progress of infrastructure initiatives under the rpjmn … toll road development (cumulative 5-years...

17
1 1 Note on Progress of Infrastructure Initiatives Progress of Infrastructure Initiatives under the RPJMN 2015-2019 Introduction The National Long-term Development Plan (RPJPN), a development plan which stretches twenty years, aims to achieve the development goals of Republic Indonesia as mandated in the Constitution. The RPJPN 2005-2025 has been drawn up as a continuation and renewal of earlier stages of development planning in Indonesia and involves institutional restructuring while simultaneously keeping the nation in pace with other nations. The RPJPN divided into four separate medium term plans called National Medium Term Development Plan/RPJMN (2005-2009; 2010-2014; 2015-2019; and 2020-2025) and run parallel with the taking office of a new government. Through these medium term plans, separate governments can set their own priorities in the process of national economic development, on the condition that these priorities are in line with the long term RPJPN. Indonesia is now approaching the third stage of RPJMN (2015-2019) which is aiming for the greater consolidation of development in a comprehensive manner in all fields by emphasizing attainment of economic competitiveness on the basis of competitiveness of natural resources and the quality of human resources and by the increasing capability to master science and technology. The National Medium-term Development Plan (RPJMN) 2015-2019 In accordance with RPJPN, RPJMN 2015-2019 directed to support the national development agenda, including enhancing the competitiveness of the national economy. The RPJMN 20152019 forms the basis for ministries and government agencies in formulating their respective Strategic Plans (RenstraKL). Regional governments must also take into account the RPJMN 20152019 when formulating or adjusting their respective regional development plans to reach national development targets. For the implementation of the 20052025 National LongTerm Development Plan, the RPJMN is to be further elaborated into the Annual Government Work Plan (RKP) that will then become the basis for formulating the Draft Government Budget

Upload: dangnga

Post on 01-Jul-2018

214 views

Category:

Documents


0 download

TRANSCRIPT

1

1 Note on Progress of Infrastructure Initiatives

Progress of Infrastructure Initiatives under the RPJMN 2015-2019

Introduction

The National Long-term Development Plan (RPJPN), a development plan which stretches

twenty years, aims to achieve the development goals of Republic Indonesia as mandated in the

Constitution. The RPJPN 2005-2025 has been drawn up as a continuation and renewal of earlier

stages of development planning in Indonesia and involves institutional restructuring while

simultaneously keeping the nation in pace with other nations.

The RPJPN divided into four separate medium term plans called National Medium Term

Development Plan/RPJMN (2005-2009; 2010-2014; 2015-2019; and 2020-2025) and run parallel

with the taking office of a new government. Through these medium term plans, separate

governments can set their own priorities in the process of national economic development, on

the condition that these priorities are in line with the long term RPJPN.

Indonesia is now approaching the third stage of RPJMN (2015-2019) which is aiming for

the greater consolidation of development in a comprehensive manner in all fields by emphasizing

attainment of economic competitiveness on the basis of competitiveness of natural resources and

the quality of human resources and by the increasing capability to master science and

technology.

The National Medium-term Development Plan (RPJMN) 2015-2019

In accordance with RPJPN, RPJMN 2015-2019 directed to support the national

development agenda, including enhancing the competitiveness of the national economy. The

RPJMN 2015‐2019 forms the basis for ministries and government agencies in formulating their

respective Strategic Plans (Renstra‐KL). Regional governments must also take into account the

RPJMN 2015‐2019 when formulating or adjusting their respective regional development plans to

reach national development targets. For the implementation of the 2005‐2025 National Long‐

Term Development Plan, the RPJMN is to be further elaborated into the Annual Government

Work Plan (RKP) that will then become the basis for formulating the Draft Government Budget

2

2 Note on Progress of Infrastructure Initiatives

(RAPBN). Therefore, the RPJMN 2015‐2019 is the guideline that central and regional

governments, society, and the business community should follow in order to achieve the goals of

the nation contained in the Preamble of the 1945 Constitution of the Republic of Indonesia. In

RPJMN 2015-2019, there are three main focus of development namely human development,

priority sector development, and distribution and regionality.

