Table of Contents

Table of Contents i

Acknowledgement ii

Chapter 1 Committee for Acceleration of Priority Infrastructure Delivery 1

Chapter 2 Progress of Infrastructure Development in Indonesia 7

Chapter 3 Achievement of KPPIP 19

Chapter 4 Latest Updates on KPPIP Priority Projects 30

Chapter 5 KPPIP’s Plan for the Future 101

Glossary 108

List of Figures 111

KPPIP’s Report of August 2015 – December 2015 KPPIP’s Report of August 2015 – December 2015 i FOREWORD

As a country grows, the growth is inevitably reflected in its peoples’ changing needs, and such a change following the issuance of Presidential Regulation and Presidential Instruction on national strategic projects, correlates with demand for infrastructure, ranging from fundamental infrastructure such as the availability KPPIP was given additional responsibility to safeguard the delivery of 225 projects and construction of the of clean water to construction of hub ports that play a vital role in improving the country’s domestic and selected power plants of 35,000 MW, and conducted evaluation on the proposal for future national strategic international connectivity. projects.

Aside from such a change, a nation’s economic growth is also closely related to the development of To ensure an effective project monitoring, KPPIP built a monitoring system using integrated information infrastructure. Building appropriate and effective infrastructure offers significant multiplier effects ranging technology for the use of KPPIP and other relevant parties in the second semester of 2015. The system from employment of manpower for construction process until operation, an increase in investment by both provides a dashboard for decision-making and may be used to monitor the progress of a project, reduce domestic and foreign investors to an improved competitiveness. All the above-mentioned matters are the potential obstacles, and formulate concrete and accountable action plans. KPPIP plans to introduce the contributing factors in economic growth. system to relevant stakeholders to ensure the maximum use of the facilities by related parties.

Bearing the aforementioned issues in mind, the Government of indonesia places infrastructure as one of the In spite of KPPIP’s success in achieving a number of milestones in project acceleration during the second major work priorities. This decision is evidenced by establishing and strengthening Committee for Accelaration semester of 2015, we are fully aware of the fact that more improvement and strengthening are still needed to of Priority Infrastructure Delivery (KPPIP) as one form of the said strategies. improve the infrastructure.

In the second semester of 2015, KPPIP conducted institutional strengthening for the purpose of carrying out By issuing KPPIP’s report at the end of 2015, we are hopeful that all parties become more familiar and the assigned duties. KPPIP’s Project Management Office (PMO), which has become one of the key stimulators supportive to KPPIP. In a spirit of acceleration, KPPIP calls for all relevant parties to put in joint efforts to to support the execution of KPPIP’s duties, was equipped with a program director and sector directors, each realize this dream. having professional experiences in the sector led. These directors have background knowledge in various infrastructural sectors and are experienced in the management of infrastructure project with high level of complexity.

In order to enhance its legal standing, Regulation of the Minister of Economic Affairs No. 12 of 2015 on the Acceleration in Provision of Priority Infrastructure was issued in December 2015. This Regulation of the Minister of Economic Affairs provides operational foundation for KPPIP by officially deciding 30 priority projects of Luky Eko Wuryanto KPPIP’s as the first set of works on the list needed to be done in the future. In its implementation, KPPIP has Deputy for Coordination of Infrastructure and Regional Development / produced various facilities and budgeting support in order to maintain the quality of the project preparation as the Chairperson of KPPIP Implementation Team phase and the punctuality of the projects overall progress. This will lead to the projects increased acceptance by the market.

In an attempt to perform its duties effectively, KPPIP also assembled a number of working teams with duties specific to each team, namely the Working Team for Acceleration in Electric Infrastructure Provision, Working Team for Acceleration in Bontang Refinery Construction, and Working Team for Acceleration in Land Procurement.

In addition to the key mandate stipulated in Presidential Regulation No 75 of 2014, KPPIP plays an important role in formulating Presidential Regulation No. 3 of 2016 and Presidential Instruction No. 1 of 2016 in the second semester of 2015, where KPPIP selected projects to be included within the national strategic projects and was later contained in the amendment to Presidential Regulation No. 3 of 2016. As it develops, in particular

ii KPPIP’s Report of August 2015 – December 2015 KPPIP’s Report of August 2015 – December 2015 iii KPPIP’s Report of August 2015 – December 2015 COMMITTEE FOR ACCELERATION OF PRIORITY INFRASTRUCTURE DELIVERY

KPPIP’s Report for August 2015 – December 2015 1 COMMITTEE FOR ACCELERATION OF PRIORITY INFRASTRUCTURE DELIVERY

Infrastructure provision in Indonesia often faces obstacles due to the lack of coordination between various stakeholders involved, namely the Government (ministries, institutions, regional governments, SOEs/ROEs) and the private sector. Such a large range of stakeholders, each having its own objectives and responsibilities, has the potential to cause delays to the implementation of infrastructure projects. Therefore, the establishment of a committee that can work across ministries and institutions will facilitate and assist the Project Owner in preparing and performing the development of the project.

The Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) was established with the main objective of becoming a coordinating unit in decision-making processes to encourage settlement of issues arising from the lack of effective coordination between the various stakeholders. KPPIP acts as the point of contact to facilitate coordination in debottlenecking efforts for National Strategic Projects and Priority Projects.

KPPIP was formed by revitalizing KKPPI (National Committee for the Acceleration of Infrastructure Provision), which was considered ineffective for several reasons such as lack of decision-making authority, limited roles at all stages of the projects starting from the design stage until the commencement of the construction, inability to provide incentives or disincentives in order to encourage projects acceleration, and an organizational structure that was too large that often caused ardous decision-making process. Taking such limitations into consideration, Presidential Regulation No. 75 of 2014 on Acceleration in Priority Infrastructure Delivery was issued for the purpose of establishing KPPIP.

Led by the Coordinating Minister for Economic Affairs as the Chairperson, the Committee consists of the Minister of Finance, Minister of PPN (National Development Planning)/Head of Bappenas (National Development Planning Agency), and Minister of Agrarian Affairs and Spatial Planning. Due to the change of the structure of Kabinet Kerja (the currently ruling cabinet) in October 2014, a change in the organization structure to include the Coordinating Minister for Maritime Affairs and Minister of the Environment and Forestry in the membership is currently under consideration.

According to the mandates as provided under Presidential Regulation No. 75 of 2014, KPPIP will provide support for the projects selected as priority projects in line with the criteria established by KPPIP. For such priority projects, KPPIP will ensure that the projects are prepared in accordance with quality standards it has established and will control the steps taken for problem resolution. Furthermore, KPPIP will apply incentive/disincentive schemes to follow-up project monitoring results so that all relevant parties are encouraged to accelerate the delivery of the priority projects. Besides that, KPPIP also has a duty to expand the capacity of the Government Contracting Agencies (GCAs) to ensure their capability for providing the projects as well as a duty to coordinate issuance of regulations and policies related to infrastructure. The chart below shows a brief description of the roles and functions of KPPIP derived from the objective of its establishment.

KPPIP Report Agustus 2014 - Desember 2015 2 KPPIP’s Report for August 2015 – December 2015 3 6 MAIN DUTIES OF KPPIP AS ASSIGNED IN PRESIDENTIAL REGULATION In line with the development of economic policies, the roles of KPPIP are in adjustment to these developments. KPPIP NO. 75 OF 2014 has been entrusted with selecting National Strategic Projects (PSN), which have been given privileges and accelerating facilities as stipulated by Presidential Regulation No. 3 of 2016 on Acceleration of the Implementation of National 1 Strategic Projects. From the PSN list of projects, KPPIP selected some projects to be put on the list of priority projects. In 2015, KPPIP finalized various preparations for the operation, establishment and image building of the committee, which among others covered:

Top Down Project Establishment and operation of various Working Teams (Tim Kerja1) dan Project Management Offices (PMO); Application of quality standard for Pre-Feasibility Bottom-Up Project (proposed (proposed by the Study (OBC) and Making Revision/Re-Doing if by Ministry/Gov. Agency/Local Finalization of the List of Priority Projects for 2015 – 2019 as stipulated by Coordinating Minister for Economic President/Vice required (3-5 months) Government) President) Affairs Regulation (Permenko) No. 12 of 2015; Provision of facility to prepare Pre-Feasibility Study, Value for Money, and AMDAL Study for the selected Priority Projects; Preparations for and establishment of Standard Operating Procedure (SOP) and mechanisms for monitoring 2 and debottlenecking; Actual acceleration in priority projects as elaborated further herein; Decision on the List of Priority Projects Mapping of improvements to be made to regulations on infrastructure; Decision on funding scheme & source of Development of an IT system for the purpose of project management and improvements in decision-making funds for projects determined as priority quality. projects 3 By having completed the operationalization of the Committee in 2015, KPPIP is expected to be able to accelerate the accomplishment of the tasks as mandated by Presidential Regulation No. 75 of 2014. In order to achieve the target for 2016, KPPIP will push for financial closure of 2 to 4 priority projects, establish all Working Teams required, and ensure PPP Strategic Funding that the IT system is fully operational by the end of the 1st Quarter for the use of all stakeholders. It is expected that all of APBN Assignment to SOE PPP Unit at the Ministry the endeavors will encourage the development of infrastructure urgently required to improve the economy of Indonesia. Coordination between (BUMN) of Finance to coordinate PJP and Ministry of Is aimed at accelerating preparation for Final PPN related to source the implementation Business Case (FBC) and of fund (APBN, APBD, and utilization of SOE’s transaction advisory for PHLN) financial capacity the implemenntation of PPP projects (involving internationally reputable consultants) OUTPUT FROM KPPIP

Action Plans with target List of Priority Projects Service Level to be achieved along approved by all parties Agreement (SLA) which with incentives and is binding disincentives

4 5 6

Monitoring and debottlenecking Mapping of strategy for and Facilitating capacity KPPIP assists in the action plan policy on infrastructure development of apparatus and conduct monitoring and and institutions related to debottlennecking priority infrastructure

1The Working Team for Acceleration of Electricity Infrastructure Provision (UP3KN) established under Coordinating Minister for Economic Affairs Decree as the Chairperson of KPPIP No. 129 of 2015 and the Working Team for Acceleration of Bontang Oil Refinery Development Figure 1: Duties and Mandates of KPPIP in accordance with Presidential Regulation No. 75 of 2014 formed under Coordinating Minister for Economic Affairs Decree as the Chairperrson of KPPIP No. 159 of 2015.

4 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 5

PROGRESS OF INFRASTRUCTURE DEVELOPMENT IN INDONESIA

KPPIP’s Report for August 2015 – December 2015 7 PROGRESS OF INFRASTRUCTURE DEVELOPMENT IN INDONESIA

Indonesian economic growth at 4.73 per cent as of September 2015 did not live up to expectations particularly because Indonesia needs to achieve a growth rate of 7 per cent at a minimum to be considered as a developed country in 2025. In the spirit of acceleration, the Government of Indonesia has made every endeavor to boost investment in various sectors related to infrastructure. Improvements in regulatory, fiscal, and institutional aspects have been made to spur the achievement of priority projects milestones.

Provision of infrastructure in Indonesia is sluggish because of obstacles encountered at various project stages from the preparation to the execution. As a whole, poor coordination between stakeholders often delays the decision-making process. At the preparation stage, problems usually arise as a result of low quality in project preparation and constraints on allocation of funds. Similarly, projects are often hindered by problems in land acquisition resulting in delays in achieving financial close of PPP projects. Furthermore, from a financial perspective, unavailability of fiscal support caused by inconsistency or disagreement on equal risk sharing mechanism between the Government and Business Entity is another constraint that often emerges. In addition to financial support, limitations on guarantee provided by the Government for infrastructure projects also reduce interest in investment in Indonesia.

To overcome these obstacles, the Government has taken corrective measures in regulatory, fiscal, and institutional aspects. In 2014 the Government formed the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP) charged with leading coordination to accelerate priority infrastructure and promoting improvement in quality of project preparation by adopting OBC Guidelines. These corrective measures are further supported by the increasing capacity of Ministry of National Development Planning (PPN)/National Development Agency (Bappenas) in providing facilities for project preparation, and then continued by the PPP Unit at the Ministry of Finance that provides Project Development Facility (PDF) and Transaction Advisory for PPP projects to increase investors’ interests in funding the projects.

Aside from the above-mentioned matters, in order to surmount obstacles to land procurement, Law No. 2 of 2012 has also been issued for the purpose of accelerating land acquisition process for public interest. This particular regulation is equipped with derivative regulations that have been revised as needed.

Considering that Government support is pivotal to attract investment of Business Entity, the Government has issued regulations to provide Viability Gap Funding (VGF) and availabilty payment. To bolster this Government support, guarantee provided by the Government has been expanded to allow State Owned Enterprises (SOE), that are assigned with instructural development, to receive such a guarantee.

KPPIP Report Agustus 2014 - Desember 2015 2 KPPIP’s Report for August 2015 – December 2015 9 THEN NOW

KPPIP is formed to become coordinating center A. DEVELOPMENT IN REGULATORY IMPROVEMENT TO SUPPORT The lack of champion in final decision for Project Implementing Agencies and to lead making on strategic issues. INFRASTRUCTURE PROJECTS debottlenecking effort. Below is the summary of regulatory corrective measures taken by the Government of Indonesia throughout Strengthened project preparation facility as :follows: Poor quality of project preparation and limita- 2015 for the purpose of creating favourable climate for the acceleration in infrastructure delivery in Indonesia: - Guidelines for OBC and Determination of Funding tions in funding allocation Scheme in KPPIP. - PDF/TA under PPP Unit, Ministry of Finance. - Centralized facilities for preparation of regular projects at Ministry. Issuance of Perpres No. 38 of 2015 on PPP

Issuance of Reg. Delays to projects due to lengthy process in The Government has issued Law No. 2 of 2012 on of MoAASP No. land acquisition. land acquisition and its derivative regulations to give 6 of 2015 on land guarantee for land procurement to investors. acquisition Jan 2015 Mar 2015 May 2015

Expanded fiscal support that can be given and expanded role of Ministry of Finance: Feb 2015 Apr 2015 Jun 2015 Unavailability of fiscal support and prudent - PPP Unit is formed under Ministry of Finance. risk management between the Government Issuance of Perpres - Issue regulations on Viability Gap Funding (MoF ­and Business Entity. No. 30 of 2015 on Regulation No. 23 of 2013) land acquisition - Issue MoF Regulation No. 190 of 2015 on Availability Payment

Issuance of Perpres No. 117 Issuance of Perpres No. 38 of of 2015 on Trans Perpres No. 82 of 2015 allows provision of Government Perpres No. 146 2015 on PPP Sumatera Limitations on the scope of provision of guarantee for State-Owned Enterprise (BUMN) to Issuance of Perpres Reg. of Head of LKPP of 2015 on The Government guarantee. obtain direct lending from Financial Institutions and/or No. 82 of 2015 on No. 19 of 2015 on Acceleration Direct Lending Procurement in PPP Reg. of Mof No. of Oil Refinery receive mandate to build infrastructrure as contained in 190 of 2015 on Development Presidential Regulation. Availability Payment

Jul 2015 Sep 2015 Nov 2015 Even though tha above-mentioned corrective measures have been taken by adopting partial approach, the Government has been working on a holistic improvement that reaches all aspect. In the future, the Government of Indonesia shall put forth political courage, consistency in implementing policies that have been formulated, and the enhancement of a sense of urgency in infrastructure provision for the public. 1st Economic Aug 2015 Oct 2015 6th Economic Dec 2015 Package (9 Sept) Package (6 Nov)

Figure 2: Increasing support for the development of Infrastructure in Indonesia 3rd Economic 7th Economic Package (7 Oct) Package (4 Dec) 2nd Economic Package (29 Sept) In 2015, the Government actively drew up and issued Economic Policy Packages encompassing improvement to policies 4th Economic 8th Economic and regulations to boost Indonesia’s economy, including formulation of Presidential Regulation on National Strategic Package (15 Oct) Package (22 Dec) Projects and Presidential Regulation on Development and Construction of Domestic Oil Refineries. From fiscal-policy point of view, the Government has provided direct lending facility for State Owned Enterprises (SOE) and availability 5th Economic payment facility taken from APBN (the State Budget), which are expected to improve the feasibility of the projects. In Package (21 Oct) addition, improvement on instutional aspects can be seen in the form of merger between PT Sarana Multi Infrastruktur (PT SMI) and Government Center for Investment (Pusat Investasi Pemerintah) as well as an extension of a mandate received by Indonesia Infrastructure Guarantee Fund (PT Penjaminan Infrastruktur Indonesia or PT PII).

