the role of iigf in infrastructure development in...

PT Penjaminan Infrastruktur Indonesia (Persero)

The Role of IIGF in Infrastructure Development in Indonesia

September 2017

Armand Hermawan Chief Financial Officer

PT Penjaminan Infrastruktur Indonesia (Persero) Indonesia Infrastructure Guarantee Fund


Emerging Opportunity - Substantial Infrastructure Need In line with Indonesia’s Medium Term Development Plan 2015-

2019

3

2

Sector US$ Bio

Road 54.7

Railway 16.86

Air Transport 10.75

Sea Transport 44.12

Water Resources 33.65

Housing 24.44

Urban Transport 6.42

Land Transport (incl. Ferry) 3.5

Power 74.6

Energy 37.8

Waste Management 30.07

ICT 20.9

TOTAL 358

INFR

AST

RU

CTU

RE

NEE

DS

(20

15

– 2

01

9)

FINANCING SOURCE PLAN

1

41,3%

Realized & Allocation: • 2015: $ 19.1 Bio • 2016: $ 23,7 Bio • 2017: $ 28.9 Bio Gap to 2019: $ 76 Bio

STATE BUDGET

$ 147.7 Bio

22,2% SOE

$ 79.6 Bio

Include Equity Injection to SOE from Government budget allocation

36,5% PRIVATE

$ 130.7 Bio

Promoting Public Private Partnership (PPP)

Page 1


Fiscal tools for PPP Scheme

US$ 358 Bn

41.3%

US$ 148 Bn 22.2%

36.5%

US$ 131 Bn

APBN/

APBD

SOE

Closing the GAP

Private

Sector

Investm

en

t ta

rget

20

15-2

019

• 225 National

Strategic Project

• 30 National Priority

Project

• Social Infrastructure

Project

• Others

US$ 80 Bn

1. Project Development Fund 2. Viability Gap Funding 3. Availability Payment 4. Guarantee 5. Infrastructure Financing 6. Land Acquisition Support

Emerging Opportunity - Substantial Infrastructure Need Various fiscal policy & support to close the Gap using private sectors

Page 2


US$ 358 Bn

41.3%

US$ 148 Bn 22.2%

36.5%

US$ 131 Bn

APBN/ APBD

SOE

Private

Sector

Investm

en

t ta

rget

2015-2

019

• 225 National

Strategic Project

• 30 National Priority

Project

• Social Infrastructure

Project

• Others

US$ 80 Bn

Emerging Opportunity - Substantial Infrastructure Need Potential Source of Funding in PPP

In Indonesia alone there is USD $95 billion in assets under management

100

732 Private pensions 556

Public pensions

Insurance

Investment companies 19 Foundations

Bank 81,919 9,800

Indonesia AUM 2015, USD Mn

*) Based on McKinsey Study on IIGF Long-term Strategy Assignment

Banking Industry as the biggest pool

still has its own limitation.

Page 3


IIGF Profile

PT PII (Persero) “IIGF”

Established on 30 December 2009.

As a “Single Window” in providing government guarantee provision for Infrastructure Projects. IIGF is also valued for its state budget’s ring fencing function.

Projects Guaranteed 13 projects in 4 Sectors: Electricity, ICT, Water & Toll Road

~Project Value: Rp 119 Tr or ~ US$ 8.9 Billion

Guarantee amount: Rp 29 Tr ~ US$ 2.1 Billion

Retained Earning

~US$ 149 M

Paid in Capital (CI)

~US$ 525 M

Revenue

~US$ 29 M

Gearing Ratio

3,1 x

Int’l Credit Rating

BBB- Sovereign rating

By Fitchratings

Key Financial Figures (30 June 2017)

Income Margin

63.11%

Opex Ratio (OER)