In the context of infrastructure, the development of infrastructure, among others,

directed to (a) provide a transportation infrastructure for commodity distribution services trade

and industry as well as the movement of passengers and goods, both national and international

in scope; (b) eliminate the gap between supply and demand as well as the effectiveness and

efficiency of energy use including electricity; (c) increase the teledensity of telematics services

public service users; (d) meet the needs of decent housing for the people and achieve the city

without slums; and (e) realize increased reliability and sustainability of water resources better

services for the fulfillment of drinking water, sanitation, and irrigation to support the

conservation of the water and food.

Infrastructure development is one the of focus in RPJMN 2015-2019, which is aimed at

the improvement of basic infrastructure and connectivity. There are 19 sub-sectors of basic

infrastructure improvement targeted during the period 2015 to 2019 ranging from electricity

generating capacity, improvement of access to safe drinking water, development of roads,

highways, ports, airports, and broadband coverage.

Basic Infrastructures and Connectivity Program under RPJMN 2015-2019

No. Sub-sector Development 2014 Baseline 2019 Target

1 Electricity Generating Capacity (GW) 50,7 86,6

2 Electrification Ratio (%) 81,5 96,6

3 Electricity Consumption per capita 843 KWh 1200 KWh

4 Urban Slums Neighborhood 38.431 Ha 0 ha

5 Housing Backlog 7,6 millio 5 million

6 Clean Water Access 70% 100%

7 Adequate Sanitation Acces 60,9 % 100%

8 Well-maintained National Roads 94% 98%

9 National Road Development 38.570 km 45.592 km

10 Construction of New Roads (cumulative 5-years) 1202 km 2650 km

11 Toll Road Development (cumulative 5-years 807 km 1.000 km

Three Dimensions of Development

1. Education2. Health3. Housing4. Character Building

1. Equal distribution among income group

2. Equal distribution among regions

1. Food Self-Sufficiency2. Energy and Electricity3. Maritime4. Tourism and Industry

Human Development Distribution and RegionalityPriority Sector Development

Necessary Conditions

Certainty and Law Enforcement

Security and OrderGovernance and

Bureaucratic ReformsPolitics and Democracy

Quick Wins and Continued Programs

3

3 Note on Progress of Infrastructure Initiatives

12 Length of Railway Line 5434 km 8692 km

13 Port Development 278 450

14 Port Dwelling Time 6-7 days 3-4 days

15 Number of Airports 237 252

16 On-time Flight Performance 75% 95%

17 Broadband Coverage to Regencies/Cities 82% 100%

18 Number of Ferry Docks 210 275

19 Urban Public Transport Market Share 23% 32%

Source: RPJMN 2015-2019

Following the decentralization process which was implemented nationally, national

investment landscape changed since then. Local authorities increased their infrastructure

spending three-fold when compared to before decentralization. This is due to the increased

amount of expenditure functions transferred to local government. Based on data from the World

Bank, about 80 per cent of government infrastructure investment comes from the central

government, with only 20 percent coming from local government before decentralization. After

2001, in which decentralization implemented, this composition shifted to about 65 percent of

spending by local governments and only 35 percent by the Central Government. However, the

magnitude of the national infrastructure needs have still not been able to be met by the state

budget (APBN) nor the regional budget (APBD).

As indicated by the RPJM 2015-2019 document, the total requirement of national

infrastructure is Rp 6780 trillion. The ability of national and regional budgets in the financing of

infrastructure projects is only 52%. Furthermore, only about 28% funded by the state, lending,

bond issuance and other financing. So that there is still a gap of 20% of the total infrastructure

needs that still need financing. The financing gap is exactly what is expected to be met from

Public Private Partnerships (PPP). Here it takes the role of the government both at central or

regional level in attracting private investment in infrastructure.

Infrastructure Investment Financing Needs (Indicative) for 2015-2019 (IDR Trillion)

No. Projects Budget 1 Road 1274

2 Railway 278

3 City Transportation 155

4 Sea Transportation 563

5 Ferries 91

6 Air Transportation 182

7 Electricity 1080

8 Clean Water 1091

9 Drinking Water and Sanitation 905

10 Energy 535

11 Housing 384

12 ITC 242

Total 6780

Source: RPJMN 2015-2019 as cited by PT. Sarana Multi Infrastruktur (2014)

Priority Infrastructure Projects (Quick Wins)

The diversity of the project list published by different institutions with the various time

frame and information, have led to confusion to the public and business world. Formulating a list

of projects therefore is needed to foster interest and readiness of private sector to participate in

infrastructure development. It is necessary to provide a well prepared list of priority projects at

4

4 Note on Progress of Infrastructure Initiatives

the national level issued by a credible and competent institution so that the projects can be

implemented within the stipulated time frame.