Although such measures taken by the Government have shown positive impacts on infrastructure delivery and Business Regulations in finalization stage: Entity interest in making investment, it is necessary to bear in mind that regulatory, fiscal, and institutional aspects are - Revision to Perpres No. 75 of 2014 - Perpres on the Development of Electricity Infrastructure still in need of further improvement.

10 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 11 Economic Policy Packages Presidential Regulation on National Strategic Projects (PSN)

The Government has released 8 Economic Policy Packages from 9 September 2015 to 21 December Despite the fact that the central government has issued conducive policies on infrastructure, in practice, their execution 2015. The 8 packages are aimed at reorganizing Indonesia’s regulations that hinder economic growth often encounter obstacles. Considering that infrastructure delivery requires punctuality, additional facilities are needed to (deregulation), restructuring Indonesian bureaucracy, and offering conveniences to create conducive accelerate completion of projects considered to have national strategic interests. Facilities provided range from privilege investment climate and strengthen Indonesia’s economy. or special treatment in applications for permits and non-permits, government procurement, land procurement, local content, debottlenecking, spatial planning, and government guarantee. Each Economic Policy Package and the expected positive impacts are as follows. This Presidential Regulation attaches a list of projects deserving the facility and privilege/special rights as stipulated in the body of the regulations. KPPIP plays a role in selecting national strategic projects carried out in consultancy with ministries/government institutions/regional government serving as project coordinators. The list comprises of 225 Economic Policy Key Policy projects and 1 electricity program. Package Presidential Regulation No. 3 of 2016 on Acceleration of the Implementation of National Strategic Projects and Presidential To deregulate 165 regulations, reduce bureaucracy in obtaining Instruction No.6 of 2016 on Acceleration of National Strategic Projects were issued in January 2016. licences related to land acquisition and other licences for I infrastructure projects, provide the legal certainty over land ownership as well as clarify procedures for and completeness of Revision to Presidential Regulation on the Assignment to Hutama Karya for documents required in obtaining certain licenses. the Development of Trans Sumatra Toll Road

To improve services in granting investment licences in industrial Pursuant to Presidential Regulation No. 117 of 2015, which is a revision to Presidential Regulation No. 100 of 2014, areas, to cut the length of time needed to .apply for tax allowance as many as 24 sections of toll road from Bakauheni to Banda Aceh will be built to accelerate the construction of II and tax holiday, and to remove value added tax for transportation toll roads in Sumatera. The first stage of the construction puts priority on the construction of 8 toll road sections equipment. including the 4 sections stated in Presidential Regulation No. 100 of 2014, namely Medan-Binjai, Palembang- To decrease fuel prices, gas prices, and basic electricity. rate for Simpang Indralaya, Pekanbaru-Dumai, and Bakauheni-Terbanggi Besar, and 4 additional sections, consisting III industry and to simplify licensing process over land for the purpose of Terbanggi Besar-Pematang Panggang, Pematang Panggang-Kayu Agung, Palembang-Tanjung Api-api, and of investment. Kisaran-Tebing Tinggi sections. Prioritization for the development of the following sections will be decided by the Minister of Public Works and Public Housing based on evaluation results. To reform the labor system as well as annual salary increase IV mechanism and to implement policy on a larger-scale and The Government assigns PT Hutama Karya (Persero) for the aforementioned operation of Trans Sumatera toll road, affordable Credits for Micro, Small and Medium Businesses. and this assignment encompasses funding, technical preparation, construction, operation, and maintenance with a concession lasting for 40 years. In its implementation, the operation and maintenance of these toll road sections To give incentives in the form of tax relief and revaluation of assets are predicted to be finalized by the end of 2019 at the latest. V of a company, state-owned enterprises (SOE), and individuals to create a more transparent and efficient economic and investment scheme. Presidential Regulation No. 146 of 2015 on Construction and Development To give incentives in the form of ease of investment process of of Domestic Oil Refineries VI Special Economic Zone (SEZ), regulations on water resources, and expedited licensing process (paperless). As part of Economic Policy Package VIII and for the purpose of supporting KPPIP priority projects, namely construction of domestic oil refineries, Presidential Regulation No.146 of 2015 on Construction and Development

To provide labor intensive industry, where income tax (PPh 21) is of Domestic Oil Refineries has been issued. VII paid by the company, with relief. This regulation serves as the guidelines for the implementation and acceleration measures that can be done if oil refinery projects are to be carried out by the Government using PPP scheme or SOE assignment, and Business VIII To adopt one map policy, to accelerate the development of Entities. In addition, Presidential Regulation also gives room to PT Pertamina to become Government Contracting domestic oil refineries, and to give incentives to company dealing with aircraft maintenance service. Agency (GCA) if the project adopts PPP scheme. This Presidential Regulation further dictates incentives that can be given by the Government of Indonesia and parties acting as offtaker.

12 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 13 Support given by KPPIP for developing and revising regulations

Regulation of the Head of National Public Procurement Agency (LKPP) No. In accordance with Presidential Regulation No. 75 of 2014, KPPIP has a mandate to assist, facilitate, coordinate, 19 on the Procedure for Procurement of Business Entity in Infrastructure recommend amendment and/or issuance of new regulations for the purpose of accelerating infrastructure delivery, Delivery including to resolve issues arising in infrastructure implementation. In line with the mandate given, KPPIP undertakes several activities to make and revise regulations related to infrastructure delivery. Presidential Regulation No. 38 of 2015 on Public Private Partnership in Infrastructure Provision requires several derivative regulations relating to availability payment and procurement of the implementing business entity to support the implementation of PPP in Indonesia. No. Regulations Description

As a follow up, Head of LKPP Regulation no. 19 of 2015 on the Procedure for Procurement of Business Entity in Trans-sectoral Infrastructure Delivery was issued in September 2015 governing the procurement of preparatory Business Entity and implementing Business Entity for PPP projects. • Presidential Regulation No. 75 of 2014 has stipulated 1 Amendment to Presidential Regulation KPPIP’s membership. Along with recent development, In the implementing business entity procurement, the procurement is aimed to select a business entity to act as the No. 75 of 2014 on Acceleration of Priority there are other agencies that need to be included in counterpart for the GCA to execute the PPP project. The selection itself can be made through a tender with pre- Infrastructure Provision KPPIP, namely Coordinating Minister of Maritime Affairs qualification or direct appointment. The latter can be made under certain conditions. By making direct appointment, it is and Minister of Environment and Forestry. expected that tender failure can be mitigated and delivery process can be expedited. • Additionally, operational strengthening of KPPIP in In the procurement of the preparatory business entity, the procurement is intended to choose a business entity, institution, procurement of goods and services is necessary, especially national or international organization that is selected through a selection process or by consensus. The chosen entity is to support the establishment of pool of consultants. then tasked to carry out supporting activities in order to prepare for the PPP transaction. • In order to accommodate attempts at accelerating provision of priority infrastructure, Perpres No. 75/2014 needs to be revised.

2 Head of KPPIP Decree to assemble Working • Even though Law No. 2 of 2012 has been issued, land Team for Acceleration of Land Acquisition procurement remains the biggest problem that slows down the execution of infrastructure projects. Obstacles identified are: (1) Information gap between Project Implementing Agency and Ministry of Agrarian Affairs and Spatial Planning concerning location and planning of land procurement; (2) Poor coordination among stakeholders when obstacles to land procurement arise; and (3) Lack of monitoring and synchronization in transferring the Government’s/SOE’s/ROE’s land for public use

• Consequently, KPPIP intends to form a Working Team for Acceleration of Land Acquisition to solve the aforementioned obstacles as well as to expand its capacity needed for the acceleration.

3 Issuance of Presidential Regulation on • Until 2019, the Government is planning to build power Acceleration in Electricity Infrastructure plants with total capacity of 35,000 MW. All projects in Provision the Ten-Year Electricity Infrastructure Development Plan (RUPTL), including projects both developed by PT PLN itself and those under partnership with the private sector, are contained in this Presidential Regulation.

14 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 15 B. DEVELOPMENT OF FISCAL POLICY C. INSTITUTIONAL DEVELOPMENT

Availability Payment Additional Capital to PT Sarana Multi Infrastruktur (PT SMI)

Presidential Regulation No. 38 of 2015 on PPP provides legal basis for availability payment. Availability payment means In December 2015, Ministry of Finance issued Minister of Finance Regulation No.232/PMK.06/2015 on the Shifting of periodic payment is made by the GCA to the business entity for the availability of infrastructure that satisfies the quality Government Investment at the Government Investment Center to Become State Capital Injection for the Limited Liability and criteria set in PPP contracts. Availability payment is expected to increase project feasibility to stimulate investors’ Company PT. Sarana Multi Infrastruktur (PT SMI) which serves as the ground for capital injection of PT SMI in the amount interest. of Rp 18.4 trillion. Prior to receiving the additional capital, the state capital injection into PT SMI was limited to Rp 2 trillion. In October 2015, Ministry of Finance issued Minister of Finance Regulation No. 190/PMK.08/2015 to manage the mechanism of availability payment derived from the State Budget (APBN). This will be followed by, Minister of Home Along with the State Capital Injection, PT SMI has expanded its role to become the center for infrastructure financing Affairs regulation, which will regulate the mechanism of availability payment from the Regional Budget (APBD). in Indonesia with the capacity to fund development of infrastructure by State-Owned Enterprises (SOE), Regional Government-Owned Enterprises (ROE), and Regional Governments.

Government Guarantee for Direct Lending Expansion of Facility of Indonesia Infrastructure Guarantee Fund (IIGF) Previously, project guarantees were focused merely on projects financed through PPP schemes or Government Budget (APBN/APBD). However, the government has expanded its guarantee to projects receiving direct lending from Government guarantee is one of the important factors to attract investment in projects. However, in the past, guarantee international financial institutions as has been governed under Presidential Regulation No. 82 of 2015. can only be provided for projects under PPP scheme.

With the existence of Minister of Finance Regulation No.189/PMK.08/2015, the scope of the projects eligible for such Through the issuance of Presidential Regulation No. 82 of 2015 on Central Government Guarantee for Infrastructure guarantee has been broadened by including projects assigned to State-Owned Enterprises (SOE) under Presidential Finance Using Direct Lending from International Financial Institutions to a State Owned Enterprise, the scope of projects Regulations or SOEs that are completely owned by the government. eligible for such guarantee is broadened. This guarantee can be provided for a SOEs that are wholly owned by the Government. SOEs that has been given assignment under the Presidential Regulation is also provided with a guarantee. As a result, the number of projects eligible for guarantee provided by IIGF is likely to increase. Project Development Fund Improvements and new initiatives in regulatory, fiscal, and institutional policies undertaken by the Government are At this moment, the implementation of PPP funding scheme is still limited due to the unavailability of expertise and expected to be able to solve obstacles encountered in infrastructure provision so that decision on decisions made by special funding as required for high quality project preparation needed for the success of PPP projects. Considering the central and regional government for acceleration can be executed. the importance of PPP schemes to increase private sector investment in infrastructural development, the Ministry of Finance has formed Directorate of Government Support and Infrastructure Financing Management (PPP Unit) to provide technical support and funding as has been mandated in Presidential Regulation No. 75 of 2014. This facility is financed by Project Development Fund governed in Minister of Finance Regulation No.265/PMK.08/2015.

16 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 17 18 KPPIP’s Report for August 2015 – December 2015 ACHIEVEMENT OF KPPIP

KPPIP’s Report for August 2015 – December 2015 19 ACHIEVEMENT OF KPPIP

In 2015 KPPIP made provisions for and conducted monitoring and debottlenecking of 22 priority projects with a a total investment value of Rp 851 trillion, which was determined at the committee level and reported to the President by a letter dated March 18, 2015. At the end of 2015 the number of projects increased to 30 priority projects as stipulated in Regulation of the Coordinating Minister for Economic Affairs Regulation No. 12 of 2015 on the List of Priority Infrastructures1.

Throughout the year 2015, KPPIP provided project preparation facilities for the preparation of Bontang Refinery, funded a strategic study on Jakarta-Bandung High Speed Railway as well as VfM and AMDAL studies on Panimbang-Serang Toll Road. Besides that, in order to ensure that the projects are implemented on schedule, KPPIP also facilitated coordination meetings to resolve issues and discuss funding schemes for the priority projects.

In accordance with Presidential Regulation No. 75 of 2014, KPPIP has 6 major mandates with achievements as summarized below:

Facilitating JSS project meetings with Governor of Strategic Study on Feasibility Study on Determination of Determination of DKI Jakarta resulting in the Jakarta-Bandung Panimbang-Serang Jabodebek LRT Palembang LRT agreement to follow up HSR proposals Toll Road funding scheme Funding Scheme project preparation

Tender for Investment in Signing of Loan Encouraging Issuance of Environmen- Manado-Bitung Toll Road and Agreement on MRTJ tal Permit for PLTU Indramayu by Balikpapan-Samarinda Toll Road (North-South) Indramayu Regent

MRT Jakarta: Facilitating coordination meetings with stakeholders for the purpose of acceleration in negotiation process having prolonged for seven months until signing of loan agreement on December 4, 2015

Jakarta-Bandung HSR: Resolving deadlock related to the proposal received from Government of Japan and Government of Panimbang-Serang Toll Road: Facilitating AMDAL document preparation as a requirement for PRC by conducting issuance of Environmental Permit and VfM study as one of bases for determining the funding evaluation on both scheme to complete the existing Feasibility Study proposals

1Permenko No. 12 of 2015 on the List of Priority Infrastructures governing 30 Infrastructure Projects. The expansion from 22 Priority ­Projects to 30 Priority Projects took place through a series of discussions with relevant stakeholders and the guidance from the President and Vice President as to which projects to accelerate.

