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Infrastructure & PPPs in Indonesia - Q22021 Update

INDONESIA's transport and water sectors have seen extensive activity with a slew of planned PPP project developments and announcements. There is minimal activity in the renewable energy sector vis-à-vis other ASEAN countries.

Read more about key developments in Infrastructure and PPPs in Q2-2021 in Indonesia in our latest insight.

June 2021

CPPIB-BACKED INDONESIAN TOLL ROAD CLOSES USD 587Mn REFINANCING.

A Canada Pension Plan Investment Board (CPPIB)-backed toll road project in Indonesia has secured an IDR 8.5trn (USD 587Mn) refinancing facility. The project sponsors for the 117km Cikopo-Palimanan (Cipali) toll road closed the refinancing in May 2021.

Bank Negara Indonesia (BNI) and Bank Mandiri acted as joint lead arrangers. Indonesian infrastructure investor Astra Infra owns a 55% stake in the asset, while CPPIB holds the remaining. The transaction is part of the refinancing of a portfolio of three operational roads owned by Astra Infra totalling IDR 13.5trn.

Indonesia’s central bank has lowered interest rates in 2021 in order to stimulate the economy during the pandemic. Bank Indonesia's benchmark interest rate is currently 3.5%, compared to 4.75% in February 2020.


WASKITA RESTRUCTURES USD 242M LOAN FOR JAKARTA TOLL ROAD

Indonesian state-backed developer Waskita Toll Road (WTR) has restructured an IDR 3.5trn (USD 242Mn) loan facility for a 16km COVID-affected toll road in eastern Jakarta. The project, which started operations in 2017, has a 40-year concession period, starting in 2016. Bank Negara Indonesia (BNI) acted as mandated lead arranger and bookrunner for the restructuring process. BNI, Bank Rakyat Indonesia and Bank Rakyat Indonesia Agroniaga are acting as lenders.

Waskita Karya, the parent company of WTR, aims to raise finance through the sale of several toll roads in 2021 to pay high-yielding debt and fund new infrastructure projects. It plans to divest a total of nine toll roads to raise between IDR 10trn and IDR 11trn in 2021. Most toll road operators are evaluating the impact of COVID-19 in operational toll roads, and more projects will announce debt restructurings in the second half of 2021 and during 2022.


AIRPORT OPERATOR SEEKS PARTNER FOR BALI MIXED-USED PROJECT

Indonesian airport operator Angkasa Pura I is seeking partners for an IDR 3.8trn (USD 262m) mixed-use development near the international airport in Bali Island. The project will involve a 30-year partnership between the private investor and Angkasa Pura Property, the real estate division of the state-owned airport operator.

The two partners will develop a 30.9 ha area south of Bali’s I Gusti Ngurah Rai International Airport, the only airport on the island. The project aims to develop hotels, an exhibition center, a warehouse, retail spaces, a leisure park, and a residential area.


INDONESIA TO LAUNCH USD 104M DAM PPP IN 2022

The Indonesian government plans to launch a tender for an IDR 1.5trn (USD 104Mn) dam PPP in the province of Central Java in early 2021. The Ministry of Public Works and Housing is currently developing the final business case for the Bodri Dam project, which will be finalized by the end of 2021. The project will be supported by an availability payment from the government and will have a concession period of 20 to 30 years.

The dam will be able to reduce flooding in the region and supply raw water with a capacity of 497 liters per second. The government will explore the development of new projects on the site once the dam is finalized, including adding a hydroelectric plant or using the reservoir for a water supply system.

The Indonesian government is planning to tender the IDR 3.7trn Merangin dam project in Sumatra’s Jambi province.


INDONESIAN WATER PPPS SCHEDULED TO LAUNCH IN 2022

Indonesia plans to tender two water projects in 2022. The government will finalize the final business case for the IDR 3.7trn (USD 256Mn) Merangin Dam project by the first quarter of 2022, Arvi Argyantoro. The project, located in Sumatra's Jambi province, will occupy a total area of 686.7 ha, and will have a capacity of 100.2 million cubic meters of water.

The pre-qualification process for the project is set to start in the first half of 2022, while submission of bids will happen no later than the first quarter of 2023. The PPP project is estimated to reach financial close by mid-2023 and will be operational by 2028.

The project will provide 2,000 liters of water per second to the surrounding population and generate between 90 MW and 107.5 MW of power. It will have a concession period of 20 years, including five years of construction.