Of all the infrastructure program, the government therefore shortlisted the projects into

quick wins (priority projects) to focus on in 2015. The process of selecting priority projects have

been carried out by KPPIP1 through discussions with stakeholders and taking into account the

following criteria:

a. Main criteria: conformity with RPJMN and RTRW (Spatial Plan), the project has linkages

between infrastructure sectors and between regions, the project has a strategic role, and

the project requires the support of government and/or government guarantees for PPP

projects.

b. Supporting criteria: The investment value of over IDR500 billion, strategic value

(economic, social, environmental), the urgency of the implementation and the level of

preparedness.

Priority Project Selection Process by KPPIP

Following the selection process, there are 22 priority projects enlisted for 2015 as

follows:

22 Priority Infrastructure Projects for 2015

No Project Location Financing Scheme

Water and Sanitation

1 Jakarta Sewerage Management

System Zone 1

Jakarta Government Budget (APBN) with Foreign

Loans

2 West Semarang Water Supply System Semarang (Central Java) Potential of Cooperation between the

Government and Business Entities (KPBU)

with government support through VGF

(Viability Gap Fund)

3 National Capital Integrated Coastal

Development (NCICD) Phase 1

Jakarta & West Java APBN dan Regional Budget (APBD) (50:50)

for phase 1. Potentially KPBU for the next

Phase

4 Water to Energy (construction of 4

new hydropower: Karangkates IV & V,

Kesamben, Lodoyo)

East Java Appointment of a consortium of state-

owned companies (BUMN)

1 KPPIP (Committee on Acceleration of Infrastructure Provision Priority Development) is a special committee under the Coordinating Ministry for Economic Affairs which has been established as instructed through President Regulation 75/2014 enacted on July 2014 and is mandated to provide list of priority projects no later than six months after the issuance of Presidential Regulation 75/2014.

Administration/ threshold Requirements:

From 1781 projects to Top 200

Scoring & Ranking:

From Top 200 projects to To 60

Stakeholder Discussions:

From Top 60 projects to Top 41

22 Priority

Infrastructure

Projects for 2015

5

5 Note on Progress of Infrastructure Initiatives

Energy

5 Bontang Refinery East Kalimantan Potentially KPBU

6 Revitalization of Existing Oil Refineries

(RDMP)

Cilacap, Dumai, Plaju,

Balongan, Balikpapan

B2B Strategic Partnership

Electricity

7 High Voltage Direct Current (HVDC) South Sumatera & West

Java

APBN with Official Development Assistance

(ODA) Loans

8 Mouth Mine Power Plant Sumsel

8,9,10

South Sumatera Private Sector (Independent Power

Producer/IPP)

9 Sumatera 500 kV Transmission Sumatera APBN and potential funding of SOEs for

some segments

10 Central-West Java Transmission Line

500 kV

Central and West Java Potentially APBN with foreign loans

11 Indramayu Power Plant West Java APBN with foreign loans

12 Batang Power Plant (Central West Java

Power Plant)

Central Java Private Sector (Independent Power

Producer/IPP)

Sea Port

13 Kuala Tanjung International Port Hub North Sumatera Potentially KPBU

14 Bitung International Hub Port North Sulawesi Potentially KPBU

Airport

15 Revitalization of 10 Airports National-wide Potentially KPBU

Toll Road

16 Trans Sumatera Toll Road Sumatera Designated SOE

17 Balikpapan-Samarinda Toll Road East Kalimantan Potentially KPBU with partial government

support

18 Manado-Bitung Toll Road North Sulawesi Potentially KPBU with partial government

support

19 Serang-Panimbang Toll Road West Java Potentially KPBU

Public Transportation

20 MRT Jakarta (South-North Line) Jakarta APBN with with Foreign Loans

21 Soekarno-Hatta International Airport

(SHIA) Express Railway

Jakarta Potentially KPBU or designated SOE

22 Makassar-Parepare Railway South Sulawesi APBN

Source: KPPIP

With the construction of 22 priority projects, it is expected to increase the supply of

electricity up to 6,000 MW, to increase toll roads outside Java to 442 km, to increase railways

(Trans Sulawesi) up to 146 km, to increase international hub port capacity of up to 500

vessels/day, as well as to increase oil production to 300 thousand barrels per day.