KPPIP Report Agustus 2014 - Desember 2015 2 KPPIP’s Report for August 2015 – December 2015 21 In addition, in order to ensure that the preparation for the Project could be done without delay, KPPIP provided Rp 990 A. ACHIEVEMENT OF KPPIP’S MANDATES Million for consulting services for the purpose of preparing an AMDAL Report. PT Karsa Buana Lestari has carried out 1. Determination of Priority Projects for for the Year 2016 the study, given a detailed account of and preliminary dissemination of information with regional governments and the local community along the areas traversed by the toll road. In the process of preparation for the report, the consultant Pursuant to Presidential Regulation No. 75 of value of more than Rp 100 billion or play strategic roles coordinated with Ditjen Bina Marga, Banten Provincial Government and Regional Environmental Protection Agency 2014, in December 2015, KPPIP issued a list in improving the region’s economy; (BLHD) of Banten. By providing the fund, the land procurement process is expected to be realized on schedule in 2016 . of priority projects in the form of Coordinating 3. Construction must commence by 2018. Based on Minister for Economic Affairs Regulation No. 12 of such basic and additional criteria, 225 PSNs and Jakarta-Bandung High Speed Railway 2015 on the List of Priority Infrastructures for the one electricity infrastructure development program period of 2015-2019. have been selected. KPPIP provided Rp 3.1 Billion for consultation with a first-class internationaly-known consultant as stipulated in Presidential Regulation No. 93 of 2015 on the Evaluation Team for Jakarta-Bandung High-Speed Railway Project and The projects were selected from potential National The priority projects were then selected from the list of appointed PT Boston Consulting Group - Parsons Brinckerhoff consortium through a series of selection process to Strategic Projects duly stipulated in Presidential National Strategic Project by taking the following matters review the proposal for Jakarta-Bandung High Speed Railway submitted by the Government of Japan and Government Regulation No. 3 of 2016 where further selection into account: of PRC. The Evaluation Team consisted of the Coordinating Minister for Economic Affairs, Coordinating Minister for was made by KPPIP. In the process of preparing 1. There must be an undisputed firmly-committed Maritime Affairs, Minister of Finance, Minister of Transportation, Minister of SOE and Minister of National Development the National Strategic Projects, KPPIP referred champion to realize the project, particularly Planning/Bappenas. to the basic criterion, that is synchronization to prepare for an action plan and project between RPJMN, Renstra and RTRW, so that implementation schedule; The components under evaluation encompassed aspects of commitment, government risks, technology, and user’s Green Open Spaces will not be tampered with. 2. The value of the project must be over Rp 500 experience, socio-economic impact and project planning. The final report on the work results, which constituted part of Other than the aforementioned basic criterion, the billion; however, KPPIP will demonstrate flexibility the consideration for the Evaluation Team in the decision-making process for the selection of the proposed projects, was PSN (National Strategic Projects) were selected regarding the minimum project value; finalized at the end of September 2015. The decision on the determination of the project funding scheme was made by based on additional criteria covering: 3. KPPIP not only considers projects with high the Government of Indonesia at the beginning of October 2015 and the preparation for the project could be continued. investment value, but also takes account of A. Strategic Criteria: projects with high economic value; Bontang Oil Refinery 1. Strategic roles for the economy, social welfare, 4. KPPIP focuses on new infrastructure projects, defense and national sovereignty (creating rather than on maintenance projects or projects KPPIP allocated a budget of Rp 12.2 Billion in 2015 for the procurement of a consultant, PT Pricewaterhouse Coopers positive impacts on GDP, employment for procurement of facilities. (PwC) Advisory, which was appointed as the consultant charged with conducting the prefeasibility study/OBC for rate, socio-economic conditions, and the Bontang Refinery. The OBC, which was completed in December 2015, became the basis for determining the funding environment); From such a priority-based process, 30 priority projects scheme and served as grounds for Government support to improve the feasibility of the project. 2. Conformity between infrastructures (supportive have been selected for 2015-2019, and these projects and complementary to each other); have been stipulated in Regulation of the Coordinating In drawing up the OBC, the winning consultant worked collaboratively with a first-class internationally-known technical 3.Distribution of projects among regions. Minister for Economic Affairs No. 12 of 2015. Therefore, consultant such as Jacobs Engineering, which is highly experienced in conducting technical studies on oil and gas KPPIP can focus on these 30 projects without neglecting projects around the world as part of the team. Such technical study gave some insight for the decision makers into B. Operational Criteria: its mandates, but continue to monitor and support the determining the applicable configuration to Bontang Refinery that is in line with the policy of the Government of Indonesia 1. The proposed project must have a high quality debottlenecking process required for the PSN. with respect to the strategy to achieve energy security. feasibility study. 2. The Project shall either have an investment Synchronization between PPP Unit, Ministry of Finance, and Ministry of PPN (National Development Planning) / Bappenas 2. Improvement in Quality of Project Preparation To avoid obstacles posed by different standards or overlaps in the process during the preparation for the project, Panimbang-Serang Toll Road KPPIP has coordinated with the PPP unit at the Ministry of Finance on projects potentially implemented under the PPP scheme. The synchronization was made by harmonizing feasibility study standards which also involved the Ministry of In preparing the toll road project which was potentially implemented under the PPP scheme, KPPIP facilitated PPN/Bappenas and cutting down stages and simplifying documents required to apply for the fiscal support (VGF) and the provision of consulting services in the amount of Rp 2.6 Billion for conducting quantitative evaluation and government guarantee. establishing guidelines for the preparation of VfM study for the toll road sector. PT Marga Graha Penta was awarded the Project and has coordinated with Indonesia Toll Road Authority (BPJT), Directorate General of Having clear standards in preliminary feasibility study is very important to ensure that the project is well-prepared, so Highways (Ditjen Bina Marga) and Banten Provincial Government for the preparation of the study and the study that obstacles in the future can be minimized. Effective coordination between KPPIP, Ministry of PPN/Bappenas and PPP was completed at the end of December 2015. The VfM study becomes the basis for determining the funding Unit involved in establishing such standards is expected to prevent confusion on the side of Implementing Agency as the scheme for the project proposed under the PPP scheme. party preparing the preliminary feasibility study.

22 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 23 3. Acceleration in Determining Project Funding Scheme of the Location Determination for the project and referring to Article 36 of Presidential Regulation No. 38 of 2015, procurement for the PPP Executing Business Entity was put out to tender. The Indonesia Toll Road Authority (BPJT) South Sumatra LRT carried out pre-qualification stage from July to August 2015 and announced the result of the pre-qualification stage on September 29, 2015 by producing a shortlist of four business entities, namely (1) Consortium of PT Jasa Marga – PT Through a series of coordination meetings and active monitoring by KPPIP, the Palembang LRT funding scheme has Wijaya Karya – PT Pembangunan Perumahan, (2) PT Bangun Tjipta Sarana, (3) Consortium of HCM – Dewanto, dan (4) been decided to use SOE assignment under Presidential Regulation No. 116 of 2015 on the Acceleration in Light PT Waskita Toll Road. Rail Transit Operation in South Sumatra Province in October 2015. It is stipulated that PT Waskita Karya is assigned to build the infrastructure while PT Kereta Api Indonesia is to operate the railway facilities. By the issuance of the Balikpapan-Samarinda Toll Road Presidential Regulation, all stakeholders are expected to perform their duties and obligations to ensure that partial target operation is achieved in August 2008. In the coordination meeting held by KSP in July 2015, KPPIP reported the progress of the priority projects in the toll road sector, including Balikpapan-Samarinda toll road. Considering the issuance of the Location Determination for Jakarta, Bogor, Depok and Bekasi LRT the project and the progress of land procurement that had achieved more than 75%, and referring to Article 36 of Presidential Regulation No. 38 of 2015, the tender for procurement of PPP Executing Business Entity was held. Through In line with the process undergone for determining the Palembang LRT funding scheme, KPPIP conducts active the coordination following the tender, BPJT carried out a pre-qualification between July and August 2015 and selected monitoring related to the preparation of the required regulations until the issuance of Presidential Regulation No. 98 of four business entities, namely (1) Consortium of Naza Engineering and Construction Sdn Bhd – PT Daya Mulia Turangga, 2015 on the Acceleration in the Operation of Integrated Light Rail Transit in Jakarta, Bogor, Depok and Bekasi Areas (2) PT Waskita Toll Road, (3) Consortium of PT Citra Marga Persada – PT Kaltim Binasarana Konstruksi – PT Brantas in September 2015.The development of the infrastructure with six-track services is assigned to PT Adhi Karya and Abipraya – PT Istaka Karya dan (4) Consortium of PT Jasa Marga – PT Wijaya Karya – PT Pembangunan Perumahan with procurement of the railway facilities will be carried out by the Ministry of Transportation. Under this SOE assignment the notification of award sent on November 27, 2015. scheme, it is expected that the target for the whole operation of LRT tracks services will be achieved in 2018. North-South Corridor of MRT Jakarta Soekarno-Hatta International Airport (SHIA) Express Railway KPPIP facilitated the support for acceleration in the signing of the exchange note required to secure the execution of For the purpose of obtaining clarity on the continuation of the preparation for SHIA Express Railway project, KPPIP the loan agreement. A close coordination between the Ministry of Finance, Ministry of National Development Planning/ facilitated coordination meetings to discuss the updated status of the project, including the funding scheme for the Bappenas, and Ministry of Foreign Affairs was needed during the steps to conclude agreements on the substance of project. In the meeting, Directorate General of Railway of the Ministry of Transportation announced the cancellation of and mechanism for loan disbursement. As a result, the exchange note was signed on November 27, 2015, and the loan the application of PPP scheme in this project. In response to this decision, the facilities for preparation of the project agreement was targeted to be executed in December 2015. under PPP scheme by PT SMI was decided to be discontinued and returned to the Ministry of Transportation. Trans Sumatera Toll Road

4. Monitoring dan Debottlenecking KPPIP facilitated the initiative to coordinate integrated infrastructure development in Sumatra by using Trans Sumatra toll road as the backbone of the cross-sectoral infrastructure development. The coordination is aimed at optimizing High Voltage Direct Current (HVDC) the utilization of the toll road track and involving a number of stakeholders, among others, the Ministry of Public Works and Public Housing (BPPASPAM, Cipta Karya and Directorate General of Water Resources, Ministry of Energy and KPPIP has supported the process of transfer of land required to be used as the location of the converter station from Mineral Resources (Directorate General of Oil and Gas and Directorate General of Electricicy), Ministry of Transportation PT Perkebunan Nasional (PTPN) 7 to PT PLN. In November 2015, the appraisal process was completed and both (Directorate General of Railway), Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (MoAASP/NLA) parties negotiated the price. Therefore, the transaction process could take place in December 2015 so the transfer of Ministry of Environment and Forestry, Ministry of Communication and Information, PT Hutama Karya, PT PGN and PT rights over the land could be expedited and PLN could start the construction. PLN.

Additionally, KPPIP also encouraged the issuance of the Location Determination for Lahat – Gumawang transmission KPPIP facilitated a series of coordination meetings and collected data and information related infrastructure development line required for the purpose of backfeeding for PLTU Sumsel 8 Mine Mouth Power Plant (PLTU Mulut Tambang plan from each institution. Considering that the integration plan will use the toll road track, further coordination will be Sumsel 8). If this backfeeding process is delayed, the schedule for the HVDC project is predicted to fall behind made by the Regional Infrastructure Development Agency (BPIW) and MoPWPH with the support of ad hoc coordination schedule. by KPPIP.

Manado-Bitung Toll Road In addition, KPPIP also monitored the revision process of Presidential Regulation No. 100 of 2014 on the Acceleration of Toll Road Development in Sumatra until the issuance of Presidential Regulation No. 117 of 2015 in October 2015 to In the coordination meeting held by Presidential Staff Office (KSP) in July 2015 and attended by stakeholders, include the assignment of 24 road sections to PT Hutama Karya. Out of the 24 sections, 8 priority sections are targeted among others, the Ministry of Public Works and Public Housing (MoPWPH) and the Provincial Government of North to be in operation by 2018-2019. Sulawesi, KPPIP reported the progress of the preparation for Manado-Bitung Toll Road. Considering the issuance

24 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 25 5. Improvement to Regulations B. OPERATIONALIZATION OF KPPIP’S PMO AND DEVELOPMENT OF

Presidential Regulation on National Strategic Projects WORKING SYSTEM

The Presidential Regulation on National Strategic Projects (PSN) aims to provide special facilities for the projects Operationalization of KPPIP’s PMO (Project Management Office) serving national strategic interests so that the provision of the infrastructure can be made easier and faster. The facilities provided under the Perpres (Presidential Regulation) cover permits-and-licenses and non-permits- The Project Management Office (PMO) was established at the beginning of 2015. The KPPIP’s PMO consists of and-licenses facilities, government procurement, land procurement, local content, debottlenecking support and professional experts led by the Program Director for the purpose of supporting the operation of the KPPIP. The PMO government guarantee. has the duties to provide full support and conduct analysis required during the preparation for and implementation of priority projects. KPPIP was appointed as the party in charge of selection of the PSN. Since September 2015 KPPIP has been preparing for the establishment of a criteria for selection and has selected the projects based on information and In August 2015, the Program Director, Director of Finance, Director of Energy and Electricity, and Accountant were confirmation from the Project Implementing Agencies. After undergoing such a process, KPPIP selected 225 appointed and started performing their duties. Meanwhile, KPPIP has planned and conducted preparation for the projects and 1 electricity program as described in the PSN Regulation Attachment. tender for other expert positions for the year 2016.

Presidential Regulation No. 3 of 2016 on the Acceleration in the Implementation of National Strategic Projects and Integrated Information Technology (IT) System Presidential Instruction No. 1 of 2016 on the Acceleration in the Implementation of National Strategic Projects were issued in January 2016. In order to provide an integrated IT system as the information and data base for the development of the projects being monitored, KPPIP appointed PT Accenture Indonesia to build the IT system which was targeted to be Decision of the Coordinating Minister for Economic Affairs on the Working Team for the completed by the end of December 2015. Acceleration of Land Acquisition Its initial implementation will be by KPPIP, the system was expected to be used by all Implementing Agencies in The process of land procurement for infrastructure projects often poses as a major hurdle. A large number of ­inter- Ministries/Institutions and SOEs to report the progress and issues during preparation and implementing stages of ministerial or inter-institutional stakeholders are involved a large variety of land procurement obstacles starting from the projects. This IT system is expected to improve the level of accuracy in the data as they will be updated on a the planning stage to the delivery of the result requires intensive and comprehensive coordination. In response real time basis by the parties performing preparation and implementation activities for the projects. To support the to this matter, KPPIP finds it necessary to establish a Working Team for the Acceleration of Land Acquisition that project management functions and activities at each stage of the project cycle, the IT system will provide data and consists of Coordinating Ministry for Economic Affairs, Coordinating Ministry for Maritime Affairs, Ministry of Finance, information that encompass: Ministry of the Environment and Forestry, Ministry of Foreign Affairs, Ministry of State-Owned Enterprises, Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (MoAASP), Ministry of Religious Affairs, Attorney 1. Project Status Overview Dashboard: displays the project performance as a whole from the point of view of General’s Office and the National Police of the Republic of Indonesia. In order to support the working team in their development and achievement of actual project phases as well as the latest issues about the project; job, a Technical Team will be established, with details of membership and duties of which shall be determined by the 2. Milestone Analytical Dashboard: displays information concerning potential delay in the project based on the MoAASP based on the requirement for settlement of land procurement issues. plan and actual conditions of the project; 3. Project Performance: displays information concerning details of a project from various perspectives such as The letter of decision on the Working Team for the Acceleration of Land Acquisition was targeted to be issued in general information about the project, progress of preparation, as well as the risks to and issues about the January 2016. project; 4. Data webservice and Batch Uploader: are features in an application to make the data maintenance process 6. Facilitation for Capacity Building of Apparatus and Institutions Related easier using program uploading or interface with the application currently available at the Ministries/ to Priority Infrastructure Provision Institutions; 5. Project Risk and Issue Dashboard: displays the status of risk mitigation and settlement of issues in all In 2015, KPPIP’s capacity building activities were still focused on building KPPIP’s internal capacity in performing projects available on the KPPIP’s dashboard. the mandates it had received. KPPIP organized workshops on November 30 and December 1 to improve its capacity to apply the Outline Business Case (OBC) Guideline, determine the funding scheme, and monitor the projects and All data and information in the system will be used by KPPIP to monitor and evaluate preparation for and resolve issues. implementation of the project as well as becoming the basis for decision-making related to the projects.

26 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 27 C. KPPIP BUDGET REALIZATION

Budget realization was accelerated after the establishment of the PMO at the second semester of 2015. Throughout the year 2015, KPPIP absorbed 61.76% of the total budget where 62.62% of it was spent on consulting services (Strategic Studies on Jakarta-Bandung HSR, Pre-Feasibility Study for Bontang Refinery, Value for Money and AM- DAL Studies for Panimbang-Serang Toll Road and KPPIP IT System mockup). On top of that, 16.96% and the total budget absorbed was spent on daily operation expenses; 8.14% on the fees of services rendered by individual consultants, 4.75% on overseas business travel, 3.49% on out-of-town businesss travel, 2.62% on within-the-city business travel, and 1.41% on other operational expenses.

In 2015, KPPIP succeeded in funding 4 studies on project preparation which were completed in December 2015. The results of the studies play important roles in the decision making and progress of priority projects.

