Regional Availability Payment

• Coordinating Ministry for Economic Affairs / Kemenko Perekonomian: Debottlenecking

• Indonesia Infrastructure Guarantee Fund / PT.PII: Government Guarantee

Capacity Building

PPP Joint Office in Indonesia

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THANK YOU