The Implementation Stages of Infrastructure Projects

Phase of the project implementation can be grouped into five main stages, namely (1)

Preparation of the Outline Business Case (OBC); (2) Implementation of the auction process

(tender) for projects that will be funded by the scheme of Public-Private Partnership (PPP); (3)

The process of licensing and land acquisition; (4) Financial closing; and (5) The construction.

Outline Business Case (OBC)

Outline Business Case (OBC) needs to be prepared on behalf of the public authority, in which the

project and procurement options are decided on. During the OBC stage, several assessments

take place which include (1) the affordability of the project; (2) Which option offers best value

for money: a ‘reference project’ is developed during this stage, which is the PPP option against

which the future bids should be evaluated, and this should be compared with a publicly-financed

6

6 Note on Progress of Infrastructure Initiatives

variant of the project, called the Public Sector Comparator, to see whether a PPP option or public

option offers better value for money; (3) What outputs are needed from the project; (4) Which

risks are involved in the project and which party should bear them; (5) The timeline for the

implementation; (6) Whether there is likely to be sufficient interest from private companies in the

project and whether there are a sufficient number of private companies with the relevant skills to

ensure that real competition takes place; (7) Service requirements and standards; (8) The

payment mechanism that would be appropriate; and (9) Proposals for the monitoring of the

project.

Auction (Bidding) Process

An open and competitive procurement procedure begins with the promoter’s description of its

requirements and an invitation to suppliers to indicate their interest in the contract and their

professional capacity to fulfil it. The promoter then identifies potential suppliers and invites them

to submit bids. After the bidding phase, most procurement systems require a public declaration

of the competitors’ names and their bid prices and, ultimately, of the successful bidder. There is

a wide variety of procurement procedures available for use in tendering when it comes to PPP

arrangements. Many of these procedures have become prescriptive in nature. Many local

governments follow standard procurement procedures drawn up by the International Federation

of Consulting Engineers (FIDIC). However, most commonly PPP contracts are awarded as the

result of some form of competitive bidding procedure. Designing a competitive bidding process –

and getting the best possible result – is easiest when the product or service required is a fairly

standard one and the technical outputs can be defined with reasonable certainty in the bidding

documents. Particular attention, therefore, should be paid to providing good quality information

to potential bidders and to the detailed design of the bidding process.

Licensing and Land Acquisition

The land acquisition process for PPP projects is no doubt the most challenging pre-development

activity. In most cases, the government commits provision of land free from encumbrances for

the project before actually completing the necessary formalities

Financial closing

Financial closure is defined as a stage when all the conditions of a financing agreement are

fulfilled prior to the initial availability of funds. Financial closure is attained when all the tie ups

with banks/financial institutions for funds are made and all the conditions precedent to initial

drawing of debt is satisfied. Financial closure indicates the commencement of the Concession

Period. The date on which financial closure is achieved is the appointed date which is deemed to

be the date of commencement of concession period. Financial close occurs when all the project

and financing agreements have been signed and all the required conditions contained in them

have been met. It enables funds (e.g. loans, equity, grants) to start flowing so that project

implementation can actually start.

7

7 Note on Progress of Infrastructure Initiatives

Construction Stage

Construction is when the project entering the periode of concession. A concession gives a

concessionaire the long term right to use all utility assets conferred on the concessionaire,

including responsibility for operations and some investment. Asset ownership remains with the

authority and the authority is typically responsible for replacement of larger assets. Assets revert

to the authority at the end of the concession period, including assets purchased by the

concessionaire. In a concession the concessionaire typically obtains most of its revenues directly

from the consumer and so it has a direct relationship with the consumer. A concession covers an

entire infrastructure system (so may include the concessionaire taking over existing assets as

well as building and operating new assets). The concessionaire will pay a concession fee to the

authority which will usually be ring-fenced and put towards asset replacement and expansion.

The Progress of the 22 Priority Projects

Until the end of the first quarter of 2015, of the 22 infrastructure projects2, 7 projects

(32%) are currently in the process of preparing the OBC or the business plan of the project, 4

projects (19%) in the process of implementation of auction for the project with PPP scheme, 6

projects (27 %) in the licensing and land acquisition stage, 2 projects in the financial closing

(1%), and 4 projects (19%) is entering the construction phase.