Realization of 2015 Budget by KPPIP - 61.76%

1,41% 16,96%

4,75%

3,49% 2,62% 62,62% 8,14%

Consulting Service Expenses – for Study purpose Within-the-city Business Travel Overseas Business Travel Other Operational Expenses Consulting Services Expenses – Individual Out-of-town Business Travel Daily Operational Expenses

28 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 29 LATEST UPDATES ON KPPIP PRIORITY PROJECTS

30 KPPIP’s Report forof August August 2015 2015 – – December December 2015 2015 KPPIP Report Agustus 2014 - Desember 2015 2 KPPIP’SDAFTAR PRIORITY PROYEK PRIORITASPROJECTS 201 IN 20155

LATEST UPDATES ON KPPIP PRIORITY PROJECTS In the second semester of 2015, KPPIP encouraged preparation of 22 infrastructure projects which becomes the focus of KPPIP1. The 22 priority projects have a total investment value of Rp 851 Trillion and they are targeted ­to be realized by 2019 Legends:

Water & Sanitation Airport

Energy Road Electricity Urban Transportation

Port Railway 1 Although Coordinating Minister for Economic Affairs Regulation No. 12 of 2015 that determines 30 Priority Projects for 2015-2019 was is- sued in December 2015, such 30 Projects have not become the main focus in the second semester of 2015 considering the determination­ was made at the end of 2015.

32 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 33 List of 22 KPPIP’s Priority Projects

34 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 35 JAKARTA ­SEWERAGE SYSTEM (JSS) PROJECT IMPLEMENTATION SCHEDULE AND PROJECT STATUS ASSUMING PPP SCHEME IS ADOPTED Investment Value : Rp 8.1 trillion (Zone 1) Funding Scheme : Likely to spend APBN with Foreign Loan (Japan) for Zone 1; funding scheme for other zones has yet to be decided 1 Location : DKI Jakarta Implementing Agency : Provincial Government of DKI Jakarta Construction Commencement Date : 2018 (IPAL Zone 1) Commercial Operation Date : 2022 (Zone 1)

PROJECT DESCRIPTION have

Jakarta Sewerage System project will manage domestic waste treatment in 15 zones (including the zone that has been in operation), with the initial focus on Zones 1 and 6. Both are targeted for operation in 2021. Zone LATEST UPDATES 1 will serve the central and north areas and Zone 6 will serve the west area. Total cost of Zone 1 project is ± JICA has provided support in the preparation of Pre-feasibility Study for Zone 1 and the result has been disseminated to IDR 8 Trillion, while the development of Zone 6 will cost ± IDR 5 Trillion. related parties, including the Coordinating Ministry for Economic Affairs, the Directorate General of Cipta Karya, Ministry of Public Works and Public Housing, National Development Planning Agency (Bappenas), and Regional Development Zone 1 constitutes an integrated waste treatment system consisting of: 1). Waste Water Treatment Plant Planning Agency of DKI Jakarta. Subsequent coordination meetings at the ministerial level will be held to determine the (IPAL); 2). Piping System; and 3). House connections, with an area coverage of 4,901 Ha. IPAL for Zone 1 will optimum funding scheme based on the results of the study conducted. be constructed in Pluit with an average capacity of 198,000 m3 per day. Currently, the acceleration of the project is focused on Zone 1. A coordination meeting at the ministerial level is planned to be held at the beginning of 2016.

The government of DKI Jakarta through PD PAL has appointed a consultant to develop Detailed Engineering Design for PROJECT SIGNIFICANCE zones outside of zone 1 and 6.

As the nation’s capital city, DKI Jakarta has developed as a center of government, business, and industry. Considering that this project is closely related with NCICD, support will be given so that the project is not delayed and Since the development is not accompanied by the improvement of disposal system for handling wastes will not reduce the optimum level of the environmental/economic benefits from NCICD, especially when NCICD Phase generated, the condition of water and sanitation in Jakarta has increasingly worsened. Currently, the coverage B has commenced. ratio in DKI Jakarta is only 4% of the entire area with a BOD pollution rate of 84 mg/l. This condition makes DKI Jakarta the second lowest capital city in Southeast Asia in terms of sanitation. In addition to the above, JSS FUNDING SCHEME is also needed to support the effectiveness of the National Capital Integrated Coastal Development (NCICD), which has commenced with construction. Since the development of waste water treatment plant is crucial to The pre-feasibility study for Zone 1 has been carried out with JICA support. NCICD development, this project has become a priority to the central government with the issuance of Letter No: S-130/D.VI.M.EKON/09/2013 regarding the Acceleration of the Development of Integrated Waste Water Based on the discussion meeting at Echelon 1 level held on May 20, 2015, the funding scheme has been narrowed down to Treatment System in DKI Jakarta, which stipulates the importance to achieve 75% coverage of waste water two funding scheme options, which are State Budget with foreign loan from Japan and Public-Private Partnership scheme. service area in 2022. The meeting concluded that the funding scheme will be decided at Ministerial level with the option of State Budget or PPP scheme. The construction of Zones 1 and 6 will increase the area coverage of waste water service in DKI Jakarta by 20%. The commencement of the Zone 1 project preparation is aimed to have a spillover effect to the construction of other Zones. In the end, the construction of all projects in the Jakarta Sewerage System (JSS) is expected to exceed the targeted waste service coverage in DKI Jakarta.

36 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 37 LAND ACQUISITION WEST SEMARANG DRINKING WATER SUPPLY SYSTEM The development of Zone 1 does not need land acquisition as the land is owned by the Regional Owned Enterprise Investment Value : Rp 1.17 Trillion (ROE) of DKI Jakarta, hence, matters related to land acquisition in Zone 1 will be solved internally within the jurisdictions Funding Scheme : Not yet determined of DKI Jakarta. Location : Semarang, Central Java Implementing Agency : Municipal Government of Semarang 2 Construction Commencement Date : 2017 NEXT STEPS Commercial Operation Date : 2021

PROJECT DESCRIPTION 1 To expedite the determination of project funding scheme for Zone 1 and Zone 6 of IPAL JSS at the ministerial level. West Semarang Drinking Water Supply System is a project to supply drinking water under PPP scheme. The Government Contracting Agency is the Municipal Government of Semarang, supported by PT Indonesia To provide facilities for other zones to expedite the Infrastruktur Finance (IIF) as the transaction advisor. It has become one of the pilot projects for PPP with 2 determination of the funding scheme. availability payment scheme from the Regional Budget.

THE DRINKING WATER SUPPLY SYSTEM PROJECT IS DIVIDED INTO 2 DIVISIONS:

DISTRIBUTION NETWORK

RAW WATER SUPPLY SYSTEM

Raw water source facilities Transmission network Water Treatment Plant (WTP) Clean water transmission network Reservoir

PROJECT SIGNIFICANCE This project will use water from Jatibarang Dam and aims to resolve the problem of raw water supply shortage in Semarang, which is currently supplied by Kudus Regency. The purpose of the project is to provide drinking water for 31 sub-districts in 3 districts, in which around 60,000 families do not yet have access to the Drinking Water Supply System (SPAM) network in West Semarang, Tugu, and Ngaliyan areas. The project aims to resolve clean water crisis and reduce the use of ground water in Semarang.

38 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 39 PROJECT IMPLEMENTATION SCHEDULE AND PROJECT STATUS ASSUMING PPP SCHEME IS ADOPTED As the succession of the Municipal Government is approaching, the determination of the funding scheme shall await the new government election. LAND ACQUISITION

Even though the Documents for Land Procurement Planning have been prepared, the issuance of the Location Determination was suspended in late 2015 to wait for the results of the Regional-head Elections. To ensure that the project is on schedule, the land procurement is projected to be completed in April 2016.

NEXT STEPS

To coordinate with the new Municipal Government of Semarang for the funding scheme determination and the continuance of other stages of the project.

Spatial Plan

LATEST UPDATES Funding scheme determination and other related matters have yet to be resolved shall be decided by the Mayor elected in Regional-Head Elections on 9 December 2015. As mayor inauguration can take some time, the decision is likely to be made in January 2016.

FUNDING SCHEME

The West Semarang Drinking Water Supply has been prepared to adopt PPP scheme, and has been planned to receive Government Support in form of Viability Gap Fund (VGF). In-principle approval for VGF was issued in May 2015. The West Semarang Drinking Water Supply constitutes one of the projects planned to receive availability payment from Semarang Regional Budget.

Following the meeting chaired by the Vice President on 3 July 2015, guidance was given on the change in the project scheme from PPP to the Assignment of Regional Government–Owned Enterprise (ROE) via Regional Drinking Water Company of the city of Semarang.

40 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 41 NATIONAL CAPITAL INTEGRATED COASTAL DEVELOPMENT (NCICD) PROJECT IMPLEMENTATION SCHEDULE OF NCICD PHASE A PHASE A Investment Value : Rp 600 trillion (all phases); Investment value of Phase A amounts to Rp 26 trillion Funding Scheme : State Budget and Regional Budget for Phase A, potential PPP for other phases 3 Location : DKI Jakarta Implementing Agency : Provincial Government of DKI Jakarta and the Ministry of Public Works and Public Housing. LATEST UPDATES Construction Commencement Date : 2016 Commercial Operation Date : 2018 In order to accelerate the delivery of this project, the Environmental Impact Assessment (EIA) and Strategic Environmental Assessment (SEA) were completed in December 2015.

Although the division of tranches for Phase A in DKI Jakarta has been completed, determination of tranches for Phase A PROJECT DESCRIPTION in Tangerang and Bekasi is still required, for which the Decision Lettesr from each Governor is necessary for the progress National Capital Integrated Coastal Development (NCICD) includes the construction of a giant seawall in the of tranches finalization. north of Jakarta Bay as an effort to protect the capital city from floods. Large lagoons will be built within the walls to accommodate the water flow from 13 rivers in Jakarta (water reservoirs). This project also awaits the approval for the allocation of multiyear funding from the Regional Government of DKI.

FUNDING SCHEME This mega project consists of three phases, as follows : Phase A funding scheme will use State and Regional budgets and the details of cost allocation will be further determined. Phase Phase A focuses on improving the existing coastal protection. This includes the reinforcement Other project phases are planned in collaboration with private entities with investment opportunities in NCICD. A and development of the existing coastal dams of 30 kilometers in length and the development of 17 artificial islands on the Jakarta Bay. The first phase was launched in the beginning of LAND ACQUISITION September 2014. The construction is planned to begin in early 2016. National Capital Integrated Coastal Development (NCICD) which is located in the north of Jakarta will require a Phase Phase B focuses on efforts to develop the west outer giant seawall planned to be constructed land reclamation in which 90 million m3 of sand will be needed for the construction of the outer giant seawall. The B during 2018 through 2022. additional 210 million m3 of sand will be used for land reclamation that creates new dry land with 1,250 hectares area to accommodate urban development. Phase Phase C focuses on constructing east outer giant seawall planned for after 2023. Several long- C term developments in the east of the Jakarta Bay are conducted by closing part of the bay in The raising of seawalls in Phase A will use the existing seawalls ground area, hence land acquisition is not needed. order to anticipate if land subsidence in the east part of Jakarta cannot be avoided. To reduce the impact due to the closure during construction, a part of the eastern giant seawall will be NEXT STEPS allocated for Tangerang-Bekasi toll road. Determination of tranches for Phase A is required for Tangerang and Bekasi accompanied by the Decision Letters issued by the Governor of the respective provinces. PROJECT SIGNIFICANCE More than half of Jakarta residents live in the coastal area and significant urban economic activities develop in the coastal area. There are 13 rivers which disembogue in Jakarta Bay and 40% of the coastal lowland area lies below tidal surface. Floods in coastal area are exacerbated by the land subsidence due to excessive extraction of ground water.

Due to such concerns, the National Capital Integrated Coastal Development (NCICD) becomes crucial. This mega project will be conducted in 3 phases where the first phase will be conducted by raising the existing seawalls. .

42 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 43 OIL REFINERY IN BONTANG PROJECT IMPLEMENTATION SCHEDULE ASSUMING PPP SCHEME IS ADOPTED Investment Value : Rp 75-140 trillion Funding Scheme : Potential for PPP scheme (awaits the Determination) Location : Bontang, East Kalimantan Investment Development of BED Guarantee Financial Close Implementing Agency : PT Pertamina (awaits the Determination) Tender and FEED Construction Commencement Date : 2018 4 Commercial Operation Date : 2022 June 2016 Projected to start in September 2017 April 2018 February 2016

PROJECT DESCRIPTION LATEST UPDATES Bontang Refinery is a refinery construction project in Bontang, East Kalimantan, aiming to produce fuel at the minimum of 235 thousand barrels per day. The refinery is planned to use a configuration system which Since October 2015, PT Pricewaterhouse Cooper Advisory Indonesia (PwC) has started to draw up OBC based on includes system collaborations like petrochemicals system. The output of the refinery will be prioritized to KPPIP’s standards for Bontang oil refinery. The drawing up of the OBC is aimed at recommending the optimum funding satisfy domestic fuel demand. scheme for the project and promoting good governance in giving financial incentives required.

PROJECT SIGNIFICANCE While drawing up the OBC, the Consultants have consulted with the related parties such as the Ministry of Finance, the Ministry of ESDM, and PT Pertamina. In addition, the Consultant and PT Pertamina have made a field trip to Bontang to Considering the need for fuel and the vision to achieve energy security, Indonesia needs to grow the carry out an appraisal of the facilities both available and required for the construction of this oil refinery. domestic refinery industry. A combination of Grass Root Refineries (GRR) and Refinery Development Master Plan (RDMP) is needed to enhance the provision of crude oil and oil fuel in Indonesia to be able to reduce In December 2015, the Government announced Paket Kebijakan VIII (8th Economic Policy Program) covering the import dependence. issuance of Presidential Regulation No. 146 of 2015 on Construction and Development of Domestic Oil Refinery required as legal ground for the preparation of Bontang oil refinery project. It is expected that the construction of Bontang refinery will not face significant issues in land procurement process because a 300 hectares area has been made available. In addition to that, the supporting infrastructure such as road access, jetty, etc., are also available. FUNDING SCHEME

PROJECT IMPLEMENTATION SCHEDULE ASSUMING PPP One of the plans for the construction of oil refinery in Bontang is to adopt PPP scheme where PT Pertamina will act as the Government Contracting Agency. PPP scheme is considered because of the limitations on funding capacity of the SCHEME IS ADOPTED State Budget (APBN) to finance the construction of the refinery.

In December 2015 the government, in its Economic Policy Program IIII (Paket Kebijakan Ekonomi III), announced that Bontang oil refinery is likely to adopt PPP (KPBU) scheme, and Presidential Regulation on Oil Refinery allows the adoption of PPP (KPBU) scheme and gives room for PT Pertamina to be the Government Contracting Agency.

Based on the results of OBC, PPP scheme can be adopted. Further, the decision on the location and configuration is required to determine the level of government support needed to improve the feasibility of the project. Now there are 2 options, namely pure fuel oil refinery and petrochemical fuel oil refinery.

The decision on the funding scheme for the project will be made at the ministerial level.

44 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 45 LAND ACQUISITION REVITALIZATION OF THE EXISTING REFINERIES / The Directorate General of the State Treasury of the Ministry of Finance, has provided a 300-ha parcel in Bontang District REFINERY DEVELOPMENT MASTER PLAN (RDMP) that can be used for the construction of oil refinery under rental mechanism charged at Rp 0 (null Rupiah) rental fee. Investment Value : RP 210 trillion NEXT STEPS Funding scheme : Potential for SOE Assignment Location : Cilacap, Balongan, Dumai, Balikpapan, Plaju 5 Implementing Agency : PT Pertamina Construction Commencement Date : 2017 1 Decision on the Government policy on energy sustainability is required so that funding scheme for Commercial Operation Date : 2021 the project can be determined.

2 Meetings at the ministerial level to determine project funding scheme. PROJECT DESCRIPTION

RDMP project is a project to revitalize 5 refineries located in Cilacap, Central java; Balongan, West Java; Dumai, Riau; Balikpapan, East Kalimantan; Plaju, South Sumatera; to increase the capacity of oil refineries in Indonesia.

PROJECT SIGNIFICANCE

Considering the fuel demand and the goal to achieve energy security, Indonesia needs to grow the domestic refinery industry. The capability of Indonesia to meet domestic demands is very low (48 days in 2013 and it is estimated to decrease to 38 days in 2025) and has a potential to threaten energy security.