22.23%

at max exposure

Page 4

Leveraging Ratio*

13,2 x

Guarantee Value/ Capital Ratio Project Size/ Capital Ratio

*Economic Impact


PALAPA RING PAKET BARAT

1980 KM

1,29 TRILIUN

Rp,

PALAPA RING PAKET TENGAH

2647 KM

1,38 TRILIUN

Rp,

JALAN TOL MA-BIT 39 KM

5,1 TRILIUN

Rp,

PALAPA RING PAKET TIMUR

8454 KM

5,1 TRILIUN

Rp,

JALAN TOL BAL-SAM

99 KM

10 TRILIUN

Rp,

JALAN TOL JAK-PEK II

36,4 KM

14,7 TRILIUN

Rp,

JALAN TOL CISUMDAWU

60,27 KM

8,21 TRILIUN

Rp,

JALAN TOL BAT-SEM

77 KM

10 TRILIUN

Rp,

PLTU BATANG

2 x 1000 MW

40,5 TRILIUN

Rp,

JALAN TOL SER-PAN 83,9 KM

5,33 TRILIUN

Rp,

JALAN TOL PAN-MAL

38 KM

6 TRILIUN

Rp,

SPAM UMBULAN

4000 Lt/Detik

2,1 TRILIUN

Rp,

JALAN TOL KR-LG-BU-MN

38,2 KM

9,02 TRILIUN

Rp,

IIGF Guaranteed Project Portofolio

Page 5


Multilateral Development

Agency

Bilateral

Mitra Swasta

Technical Assistance Purposes USD 4,6 juta

Stand-by Loan (Guarantee Capacity) USD 25 juta

MOU Institutional Development

Guarantee Capacity

MOU knowledge sharing initiative

Guarantee Capacity

insurance

World Bank

MIGA

IDB - ICIEC Islamic Corporation for the Insurance of Investment & Export

Credit

Extending Cooperation with World Class Institution

Page 6


Government Guarantee through IIGF

IIGF Value Proposition

SAFEGUARD Support the continuation of the project through a careful analysis of safeguard.

RISK Fair risk allocation between

government and private investor

Clear risk mitigation

BANKABILITY Provide more comfort for financier to support the project.

Reducing the cost of fund

TRANSPARENCY Increasing bidding competition

resulting the most optimal project investment

Guarantee provision that can be verified during the bidding process

VALUE PROPOSITION

(Mirroring World Bank Safeguard Policy) As written in IIGF Operation Manual

ACCOUNTABILITY

Page 7


Keywords for Projects to be eligible for IIGF (Sovereign) Guarantee

Page 8

3 2 1

Viable (financial and

technical)

Risks (cover government

triggered risks)

Tender (guarantee covers is attached in RfP)


Typical Risk Allocation Coverage

Public Allocation

Private Allocation

Political Risk

• Currency inconvertability

• Expropriation risk

• Change in law • Fail in

obtaining permits

• N/A

*) For complete set, IIGF published Risk Allocation Guidelines Book

Site Acquisition

• Land acquisition delay

• Complex resettlement

• Contamination/pollution to the site

• Disruption of the community convenience around the project

Design, Construction & Commisioning

• N/A

• Design faults • Failure to maintain

security & safety • Default of sub-

contractors • Increase in

construction cost

Sponsor Risk

• VGF disbursement • Refund of land

acquisition fund (DTT)

• Default of project company, sponsor, or lender

• Increase in construction cost

• Fail to achieve financial close

• Forex, inflation

Operating Risk

• N/A

• Failure project management

• O&M cost operation increase

• Incompetent of technology & information system

Revenue

• Failure in AP payment

• Delay in periodical tariff adjustment

• Failure in initial tarif determination

• Misscalculation of tariff estimates

Network connectivity

• Road & transportation connectivity

• Smoothness of transportation system

• Competing facilities

• N/A

Page 9


IIGF Guarantee Offering Government Guarantee through IIGF – Typical Risks Covered

Land acquisition

Project Budget approval

Discriminatory change in law (project specific)

Delays in necessary approval

(Early) termination by government

Pre-construction Construction Operation

Payment risk

Tariff adjustment risk

Page 10


Proven Business Model for PPP Guarantee

Cooperation Agreement

Investor/Sponsor

Multilateral

Development

Agenvy

Ministry of

Finance

Guarantee Agreement

Co guarantor/

Liquidity facility

Regulatory &

Capital Injection

Recourse Agreement

Risk Mitigation Plan

Guarantee

Application

Package

Counter Guarantee

PJPK Government Contracting

Agency

Page 11


IIGF

PPP Scheme

Project Finance

Corporate Finance

Project Guarantee

Credit Guarantee

19 infrastructure sectors Infrastructure company/developer

Bank Loan Bond

PerPres 38/2015

PerPres 82/2015; 100/2015

Under Development

IIGF is extending its reach to support Indonesia’s infrastructure

projects

Page 12


Power Sector

CJPP Project

Power Plant 2x1000 MW in Batang, Central Java

Rp 40.5 Tn GA Effective

Guarantee Period – 16/21 Years

• Monthly Payment (Rp 300 Bn)

• Termination (Co-Guarantee Government)

Contracting Agency: PLN

IIGF had an active role as a Chairman of the Joint Monitoring Committee until Financial Close was achieved.

