Airport and toll road become priorities in 2012

JAKARTA: Ministry of National Development Planning reveals the priorities in infrastructure construction next year, which is included in Indonesia’s Master Plan of Economic Development Expansion Acceleration (MP3EI).

The priority of infrastructure development will be focused on MP3EI projects and Metropolitan Priority Area (MPA), said Dedy Supriadi Priatna, Deputy of Facility and Infrastructure at Ministry of National Development Planning (Bappenas).

The projects include expansion of Tanjung Priok Port with investment of US$1.17 billion and expansion of Soekarno-Hatta Airport. The airport expansion features modification of terminal and taxiway, Dedy said.

In addition, the priority include some toll road projects, including Serangan-Tanjung Benoa toll road in Bali with investment US$196.1 million and Pasir Koja-Soreang toll road in West Java with investment of US$143.5 million.

There is also Bandung Intra Toll Road, which will be constructed inside the capital of West Java Province, with investment of US$800 million. Another toll road will connect Cileunyo-Sumedang-Dawuan in West Java with investment of US$1.01 billion.

The first groundbreaking of Cileunyi-Sumedang-Dawuan (Cisumdawu) will take place in January 2012, building 6.35-kilometer road with investment of IDR1.02 trillion.

The groundbreaking may start after the signing of construction agreement on Dec 1 between Directorate General of Road Construction at Ministry of Public Works and the winning contractor consortium, consisting Shanghai Corporation Construction Group, PT Waskita Karya and PT Wijaya Karya.

At the signing ceremony, Director General of Road Construction at Ministry of Public Works Djoko Murjanto said that the start of construction in the Rancakalong-Sumedang section would be completed to increase the project feasibility to 17%.

The feasibility is crucial, as a bidding will be taken to find investor for the project under a public private partnership. Part of the construction uses funding from 2012 State Budget and loans from China.

In the meantime, Binjai-Medan-Kuala Namu-Tebing Tinggi toll road will start construction with investment of US$790.8 million. According to data of MP3EI projects, the 16.91-kilometer road from Medan to Kuala Namu will get funding from China as much as IDR1.22 trillion. The signing of the contract took place on December 12.

In Kalimantan, three main construction project priorities are Malory International Harbor in East Kalimantan with US$1.78 billion investment value, extension of Tjilik Riwut Airport in Central Kalimantan US$11.3 million and Tayang Bridge in West Kalimantan IDR740 billion.

The construction of two special economic zones, Sei Mangke in South Sumatera and Tanjung Lesung in Banten, Dedy continued, also become government main focuses. According to MP3EI project data, SEI Mangke needs IDR334 billion while the construction of industrial zone needs IDR2.50 trillion.

Tourism spot Mandalika in Lombok, West Nusa Tenggara will also become new economic zone in 2012. The development requires IDR829 billion to construct infrastructure, public facilities, hotels, villas, residential areas and golf field.

Airport and toll road become priorities in 2012 – Bisnis.com.

Finance Ministry urged to issue regulation on MP3EI gap fund

JAKARTA : The Ministry of Finance is urged to immediately issue regulation on viability gap fund by the end of the year, to speed up the construction of five nation-scale project in 2012. “This regulation must be issued in the end of December to speed up those projects. Otherwise, there will be another delay,” Dedy Supriadi Priatna, a Deputy Minister of National Development Planning Agency, this week end. Some of the projects, under the acceleration and expansion of economic development masterplan MP3EI, are Lampung water supply worth US$50 million and Umbulan project US$300 million–US$500 million in Pasuruan, East Java. Next, Dedy who is in charge on infrastructure and utilities said Maros project US$50 million, railway infrastructure in Central Borneo US$1,5 billion–US$3 billion, and Ampo terminal US$50 million. Such regulation will allow private investors to obtain viability gap fund VGF in cash after the construction phase on infrastructure finished. The government must work hard in formulating the regulation to justify the lumpsum system. The fund will be given to projects that economically viable, but having profit gap under investor’s expectation.

Finance Ministry urged to issue regulation on MP3EI gap fund – Bisnis.com.

Government to hold bid towards 17 infrastructure projects, valuing IDR 89 trillion

JAKARTA: About 17 infrastructure projects, employing public private partnership and valuing IDR89 trillion are ready to be transacted.