Water supply project in West Java

The West Java provincial government is set to complete a final business case for the IDR 2trn Jatigede water supply PPP in the first quarter of 2022, The pre-qualification process for the project will be launched in the first half of 2022.

The project will have a total capacity of 1,500 liters per second and will serve the Majalengka Regency, the Indramayu Regency, the Sumedang Regency, and the Cirebon Regency. The project will have a concession period of 32 years, including a two-year construction period. Regional government-owned water management firm Trita Germah Ripah will act as offtaker for the project.


INDONESIA'S WASKITA KARYA PARTNERS WITH CCCC FOR INFRASTRUCTURE PROJECTS

China Communications Construction Company (CCCC) has agreed to work with Indonesian state-owned developer Waskita Karya to develop infrastructure projects. These will include two major toll roads: the 111.6km Kayu Agung-Palembang-Betung highway and the 54km Ciawi-Sukabumi toll road.

They will work together also on the Cikampek-Plumpang fuel distribution pipeline, and the building of a revetment wall in the Benoa Bali port. A 42.5km section of the Kayu Agung-Palembang-Betung Road was inaugurated in January, while the government expects 27km of the Ciawi-Sukabumi stretch to be operational by 2021.

The two projects are valued at IDR 22.1trn (USD 1.5Bn) and IDR 11.7trn, respectively. Waskita Karya aims to sell a total of nine toll roads in 2021 with an approximate value of IDR 10trn-IDR 11trn to shore up its finances and fund new infrastructure projects.


INDONESIA'S FIRST RAILWAY PPP REACHES FINANCIAL CLOSE

A consortium of Indonesian lenders will provide a loan facility of up to IDR 991Bn (USD 69Mn) to finance the country's first railway PPP. PT Indonesia Infrastructure Finance (IIF), Ministry of Finance-owned PT Sarana Multi Infrastruktur (SMI) and Bank Syariah Indonesia will provide a seven-year tenor loan to the IDR 1.4trn Makassar-Parepare railway project. The debt facility will include an option to be extended for three years.

The project, which was awarded to a consortium including state-backed developer PT PP in April 2019, involves the building of a 13.9km segment of the train line and the operation and maintenance of the 111.7km route connecting the cities of Makassar and Parepare for a period of 18 years and six months. The project will receive a yearly availability payment from the government.

PT PP owns a 45% stake in the project company. The remaining is held by engineering firm Bumi Karsa (22.5%), China Communications Construction Engineering Indonesia – a subsidiary of China Communications Construction Company - (22.5%) and developer Iroda Mitra (10%).

The Ministry of Finance-backed Indonesia Infrastructure Guarantee Fund is providing guarantees against political, termination and late payment risks.



May 2021

NORTH SUMATRA SEEKS STUDY FUNDING FOR USD 1.4BN RAIL.

North Sumatra's plans to build an IDR 20.3trn (USD 1.4Bn) light rail transit PPP project are on track, with the authorities in the Indonesian province now seeking funding for related studies.

It will involve the development of a 41.3km light rail system connecting Medan with neighboring Binjai city and Deli Serdang regency. The project will have a concession period of 20 years and is expected to serve more than 4 million passengers per year.

Private investors will have to finance the construction of the LRT system and the acquisition of rolling stock as well as operate the lines. The project is expected to generate an IRR of 9.68%. The government of North Sumatra also plans to launch a PPP to develop a new stadium as the province gets ready to co-host the country's National Games in 2024.


INDONESIA CONSIDERS PPP FOR USD 1BN NEW BALI AIRPORT

Indonesia’s Ministry of Transportation will decide on whether to use a public-private partnership to develop a new IDR 16trn (USD 1Bn) airport in Bali only after finishing a feasibility study. In 2021, the ministry included the project to a list of infrastructure works to be developed as PPPs.

The airport will be located on the northern coast of the island and will have the capacity to handle at least two million passengers per year. The Indonesian government is launching a study for the development of airport The airport will be able to handle two million passengers per year.

The government has delayed an auction to redevelop, operate and maintain Hang Nadim Airport, on Batam island. State-owned airport operator Angkasa Pura I also delayed the submission of pre-qualification bids for the upgrade of the Lombok Airport, and it is currently reviewing its traffic and capital requirement forecasts for the project.


INDONESIA TO AWARD USD 1.5BN ROAD PPP IN 2022

Indonesia’s Toll Road Authority (BPJT) plans to award an IDR 21.6trn (USD 1.5Bn) toll road PPP in the first quarter of 2022. The agency launched a pre-qualification process for the project in May 2021.

