Key Improvements in Infrastructure Delivery in Indonesia
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Key Improvements in Infrastructure Delivery in Indonesia Joseph Tobing, Director of Finance Committee for Acceleration of Priority Infrastructure Delivery August 2017 Agenda KPPIP, National Strategic Projects (PSN) and Priority Projects Issues and Challenges Latest Policy Development 2 Agenda KPPIP, National Strategic Projects (PSN) and Priority Projects Issues and Challenges Latest Policy Development 3 KPPIP is formed as a center of excellence for priority projects acceleration and preparation to achieve infrastructure development target KPPIP is mandated by Presidential Regulation No. 75/2014 j.o. Presidential Regulation No. 122/2016 in decision-making, project involvement from planning and capacity building for human resource. Through PR No. 122/2016, there are 2 new additional ministry as the member of KPPIP KPPIP MEMBERS SOME FUNCTIONS OF KPPIP Coordinating Minister of Economic Affairs Established standard quality of Pre-Feasibility 1 1 o Providing OBC facility for top-down projects Study/Outline Business Case (OBC) o Monitoring and debottlenecking of projects on economic issues 2 Provided facilities for review and revision/re-do and/or other project preparation (e.g: Coordinating Minister of Maritime Affairs – New Member Environmental Impact Assessment (EIA)) o Overseeing and performs debottlenecking effort especially for issues in energy and transportation 3 Preparing action plans, carry out monitoring projects activities as well as conduc debottlenecking Minister of Finance strategies for priority projects o Reviewing and approving Government support and 4 Determine strategies and policies in the guarantee infrastructure sector 2 o Providing PDF facility for PPP projects Minister of National Development Planning/Bappenas NEW MANDATES and FACILITES o Assessing and providing OBC facility for bottom-up projects 1 Infrastructure sectors which can be listed in the o Developing Pre-Feasibility standard and quality guidelines Priority Projects, for example: oil and gas, education, industrial zone, tourism and health Minister of Agrarian and Spatial Planning (BPN) 2 Special Procurement Facility within KPPIP, such o Debottlenecking on issues related to land acquisition as Direct Appointment (up to IDR 500 million) and supporting acceleration efforts and Direct Appointment of Multilateral Agency Minister of Environment & Forestry – New Member for project preparation facility purpose. Supporting environmental permitting process o Consulting Panel System to allow 5-7 acceleration, IPPKH, and land clearing inside forest 3 companies/ institutions to sit in the panel. area 1 2 OBC: Outline Business Case; PDF: Project Development Facility 4 As stipulated by Pres. Reg. No. 75/2014, KPPIP was mandated to execute six main tasks KPPIP’s six main tasks as stipulated in Pres. Reg. No. 75/2014 1. Development of pre-feasibility study (OBC*) quality standard and revise/re-do when necessary (3-6 months) General Funding Scheme Options 1. State Budget 2. Determination of Priority Projects Coordinate between the project owner** • Top down projects (from President/Vice President) and Bappenas related to secure funding • Bottom Up Project (Proposed by Line Ministries and Regional Govt) (State Budget, Regional Budget, ODA) 2. SOE appointment 3. Determination of funding scheme & source for priority projects SOE appointment aims to accelerate implementation and leverage SOE financial capacity. 4. Monitoring & Debottlenecking KPPIP assists development of Action Plans and monitor debottlenecking efforts 3. PPP/Strategic Funding PPP Unit at MoF to coordinate FBC* development and do transaction 5. Determine Strategy and Policy for Infrastructure Delivery Acceleration advisory to implement PPP projects (involving internationally reputable consultant). 6. Facilitate capacity and institutional building related to Priority Infrastructure delivery PSN Monitoring & Evaluation including debottlenecking high level issues (additional) * OBC (Outline Business Case) is the output of pre-feasibility study. FBC (Final Business Case) is the output of feasibility study. ** Project owner is the ministry, agency head, regional heads, SOE/ROE heads established as the responsible party in priority infrastructure delivery. 