1. Project Sumsel 9 &10 Mine Mouth Power Plant

2. Project Sumsel 8 Mine Mouth Power Plant

2 For project Sumsel 8,9,10 Mine Mouth Power Plant, of the three sub-projects, two of them are still at the stage of licensing and land acquisition, while one sub-project (ie Sumsel 8) has been entering the financial closing stage.

•7 Projects

Outline Business Case

•4 Projects

Auction Process

•5 Projects

•2 sub-projects1

Licensing & Land

Acquisition

•1 Projects

•1 sub-project2

Financial CLosing

•4 Projects

Construction

8

8 Note on Progress of Infrastructure Initiatives

Phase I: Outline Business Case

No. Project Remarks

1 Bontang Refinery Presidential Regulation that appoints Pertamina as party who in charge for

the project (Penanggung Jawab Proyek Kerjasama or PJPK) is being

drafted by Ministry of Energy and Mineral Resources. KPPIP will hire a

consultant for the preparation of pre-feasibility study

2 Jakarta Sewerage Management

System Zone 1

Ministerial level meeting will be conducted to deliberate the project's

funding scheme as proposed by echelon 1 namely the state budget with

foreign loans.

3 Revitalization of 10 Airports Discussion on the final funding scheme is still on going.

4 Kuala Tanjung International Port

Hub

Pelindo I has conducted several studies related to the port, yet it does not

cover the supporting infrastructure and regional development.

5 Bitung International Hub Port Location has been set on the existing port locations. If capacity

expansion is required, it will be expanded to the location of the Special

Economic Zone (Kawasan Ekonomi Khusus/KEK) Bitung.

Chinese government keen to cooperate for the development of Bitung

International Hub Port and KEK in the surrounding area. Chinese parties

are conducting studies related to the development which will be the basis

for discussion of cooperation and the signing of the MoU between the

governments of China and Indonesia.

Korean government is also conducting study on the development of KEK

Bitung.

6 Serang-Panimbang Toll Road Awaiting the finalization of road alignment. Currently exploring the

possibility of financial support to carry out Environmental Impact

Assessment by KPPIP.

7 Revitalization of Existing Oil

Refineries (Refining Development

Master Plan/RDMP)

Pertamina is currently exploring with some foreign investors to carry out

joint study and encourage the participation of funding from those investors.

Head of Agreement (HoA) signing with investors mainly for Phase I, such as

Balikpapan and Cilacap refinery is in the process.

Source: KPPIP

From 7 project that is currently in the process of documentation (OBC), there are encouraging

developments, among others on the project Kuala Tanjung International Airport where as of May

2015 a number of foreign investors from China, Japan, and the Netherlands have expressed an

interest in developing the port.3 Meanwhile, for the Bontang Refinery, Auction for appointment

KPBU be completed in December 2015.

Phase II: Auction Process

No. Project Remarks

1 Soekarno-Hatta International

Airport Express (SHIA Express)

The project is decided to use a narrow gauge railway that resulted in the

delay of tender process which initially scheduled for Q3 2015 to be Q1 2016.

Project scheme and SOE's involvement (PT KAI) has not been decided.

2 West Semarang Water Supply

System

Requires the issuance of Government Regulation Draft on Water Supply

System (RPP SPAM) which is expected to allow municipal government to be

responsible for the project cooperation (PJPK).

3 Balikpapan-Samarinda Toll Road Land acquisition guarantee letter has been 75% completed by the East

Kalimantan Provincial Government, has been accepted by the Ministry of

Public Work so that the Toll Road Authority (BPJT) can immediately

conduct auction for business entity.

BPJT is currently undergoing preparation for the auction. BPJT is waiting

for feedback from the Indonesia Infrastructure Guarantee Fund (PII) on

the pre-feasibility study that has been submitted.

4 Manado-Bitung Toll Road Land Clearing for Section 1 (Manado-Airmadidi) has been 90.16%

completed. Currently auctioning 1 unit of geodetic measuring devices.

Awaiting for additional funds for land acquisition from the Ministry of Public

Works. Auction will be conducted if land clearing has reached 75% in total.

