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Infrastructure & PPPs in Indonesia - Q4 2021 Update

INDONESIA is prioritizing development of urban infra and social infra projects through PPP/ private sector participation, with an aim to build back better as from COVID-19 pandemic. Such developments would largely be driven by local conglomerates given familiarity with country context and regulations, with financing support from local and international lenders.

Read more about key developments in Infrastructure and PPPs in Q4 2021 in Indonesia in our latest insight.

 

October 2021

JAKARTA SEEKING INVESTORS FOR USD 105MN TRANSIT PROJECT

Jakarta government-owned developer Jakarta Propertindo (JakPro) will seek investors to build a USD 105Mn transit-oriented development in Indonesia's capital. The project will be located in northern Jakarta, on top of the underground Pengangsaan Dua train depot, part of the city's Light Rail Transit system.

The project will be developed in an area of approximately 10 hectares. Approximately 68% of the land will be used to construct residential units, and the project will also include community facilities and office and retail spaces. JakPro is open to receiving letters of interest from potential investors. The government-owned developer will launch a selection process if it receives interest from several parties.

JakPro is open to partnering with investors using a Build-Operate-Transfer scheme or launching a joint venture.

Several Indonesian state-owned firms are seeking private capital to develop infrastructure-adjacent mixed-use projects. Airport operator Angkasa Pura II is looking for business partners to build an IDR 4trn (USD 281Mn) aerocity near Kualanamu International Airport, while the West Java government is planning to attract private capital to develop an IDR 14.4trn airport city next to Kertajati Airport.


INDONESIA TO SEEK PARTNERS FOR JAKARTA AIRPORT LOGISTICS PROJECT

The Indonesia Investment Authority (INA), the country’s sovereign wealth fund, plans to seek investors to jointly develop a cargo facility in Jakarta’s Soekarno-Hatta International Airport.

State-owned airport operator Angkasa Pura II would build the facility, which will be able to handle between 1.5 million and 2.2 million tonnes of cargo per year. The airport currently has one cargo facility with capacity of 700,000 tonnes.


INDONESIA TO LAUNCH USD 58MN WATER SUPPLY PPP IN 2022

A water utility in Indonesia's West Java province is preparing to launch a Swiss Challenge in January next year for an IDR 828Bn (USD 58.4Mn) water supply PPP. The Sinumbra project, to be located in Bandung Regency, will have a capacity of 1,250 liters per second. It will reach financial close in June 2022. Construction will begin in 2023, and commercial operations will start at the end of 2024.

State-backed developer Waskita Karya, which is in the midst of an asset divestment effort to pay off debt, is the original proponent. The project will have a concession period of 30 years and will involve the development of intake units from three water sources and 22.4km of pipelines. Indonesia has launched several water supply PPPs in recent months, attracting interest from regional players such as Malaysia’s Ranhill, South Korea’s K-Water and the Philippines Maynilad and Manila Water.


SEMBCORP TEAMS UP WITH INDONESIAN COMPANIES TO DEVELOP 1 GW SOLAR PROJECT

Singapore's Sembcorp Industries has signed a development agreement with Indonesia's state-owned power utility PT PLN and renewables developer PT Trisurya Mitra Bersama (Suryagen) to develop a 1 GW integrated solar and energy storage project in Indonesia’s Batam, Bintan and Karimun regions.

The development will provide clean energy for local communities and also export power via subsea cables into Singapore. Indonesia plans to grow renewables' share of the country's energy mix from 11% now to 23% in 2025 and to add 4.7 GW of renewable power by 2030.

Singapore started working on a clean electricity import plan in 2019. It has contracted with a consortium led by PacificLight Power to import 100 MW of solar power from Pulau Bulan in Indonesia, starting around 2024 and working with Malaysia's YTL PowerSeraya to import another 100 MW of clean energy from Malaysia using the existing interconnector for the next two years.

The country also supports a plan to import up to 100 MW of power from Lao PDR to Singapore via Thailand and Malaysia from 2022 to 2023; and Australia's Sun Cable is working on a medium-term plan to import 15% of Singapore's power from a northern Australian solar farm via a 4,200 km undersea link.


INDONESIA SOLAR PROJECT TARGETS FINANCIAL CLOSE IN 4Q 2022

A consortium including Singapore-based power generator PacificLight Power (PLP) is targeting financial close in the last quarter of 2022 for a USD 750Mn solar project in Indonesia. The joint venture, which also includes Indonesian power firm Medco Energy and a subsidiary of Salim Group, will build a 670 MW solar power plant on Bulan island, around 40km south of Singapore. The project will export 100 MW of non-intermittent electricity to Singapore through a 230 kV subsea connection.