RDMP needs to coincide with new refinery project (Grass Root Refinery) to improve production capacity and competitiveness of the existing refineries in Indonesia. With the revitalization of the five refineries (Cilacap, Balikpapan, Plaju, Balongan, and Dumai), the production will increase 150%.

PROJECT IMPLEMENTATION SCHEDULE OF RDMP STAGE I

46 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 47 LATEST UPDATES HIGH VOLTAGE DIRECT CURRENT (HVDC) Pre-feasibility study, selection of contractors, and Bankability Study for RDMP projects had been completed in the end of 2014. PT Pertamina had signed a Memorandum of Understanding (MoU) with selected investors on December 10, Investment value : Rp 33.4 Trillion 2014 with partners from Saudi Aramco, JX Nippon, and Sinopec China. Based on the latest updates in 2015, JX Nippon Funding Scheme : State Budget with Foreign Loan has withdrawn from Balikpapan refinery project because the estimated investment plan differed from what had been Location : South Sumatra, Lampung, Banten, West Java initially approved. PT Pertamina will conduct the revitalization in stages. Phase 1 will start from Balikpapan Refinery and Implementing Agency : PT PLN Cilacap Refinery. 6 Planned Construction Commencement Date : Packages 1-4 in 2016. Package 5 in. Planned Commercial Operation Date : 2019 FUNDING SCHEME

For this revatilization project, PT Pertamina will establish strategic partnerships with several entities, such as with Saudi Aramco for Cilacap refinery. PROJECT DESCRIPTION LAND ACQUISITION Revitalization will be conducted in the locations of the existing refineries, thus, land procurement will not be needed. High Voltage Direct Current (HVDC) is a project to develop transmission system that connects Sumatra and Java. The system will be utilized to transmit electricity from Mine-Mouth Coal-Fired Power Plant 8, 9, and 10 in South Sumatra to Java Island. FOLLOW-UPS REQUIRED

To obtain long-term contracts and provision of crude oil, G2G agreements with 1 countries such as Irak, Iran, Azerbaijan, Saudi Arabia are required. Regency

2 To issue in principle permits for foreign investment for the establishment of JV companies in 2017 at the latest.

3 Approval for tax holiday or tax allowance in 2016. (Lampung) to Salira

The issuance of other certificates and related oil and gas permits at 4 the EPC phase up to the operation.

5 Approval for Environmental Permits.

48 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 49 PROJECT SIGNIFICANCE HVDC is a ~742 km transmission project and its implementation needs ~300 ha land. HVDC transmission LATEST UPDATE has the capacity to transmit 3,000 MW power from Sumatra to Java and vice versa. It aims to improve the In December 2015, PT PLN (Persero) and PT Perkebunan Nusantara VII had a discussion, and both parties were capacity of electricity supply on Sumatra and Java, and to reduce power generation costs by optimizing in agreement about the amount of compensation proposed by the assigned KJPP . the abundant low grade coal on Sumatra Island. • Tender for Package 1 is undergoing the technical evaluation stage. • Tender for Package 2 awaits the Board of Directors’ approval for technical evaluation that has been duly FUNDING SCHEME completed. HVDC project has been determined to use fund from State Budget with Foreign Loan from JICA in the • Tender for Package 4 is undergoing the technical evaluation stage. amount of JPY 181.87 Billion (~IDR 33.4 Trillion). LAND ACQUISITION HVDC PROJECT IMPLEMENTATION SCHEDULE South Sumatra

Land acquisition process for HVDC converter station in Muara Enim has already reached the final stage 1 as PT PLN and PT Perkebunan Nusantara VII have agreed upon the price determined by the appointed KJPP. The latest update on December 15, 2015 showed that both parties were in the process of handing TENDER the land over and submitting an administrative application .

Most of the land for transmission line and HVDC tower sites in Muara Enim is at the land appraisal 2 stage by KJPP, and so is the land in Ogan Komering Ulu (OKU), Ogan Komering Ulu Timur (OKUT) and TENDER Ogan Komering Ilir (OKI). So far the land for 44 tower sites in OKUT District and 3 tower sites have been acquired.

The legal basis for land procurement for 275 kV Lahat – Gumawang transmission line to transmit power 3 from South Sumatra 8 Mine Mouth Power Plant (PLTU MT Sumsel 8) is currently being shifted from the TENDER obsolete land law to the new one.

Lampung

The Decision Letter on the determination of the Land Acquisition Committee for the land located in six TENDER 1 (6) regencies, that are Lampung Tengah, Lampung Selatan, Lampung Timur, Mesuji, Tulang Bawang, and Tulang Bawang Barat, was issued by the Ministry of AASP in August 2015. Thus, land acquisition for HVDC transmission line in those areas refers to Law No. 2 of 2012 as the legal basis.

The procurement of land for the landing point in Lampung Selatan regency has been completed. At TENDER 2 present, the landing point is under construction.

Oper ation The procurement of land for 253 tower bases in Lampung Province has mostly reached valuation phase 3 except for those in Lampung Timur regency. So far, land has been procured for 17 tower bases in Lampung Timur and 8 tower bases in Mesuji.

Oper ation

TENDER

50 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 51 Banten Banten A. SOUTH SUMATRA MINE-MOUTH COAL- FIRED POWER PLANT 8 Land acquisition process is being shifted from B2B land procurement scheme by PT PLN to that of under 1 Law No. 2 of 2012. Investment Value : Rp 18 Trillion Land for landing point in Cilegon Regency is now available and the sub-sea cable is at the construction Funding Scheme : IPP where the successful bidders are PT Bukit 2 stage. Asam dan China Huadian Corporation which together formed a consortium named PT Huadian Land acquisition for electrode station awaits the Decision Letter from the National Land Agency’s regional 7 Bukit Asam Power (HBAP) 3 office of Banten to start the process. Location : South Sumatra Project Implementing Agency : PT PLN So far the land acquisition in Banten has reached the inventory taking stage, particularly for five (5) areas Planned Construction Commencement Date : 2016 4 traversed, namely Serang Regency, Serang Municipality, Cilegon Regency, Pandeglang Regency and Lebak Planned Commercial Operation Date : 2019 Regency. Currently, land has been acquired for 12 tower sites in Cilegon and 6 tower sites in Pandeglang.

West Java PROJECT DESCRIPTION

The process of land acquisition for converter station in Bogor Regency is ongoing following the renewal of South Sumatra Mine-Mouth Coal-Fired Power Plant 8 (PLTU Sumsel 8) is a coal-fired power plant with 1 the Location Permit issued by the Provincial Government of West Java in August of 2015. So far, 51 out of ‘mine-mouth’ scheme where the power plant is located parallel to the coal mine, thus reducing logistic 55 hectares of land has been procured. costs. This PLTU will have 1,200 MW capacity and will be connected with HVDC transmission line (Project No. 6). Land acquisition for tower sites in Bogor Regency has reached the inventory taking stage. 2 PROJECT SIGNIFICANCE

The growth of population and industry on Java Island especially the west part of Java has increased the NEXT STEPS needs for electric power that cannot be fulfilled by power plants in Java Island. Seeing the huge potentials for coal and the construction of coal-fired power plants on Sumatra Island, the Government of Indonesia Issuance of LoI for HVDC Package 1 and 2. has prepared a plan to develop power plants and transmissions to create sustainable electricity supply for both Sumatera and Java islands.

52 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 53 PLTU SUMSEL 8 PROJECT IMPLEMENTATION SCHEDULE FUNDING SCHEME

PLTU Sumsel 8 is a project with Independent Power Producer (IPP) scheme where PT PLN conducts a tender for Business Entities that will fund and construct the project. The winning bidder is PT Huadian Bukit Asam Power (HBAP) which is a consortium of PT Bukit Asam and China Huadian Corporation.

LAND ACQUISITION

The AMDAL for the project has been issued and the land has been procured. At present, certificates for the land procured TENDER are in the process of issuance. LATEST UPDATE Power Purchase Agreement (PPA) for Sumsel 8 was signed on September 17, 2012 with 3 times extension of financial close. TENDER As the Letters of Intent (LoI) for HVDC Package 1 and Package 2 have not been issued, an amendment to PPA is under consideration in order to accommodate the change in the schedule for the financial close. NEXT STEPS TENDER

1 To encourage acceleration in the issuance of decision on the change in the schedule of financial close and to determine the follow-ups required at a later stage.

2 To secure the issuance of LoI for HVDC Package 1. TENDER 3 To secure the issuance of LoI for HVDC Package 2.

4 To finalize land certification process.

5 To achieve financial close. TENDER

Oper ation

Oper ation

TENDER

54 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 55 PLTU SUMSEL 9 & 10 PROJECT IMPLEMENTATION SCHEDULE B. SOUTH SUMATRA MINE-MOUTH COAL- FIRED POWER PLANTS 9 & 10

Investment Value : Rp 36 Trillion (Sumsel 9) and Rp 18 Trillion (Sumsel 10) Funding Scheme : IPP where the winning bidder has not been 7 determined TENDER Location : South Sumatra Implementing Agency : PT PLN Planned Construction Commencement Date : 2017 Planned Commercial Operation Date : 2021 TENDER

PROJECT DESCRIPTION South Sumatra Mine-Mouth Coal-Fired Power Plant 9 & 10 (PLTU Sumsel 9 & 10) are coal-fired power TENDER plants with ‘mine-mouth’ scheme where the power plant is located parallel to the coal mine, thus reducing logistic costs. These PLTUs will have 1,200 MW and 600 MW capacities and will be connected to HVDC transmission line (Project No. 6).

PROJECT SIGNIFICANCE TENDER

The growth of population and industry on Java Island especially the west part of Java has increased the needs for electric power that cannot be fulfilled by power plants in Java Island. Seeing the huge potentials for coal and the construction of coal-fired power plants on Sumatra Island, the Government of Indonesia has prepared a plan to develop power plants and transmissions to create sustainable electricity supply for TENDER both Sumatera and Java islands.

Oper ation

Oper ation

TENDER

56 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 57 500 KV SUMATRA TRANSMISSION LINE LATEST UPDATE

The new Requests for Proposals (RFP) for Sumsel 9 and Sumsel 10 were issued on 18 Desember 2014. The deadline for Investment Value : Rp 24.4 trillion submission of the bids (bid submission date) was extended until February 2016. Funding Scheme : Of the total 1,330 km, 430 km is potentially funded by SOE, the funding scheme for the remaining 900 FUNDING SCHEME km is yet to be decided Location : Sumatra PLTU Mulut Tambang Sumsel 9 & 10 project adopts Independent Power Producer (IPP) scheme where PT PLN conducts 8 Implementing Agency : PT PLN a tender for Business Entities that will fund and develop the project. Planned Construction Commencement Date : 2016 Planned Commercial Operation Date : 2017 – 2023 LAND ACQUISITION

The project has not entered the land acquisition stage. The land acquisition for the Mine-mouth Power Plant will start after tender award notification. NEXT STEPS PROJECT DESCRIPTION The construction project of 500 KV Sumatra Transmission Line aims to deliver electricity generated in the To ensure that the notification of award is achieved in mid-2016. southern part of Sumatera to the northern region of the island using a 1,330-km transmission line from Muara Enim in South Sumatera to Langsa in Aceh.

PROJECT SIGNIFICANCE The Sumatra Transmission is needed to transmit electricity from Coal-Fired Power Plant (PLTU) in South Sumatra to the north region of Sumatra to improve electricity access of the communities. The schedule for the construction of this project will be synchronized with the completion of the construction of PLTU Sumsel 8, 9, 10 and the construction of HVDC so as to avoid uneven supply of electricity on Sumatra Island and Java Island.

58 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 59 IMPLEMENTATION SCHEDULE LATEST UPDATE

The 430-km (New Aur Duri – Peranap – Perawang) Sumatra Transmission Line project was initially planned to be assigned through direct appointment to and be divided equally among five (5) SOEs (Hutama Karya, Adhi Karya, Waskita Karya, Wijaya Karya, Pembangunan Perumahan). However, due to the absence of legal basis for direct appointment scheme, PT PLN decided to conduct a tender.

At the end of 2015, PT PLN stipulated PT Waskita Karya as the winning bidder for New Aur Duri – Peranap – Perawang section.

A suitable funding scheme for the remaining 900-km project is currently still being explored. PT PLN is also preparing tender documents for the tender to take place in the early 2016.

FUNDING SCHEME

PT PLN has stipulated PT Waskita Karya as the winning bidder for the 430-km section from New Aur Duri – Peranap – Perawang. However, PT PLN is still in the preparation stage of putting the remaining ~900 km of Transmisi Sumatera out to tender.

LAND ACQUISITION

PT Waskita Karya has started the process of land procurement for New Aur Duri – Peranap – Perawang section followed by groundbreaking in of April 2016.

NEXT STEPS

1 To monitor the process of land acquisition for New Aur Duri – Peranap – Perawang section

2 To monitor the tender process of the 900-km section.

60 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 61 SUTET 500 KV TANJUNG JATI – TX (UNGARAN – PEDAN) (144 KM) CENTRAL – WEST JAVA 500 kV TRANSMISSION LINE

Investment Value : Rp 7.64 trillion Funding Scheme : Potential for State Budget with Foreign Loan (KfW and JICA) Location : West Java and Central Java 9 Implementing Agency : PT PLN Planned Construction Commencement Date : 2017 Planned Commercial Operation Date : 2019

PROJECT DESCRIPTION The construction of the 500-kV transmission is aimed to deliver electricity produced in Central Java to Jakarta load center that is located in the western part of Java.

PROJECT SIGNIFICANCE SUTET 500 KV TX (UNGARAN – PEDAN) – BATANG (63 KM) The transmission line from West Java to Central Java is highly needed to transmit the electricity generated by PLTU Indramayu (1,000 MW), PLTU Jawa 1 (1,000 MW), PLTU Pemalang (2x1,000 MW), PLTU Jawa 3 Description (2 x 660 MW), PLTU Jawa 4 (2x1,000 MW) and PLTU Batang (2,000 MW). Consequently, it is necessary to synchronize the development schedules and completion of all projects. Funding Survey, study IMPLEMENTATION SCHEDULE FOR CENTRAL – WEST JAVA 500 KV EIA TRANSMISSION LINE PROJECT Permits & License Land Acquisition Tender Documents Bidding Process Construction Energizing (for Back Feeding)

SUTET 500 KV BATANG – MANDIRANCAN (334 KM)

Description

Funding Survey, study EIA Permits & License Land Acquisition Tender Documents Bidding Process Construction Energizing (for Back Feeding)

62 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 63 SUTET 500 KV MANDIRANCAN – INDRAMAYU (180 KM) LATEST UPDATE

All sections are going through a survey and study process, which is projected to finish in the second quarter of 2016. The funding scheme is under a further in-depth review to ensure the completion of the construction by the year 2019. Description FUNDING SCHEME Funding Survey, study This project potentially receives a foreign loan from JICA and KfW. While waiting for the loan, PT PLN undertakes the initiative to first allocate its own budget to land acquisition and preparation for other tender documents. EIA Permits & License LAND ACQUISITION Land Acquisition Tanjung Jati – Cibatu section is in the process of land acquisition in compliance with Law No. 2 of 2012 with construction Tender Documents projected to commence in 2017. Bidding Process Construction Tanjung Jati – TX (Ungaran – Pedan) section is also going through the process of land acquisition and is projected to be Energizing (for Back Feeding) completed in late 2016. Initial construction is targeted to start in mid-2016.

Ungaran – Pedan – Batang section, Batang – Mandirancan section, Mandirancan – Indramayu section, and Indramayu – SUTET 500 KV INDRAMAYU – CIBATU (260 KM) Cibatu section will undergo land procurement in mid-2016.