Source: KPPIP

3 The Jakarta Post, May 29, 2015

9

9 Note on Progress of Infrastructure Initiatives

For the development of West Semarang Water Supply System, the auction will be conducted by

Semarang city administration with a target time of the third week in June 2015. For the

Balikpapan-Samarinda Toll Road, recent development indicated that land acquisition for the

project has been completed 86 per cent and the auction id is targeted at the September 2015.

Since the four projects in the auction stage is under the PPP scheme, according to KPPIP

calculation, the government could save the state budget at around Rp 20 trillion. Total

investment for the four projects is approximately Rp 40 trillion, of which the government only

spent around Rp 20 trillion and the rest will be funded by the private sector. This is in line with

government directives to maximize the use of private funds for infrastructure development.

Phase III: Licensing and Land Acquisition

No. Project Remarks

1. High Voltage Direct Current

(HVDC)

Land acquisition is being conducted for transmission towers in Sumatra and

Java. The land acquisition process for the converter station and electrode

station are being finalized.

There is a potential constraints given that the relocation of Lahat-Gumawang

275 kV transmission is hampered by land acquisition issues. These

transmission lines are needed for backfeeding test Sumsel 8 planned for the

year 2017/2018. The relocation process is potentially delaying the critical

path of HVDC.

2. Indramayu Power Plant The delayed Environmental Permit issuance that has been the project’s main

constraint, has now been released by the Indramayu Regent.

3. Sumatera 500 kV Transmission Transmission Project Sumatra initially assigned to 5 SOEs (Hutama, Adhi

Karya, Waskita, Wijaya Karya, Housing Development) through Direct

Appointment to 400 km (New Aur Duri-Peranap-Perawang) section.

However, because there is no legal basis for the Direct Appointment, PT. PLN

is undergoing auction with the winner will be announced in August 2015.

The rest of the project (900 km) will be done by pointing directly Chinese

SOE (State Grid Corporation of China). Hence, PT PLN requires legal opinion

of the Attorney General as the legal basis of Direct Appointment.

4. MRT Jakarta (South-North Line) Awaiting the results of audit to determine the amount of overrun cost. The

parties who will bear the overrun cost has not been decided yet.

The delay in the land acquisition process in Lebak Bulus Station resulted

from a failure in contractor’s procurement process, and required further

studies related to fair price of the land price. The target of phase 1

construction has not been achieved due to constrained land acquisition

process. Construction only accounted for 17% from the target of 31% in

March 2015.

5. Mine Mouth Power Plant Sumsel

9 & 10

The tender deadline for Sumsel 9 & 10 is pushed back from May 18 2015 to

August 18, 2015, to allow sufficient time for bidders to adjust the coal and

power plant specifications.

6. Central-West Java Transmission

Line 500 kV

In the process of procurement planning with the funding from KfW and JICA

funds. Survey and environmental impact assessment has been conducted,

while licensing is in the process. International tender will be held.

Transmission lines Ungaran-Pemalang (86 km), Pemalang-Mandirancan (167

km), Pemalang-Incomer 2 pi (110) km, Mandirancan-Indramayu (90 km),

Indramayu-Cibatu (110 km).

Source: KPPIP

10

10 Note on Progress of Infrastructure Initiatives

Phase IV: Financial Closing

No. Project Remarks

1. Mine Mouth Power

Plant Sumsel 8

Sumsel 8 will reach financial close phase in September 2015.

Financing Agreement has been signed On March 27, 2015 between HBAP as IPP

developers with CEXIM as lenders in China.

Currently land acquisition have been met, the EIA (AMDAL) has been approved.

Relocation of 275 kV Transmission Lahat - Gumawang required for backfeeding test in

2017/2018 is potential to impede.

2. Batang Power Plant

(Central West Java

Power Plant)

The project is still constrained by the land acquisition of 19.6 hectares in the power

block. In this regard, PT PLN has taken over the land acquisition of PT BPI for the

remaining land by using UU No.2/2012 which is accompanied by changes in the Power

Purchase Agreement (PPA).

On March 2015, the attorney for civil administrative (Jamdatun) has published legal

opinion requested by the Ministry of Maritime which stated that the land acquisition can

be done to spread soil.