The project will install a battery energy storage system to manage intermittency issues. The energy will be transmitted to PLP´s existing power plant on Jurong island. Singapore’s Energy Market Authority (EMA) aims to issue two requests for proposals for the import of up to 4GW of low-carbon electricity into the island nation.

The country is currently 95% dependent on imported natural gas for its power needs and is seeking to import renewable capacity from neighboring countries including Indonesia, Australia, and Laos.


November 2021

INDONESIA TO SEEK PARTNERS FOR TOURISM PROJECT IN JANUARY

A state-backed developer in Indonesia’s West Java province is set to launch a partner selection process for an IDR 1.3trn (USD 91Mn) tourism project by the end of January. Provincial government owned Jaswita Jabar has received two expressions of interest for the Ciater Eco-tourism project, including one from an international investor. The private partner is expected to fully fund the development.

The 445 hectares eco-tourism project will include a convention area, retail spaces, and a theme park. It will be developed in Subang Regency, approximately 100km east of Jakarta. A regency is an administrative division in Indonesia, equivalent to a municipality. West Java province is seeking investors to develop several infrastructure projects.


INDONESIA IN TALKS WITH THREE FIRMS FOR USD 215MN HEALTHCARE PROJECT

Three potential investors are in talks with an Indonesian government agency to develop a USD 215Mn healthcare project on Batam island. The firms are based in Singapore, Malaysia, and the United Arab Emirates.

Dubai-based conglomerate Thumbay Group has filed an expression of interest (EoI) for the Sekupang International Healthcare Special Economic Zone. Thumbay is interested in developing a university in the 44.5ha site. BP Batam has not established any deadline for submission of EoIs, but that the agency expects to launch construction work in 2022.

The project will involve the building of an international hospital, a medical personnel vocational education center, and wellness tourism facilities. The development will target the Indonesian healthcare market, and particularly patients who were seeking treatment abroad before the pandemic. Indonesia aims to revitalize Batam island, located approximately 30km from Singapore, as a major industrial hub.


MEDAN AIRPORT PROJECT TARGETS FINANCIAL CLOSE IN 2Q 2022

The consortium seeking to upgrade Indonesia’s Kualanamu International Airport in Medan aims to reach financial close in the second quarter of 2022. The partnership is open to including international lenders and multilateral banks in the financing. AP II chose Delhi-based GMR Infrastructure as its partner to upgrade the airport.

The project will use a 70:30 debt-to-equity structure. The two firms will first increase the airport's capacity to 17 million passengers from 9 million, at an estimated cost of USD 217Mn.

AP II will own a 51% interest in the project, while the Indian operator will hold the balance. GMR will oversee the operation, development, and expansion of the airport for a period of 25 years. Medan is the fourth-largest urban area in the Southeast Asian nation and the capital of the province of North Sumatra.


INDONESIA SEEKS PROPOSALS FOR USD 1.3BN TOLL ROAD PPP

Indonesia’s toll road authority today launched a pre-qualification process for an IDR 18.6trn (USD 1.3Bn) public-private partnership (PPP) highway. The 38.6km Kamal-Teluknaga-Rajeg project will be built in the northwestern part of Greater Jakarta. It will connect Cikupa town in Banten province with Jakarta’s Soekarno Hatta International Airport. The toll road will have a concession of 50 years. The project was proposed by a consortium that includes real estate developer Agung Sedayu and Indonesian conglomerate Salim Group. The two partners are also constructing a mixed-use project spanning 1,000ha near the airport.

Traffic volume will be attractive for investors as the proposed road connects to the capital’s main aerodrome, the authority expects real estate companies that are involved in other developments in the area to show interest in bidding for the highway project.


INDONESIA TO AWARD USD 119MN DAM PPP IN 2023

Indonesia aims to award an IDR 1.7trn (USD 119Mn) dam project in the second half of 2023. The Ministry of Public Works and Housing will call for pre-qualification bids for the Bodri Dam PPP, in Central Java province, during the first half of 2022.

The selected partner will receive an annual availability payment of IDR 413Bn per year. The 18-year concession will include a six-year development period, including four years of construction works. The concessionaire will start receiving the payment once the project becomes operational.

The development will be supported by guarantees from the Ministry of Finance-owned Indonesia Investment Guarantee Fund, which provides political risk cover for PPPs.


INDONESIA INFRASTRUCTURE FINANCE FUNDS OFFSHORE ENERGY PROJECT

Indonesia Infrastructure Finance (IIF) has participated in a syndicated loan to fund part of an energy project in the Madura Strait. The debt facility amounts to USD 85Mn, the facility will be utilized by PT Timas Oceanstar Indonesia to construct a floating gas processing facility with a capacity of 175 MMSCFD.

The country's upstream regulator approved a gas production project in the strait with a total investment of USD 88Mn. The project is a joint venture between Canada's Husky Energy, China National Offshore Oil Corporation and Samudra Energy.