Description NEXT STEPS Funding

Survey, study To accelerate the land acquisition that is now in the stage of EIA document preparation. Permits & License Land Acquisition Tender Documents Bidding Process Construction Energizing (for Back Feeding)

64 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 65 LAND ACQUISITION INDRAMAYU COAL-FIRED POWER PLANT (PLTU INDRAMAYU) Following the Environmental Permit issuance on May 26, 2015, PLTU Indramayu is now in the process of preparing Land Acquisition Planning Documents to acquire the land. Land acquisition will be continued after the edict on the consistency Investment Value : Rp 20 trillion of Indramayu spatial planning from the Ministry of Agrarian Affairs and Spatial Planning (MoAASP) is issued. Funding Scheme : State Budget using Foreign Loan (JICA) Location : Indramayu, West Java NEXT STEPS 10 Implementing Agency : PT PLN Planned Construction Commencement Date : 2017 Planned Commercial Operation Date : 2019 1 To hold coordination meetings on the consistency of spatial planning of Indramayu Regency for the construction of the said PLTU.

PROJECT DESCRIPTION 2 To promote the acceleration of preparation and imple- mentation of land acquisition The development of coal-fired power plant with a capacity of 1,000 MW is aimed to supply electricity for Java and Bali. PROJECT SIGNIFICANCE

The purpose of this PLTU is to support the electricity supply system and reduce electricity crisis in the Java and Bali regions. In addition to the above, this project aims to create economic growth and create positive impacts on the communities by supporting the industrial estates growth in the Eastern region of Jakarta and West Java.

LATEST UPDATE

Regional Secretary of Indramayu Regency called for an edict from the Ministry of Agrarian Affairs and Spatial Planning regarding the consistency of spatial planning for the construction of PLTU Indramayu by taking into account the measure of the designated land and of the village covered for the construction of PLTU in Regional Regulation of Indramayu No.1 of 2012 on Spatial Planning of Indramayu Regency.

The requested edict is being formulated at the Directorate General of Spatial Planning, Ministry of Agrarian Affairs and Spatial Planning (MoAASP). KPPIP will facilitate coordination meetings to expedite the issuance of the edict so that the project can continue to land acquisition stage. FUNDING SCHEME

PLTU Indramayu has been stipulated to use funding from the State Budget (APBN) received as foreign loan from Japan International Cooperation Agency (JICA) that amounts to USD 2 billion.

66 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 67 PLTU BATANG / CENTRAL JAVA POWER PLANT LATEST UPDATE The deadline for the Financial close is put off from October 2015 to March 2016 and the revision to the PPA has been Investment Value : Rp 40 trillion signed. Funding Scheme : Independent Power Producer (IPP) with PT Bhimasena Power Indonesia (PT BPI) as the FUNDING SCHEME selected investor The funding scheme has been determined as IPP where the winning bidder was PT Bhimasena Power Indonesia formed 11 Location : Batang, Central Java by J-Power (34%), Adaro (34%), and Itochu (32%). Implementing Agency : PT PLN LAND ACQUISITION Planned Construction Commencement Date : 2016 Planned Commercial Operation Date : 2019 Cassation process against community refusal to provide land for the power block was expected to be settled in December 2015, yet the process took longer. At the same time, the District Court of Batang will deliver the minutes of consignment to the Ministry of AASP. Consequently, compensation process has legally ended and rights over land have changed PROJECT DESCRIPTION hands from the locals to the Ministry of AASP and therefore can be transferred to PT PLN. PLTU Batang or Central Java Power Plant (CJPP) is an ultra critical coal-fired power plant with 2 x 1,000 MW capacity in Batang Regency, Central Java. PLTU Batang will be constructed by the Special Purpose Transfer process of State’s General Reserve Land (TCUN) has been executed using a transfer scheme to PT PLN prior Vehicle (SPV) of PT Bhimasena Power Indonesia consisting of J-POWER (34%), Adaro (34%), and Itochu to the utilization of the land by PT BPI. (32%). This project is guaranteed by Indonesia Infrastructure Guarantee Fund (IIGF) and the Central Government for political and force majeure risks.

PROJECT SIGNIFICANCE

The power plant with a capacity of 2,000 MW is aimed to supply electricity for the population of Java Island. This project also becomes a pilot project with PPP scheme with the largest value in Indonesia.

PROJECT IMPLEMENTATION SCHEDULE OF PLTU BATANG

Commercial Land Acquisition Financial Close Construction Operation Projection

Awaits the completion March 2016 Has yet to start 2019 of land acquisition for Power Block in early 2016

68 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 69 WATER TO ENERGY (DEVELOPMENT OF 4 NEW HYDROELECTRIC POWER PLANTS (PLTA KARANGKATES IV & V, KESAMBEN, AND NEXT STEPS PLTM LODOYO)

Investment Value : Has yet to be decided 1 Transfer of rights of public land within the power block area to PT PLN. Funding Scheme : Potential SOE appointment for PLTA Karangkates IV & V, Kesamben, and PLTM Lodoyo, and PPP 2 Transfer of TCUN land to PT PLN. potential for other projects, including to increase 12 dam capacity to become power plants. Location : West Java and Central Java Implementing Agency : PT PLN Planned Construction Commencement Date : 2016 Planned Commercial Operation Date : 2019

PROJECT DESCRIPTION Water to Energy Program is divided into 4 acceleration programs, where one of them is a breakthrough for Karangkates IV & V, Kesamben, and Lodoyo Hydro Power Plants (PLTA) and Micro-Hydro Power Plant (PLTM) construction acceleration, with a total capacity of 147 MW. PLTA Karangkates IV & V and Kesamben are located in Brantas River, East Java, while PLTM Lodoyo will utilize a weir. Total capacity of the three PLTAs and one PLTM reaches 147 MW.

In addition to the above-mentioned projects, Matenggeng Dam, which has the potential to generate 900 MW, has received KPPIP’s attention. The project is currently in the study process and the funding scheme is not yet determined. PROJECT SIGNIFICANCE PLTA Karangkates IV & V can generate 100 MW of electricity. PLTA Kesamben has a capacity to generate 37 MW and PLTA Lodoyo can generate 10 MW. With a total of 147 MW, the four power plants are selected as they can potentially be constructed the fastest.

IMPLEMENTATION SCHEDULE FOR PLTA KARANGKATES IV & V AND PLTA KESAMBEN

Environmental Funding Scheme Feasibility Study Detailed Engineering Impact Assessment Determination Design (DED) (EIA)

December 2015 April 2016 2016 2016

Commercial Land Acquisition Construction Operation Projection

December 2015 April 2016 2018

70 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 71 IMPLEMENTATION SCHEDULE FOR PLTMH LODOYO (LODOYO MINI-HYDRO NEXT STEPS POWER PLANT)

1 To encourage finalization of consortium to determine funding scheme and EPC value Basic Design and Funding Scheme required for PLTA Karangkates IV & V. Feasibility Study UKL - UPL Detailed Engineering Determination Design (DED) 2 To promote issuance of letter of approval from the Board of Directors of PLN on the inclusion of PT PJB in SPC. October 2014 December 2014 December 2015 2016

Groundbreaking Commercial Operation Date

December 2016 2019

LATEST UPDATE PLTA Karangkates IV & V encountered obstacles in funding scheme determination as it is subject to approval by six (6) members of the consortium. As a result, the EPC cost is yet to be determined.

Arrangement for Power Purchase Agreement (PPA) was delayed because the Special Purpose Company (SPC) has not been formed due to a pending written approval from the Board of Directors of PLN for PT Pembangkit Jawa Bali, a member of the SPC. Once the SPC is formed, the consortium will arrange the license for SIPPA.

The Feasibility Studies (FS) for PLTA Karangkates IV & V and Kesamben were completed in December 2015.

The FS for PLTM Lodoyo II was completed in October 2014, with the basic design and DED finalized in December 2015.

FUNDING SCHEME PLTA Karangkates IV & V and PLTA Kesamben are potentially funded through a synergy among State-Owned Enterprises consisting of PT Pembangkit Jawa Bali (PJB), PT Wijaya Karya, PT Waskita Karya, PT Hutama Karya, PT Brantas Energi, and Perum Jasa Tirta I.

PLTM Lodoyo potentially uses funds from SOE synergy that comprises PT Pembangkit Jawa Bali (PJB), Perum Jasa Tirta I, and PT Brantas Energi.

Both consortiums are awaiting direct appointments as project initiators from PT PLN with a recommendation letter from the Ministry of PPN/Bappenas (National Development Planning Agency).

LAND ACQUISITION

PLTA Karangkates IV & V will use land owned by Perum Jasa Tirta I. Land procurement for PLTA Kesamben is awaiting the signing of Power Purchase Agreement (PPA).

PLTA Lodoyo does not require land procurement.

72 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 73 PANIMBANG – SERANG TOLL ROAD Borrow-to-use Spatial Plan Environmental Permit for Forest Land Permit Acquisition Investment Value : Rp 12 trillion Area (IPPKH) Funding Scheme : Potential for PPP Location : Banten Has been registered Has yet to be issued Not requiredH as yet to be started 13 Implementing Agency : Indonesia Toll Road Authority (BPJT) Planned Construction Commencement Date : 2017 Planned Commercial Operation Date : 2018

Financial Close Construction Commercial Operation Target PROJECT DESCRIPTION Projected in July 2017 Projected to 2018 The toll road development for the length of 83.6 km to provide access to the Tanjung Lesung Special commence in July Economic Zone (SEZ) and Ujung Kulon National Park. 2017

PROJECT SIGNIFICANCE LATEST UPDATE Aside from supporting tourism growth in Tanjung Lesung and Ujung Kulon National Park, this toll road is expected to reduce logistic costs for goods delivery from industrial estates in Pandeglang to ports in The Ministry of PWPH shall stipulate the route selected under the updated feasibility study delivered by the Provincial Jakarta or vice versa. Government of Banten. Since September 2015, KPPIP has provided facilities for developing VfM study and EIA (AMDAL) documents. To prepare VfM study, KPPIP has coordinated with BPJT and the Directorate General of Bina Marga as PROJECT IMPLEMENTATION SCHEDULE well as the Regional Government and decided that the findings of the study shall be used as the basis for funding scheme determination. EIA (AMDAL) documents were developed in coordination with DG Bina Marga as the initiator. Conclusion drawn from the results of Environment Impact Analysis (ANDAL) confirms that this toll road construction is environmentally feasible, and that DG Bina Marga may proceed with the next stage of the process, which is the Environmental Pre-feasibility Detailed Engineering Impact Assessment application for the Environmental Permit. Study Feasibility Study Design (DED) (EIA) DG Bina Marga is in the process of drafting documents for land acquisition planning containing a basic study on April – December 2015 December 2015 September – December environmental impacts. Location Determination by the Governor of Banten is expected to be issued within 1-2 months 2016 2015 after the submission of the documents.

FUNDING SCHEME Funding Scheme Feasibility Investment Tender Guarantee Determination Support/VGF The results of VfM study concluded that the optimum funding scheme is PPP using availability payment scheme from the State Budget (APBN) or Supported-Build-Operate-Transfer (SBOT) with Viability Gap Funding (VGF). The funding 2016 Awaits funding Awaits funding Awaits funding scheme scheme is to be determined as early as 2016. scheme determination scheme determination determination VfM study concluded LAND ACQUISITION the project is likely to adopt PPP In a Coordination Meeting on Panimbang – Serang Toll Road held on 14 July 2015, it was agreed that the process for land scheme using acquisition shall be pursuant to Law No. 2 of 2012 on Land Acquisition for Public Interest. The estimated land needed for Availability Payment or Serang – Panimbang Toll Road is 700-800 hectares in area. Ministry of Public Works and Public Housing (MoPWPH) has SBOT with VGF determined the amount of budget needed to procure the land in 2016. Location Determination by Governor of Banten is expected at the beginning of 2016.

Based on the study interim results, the majority of routes are located in plantations and irrigated fields owned by the Government which shall not be occupied by the community. The inhabitants living on land potentially impacted by the toll road plan are less than 10% of the total area of land needed for the toll road.

74 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 75 MANADO – BITUNG TOLL ROAD PT Banten West Java, as the developer of Tanjung Lesung Special Economic Zone, has expressed its willingness to acquire land for the first 25 km following the issuance of Location Determination and the signing of cooperation agreement between the Ministry of Public Works and Public Housing and PT Banten West Java that guarantees that the cost of land Investment Value : Rp 3.9 trillion acquisition for the first 25 km from PT Banten West Java will be reimbursed by State Budget. Funding Scheme : PPP supported by the Government in the form of partial construction Location : North Sulawesi NEXT STEPS 14 Implementing Agency : Indonesia Toll Road Authority (BPJT) Planned Construction Commencement Date : 2017 1 The signing of joint-operation agreement between the Ministry of Public Works and Public Housing Planned Commercial Operation Date : 2018 (MoPWPH) as the agency that needs the land and PT Banten West Java for land procurement process by a business entity.

The issuance of Determination of Locations for the implementation of land procurement by the PROJECT DESCRIPTION 2 Governor of Banten is to be done after the submission of the documents for land procurement plan by Ministry of PUPR. This 39-km toll road shall connect two major cities in North Sulawesi, Manado and Bitung. This project is divided into two (2) stages, namely (1) Section 1: Manado – Airmadidi and (2) Section 2: Airmadidi – Bitung. 3 Preparation for investment auction at the beginning of 2016. PROJECT SIGNIFICANCE

This project aims to support the increased traffic in the Manado – Bitung route, enhancing the tourism sector as well as economic growth in Manado, North Minahasa, and Bitung. This toll road will also serve as the main access road to Bitung Special Economic Zone (SEZ) and Bitung International Hub Port, which will be developed.

PROJECT IMPLEMENTATION SCHEDULE

Pre-feasibility Detailed Engineering EIA (AMDAL) Feasibility Study Study Design (DED) Documents

Completed in 2012 Completed in 2012 Completed in 2013 Completed in 2013

Determining Feasibility Investment Tender Guarantee Funding Scheme Support/VGF

Has been decided Preparation for Partial construction Has yet to be investment tender; by the Government processed Four (4) business

76 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 77

LAND ACQUISITION Environmental Borrow-to-use Land Spatial Plan Permit Permit for Forest Land acquisition process for Manado – Bitung Toll Road has started since June 2015 where land acquisition process for Area (IPPKH) Procurement Section 1 (Manado – Airmadidi) has reached 90.16% using IDR 6.72 Billion from the Regional Budget of South Sulawesi. The land acquisition fund has been allocated in the 2016 Regional Budget. Until the end of 2015, negotiation on, land Has been registered Has been issued Not required Location Determination verification of, and payment for the land would be done to finalize land procurement for Section 1. was issued in April;

Land acquisition per Following the issuance of Location Determination by the Governor of North Sulawesi on 22 March 2012 and its revision December 2015 had on 7 April 2015, land acquisition for Section 2 (Airmadidi – Bitung) was targeted to have started in August of 2015. At the achieved 31.55% of moment, land measurement for Section 2 is in progress and projected to complete in 2016. the target

NEXT STEPS

Financial Close Construction Commercial Operation Target 1 Implementation of investment tender in mid-2016.

Projected to complete Projected to 2018 Confirmation of allocation of 2016 budget for land acquisition funds by the in December 2016 commence in February 2 Provincial Government of North Sulawesi and continuation of land procurement 2017 for Section 2.

Acceleration in negotiations between Ministry of Finance and the People’s 3 LATEST UPDATE Republic of China as the lender regarding an additional loan of USD 600 million for partial construction by the Government. BPJT conducted a pre-qualification selection from July to August 2015. The notification of the pre-qualification results was issued in September 2015, where four business entities were declared as qualified. BPJT further made preparations for investment tender expected to take place in the middle of 2016.

FUNDING SCHEME

The funding scheme of this project is Supported-Build-Operate-Transfer (SBOT). The Government will provide support in the form of partial construction for Section 1, the Manado – Airmadidi route for the length of 14 km. The fund used for the construction of section 1 comes from State Budget through loan from the Government of the People’s Republic of China (PRC). The construction of Section 2, the Airmadidi – Bitung route for the length of 25 km will be implemented by private sector investment is estimated at IDR 3 Trillion. This fund from the private sector will be allocated to finance construction, operations, and maintenance during concession period.

Financing for land acquisition comes from the 2015 State Budget amounting to IDR 19 Billion for section 1 and approximately IDR 440 Billion for section 2. The Provincial Government of North Sulawesi also provides funding support through the 2016 Regional Budget amounting to IDR 6.72 Billion for land acquisition for section 1 and IDR 100 Billion for section 2.