Source: KPPIP

Phase V: Construction

No Projects Remarks 1. Trans Sumatra Toll Road Harmonization is being carried out in relation to changes in Perpres No.100/2014

on the Acceleration of Sumatra Toll Road Development to accommodate four additional segments assigned to Hutama Karya. Perpres No.100/2014 is currently only regulate the first four sections.

Service Level Agreement between at Ministerial and Governors level is being signed.

Disbursement of State Capital Participation (PMN) to accelerate construction

process is being constrained by the administrative process of PP PMN issuance. There are issues related to land acquisition, i.e. the slow process of the land rights

release for Medan-Binjai and Palembang-Indralaya segment. SP2LP Bakauheni-

Terbanggi segment has only been half issued.

2. Makassar-Parepare Railway Currently preparing for contractor tender for the construction of the first 30 km as well as the land acquisition process.

Have been allocated funds amounting to Rp 350 billion by the central government

for land acquisition. Currently the project has the potential to be deferred due to changes in the tender requirements that are still not resolved.

3. Water to Energy

(construction of 4 new hydro power: Karangkates IV & V, Kesamben, and Lodoyo

The feasibility study for the construction of Karangkates IV & V (2x50 MW),

Kesamben (37MW) and Lodoyo (10MW) power plant has been completed by consultant and is in the process of licensing and drafting basic design.

The Ministry of Public Works and Ministry of Energy and Mineral Resources has

been conducting a study to draw up a short list of reservoirs with hydropower that potentially can be updated further using KPPIP study. However, there are constraints on the existing regulations, e.g. regulations used as the basis for the acceleration of this project and the basis for cross-sectoral policy-making has not

been issued yet.

4. National Capital Integrated Coastal Development (NCICD) phase 1

Coordinating Ministry of Economy has sent a letter to the Central River Region (BBWS) Ciliwung - Cisadane in relation to AMDAL division of labor.

Based on the letter, BBWS will conduct a study for public areas (coastal areas that are under government’s responsibility) and the private sector will undertake AMDAL for private areas (coastal areas managed by developer/private) hence the procurement of AMDAL consultants could be done by mid-2015.

Strategic Environmental Study (KLHS) is also being conducted as well as study on Upstream-Downstream in order to assess the benefits and suitability of NCICD program in overall.

Source: KPPIP

11

11 Note on Progress of Infrastructure Initiatives

Current Development of Infrastructure Projects in General

Aside from those priority projects, the Government also continue the remaining projects

as set in the RPJMN 2015-2019, and the continued projects carried out by previous

administration including the 35000 Mega Voltage program to increase electricity generating

capacity. Based on our tracking on the current development of infrastructure projects specifically

related to toll road undertaken by state owned enterprises, a number of encouraging

development also present. As demonstrated in the table below, several projects have reached

construction phase as of June 2015 such as toll road for Solo-Ngawi-Kertosono, Medan-Binjai,

and Medan-Kualanamu-Tebing Tinggi.

12

12 Note on Progress of Infrastructure Initiatives

The Way Forward

Some problems indeed arose during the implementation of the projects, for every stages.

The majority of them are related to limited source of fund, followed by land acquisition and

licensing problem. Numerous breakthrough approaches, however, has been initiated to ensure

the projects realization, such as budget availability pledging and alternative funding schemes

utilization along with its scheme implementation as well as the issuance of a presidential decree

related to land acquisition for infrastructure projects.

With regards to financing, for the 2015 state budget, the Government has reallocated

savings towards basic infrastructure (food security, connectivity and maritime) and social welfare

and for the first time, infrastructure expenditure (IDR290.3 trillion) will be higher than energy

subsidy (IDR137.8 trillion). Furthermore, since several projects to be funded and operated

through a partnership of Indonesia government and private sector companies (PPP schemes),

the government also support the PPP scheme through a number of arrangements, such as land

fund (modification and simplification of land acquisition process0, Project Development Facility

(PDF) through PT Sarana Multi Infrastructure, Indonesia Infrastructure Guarantee Fund (IIGF) to

guarantee for infrastructure risks, Viability Gap Fund (VGF) for PPP projects with near-term

DescriptionLength

(km)*

Investment

(Rp trillions)*Concession By** Status** Remarks**

Completion

Target**

Solo-Ngawi-Kertosono 177.1 10 Waskita Karya, Jasa Marga In ProgressSolo-Ngawi: Construction 80% completed (by end-2015)

