Infrastructure & PPPs in Indonesia - Q3 2022 Update
YOG INFRA Q3 2022 insight series
INDONESIA made progress towards development of climate resilience infrastructure and planning for finance raise to achieve country's NDC targets. In terms of project pipeline, transport takes the lead with proposed projects primarily in road & highways sector, along with concession for a new airport project.
Read more about key developments in Infrastructure and PPPs in Indonesia in our latest insight.
INDONESIA PLANS PPPS FOR DISASTER RESILIENCE INFRA
The Indonesian government is considering the use of public-private partnerships to develop disaster resilient infrastructure. There is a need for a special centralized funding agency to improve infrastructure's ability to withstand disasters.
The ministry would offer 26 infrastructure PPP projects next year valued at IDR 166 Trn (USD 11 Bn). Ten are in the preparation stage with a value of IDR 38.8 Trn. They include two in the road and bridge sector, two in water resources and one in housing. Another 16 are in the tender stage with a value of IDR 127 Trn.
The proposed PPPs include the Bandung Intra Urban Toll Road and the Tuban-Gresik Toll Road, as well as the Colo Irrigation Area and Muara Juloi Dam. PPP projects that enter the tender stage next year include the Cilacap-Yogyakarta Toll Road, the Demak-Tuban Toll Road,the Merangin Dam, the Bodri Dam and the Tigahadji Hydropower and Solar Project.
INDONESIAN PORT PPP REACHES FINANCIAL CLOSE
A consortium led by Indonesia’s Gotrans Logistics International has signed a debt financing agreement with Bank Negara Indonesia and Indonesia Infrastructure Finance for an IDR 1.4 Trn (USD 93 Mn) port project in the North Gorontalo Regency in Gorontalo province.
To be located in the northern part of Sulawesi Island, the Anggrek Port will be built in a public-private partnership (PPP). Government did not mention the amount that the special project company, Anggrek Gorontalo International Terminal (AGIT), is raising as debt. The facility will be developed as a smart port. This entails the use of automation, technologies such as artificial intelligence and the Internet of Things to enhance performance.
The port carries a concession of 30 years. The PPP agreement was signed in 2021. The developer consortium comprises of Anugerah Jelajah Indonesia Logistics, Titian Labuan Anugrah and Hutama Karya.
GOVERNMENT OF INDONESIA REQUIRES USD 243 Bn TO REACH ITS NDC TARGETS
The Government of Indonesia requires around USD 243 Bn to reach its Nationally Determined Contribution (NDC) target to reduce carbon emissions to 29 % by 2030. These resources will be used to increase the share of electricity generated from green and renewable energy sources.
The funding will be sourced through the federal budget as well as the private sector, although international financing will play a major role. To reach its NDC target, the country’s energy sector will need to offset its carbon emissions from operations that as of today amounts to approximately 314 Mn tons. Currently, the industry is the second highest sources of pollution in Indonesia. The government is also preparing guidelines for a carbon tax that will provide incentives to businesses who manage to reduce carbon emissions.
INDONESIAN PROVINCE SEEKS INTERNATIONAL INVESTOR FOR HIGHWAY PPP
A local government agency in Indonesia is seeking an international investor for a proposed toll road in South Sulawesi province. The project is the South Coastal Toll Road, which will run from Makassar city of Gowa Regency to Bantaeng Regency.
The project will cost an estimated USD 866 Mn and the expected toll revenue is USD 2.16 Bn in the first year of operations. The road will be built in two phases, with the first stretch having a length of 136 km while the second will be 40 km. The highway could be built as an elevated expressway with pile- supported slabs.
The toll road is expected to improve the flow of supplies to and from its southern coast. The private investor will be able to build, own and operate the road, covered by a 50-year concession. The government will be responsible for acquiring land.
INDONESIA’S SOVEREIGN WEALTH FUND FINALISES JAVA ROAD INVESTMENT
Indonesian state-run developer Waskita Karya and the Indonesia Investment Authority (INA) have finalised an agreement regarding two parts of an operational toll road in Java. The assets are the 35 km Kanci-Pejagan and the 57.5 km Pejagan-Pemalang toll roads.
The transaction was supported by partner banks and financial institutions Bank Negara Indonesia (Persero), which acted as coordinator; Bank Mandiri (Persero); Sarana Multi Infrastruktur (Persero); and Bank Pembangunan Daerah Jawa Tengah.
INDONESIA PLANS USD 240 Mn ROAD PPP TENDER
The Indonesian Ministry of Public Works and Public Housing (PUPR) has held a market-sounding event for the upgrade and operation of the Mamberamo-Elelim section of the Trans Papua Road in the Indonesian province of Papua.
The government is inviting private-sector interest in this 50 km project, which will be procured as a PPP. The Mamberamo-Elelim section of the Trans Papua Road project is part of the road linking Jayapura, which is the capital and largest city in Papua, to Wamena, which is the capital of Highland Papua. It will not charge tolls.
The existing road is a "solid dirt road", with a PPP scheme expected to upgrade the road asphalt. The concession period is 15 years while the private-sector investor could earn returns from availability payments. The estimated cost of the PPP project is IDR 3.6 Trn (USD 242.5 Mn).
The Ministry of Public Works and Public Housing will act as the procurement agency for the project and it will be carried out in the form of DBFOMT (Design Build Finance Operate Maintain Transfer) contract.
INDONESIAN DEVELOPER SIGNS USD 727 Mn AIRPORT PPP
Subsidiary of local tobacco company Gudang Garam has signed an agreement to develop the country’s first fully privately-owned airport. Suryo Dhoho Investama will develop the Dhoho Airport in Kediri city, about 120 km southwest of Surabaya in East Java. The project, which will cost an estimated IDR 10.8 Trn (USD 727 Mn), will be funded entirely by the company.
Gudang Garam, which was awarded the project after it submitted an unsolicited proposal, will operate the aerodrome jointly for 50 years with state-owned airport company Angkasa Pura I. The facility will connect Kediri with Jakarta and Surabaya, among other cities.
The airport will be developed in three stages with an annual passenger capacity of 1.5 Mn at the end of the first phase, requiring an investment of IDR 6.6 Trn. It will serve 4.5 Mn passengers at the end of the second phase, which will cost an estimated IDR 1.2 Trn, with the remaining IDR 3 Trn to be spent on the third phase, taking its capacity to 10 Mn passengers.
List of Key Transactions - Indonesia Q3-2022
Source: YOG INFRA analysis, Subscription databases
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