78 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 79 BALIKPAPAN – SAMARINDA TOLL ROAD Environmental Borrow-to-use Spatial Plan Land Permit Permit for Forest Procurement Investment Value : Rp 11.4 trillion Area (IPPKH) Funding Scheme : PPP supported by the Government in the form of Has been registered Has been issued Has been issued Location Determination partial construction revision has been Location : East Kalimantan issued in April 2009 Implementing Agency : Indonesia Toll Road Authority (BPJT) 15 Planned Construction Commencement Date : 2016 Land procurement as Planned Commercial Operation Date : 2018 of December 2015 had reached 80%

PROJECT DESCRIPTION Financial Close Construction Commercial Operation Target This 99 km toll road will connect two largest cities in East Kalimantan, namely Balikapapan and Samarinda. This project is divided into two sections, Section 1 consists of Package 1 (25.07 km) and Package 5 (11.09 Projected in October Projected to start in August 2018 km) and Section 2 consists of Package 2 (23.26 km), Package 3 (21.9 km) and Package 4 (17.7 km). 2016 November 2016

PROJECT SIGNIFICANCE LATEST UPDATE This toll road will support palm oil, coal, oil and gas, and agriculture-based industrial estates in the two cities and along the toll road. This toll road project will also support the projected increase of passengers and goods BPJT held a pre-qualification tender in August 2015 and five companies were qualifed. traffic as well as reduce logistic costs and travel time between Samarinda and Balikpapan. FUNDING SCHEME PROJECT IMPLEMENTATION PLAN Funding scheme for this project is Supported Build-Operate-Transfer (SBOT). This project will use a PPP scheme with a partial construction support for Packages 1 and 5 from the Central Government and the Provincial Government of East Environmental Kalimantan. The private sector will play a role as a partner for the construction of Packages 2-4 and the operations of Pre-feasibility Detailed Engineering Impact Assessment the toll road for all packages. Study Feasibility Study Design (DED) (EIA) LAND ACQUISITION Has been completed Completed in 2014 Has been completed Completed in 2014 The Provincial Government of East Kalimantan has allocated IDR 1.2 Trillion for land acquisition, which will be deemed as a sunk cost and IDR 1.5 Trillion for construction. The Provincial Government of East Kalimantan has expressed its commitment to increase the fund from Regional Budget if necessary. The Provincial Government of East Kalimantan has sent a letter to BPJT stating that land acquisition has exceeded 75%, thus, BPJT may conduct tender. Progress in land procurement per December 2015 had reached more than 80% and the vast majority of land is in the process of receiving payment for monetary compensation from the Provincial Government of East Kalimantan.

NEXT STEPS

1 Implementation of investment tender in mid-2016.

2 Acceleration in procurement process for the remaining land.

3 Additional documents on details of land acquisition from the Provincial Government of East Kalimantan for Bina Marga are to be included in a complete set of tender documents.

80 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 81 FOUR TRANS SUMATRA TOLL ROAD SECTIONS

Investment Value : Rp 31 trillion (four first priority sections) Financial Close Construction Commerccial Funding Scheme : Assignment of PT Hutama Karya Operation Target Location : North Sumatra, Riau, South Sumatra, and Lampung Funding achhieved in Seectiion 3 & 2 are in Auggust 2018 16 Implementing Agency : Assignment of PT Hutama Karya December 2015 progresse Planned Construction Commencement Date : 2015 (for some sections) Commercial Operation Commencement Date : 2016 (Section 3 of Medan - Binjai) Fuundingg scheme was deeetermineed in Decembber 2014 (70% PROJECT DESCRIPTION of Sttate Capilital The 304 km Trans Sumatra Toll Road will connect Sumatra Island from Aceh to Bakauheni. Phase 1 consists Injectiion of 8 sections, which are divided into four initial sections: (1) Medan - Binjai, (2) Palembang - Indralaya, (3) achievedd and 30% Pekanbaru - Dumai, (4) Bakauheni - Terbanggi Besar; and four additional sections: (5) Terbanggi Besar - was PTTL SMI’ s loan) Pematang Panggang, (6) Pematang Panggang - Kayu Agung, (7) Palembang – Tanjung Api-Api and (8) Kisaran Fundinggg aggreement – Tebing Tinggi. with PT SMI has been done PROJECT SIGNIFICANCE

The purpose of this project is to improve connectivity, reduce logistic costs, and stimulate industrial growth on the island of Sumatra. PROJECT IMPLEMENTATION PLAN PROJECT IMPLEMENTATION PLAN Palembang – Indralaya Section Medan – Binjai Section Pre-feasibility Feasibility Study DED EIA Documents Study Pre-feasibility Feasibility Study DED EIA Documents Study Has been completed Has been completed Available and Has been completed

Has been completed Has been completed Available and Has been completed completion of land acquisition completion of land procurement Borrow-to-use Environmental Spatial Plan Permit for Forest Land Ennvirronmental Borrow-to-use Land Permit Acquisition Spatial Plan Area (IPPKH) Permit Permit for Forest Acquisition Area (IPPKH) Has been registered Has been issued Not required Section 1: completed Has been registered Has been issued Has been issued Sectiion 1: 2015 – 2016 in 2015 Sectiion 2 & 3: Section 2 & 3 are estimated completion projected to complete in 2016 (several in 2016 (several parcels are being parcels are still being validated by BPN and validated by BPN and awaitinii g payment of awaiting payment of a monetary compensa- Monetary Compensa- tion by DGDG Bina MaMargaa tion by DG Bina Marga) B g

82 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 83 Financial Close Construction Commercial Financial Close Construction Commercial Operation Target Operation Target

Funding scheme was Section 1 & 3 are in August 2018 Funding scheme was Section 1 & 3 are in August 2018 determined in progress determined in June progress 2015 (45% of State December 2014 (70% Capital Injection of State Capital 55% is loan) Injection - partially achieved, 30% from Some creditors are PT SMI’s loan) being studied Funding agreement by PT SMI has been entered into PROJECT IMPLEMENTATION PLAN Pekanbaru – Dumai Section PROJECT IMPLEMENTATION PLAN Bakauheni – Terbanggi Besar Section Pre-feasibility Feasibility Study DED EIA Documents Study Pre-feasibility Feasibility Study DED EIA Documents Study Has been completed Has been completed Available and Completed

Has been completed Has been completed Available and Completed completion of land procurement completion of land procurement Environmental Borrow-to-use Land Spatial Plan Permit Permit for Forest Area Borrow-to-use Acquisition Environmental Land Spatial Plan Permit for Forest Permit Area (IPPKH) Acquisition Has been registered Issued Coordination with the The majority of land is but Regency Spatial Ministry of Environ- ment and Forestry is Has been registered Has been issued Not required Section 1-4: await Plan still awaits inventoried. required to results of appraisal and determination of forest determine status of payment of Monetary area to become APL forest area to Compensation become APL for parts waiting for acquisition.

Land acquisitions for the four sections are projected to complete in 2016

84 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 85 LAND ACQUISITION Financial Close Construction Commercial Operation Target The total budget needed to acquire land for the first four sections of 304 km is IDR 3.178 Trillion. Currently, land acquisition process is underway, and there are several obstacles with regard to right relinquishment process of the land owned by Funding scheme was Has yet to start July 2019 the community for Medan-Binjai section and Palembang-Indralaya section. Furthermore, Location Determination for determined in June Development Approval Letter (SP2LP) for Bakauheni-Terbanggi Besar section has only been partially issued. 2015 (45% of State Capital Injection has Medan – Binjai Section not been achieved, 55% loan) Location Determination has been issued and land acquisition is at 70% of the total 17 km. The majority of Creditors are being land acquired belongs to State-Owned Plantation Company II (PT PN II). At the moment, appraisal, inventory, studied identification in five villages and preparation for deliberation in four villages are in progress.

Palembang – Indralaya Section LATEST UPDATE Location Determination has been issued, and land procurement has achieved 60% of the total 22 km. The Presidential Regulation No. 117 of 2015 on the Amendment to Presidential Regulation No. 100 of 2014 on Acceleration in completion of administrative procedures for the handover of the land is in progress. Toll Road Construction in Sumatra has been issued. This amendment was made to accommodate 24 sections assigned to PT Hutama Karya, where four additional priority sections, namely Pematang Panggang – Terbanggi Besar, Kayuagung Bakauheni – Terbanggi Besar Section – Pematang Panggang, Palembang – Tanjung Api-Api, and Tebing Tinggi – Kisaran are estimated to be completed between 2018 and 2019. Location Determination has been fully issued for a parcel of land that measures 140 km in length and 120 m in width. As much as 4% of land procurement has been achieved, and appraisal as well as validation process for Government Regulation No. 79 of 2015 on the Second Amendment to Government Regulation No. 29 of 2000 on the majority portion of the land needed are in now in progress. Construction Services Delivery has been issued. This regulation accommodates the implementation of construction for works assigned to SOE. Land procurement and construction process are divided into four (4) large groups, namely (1) Bakauheni – Sidomulyo, (2) Sidomulyo – Kotabaru, (3) Kotabaru – Metro, and (4) Metro – Terbanggi Besar. The circulation of Service Level Agreement (SLA) signing for Acceleration in Construction of Toll Road in Sumatra at the Ministerial and Gubernatorial level is in progress. This SLA is intended to obtain approval and joint commitment to Pekanbaru – Dumai Section accelerate toll road construction in Sumatra through expedited licensing process, synchronization, and harmonization of policies as well as united actions between stakeholders comprising the Minister of PWPH, the Minister of Finance, Acquired land has reached 19.7 km of the total 130 km and another 9.5 km is in the process of payment for the Minister of State-Owned Enterprise (SOE), the Minister of Home Affairs, the Minister of Agrarian Affairs and Spatial Monetary Compensation by DG Bina Marga. There was a complete revision to the initial plan of the 126-km land Planning, the Minister of Environment and Forestry, the Governor of North Sumatera, the Governor of Riau, the Governor needed to 130 km. of South Sumatera, the Governor of Lampung, and the President Director of PT Hutama Karya. NEXT STEPS

FUNDING SCHEME 1 Collecting signatures for Service Level Agreement by the relevant Minister and Governor. This project uses funding scheme through the assignment to PT Hutama Karya where the Government grants State Capital Injection for the equity portion, while the loan portion will come from domestic funding and direct lending scheme. 2 Acceleration in completion of land acquisition until the end of 2016. Land acquisition fund will be fully covered by the Central Government through the Ministry of Public Works and Public Housing.

86 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 87 NORTH – SOUTH JAKARTA MRT Land Acquisition Financial Close Construction Commercial Operation Projection Investment Value : Rp 25 trillion Funding Scheme : The State Budget and Regional Budget of DKI Jakarta using Location December 2015 Phase 1: Phase 1: Foreign Loan Determination August 2013 – projected in August Location : DKI Jakarta has been February 2019 2018 (partial) 17 Project Owner : The Provincial Government of DKI Jakarta issued Construction Commencement Date : 2013 Phase 2: Phase 2: 2018 – 2020 2020 (estimation) Commercial Operation Date : 2019 (estimation)

PROJECT DESCRIPTION LATEST UPDATE The development of Mass Rapid Transit (MRT) in the capital city is aimed to improve public transportation facilities and reduce traffic congestion in Jakarta. The first stage of this project consists of 2 phases: (1) Lebak KPPIP facilitated the acceleration in the signing of an exchange note required to ensure the execution of the loan Bulus - Bundaran HI and (2) Bundaran HI - Kampung Bandan. agreement. An intensive coordination between the Ministry of Finance, the Ministry of National Development Planning/ Bappenas, and the Ministry of Foreign Affairs is required to agree upon substance and mechanism of the loan deposit PROJECT SIGNIFICANCE on the Exchange Note, which is part of the loan agreement process. The Exchange Note was signed on 27 November 2015, whereas the signing of the loan agreement was on 4 December 2015. MRT Jakarta is a public transportation that will help to resolve traffic congestion, improve mobility of the people, reduce carbon emission and create new job opportunities in DKI Jakarta. At the moment, construction of depot, corridor, and station for Phase 1 is in progress. Moreover, there is a potential risk of cost overrun that has not been settled. It may be charged to the Central Government or the Provincial Government DKI Jakarta. The Finance and Development Supervisory Board (BPKP) of DKI Jakarta Province is presently conducting PROJECT IMPLEMENTATION PLAN an audit. Following the completion of the audit, the Provincial Government of DKI Jakarta will ask for financial inputs from the BPKP of DKI Jakarta Province.

Pre-feasibility Detailed Engineering EIA (AMDAL) Feasibility Study Study Design (DED) Documents FUNDING SCHEME

MRT Jakarta project uses State Budget funding with foreign loan from Official Development Assistance (ODA) of the Phase 2: 2015 Phase 2: 2015 Phase 2: 2016-2017 Has been completed Government of Japan amounting to IDR 14.3 Trillion. This loan is divided into three loan packages: Package 536 in the amount of JPY 1.869 Billion, Package 554 in the amount of JPY 48.15 Billion and Package 571 in the amount of JPY 75.218 Billion. Borrow-to-use-per- Spatial Plan Environmental Other Permits LAND ACQUISITION Permit mit for Forest Area (IPPKH) Land procurement as of December 2015 has achieved 86% of the total area needed and is likely to fall behind the Has been registered Has been issued Not required Recommendations by deadline due to unfinished submission of administrative evidence by the land owners for the land payment, ownership Minister of Youth and dispute, and difficulties in meeting the land owners. Sports for Relocating Lebak Bulus Stadium The process of land acquisition is still in progress and in need of acceleration in a number of locations encompassing (December 2014); CP 101 (depot, planned corridor DK Terminal, Pasar Jumat and Lebak Bulus Station detour corridor), CP 102 (corridor, special bridge corridor, Jl. Kartini/Simatupang corridor) and CP 103 (corridor, Blok A station, Blok M station, H. Nawi Approval of Minister of station, and Sisingamangaraja stations). Finance for POLRI’s land as a grant (March 2015)

88 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 89 NEXT STEPS SOEKARNO – HATTA INTERNATIONAL AIRPORT EXPRESS RAILWAY

1 Expedite the audit process done by DKI Jakarta Provincial Government regarding investment funds Investment Value : Rp 24 trillion that have been expended and decide on the amount of additional investment needed. Funding Scheme : Potential Assignment to BUMN Location : DKI Jakarta and Banten 2 Top down decision regarding which party is better suited to take on the additional investment Project Owner : Ministry of Transportation fund needed. 18 Construction Commencement Date : 2018 Commercial Operation Date : 2022 3 Completion of land acquisition to reach operation target in early 2019.

PROJECT DESCRIPTION

SHIA Express Railway project serves as an alternative transportation to SHIA with a 30-minute estimated maximum travel time from the city center to the airport. The SHIA Express Railway, with a 37 km track from Soekarno-Hatta Airport to Halim Perdanakusuma Airport, will have stations within the city that can be easily accessed via road and other transportation modes, and that are located close to centers of commercial activities as well as densely populated residential areas that are connected to the MRT Jakarta transportation system and other railway lines.

At the airport, the stations will be located near passenger terminals and at a walking distance from the departure terminal, or from the baggage collection place and the arrival terminal.

Moreover, the SHIA Express Railway will prioritize user experience by providing passenger baggage storage, shortening travel time and providing reliability compared to other transportation modes. This railway will also have faster speed compared to the Commuter Line Train and will have fewer stops.

PROJECT SIGNIFICANCE

The purpose of this project is to accommodate the need for access from and to SHIA, considering the growing capacity and passenger traffic at SHIA. The economic benefit of this project will help the improvement of commercial and industrial activities in the surrounding area as well as create job opportunities for local people.