Ngawi-Kertosono: Construction 40% completed (will finish by beg-2017) 2017

Soreang-Pasir Koja 10.57 1.2Wijaya Karya, PT. Jasa

SaranaIn Progress

Groundbreaking: August 2015

Land Clearing (80%)

September

2016

Tb. Tinggi-Kuala Tj-Sei Mangkei 57 5.5 n/a In Progress n/a n/a

Manado-Bitung 39 3.2 n/a In ProgressGroundbreaking: October 2014

Land Clearing: will be completed by August 20152018

Balikpapan-Samarinda 99 8.5

PT. Jaya Karya, PT.

Samacita, Waskita Karya,

Hutama Karya, Adhi Karya

In Progress Land Clearing: 80% completed 2019

Cinere-Serpong 10.14 1.8 Jasa Marga, Waskita In Progress Land Clearing 2018

Medan-Binjai 17 1.5Jasa Marga, Hutama Karya,

Waskita KaryaIn Progress

Land Clearing

Construction will be 70% completed in 20152016

Bakauheni-Terbanggi Besar 139 14.2

Hutama Karya, PP, Waskita

Karya, Wijaya Karya, Adhi

Karya

In ProgressGroundbreaking: April 2015

Land Clearing2018

Palembang-Indralaya 22 3.3 Hutama Karya In Progress Section 1: Completed. Section 2 & 3: Land Clearing 2018

Pekanbaru-Dumai 126 11.9 Hutama Karya In Progress

Land Clearing: 7 out of 126 km completed (5.5%)

Ground Breaking: October 2015

Construction starts in 2016

2018

Bekasi-Cawang-Kampung

Melayu 21.04 7.2 Waskita Karya In Progress

Groundbreaking: October 2014

Land Clearing: Section 1 - 70% completed, Section 2 - 30% completed2017

Pejagan-Pemalang 57.5 5.5 Waskita Karya In Progress Land clearing: 90% completed 2017

Pemalang-Batang 39.2 4.1 Jasa Marga, Waskita Karya In Progress Land clearing: 1.86% completed 2018

Batang-Semarang 75 7.2 Waskita Karya In Progress Land clearing: 3% completed 2018

Ciawi-Sukabumi 7.78 7.7 PT. MNC Tol Investama In ProgressGroundbreaking: Februari 2015

Land clearing: 70% completed2016

Legundi Bunder 30 4.6 Waskita Karya In ProgressLand Clearing (since May 2015), followed by concession tender (August

2015)2018

Medan-Kualanamu-Tb. Tinggi 43.9 4.1Jasa Marga, Waskita,

Hutama KaryaIn Progress

Land Clearing: Section 1 - 83% completed, Section 2 - 88.15%, Total - 85.98%

completed

Construction:

- Section 1 (Medan-Perbarakan-Kualanamu) 32 % completed - Government:

Completed, SOE: 2016

- Section 2 (Perbarakan-Tanjung Tinggi) - SOE: 2017

2017

Total 971.23 101.5

** Source: anecdotal information from various media e.g. Kompas, Media Indonesia, Liputan6, Republika, Tribunnews, Merdeka, etc

* Source: Ministry of State Owned Enterprises

13

13 Note on Progress of Infrastructure Initiatives

financial constraints, Infrastructure Fund to offer long-term financing for infrastructure projects,

and Availability Payment (AP).

On land acquisition, Presidential Decree No. 30/2015 was released on 17 March 2015

aimed at accelerate the implementation of the infrastructure projects. The decree will allow the

application of land acquisition according to the Land Acquisition Bill 2012 for projects at any

stage. Under the decree, the financing of a land can come from all sources (including the project

owner, ministry, state agency or non-ministerial government) and will be refunded through state

budget or regional budget upon completion of the land acquisition. Previously, land procurement

could only be done through either from the state or regional budget which could take years to

get approval.

14

14 Note on Progress of Infrastructure Initiatives

15

15 Note on Progress of Infrastructure Initiatives

Trans Sumatera Toll Road Section Bakauheni-Terbanggi Besar.

16

16 Note on Progress of Infrastructure Initiatives

Trans Sumatera Toll Road section Medan-Binjai.

17

17 Note on Progress of Infrastructure Initiatives

Solo- Kertosono Toll Road.