5 Government has set project pipelines for infrastructure provision in 2015-2019 Definition These are projects that are listed in RPJMN and most of the projects are included in RENSTRA (Strategic Plans) of each related technical Ministry/Institution Represent 245 PSN and 2 Programs which have strategic criteria across nation as stipulated under Presidential Regulation No. 3/2016 j.o No. 58/2017 Represent 37 Priority Projects which Priority Projects have a high economic impact and are stipulated through Coordinating Minister of Economic Affairs Regulation and will be monitored and supported by Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) 6 National Medium Term Plan (RPJMN) 2015-2019 Logistic Related Banda Aceh Sea toll concept as a means to Miangas support Indonesia in becoming the Belawan world maritime axis. Kuala Tanjung Maratua Pontianak •develop 24 new seaports Dumai Bitung •increase number of substantial Batam Singkawang Pohuwato Maloy Halmahera vessels (pioneer cargo, transport Padang Muara Jayapura vessels, pioneer crossing vessels) Pangkal Teweh Tojo Una- Sorong •develop 60 crossing ports Una Enggano Pinang Taria Banjarmasin Sultan Palangkaraya Ambon Strengthen connectivity through air Kenyam Hassanuddin Namniwel transport infrastructure Panjang Makassar Aboy Tj. Priok development Tj. Perak Kertajati Merauke Koroway • develop 15 new airports Cilacap Moa Batu • develop air cargo facilities in 6 Lombok Location of 24 new seaports & locations Kupang 15 new airports Source: Bappenas • increase number of pioneer airplanes Develop urban transport Improve transport efficiency by road Reduce logistic cost by improving railway development and maintenance infrastructure • develop Bus Rapid Transit •develop 2,650 km of new roads develop new tracks in Java, Sumatra, (BRT) in 29 cities •develop 1,000 km of new toll roads Sulawesi, and Kalimantan: • develop Mass Rapid Transit •rehabilitate 46,770 km of existing road . 2,159 km inter-urban railways (MRT) in 6 metropolis and 17 . 1,099 km urban railways large cities. Energy Related Achieve electrification ratio of 96.6% by Achieving food sovereignty through Ensure efficiency of fuel production 2019 through generating capacity irrigation system improvement by optimizing improvement domestic refineries • develop 33 new dams and 30 •develop power plants with total capacity hydropower plants •build new oil refineries of of 35,000 MW • expand 1 million ha irrigation system 2x300,000 barrels • rehabilitate existing irrigation system •Expand existing refineries in Cilacap and Balongan 7 Due to the State Budget limitation, there is an opportunity for private investors to contribute the 36.52% of the required investment ~ USD 110.3 bill National Gov’t National and Budgets Regional ~ 29.88%2) Total Need of Budgets ~ USD 42 bill Strategic Regional Gov’t Budgets ~ 11.37% Infrastructure Investment1) ~ USD 82 bill SOEs ~ 22.23% (USD 368.9 Alternative 3) bill) Financing Gap Private Investment Financing (PPPs, Off Balance Schemes ~ USD 134.9 bill Sheet, Loan, Obligations, etc ~ 36.52%) } NOTES: 1)Hypothetical number, not for quotation. Official number of needs only include budget ceiling for National and Regional Budgets as approved by Ministry of Finance in January 2015. 2)Portion of National Budgets based on agreed budget ceiling by the Ministry of Finance as proposed by the National Development Planning Ministry. 3)All estimates only based on the large investment and rehabilitation projects, e.g., not calculating the operational costs in detail. Based on conversion rate of IDR 13,000 per USD 8 Under Presidential Reg. No. 58/2017, KPPIP selected 245 projects and 2 programs to be listed as National Strategic Projects (PSN) - estimated total investment of US$322.8 billion 27 Projects 61 24 Projects 13 Projects Projects US$13.0 Bn US$49.0 Bn US$43.4 Bn US$34.2 Bn 93 Programs Projects 12 National Proyek Projects 1012 Projects US$100 Bn US$81.9 Bn 15 Projects US$0.8 Bn PSN includes 15 sectors at project level and 2 sectors at program level INDUSTRI- WATER & IRRIGA- TECH- OIL FISHERY ROAD RAILWAY SEAPORT AIRPORT HOUSING HOUSING DAM IRIGASI SMELTER SEA DIKE AL ZONE SANITA- TION NOLOGY REFINERY TION Project 74 23 10 8 30 3 3 9 54 77 4 6 12 1 1 Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Projects Project Project Small- Electricity PROGRAM Medium PROGRAM 1 Airplane 1 Exchange rate: US$ 1 = IDR 13,000 Program 9 PSN development involves various funding scheme NUMBER OF PROJECTS Undecided BASED ON FUNDING SCHEME Combination 3% 2% Three funding sources explained in previous slide can be divided into six groups of funding scheme. National or Regional State Budget: 96 Projects "100% funding from government fiscal budget" Private 15% SOE Assignment: 33 Projects "Internal SOE financial capacity, with additional capital injection from state budget if necessary" State Budget SOE or Regional-SOE: 11 Projects 39% "Internal SOE/R-SOE fiscal capacity" Public Private Partnership: 58 Projects "Private funding with additional government fiscal support to improve project feasibility in PPP form of viability gap fund or availability payment" 24% Private: 36 Projects "Private funding without government fiscal support" Combination: 6 Projects SOE/R-SOE "Combination