PROJECT IMPLEMENTATION SCHEDULE

Pre-feasibility Detailed Engineering EIA (AMDAL) Feasibility Study Study Design (DED) Documents

Has yet to be Has yet to be Has yet to be Has yet to be determined determined determined determined

90 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 91 Borrow-to-use Determination of Environmental Spatial Plan MAKASSAR – PAREPARE RAILWAY Funding Scheme Permit Permit for Forest Area (IPPKH) Investment Value : Rp 6.4 trillion Funding Scheme : State Budget (APBN) Assignment Has yet to be issued Regional Regulation Not required Location : Makassar and Parepare, South Sulawesi planned to SOE of DKI Jakarta No.1 Project Owner : Ministry of Transportation and Presidential of 2014 (Halim – 19 Construction Commencement Date : 2015 Regulation is being Palmerah – SHIA Commercial Operation Date : 2018 made corridor); Regional Regulation of DKI PROJECT DESCRIPTION Jakarta No. 1 of 2012 (SHIA – The Makassar – Parepare 144 km railway project constitutes part of the Trans Sulawesi railway network Manggarai route) that will connect the entire Sulawesi Island.

PROJECT SIGNIFICANCE Commercial Land Acquisition Financial Close Construction This railway in the western part of South Sulawesi will serve the demand for passengers and goods Operation Target transportation as well as connect ports in Parepare and in Makassar.

Has yet to be Has yet to be Has yet to be Has yet to be determined determined determined determined IMPLEMENTATION SCHEDULE PLAN LATEST UPDATE Activities

Pr The Ministry At the moment, the project is being temporarily put off for a further feasibility study. The study on funding, legality, and of Transportation project technicality has been handed over to the Ministry of Transportation. Notice of award The Ministry of Transportation FUNDING SCHEME Land Acquisition The Ministry of Agrarian Under the direction of the Minister of Transportation, the funding of this project is likely to adopt SOE Assignment Affairs and scheme. A Presidential Regulation stipulating the assignment to SOE is being made. Spatial Planning

Construction Winning LAND ACQUISITION Bidder Winning The SHIA Express Railway will need 84.68 ha land, where most of the land is owned by the Government of Indonesia. Operation Bidder The land owned by the private sector registered with the Ministry of Agrarian and Spatial Planning is estimated to be 5.2 km, or 13.09 ha. The land required for Dukuh Atas Station and Manggarai Station is not owned by the private FUNDING SCHEME sector. Meanwhile, the land required for three stations (Pluit, Tanah Abang and Halim) is estimated to be 16.86 ha. It is necessary to take into account that Halim Station requires 7.2 ha residential land while Tanah Abang Station requires 0.3 This project will use State Budget through the Ministry of Transportation. ha residential land, which is not registered with the Ministry of Agrarian and Spatial Planning. The required unregistered land is not yet included in the calculations of the total land requirement. Total estimated needs for non-government LAND ACQUISITION land as well as residential area owned by the private sector are ~IDR 2.3 Trillion. The land acquisition and resettlement processes will refer to Law No. 2 of 2012 and Presidential Regulation No. 71 of 2012. The Central Government has allocated IDR 350 Billion for the land acquisition compensation for the length of 70 km. The Ministry of Transportation estimated that the total amount needed for land acquisition is Rp 2.4 trillion. NEXT STEPS

Project implementation starts once the Presidential Regulation governing the assign- ment to SOE is issued.

92 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 93 KUALA TANJUNG INTERNATIONAL HUB SEAPORT LATEST UPDATE Investment Value : Estimated at Rp 30 trillion At the moment, fabrication and laying of railway lines along the prepared sections are in progress. In 2016, the track will Funding Scheme : Potential for PPP expand to Makassar and to Parepare from Barru Regency. Location : Kuala Tanjung, North Sumatera Project Owner : Ministry of Transportation 20 Construction Commencement Date : 2017 NEXT STEPS Commercial Operation Date : 2020

1 Completion of railway lines construction of Stage I.

2 Planning of construction of railway line extension in the direction of PROJECT DESCRIPTION Makassar and Parepare from Barru Regency. The Kuala Tanjung international hub port aims to create an entrance for logistic flow to the western region of Indonesia. Based on the assessment result conducted by the Ministry of Transportation in 2015, the development of this seaport will increase the volume of container traffic up to 12.4 million TEUs in 2039.

The increased volume of container traffic comes from the demand from Sei Mangkei Special Economic Zone (SEZ) to Jambi Province, and the seaport is projected to obtain additional demand from four competitors, namely Port of Singapore, Port of Tanjung Pelepas, Port Klang, and Penang Port.

PROJECT SIGNIFICANCE

It is expected that with this international hub, Indonesia may benefit from seaport demands that have long been enjoyed by Singapore and Malaysia. Based on the 2012 Kuala Tanjung Port Plan, the construction of this seaport will accommodate cargoes to support the development of the Sei Mangkei SEZ and the Port of Belawan.

PROJECT IMPLEMENTATION PLAN

Pre-feasibility EIA Study Feasibility Study DED Documents

December 2013 2016 2016 2016

Funding Scheme Investment Feasibility Determination Tender Support/ VGF Guarantee

Has yet to be 2016 Awaits results of Awaits results of determined feasibility study feasibility study

94 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 95 Borrow-to-use Environmental Spatial Plan Permit for Forest Land Permit BITUNG INTERNATIONAL HUB PORT Area (IPPKH) Acquisition

Has been registered Has yet to be issued Unknown Land acquisition Investment Value : Estimated at of Rp 34 trillion for the land-side area Funding Scheme : Potential for PPP Location : Bitung, North Sulawesi 21 Project Owner : Ministry of Transportation Financial Close Construction Operation Construction Date : 2017 Projection Commercial Operation Date : 2019

Has yet to be 2017 2020 determined PROJECT DESCRIPTION This seaport is chosen as an International Hub Seaport in the Eastern Region of Indonesia with the follow- ing considerations: LATEST UPDATE 1. Growth in the Eastern Region of Indonesia has a higher potential compared to the Western Region of Indonesia; The Ministry of Transportation has conducted a feasibility study for the construction of Kuala Tanjung International Hub 2. The logistic dynamics in the Eastern Region of Indonesia are expected to grow exponentially. Port with a Public-Private Partnership (PPP) funding scheme. However, the feasibility study still needs improvement to find the best and fastest funding scheme among the following options: State Budget, assignment of SOE (PT Pelindo I) PROJECT SIGNIFICANCE or a PPP scheme. KPPIP will allocate budget to the feasibility study improvement. This seaport will support the development of Bitung Special Economic Zone (SEZ), which is declared as one of the Government of Indonesia’s priorities. In addition to the above, the existence of Bitung International FUNDING SCHEME Hub Port will also support industrial activities in the eastern region of Indonesia, including Ambon and Ternate (agriculture, industry and mining) as well as Samarinda, Balikpapan, Tarakan and Nunukan (coal, petroleum The funding scheme has not been determined. This project has a potential of adopting a PPP scheme. The role of the and plywood). government and that of the private sector will be determined later following the completion of the study.

PROJECT IMPLEMENTATION PLAN LAND ACQUISITION

Currently, land acquisition process has yet to be determined and is still waiting for to the completion of the study. Pre-feasibility Study Feasibility Study NEXT STEPS December 2013 2016 1 To encourage the Ministry of Transportation to accelerate the preparation of the Kuala Tanjung International Hub Port project through coordination with KPPIP. LATEST UPDATE 2 To revise to the policy in the port sector with regard to the synchronization The location has been determined in the existing port location. If capacity expansion is necessary, then it will of the Port of Belawan, the Port of Tanjung Sauh (Batam) as well as the be expanded to the location of Bitung SEZ. effective implementation of the cabotage system. The government of the People’s Republic of China is interested in establishing cooperation with the 3 To prepare regional masterplan to be the strategic reference for Government of Indonesia to develop Bitung International Hub Port and the surrounding SEZ. On the other regional development in the future. hand, the Government of South Korea also conducts a study with regard to the development of Bitung SEZ.

Under the direction of the Minister of Transportation, part of project construction will be assigned to PT Pelindo IV; however, the determination of development scheme needs to be made in writing.

96 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 97 FUNDING SCHEME REVITALIZATION OF TEN (10) AIRPORTS This project has a potential of adopting PPP scheme. The role of the government and that of the private sector will be determined later following the completion of the study. Considering the dynamics encountered during project development that has been stagnant throughout 2015, KPPIP decided to remove this project from KPPIP priority projects. LAND ACQUISITION 22 Currently, land acquisition process has yet to be determined and is still waiting for the completion of the study.

NEXT STEPS

1 Following the studies by the Government of the People’s Republic of China and the Government of South Korea, it is necessary to accelerate the issuance of top down instructions with regard to the development scheme of Bitung International Hub Port and Bitung SEZ in the future to provide a clear deadline for the implementation of the Bitung International Hub Port project.

Preparation for regional masterplan as the strategic reference for future 2 regional development.

98 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 99 100 KPPIP’s Report for August 2015 – December 2015 KPPIP’S FUTURE PLAN

KPPIP’s Report for August 2015 – December 2015 101 KPPIP’s Future Plan

During the first year of its operation, KPPIP made every endeavour to fulfill all mandates it received under Presidential Regulation No. 75 of 2014. Below is the summary of the completion of the six mandates including the highlights of the achievement through out 2015:

KPPIP’s achievements in 2015: Having completed 6 mandates as stipulated in Presidential Regulation No. 75 of 2014, particularly in increasing project preparation quality and encouraging debottlenecking, improvement to policies/regulations as well as capacity development

2. Model Projects with quality as per 1. Improvement in Project International Pre-Feasibility Study standard 3. Determination of Funding Preparation Quality and provision of other project preparation Scheme facility

Preparation Encouranging Minister of of OBC Transportation to determine

Quality funding scheme for SHIA

Guidelines Express Railway (resolving uncertainty over PPP scheme)

Preparation of Preparation of AMDAL Encouraging Determination VfM using for Panimbang-Serang of funding scheme for quantitative Toll Road in order for the South Sumatra LRT under method for toll land to be procured in Perpres No. 116 of 2015 on road sector 2016 Assignment to SOE

4. Debottlenecking of and Acceleration 5. Improvement in policy and 6. Capacity Development in the Project regulations

Issuance of regulations Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ergo ita: non posse honeste vivi, nisi honeste vivatur? Utinam quidem dicerent alium alio beatiorem! Iam ruinas videres. Esse enim, nisi eris, non potes. Implementing Induction Issuance of Determination that support PPP namely of Location for PLTU Program for KPPIP’s MoF Regulation on PMO Batang accelerated to Availability Payment and July 2015 Regulation of Head of LKPP on procurement of Business Entity for PPP Consultant procurement to scheme review the proposal for Jakarta-Bandung High Speed Railway from Japan and PRC Issuance of Regulation of MoAASP/Head of LMA No. 6 of 2015 on Land Encouraging acceleration Acquisition in order to adjust in carrying out a tender for to the Revision of Perpres investment in Balikpapan-Samarinda Toll Road and Manado-Bitung Toll Road from Q4 to become Q2 of 2015

KPPIP Report Agustus 2014 - Desember 2015 2 KPPIP’s Report for August 2015 – December 2015 103 Achievements in 2015 are in line with KPPIP’s roadmap1 prepared for a period of three years (2015 – 2017). Thus, the KPPIP’s Future Plan: Focus and Target of KPPIP’s Achievement for 2016 target and strategy as summarized on the roadmap below are determined as a relevant target for KPPIP to achieve and meet in 2016. Meanwhile the strategies for implementation in 2016 have been broken down further into KPPIP’s business plan. The business plan has been approved by the Implementation Team. To execute the entire business plan, KPPIP has obtained a principle approval for a budget amounting to Rp 88.1 Billion. The following is KPPIP’s business plan for 2016: FOR

1KPPIP’s Roadmap of 2015 – 2017 has already been described in the performance report of the period of July 2014 – June 2015; changes have yet to be 2Category A Project is the project that needs more considerable efforts (more than 2 action plans). Category B Project is the project that requires 1 to 2 action made to such version. plans to achieve progress.

104 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 105 106 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 107 Glossary Glossary

AMDAL or EIA Environmental Impact Assessment LoI Letter of Intent ANDAL Environmental Impact Analysis LKPP National Public Procurement Agency A/P Availability Payment LRT Light Rail Transit APBD Regional Budget MoU Memorandum of Understanding APBN State Budget MRTJ Mass Rapid Transportation Jakarta Bappeda Regional Development Planning Agency MW Megawatt Bappenas National Development Planning Agency PTPIN or NCICD National Capital Integrated Coastal Development BBM Fuel Oil OBC Outline Business Case BBWS Large River Basin Organization ODA Official Development Assistance BED Basic Engineering Design PDAM Regional Drinking Water Company BLHD Regional Environmental Protection Agency GDP Gross Domestic Product BOD Biological Oxygen Demand PDF Project Development Fund BOT Build-Operate-Transfer Permenko Regulation of the Coordinating Minister BPJT Indonesia Toll Road Authority Perpres Presidential Regulation BPN National Land Agency PHLN Foreign Loan/Grant BUMD Regional Government-Owned Enterprise PPA Power Purchase Agreemment BUMN or SEO State-Owned Enterprise PJP Implementing Agency B2B Business to Business PJPK Government Contracting Agency CJPP Central Java Power Plant PLTA Hydroelectric Power Plant DED Detailed Engineering Design PLTM Micro-hydroelectric Power Plant EPC Engineering, Procurement and Construction PLTU Coal-Fired Power Plant FBC Final Business Case PMO Project Management Office FEED Front-End Engineering Design PMK Regulation of the Minister of Finance FS Feasibility Study PMN State Capital Injection GRR Grass Root Refinery PP Government Regulation G2G Government to Government VAT Value Added Tax HSR High Speed Railway KPBU or PPP Public-Private Partnership HVDC High Voltage Direct Current PT HBAP PT Huadian Bukit Asam Power IFC International Finance Corporation PT IIF PT Indonesia Infrastructure Finance IPAL or WWTP Waste Water Treatment Plant PT PGN PT Perusahaan Gas Negara (State-Owned Gas Transmission and IPP Independent Power Producer Distribution Company) IPPKH Borrow-to-use Permit for Forest Area PT PII or IIGF PT Penjaminan Infrastruktur Indonesia (Indonesia Infrastructure JICA Japan International Cooperation Agency Guarantee Fund) JSS Jakarta Sewerage System PT PLN PT Perusahaan Listrik Negara (State Electricity Company) KEK or SEZ Special Economic Zone PTPN PT Perkebunan Nasional (State-Owned Plantation Company) KLHS or SEA Strategic Environmental Assessment PT PwC PT Pricewaterhouse Cooper Advisory Indonesia MoAASP Ministry of Agrarian Affairs and Spatial Planning PT SMI PT Sarana Multi Infrastruktur MEMR Ministry of Energy and Mineral Resources PSN National Strategic Project MoNDP Ministry of National Development Planning RDMP Refinery Development Master Plan MoPWPH Ministry of Public Works and Public Housing RI Republic of Indonesia KfW Kreditanstalt für Wiederaufbau (German Development Bank) RPJMN National Medium-Term Development Plan KKPPI National Committee for the Policy on the Acceleration of Infrastructure Provision PRC People’s Republic of China KPPIP Committee for Acceleration of Priority Infrastructure Delivery RTRW Regional Spatial Plan KSP or EOP Executive Office of the President RUPTL Ten-Year Electricity Infrastructure Development Plan KUR Credits for Micro, Small and Medium Businesses SBOT Supported-Build-Operate-Transfer kV Kilo-volt SHIA Soekarno-Hatta International Aiport

108 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 109 Glossary List of Figures

SK Decision Letter Figure 1 Duties and Mandates from KPPIP in accordance with Presidential SLA Service Level Agreement Regulation No. 75 of 2014 SOP Standard Operating Procedure Figure 2 Increasing support for the development of Infrastructure in Indonesia SPAM Drinking Water Supply System SPC Special Purpose Company SPV Special Purpose Vehicle TA Transaction Advisory TCUN State-Acquired Abandoned Land TI or IT Information Technology Timja Working Team UP3KN National Electricity Development Program Implementation Unit UGR Monetary Compensation USD United States Dollar VfM Value for Money VGF Viability Gap Funding WTP Water Treatment Plant

110 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 111 112 KPPIP’s Report for August 2015 – December 2015 KPPIP’s Report for August 2015 – December 2015 113