Those 17 projects are parts of 79 infrastructure projects being included in Project Plan Book 2011, valuing US$53 billion, said Director for Public Private Partnership Development, Bastary Pandji Indra.

“From the documentation preparatory stages until now, there have been 17 infrastructure projects that will be transacted with public-private partnership scheme, costing nearly IDR100 trillion. This is a relatively significant amount of investment,” he said in a release sent to Bisnis.

Those projects include Central Java Coal Fired System Power Plant, valuing US$3 billion.

Second project happens to be Puruk Cahu-Bangkuang Coal Railway (US$2.1 billion). Government is now finalizing agreement drafts with investor and coal operator merely to complete the auction documents.

The third project, Umbulan Water Supply (US$204.2 million) has been in pre-qualification phase (PQ) and is now undergoing auction documentation. Probably, within the next two-three months, the auction document will be ready and investors joining pre-qualification phase will submit its bids.

Fourth, Maros Water Supply (US$12.9 million) the PQ has began on 16 August and the PQ documentation will be submitted by 19 October 2011. “Until now there are 16 investors having PQ documentation,” he said.

The fifth project is US$4 billion toll road project. In this project, investors had proposed their offering.

Next, Surabaya Solid Waste (US$100 million), the PQ documentation had been submitted and there are four shortlisted companies as the bidders. “This project is directly handled by provincial government of Surabaya,” he said.

Another project is Southern Bali Water Supply (US$43.5 million), a Korea based consortium has submitted its bidding to Bali provincial government.

The eight project happens to be Bandung Solid Waste (US$100 million), handled directly by Bandung provinicial government and the pre qualification phase will be conducted by the upcoming October.

The ninth project is Kalibaru Port, costing IDR11 trillion. It happens to be an unsolicited project and operated by Pelindo II.

Next is Sampah Solo project, valuing US$30 million and has been completed Feasibility Study and will enter transaction phase.

The eleventh project is Batam Solid Waste, valuing US$100 million. This project will undergo second bidding process as it had experienced a bidding process previously yet the private company failed to complete the project and finally resigned. “Thus, it will undertake second bidding.”

Besides, we are also informed that there will be intermediate transfer facility (ITF) in Jakarta. This facility will be used as final waste container. This project will be auctioned by October,” he resumed.

Government to hold bid towards 17 infrastructure projects, valuing IDR89 trillion – Bisnis.com.

PPP Framework in Indonesia

by Mutiara Rengganis

The government has promoted private sector participation in infrastructure sector since late 1970s. Many projects involving private sector at that period were on negotiated-deal basis. No systematic mechanism was developed to encourage private investment in infrastructure sectors.

During Asian financial crisis, Indonesia sustained enormous impacts in all aspects of life. In infrastructure sector, the consequences were severe. The government had to suspend most – if not all – ongoing infrastructure projects. Some foreign investors brought this matter to arbitration. An example is the notorious case of Karaha Bodas, where Pertamina had to pay fine in total of USD 261,1 million to a US-based consortium in December 2000.

Since then, the government has started to shift its focus back to infrastructure development. In 2005, Presidential Regulation No. 67 of 2005 was enacted. This marked the beginning of public-private partnership (PPP) era in infrastructure industry. Under this regulation, private sector is given incentives when investing in infrastructure sector. Monopoly rights that were given to state-owned enterprises (SOEs) were abolished. Private sector can now compete with the SOEs in a (hopefully) level playing field. Concession could no longer be granted by direct appointment, and is strictly subject to competitive tendering. This regulation has also incorporated the local autonomy principles, allowing local governments to be in charge of local projects in their territory.

In enhancing PPP institution, the government also formed two SOEs, namely IIGF and PT SMI. IIGF assumes the role as a single window institution to identify projects that worth of government guarantee, while PT SMI (and its subsidiary PT IIF) will contribute in extending project financing at arm’s length basis.

In January 2010, the government amended PresReg 67/2005 by Presidential Regulation No. 13 of 2010. The government has also putting efforts in reforming regulatory frameworks in each of infrastructure sectors (i.e. railways, water supply, waste treatment, airport, seaport, and electricity). Although merely revising the text of laws is certainly not enough in improving investment, it brings optimism that infrastructure development will soon nourishing.