Indonesia has been trying to reduce its dependency on imported refined products. In 2020, the country consumed the equivalent of 222 million barrels of oil, as well as 97 million barrels of natural gas.


December 2021

TEN FIRMS INTERESTED IN WEST JAVA AIRPORT AEROCITY PROJECT

Ten Indonesian companies have submitted expressions of interest to participate in the construction of an IDR 14.4trn (USD 1Bn) aerocity in the Kertajati Airport in West Java province. The province-owned airport operator, Bandarudara Internasional Jawa Barat (BIJB), plans to start the partner selection process early next year.

The 3,480-hectare project will include a logistics hub, a business park, a residential area, an IDR 2.5trn aircraft maintenance, repair, and overhaul (MRO) facility and a creative technology center. The development will include 589 hectares for the logistics hub, 62 hectares for the MRO facility and 668 hectares to set up a business center. The BIJB will retain a 70% interest in any joint venture with a private partner due to legal requirements.


INDONESIA SEEKING USD 316MN FOR NORTH SUMATRA TOURISM PROJECT

Indonesia will seek investment partners in the first quarter of next year to build facilities in the Toba Caldera Resort in North Sumatra. The country will launch an auction process for partners to develop a cable car system, hotels, and commercial areas for the resort.

The sites will be tendered using a Build-Operate-Transfer scheme with a 30-year concession period. In the first USD 316Mn phase of Lake Toba's development, which will run until 2031, six hotels and seven commercial areas will be developed on a 69-hectare site. The government agency awarded a USD 40Mn contract for the construction of a hotel to local firm PT. Labersa Hutahaean.


INDONESIA PREPARES TENDER FOR TWO PORT PPPS IN 2022

Indonesia will request pre-qualification bids for two port PPPs valued at IDR 7.3trn (USD 505Mn) in 2022. Both projects are slated to be operational in 2024.

The first project involves the construction of the IDR 3.3trn Tanjung Carat Port, near the city of Palembang in South Sumatra province. It will be designed to handle ships with a maximum capacity of 6,000 to 8,000 twenty-foot-equivalent units (TEUs) and to have an annual capacity of 177,145 TEUs.

The port aims to support the economic development of the nearby special economic zone of Tanjung Api-Api and the rest of the province, including the export of local commodities such as coal, crude palm oil and rubber.

The second PPP involves the building of the Ambon New Port, in Maluku province. The facility will have a total handling capacity of 197,327 TEUs per year in 2044 and will be able to accommodate ships with a capacity of 2,000 TEUs.

The initial stage will cost IDR 1.3trn, while the total capex is estimated at IDR 4trn. The project will boost the export of processed fishing products to international markets and will include a fishing port with cold storage and fish processing facilities.


INDONESIA TO TENDER TWO BUS TERMINAL PPPS NEXT YEAR

Officials in two Indonesian provinces are preparing to launch two bus terminal PPPs with a total value of IDR 590Bn (USD 41Mn). The IDR 350bn Purabaya Terminal project will involve the upgrade of an existing bus station in Sidoarjo Regency, in East Java. The 37,932 sqm development will include office, commercial and logistics areas. It will have a concession period of 20 years.

The second project, the IDR 240Bn Betan Subing Terminal PPP, will involve the creation of mixed-use areas on a 15,461 sqm site. The facility, located in Central Lampung Regency, is a transportation hub for travellers between Sumatra and the nearby Java Island. The selected bidder will receive a 30-year concession period.

Both projects are set to be awarded in January 2023 and become operational in 2025. They have an estimated internal rate of return of 14%. Revenue will come from commercial activities within the terminals, including advertisements, rental of commercial space and parking services.


INDONESIA TO LAUNCH USD 731MN ROAD PPP NEXT YEAR

Indonesia will launch an IDR 10.5trn (USD 731Mn) toll road PPP in East Java province in the third quarter of 2022. The government will offer investors the 44.5km Kediri-Tulung Agung Road, which will support the connectivity of a new airport in the province, bridges infrastructure financing at the Ministry of Public Works and Housing. The project is a continuation of the Kertosono-Kediri toll road to support the development of the Kediri Airport area and to facilitate access to the southern part of East Java,

The project has been proposed by Jakarta-listed tobacco company Gudang Garam. It will have a 50-year concession period, and the PPP winner will recoup the investment through the collection of user fees. Gudang Garam is building the Dhoho Airport in Kediri, which is likely to be completed in 2023. It expects to get a 50-year concession for the airport.

 

List of Key Transactions - Indonesia Q4-2021

 

List of Upcoming Projects - Indonesia Q4-2021

Source: YOG INFRA analysis, Subscription databases

 

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