1

Water Sector

Umbulan Water Supply Project Bulk Water distribution channel of 4.000 l/second through out 5 municipal/city of East Java


Guarantee Period– 15 Years

• Monthly Payment (Rp 180 Bn)

• Termination (Rp 1.1 Tn)

Contracting Agency: East Java Provincial Gov’t

The project delays for 43 years and now start the construction after being supported by the PDF & VGF from the Government and Guarantee facility from IIGF

2


Page 13

ASIA AWARD

7 Maret 2017

Project Finance Deal of the Year

2016

IJGlobalEuromoney

AWARD9 Maret 2017

Best Power Deal in

Asia Pacific

GLOBE ASIA

Mei 2016

Best Environmental-

Concerned Project


ICT Sector

Palapa Ring Barat Project

Backbone network across 5 cities in West region of Indonesia ; 1.122 Km sea and land



• Availability Payment (Rp 310 Bn)

• Termination (Rp 1 Tn)

Contracting Agency: MoCI

Palapa Ring Tengah Project

Backbone network across 17 cities in Central region of Indonesia ; 1.676 Km sea and land






Palapa Ring Project is the first PPP project with Availability Payment scheme in Indonesia

The projects are completed in less than a year and with the role of IIGF in facilitating the projects and strong commitment from Contracting Agency

3 4 Palapa Ring Timur Project

Backbone network across 35 cities in East region of Indonesia 5.681 Km sea, land and Mv


Guarantee Period – 15 Years




5


Page 14



Toll Roads Sector

Manado-Bitung Toll Road

39 Km Toll Road from Manado to Bitung



• Land acquisition advance fee (Rp 816 Bn)

• Land Acquisition (Rp 80 Bn)

• Limited Liquidity Fund (Rp 375 Bn)

• Toll fee adjustment (Rp 200 Bn)


Contracting Agency: MoPublic Work&Housing

Pandaan-Malang Toll Road

38 Km Toll Road from Pandaan to Malang

Rp 6 Tn GA Effective


• Land acquisition advance fee (Rp 1.35 Tn)






7 8 Batang Semarang Toll Road

75 Km Toll Road from Batang to Semarang


Guarantee Period – 15 Years

• Land acquistion advance fee (Rp 584 Bn)



• Toll fee Adjustment (Rp 200 Bn)



6

Page 15

Est. Toll Road Distance

470 Km

1.851 Km

25%Part being guaranteed by Government through IIGF

Est Length Toll road build 2015 - 2019



Toll Roads Sector

Balikpapan-Samarinda Toll Road

99 Km Toll Road from Balikpapan to Samarinda

Rp 10 T GA Effective


• Land acquisition briding fund (Rp 1.9 Tn)

• Land acquisition (Rp 194 Bn)



• Termination (Rp 6.1 T)


9 Jakarta-Cikampek (Elevated) Toll Road 36 Km Toll Road from Jakarta to Cikampek




• Political Risk (Rp 400 Bn)

• Termination (Rp 16.4 Tn) (Co-Guarantee Government)

Contractng Agency: MoPublic Work&Housing

10 Cisumdawu Toll Road

60 Km Toll Road from Cileunyi to Dawuan through Sumedang

Rp 8.2 Tn GA Signed


• Land acquisition briding fund (Rp 867 Bn)




• Termination (Rp 5,8 Tn) (Co-Guarantee Government)


11

Page 16



Toll Roads Sector

Krian-Legundi-Bunder-Manyar Toll Road 38 Km Toll Road from Krian to Manyar through Lengudi and Bunder

Rp 9.02 Tn GA Signed


• Land Acquistion (Rp 249 Bn)



• Termination (Rp 9 Tn ) (Co-Guarantee Government)


12 Serang-Panimbang Toll Road

84 Km Toll Road from Serang to Panimbang

Rp 5.3 Tn GA Signed


• Land acquisition briding fund (Rp 894 Bn)




• Termination (Rp 5.83 Tn) (Co-Guarantee Government)


13

Page 17


Disclaimer All information presented were taken from multiple sources and considered as true by the time they were written to the knowledge of PT Penjaminan Infrastruktur Indonesia (Persero)/Indonesia Infrastructure Guarantee Fund. Any questions can be submitted to: CORPORATE SECRETARY Tel : +62 21 5795 0550 Fax : +62 21 5795 0040 Email : [email protected]

mailto:[email protected]

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