The JORR Elevated Ulujami-Cikunir toll road is part of the broader network of Greater Jakarta toll roads. It aims to ease traffic congestion during rush hour in the capital. The tender is set to be launched in the fourth quarter of 2021. The 37.7km PPP project will serve the newly opened Patimban Port in the town of Subang in West Java province.

Bali toll road

BPJT aims to begin the tender for an IDR 19.7trn toll road in Bali in the fourth quarter of 2021. A consortium of local firms, formed by Cipta Sejahtera Nusautama, Sumber Rhoidum Pemprakasa and developer Bumi Sentosa Dwi Agung, was the only pre-qualified entity eligible to participate in the tender for the 96km Gilimanuk-Mengwi toll road. The project is the second toll road in Bali after the Mandara Bali development. It aims to increase tourism on the island by expanding connectivity from the island’s Gilimanuk port to the province’s capital Denpasar and its surrounding cities, known as the Metropolitan Sarbagita region.


DBS ADVISING K-WATER ON USD 167M INDONESIA WATER PPP

Singapore-based DBS Bank is acting as financial advisor for an IDR 2.4trn (USD 167Mn) water supply project in Indonesia. World Bank-backed International Finance Corporation (IFC), the Asian Development Bank and the Export-Import Bank of Korea (K-EXIM) are set to be the major lenders of the project. It is expected to reach financial close in the last quarter of 2021.

The project was awarded in December 2020 to the K-Water consortium, which also includes local developer Adhi Karya. The development involves a 33-year concession with a tariff of IDR 3,232 per cubic meter of water. The design, build, operate, maintain and transfer project will provide drinking water to 1.6 million residents in Jakarta, Tangerang city and South Tangerang city. It will have a total capacity of 4,600 litres/second.

K-Water, which owns a 70% stake in the project, is considering selling a 15% stake. The project is set to be completed in October 2024.


INDONESIA TO TENDER USD 410M WATER PPP IN JULY

Indonesia’s Ministry of Public Works and Housing plans to launch a tender process for an IDR 5.9trn (USD 410Mn) drinking water project in Jakarta. The project is slated to start construction in October and reach commercial operations in 2023.

The project aims to reduce the extraction of groundwater by improving supply to residents in the Indonesian capital and surrounding cities through a new pipeline system. Groundwater extraction is contributing to the quick sinking of the city of Jakarta, which is regularly hit by major floods.

The project will have a 30-year build, operate, and transfer contract. It will use raw water from the Jatiluhur dam in West Java province and will have a total capacity of 10,000 litres per second. The water will be distributed to Jakarta (3,500 litres/second) and Bekasi Regency, Bekasi City, Bogor Regency, and Karawang Regency - all in West Java. The Ir. H. Djuanda project is one of 12 drinking water supply system projects currently in the tender preparation stage.


CHINESE AND DUTCH GROUPS INVEST IN INDONESIAN PORT

Zhejiang Provincial Seaport Investment & Operation Group Co is interested in teaming up with the Port of Rotterdam and PT Pelabuhan Indonesia I (PT Pelindo I) on port development in Indonesia. The Chinese provincial port group signed term sheets and a memorandum of understanding with the Dutch and Indonesia port operators on the Kuala Tanjung Port and Industrial Estate Development Project facing the Malacca Strait.

The signing of the deals will accelerate the development of Kuala Tanjung PIE as Indonesia’s logistics and supply chain hub. With its strategic location, the support of the Port of Rotterdam and the Zhejiang Seaport Group, which have a global logistics network, the Kuala Tanjung PIE is poised to become Indonesia's logistic and supply chain hub.

The term sheets signed among the trio included a conditional share subscription agreement, a shareholder agreement, and an industrial estate co-development agreement. With the signing of the deals, direct call ships will also be sent from Ningbo Zhoushan Port of China managed by Zhejiang Seaport to Kuala Tanjung Port.

It is being developed in four phases with an aim to become West Indonesia's largest port by capacity. The construction is underway for the fourth phase (2021-2023) with an investment of IDR 3trn (USD 210Mn). The total cost of the project is IDR 40trn.


INDONESIA TO REVIEW FEASIBILITY OF USD 235MN WATERWAY PPP

The future of an IDR 3.4trn (USD 235Mn) waterway PPP in Indonesia's capital is in doubt after the authorities questioned its feasibility. Demand for the Cikarang-Bekasi-Laut project might be reduced due to a new toll road that can be also used by local manufacturers to ship cargo to Jakarta's main port.

