Bus Rapid Transport Development in Greater Jakarta (Jabodetabek) Finance-Ready Proposal December 2015 Contents 1. Background ............................................................................................................................................................... 5 2. Introduction ............................................................................................................................................................... 8 3. Climate Finance in Indonesia ....................................................................................................................................... 13 3.1 Domestic Climate Finance ......................................................................................................................................................... 13 3.2 International Climate Finance .................................................................................................................................................... 14 4. Institutional Framework in Indonesia ............................................................................................................................. 15 5. Policy and Legal Framework......................................................................................................................................... 18 5.1 Presidential Decrees ................................................................................................................................................................. 20 5.2 Policy Instruments .................................................................................................................................................................... 20 6. Costs and benefits of NAMA Intervention ........................................................................................................................ 22 6.1 Input Parameter Selection ......................................................................................................................................................... 23 6.2 Indicators for Investment Analysis .............................................................................................................................................. 24 6.3 Assumptions and Data Requirements ......................................................................................................................................... 24 6.4 Scenario Description ................................................................................................................................................................. 26 6.4.2 Project Scenarios ................................................................................................................................................................... 26 6.5 Factors Affecting Mode Share Shift............................................................................................................................................. 27 6.6 Calculation............................................................................................................................................................................... 28 6.6.1 Emission Reduction Calculation .............................................................................................................................................. 28 6.6.2 Travel Time Reduction Calculation ........................................................................................................................................... 30 6.6.3 Detailed IRR and EIRR calculation ........................................................................................................................................... 32 6.6.4 Policy suggestions that can help accelerate mode shift from private to public transport ............................................................... 32 7. Sensitivity Analysis .................................................................................................................................................... 35 7.1 Sensitivity Analysis of Emissions Reduction ................................................................................................................................. 35 7.2 Sensitivity Analysis of IRR .......................................................................................................................................................... 37 7.3 Percentage Change in IRR/EIRR ................................................................................................................................................ 38 7.4 Summary ................................................................................................................................................................................. 46 8. Potential Barriers for Project Implementation .................................................................................................................. 47 8.1 Financial Barriers...................................................................................................................................................................... 47 8.2 Institutional/Regulatory Barriers ................................................................................................................................................ 47 8.3 Technological Barriers ............................................................................................................................................................... 48 8.4 Behavioral/Informational Barriers .............................................................................................................................................. 48 9. Capacities of Delivering Finance ................................................................................................................................... 49 10. The case for NAMA financing of the proposed BRT projects ................................................................................................. 50 References ....................................................................................................................................................................... 51 Annexures ........................................................................................................................................................................ 52 1 List of Figures Figure 1 - Map of Transjakarta ............................................................................................................................................................... 10 Figure 2 - Institutional Framework......................................................................................................................................................... 16 Figure 3- Policy measures for Climate Change mitigation undertaken in Indonesia .................................................................................... 19 Figure 4 – ER (tCO2) in Year 1 to ER (tCO2) in Year 10 in Scenario 1 ........................................................................................................... 36 Figure 5 - ER (tCO2) in Year 1 to ER (tCO2) in Year 10 in Scenario 2 ............................................................................................................ 36 Figure 6 - ER (tCO2) in Year 1 to ER (tCO2) in Year 10 in Scenario 3 ............................................................................................................ 37 Figure 7 - Percent Change in IRR vs Percent Change in Fuel Rate (Price of fuel per litre) - Project Scenario 1 ................................................ 38 Figure 8 - Percent Change in IRR vs Percent Change in Total Fuel Consumption - Project Scenario 1 ............................................................ 39 Figure 9 – Percent Change in IRR vs Percent Change in Passengers/yr. - Project Scenario 1 ....................................................................... 39 Figure 10 - Percent Change in IRR vs Percent Change in Fare Rate - Project Scenario 1 .............................................................................. 40 Figure 11 - Percent Change in IRR vs Percent Change in Depreciation on assets - Project Scenario 1 ........................................................... 40 Figure 12 - Percent Change in IRR vs Percent Change in Depreciation on Civil Works - Project Scenario 1 .................................................... 41 Figure 13 - Percent Change in IRR vs Percent Change in Total project cost incurred in the first three years - Project Scenario 1 ...................... 41 Figure 14 - Percent Change in IRR vs Percent Change in Bus Replacement Cost after 10 years of operation- Project Scenario 1 .................... 42 Figure 15 - Percent Change in IRR vs Percent Change in Bus Replacement Cost after 20 years of operation - Project Scenario 1 .................... 42 Figure 16 - Spider Graph of Percent Change in IRR - Project Scenario 1 .................................................................................................... 43 Figure 17 - Spider Graph of Percent Change in IRR - Project Scenario 2 .................................................................................................... 43 Figure 18 - Spider Graph of Percent Change in IRR - Project Scenario 3 .................................................................................................... 44 Figure 19 – Spider Graph of Percent Change in EIRR in Project Scenario 1 ...............................................................................................