The Greater Jakarta Transport Authority has asked the government to re-evaluate the project and has said that the government would need to grant annual availability payment of IDR 1.67trn for 10 years to make it economically feasible. The project was set to upgrade a water channel to connect industrial areas in the city of Bekasi and Cikarang with Jakarta’s Tanjung Priok port. It was proposed by state-owned port operator Pelindo II in 2017.

In March 2021, a consortium formed by Dubai-based DP World, Caisse de depot et placement du Quebec and Indonesian conglomerate Maspion Group announced that they were planning to invest USD 1.2Bn in the construction of a new international port in East Java province.


INDONESIA TO TENDER TWO TOLL ROADS WORTH USD 2.4BN

Indonesia’s Toll Road Authority Agency (BPJT) plans to offer two public-private partnership toll road projects - with a total investment value of IDR 34.04trn (USD 2.4Bn). The 39km Kamal-Teluk Naga-Rajeg project is awaiting review by the Development Finance Controller, while the tender document for the 32km Semanan-Balaraja road is being prepared.

The authority is known as Badan Pengatur Jalan Tol, or BPJT, in Bahasa Indonesia. The contracts are part of 18 toll road projects that will be offered to investors in 2021. The Semanan-Balaraja stretch will connect with the Tangerang-Merak toll road, the Serpong-Balaraja toll road and six inner-city toll roads in Jakarta. The project was proposed by listed property developer Alam Sutera Realty and privately held construction company Perentjana Djaja. It has an estimated cost of IDR 15.53trn.

The IDR 18.51trn Kamal-Teluk Naga-Rajeg project will be an outer ring road aimed at helping develop the northern part of Tangerang Regency in Banten province. It will be connected to the Soekarno-Hatta International Airport area. The project was proposed by property developer Duta Graha Karya.


INDONESIA TO LAUNCH BRIDGE AND ROAD PPPS

Indonesia is preparing to launch tenders for a 37km toll road to a new port in West Java province and a bridge connecting the islands of Batam and Bintan in 2nd quarter 2021. The total investment value for the Batam-Bintan Bridge has been increased to IDR 13.6trn (USD 953Mn) from IDR 8.7trn.

The Patimban Port access toll road PPP, which will service the newly opened port in Subang, in West Java province, has an estimated investment cost of IDR 8.4trn. The government will build the first 23km of the road, while the tender winner will develop the remaining for an estimated cost of IDR 4.3trn.

Indonesia will offer a 50-year concession period for the road, consisting of two years of construction and 48 years of operation, he added. The project tender is set to start in the second quarter of 2021, and the signing of a concession agreement is slated for the first or second quarter of 2022. The whole project is expected to be operational in the fourth quarter of 2024. The concessionaire will also design, operate, and maintain the 14km project for a period of 50 years. The Riau provincial government will be responsible for land acquisition for the project.

The ministry is planning to launch the tender in the second quarter of 2021 and sign the PPP agreement with the preferred bidder in the fourth quarter of 2021 or the first quarter of 2022. The bridge is set to become operational in 2025.


April 2021

INDONESIA TO TENDER TWO TOLL ROADS WORTH USD 2.4BN

Indonesia’s Toll Road Authority Agency (BPJT) plans to offer two public-private partnership toll road projects - with a total investment value of IDR 34.04trn (USD 2.4Bn). The authority is known as Badan Pengatur Jalan Tol, or BPJT, in Bahasa Indonesia.

The contracts are part of 18 toll road projects that will be offered to investors in 2021. The Semanan-Balaraja stretch will connect with the Tangerang-Merak toll road, the Serpong-Balaraja toll road and six inner-city toll roads in Jakarta. The project was proposed by listed property developer Alam Sutera Realty and privately held construction company Perentjana Djaja. It has an estimated cost of IDR 15.53trn.

The IDR 18.51trn Kamal-Teluk Naga-Rajeg project will be an outer ring road aimed at helping develop the northern part of Tangerang Regency in Banten province. It will be connected to the Soekarno-Hatta International Airport area. The project was proposed by property developer Duta Graha Karya.

List of Key Transactions - Indonesia Q2-2021

Source: YOG INFRA analysis, Subscription databases


List of Upcoming Projects - Indonesia Q2-2021


Source: YOG INFRA analysis, Subscription databases

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