KPPIP Achievement – Semester 1 2017

In order to ensure that the development plan for Patimban Port is inter-sectoral, KPPIP invited tender to the value of Rp 5.3 billion to draw up masterplan for highway and railway infrastructure to support integration of Patimban Port intermoda.

The masterplan prepared will result in recommendation for integrated infrastructure development plan including but not limited to national road, toll road and railroad tracks and by taking account of demand and easier access to Patimban Port as well as its synergy with the existing transportation infrastructure.

KPPIP has conducted consultation on Terms of Reference (KAK) and received inputs from the stakeholders including the Ministry of Public Works and Public Housing (PWPH) and the Ministry of Transportation. The designing of the masterplan started in June 2017 and is expected to finish in 2017.

West Semarang DWSS (SPAM) is a pilot project under the PPP scheme for cities in Indonesia. Project preparation included the determination of the funding scheme. In November 2016, the Minister PWPH sent letter No. PR.01.03-Mn/1096 regarding Operational Scheme for West Semarang DWSS (SPAM) to the Coordinating Minister of Economic Affairs to ask for guidance on the funding scheme for West Semarang DWSS (SPAM) project.

In response to the letter, DWSS (SPAM) development at the Ministry of PWPH, the City Government of Semarang, PDAM Kota Semarang, and PT IIF as the parties publishing Pre- Feasibiltiy Study of West Semarang DWSS (SPAM) in 2014. Based on the study conducted on technical and financial aspects, KPPIP and the stakeholders agreed on a PPP scheme as the funding scheme for West Semarang DWSS (SPAM) project.

The approval granted by the stakeholders is confirmed by the issuance of the letter from the Coordinating Minister of Economic Affairs to the Minister of Public Works and Public Housing (PWPH) No. S-55/M.EKON/03/2017 on 2 March 2017 containing decision that West Semarang DWSS is supported by adopting PPP funding scheme in accordance with the guidance given by the President of the Republic of Indonesia to involve private parties in infrastructure development as long as it is possible.

Project preparation is then continued by determining Semarang Regional Drinking Water Company (PDAM) as the GCA pursuant to Government Regulation No. 122/2015 and Ministerial Regulation No. 19/2016, and the provision of project development fund facility by the Ministry of Finance for West Semarang DWSS project in order to accelerate its preparation.

Following up the result of OBC prepared for Kuala Tanjung International Hub Port in December 2016, KPPIP has distributed the OBC documents and the result of discussions on it with the stakeholders at central and regional level. The recommendations offered in OBC can be carried out to determine the optimum funding scheme and to prepare infrastructure development plan in North Sumatera.

Based on the results of the analysis, the funding scheme offered is landlord scheme. This scheme allows a one-way chain of command for the development of Kuala Tanjung International Hub Port covering port area, port terminal and industrial zone. The bidding mechanism for Business Entity in every area will be further decided by the landlord so it will be open to the implementation of PPP scheme or assignment of SOE considering its >14% return on investment. The implementation of this landlord scheme allows the Government to provide support in terms of land procurement which covers port area, port terminal and industrial zone and whose management throughout the concession will be given to the successful bidder.

Given the scope offered is bundling of port area, port terminal and industrial zone, Memorandum of Understanding/MoU needs to be prepared to determine the landlord between the Ministry of Transportation and the Ministry of Industrial Affairs; the Ministry of Transportation will act as the landlord and the Ministry of Industrial Affairs continues to have authority over issuance of permits for the development of industrial zone. Based on the results of Committee Meeting held in June 2017, a further discussion is needed at technical level to agree on the follow-up for project preparation.

Palapa Ring Broadband project is divided into three packages, namely West, Central and East Packages. In mid-2016, West and Central Packages reached financial close. The financing of this project is sourced from syndicate of banks comprising PT Bank BNI (Persero), Bank Papua, Bank Maluku Malut, Bank Sulselbar, and Bank ICBC Indonesia. Total financing obtained from this syndicate of banks amounts to Rp4 Trillion or around 80% of project investment, which is Rp5.1 Trillion.

Following the financial close, the project covering 35 Districts/Cities in East Nusa Tenggara, Maluku, Papua and West Papua is expected to complete its construction within 18 months to allow its operation to start in September 2018. Becaues it is part of priority projects, KPPIP conducts monitoring of the projects’ progress with the Minsitry of Communication and Informatics (Kominfo), the Ministry of Finance, PT Sarana Multi Infrastruktur, and PT Penjaminan Infrastruktur Indonesia.

At the beginning of 2017, Cilacap RDMP encountered obstacles in its EIA process. The EIA is a critical part of a project’s preparation stage, in particular the issuance of Environmental Permit, which is a prerequisite for the issuance of Location Permit. PT Pertamina expects that the Environmental Permit will have been issued before groundbreaking which is initially predicted to be in July 2017.

Conformity with spatial plan, and permits for facilities are parts of the requirements to start assessment of environmental documents, issuance of Environmental Permit, and Permit for Determination of Location. Actions to deal with issues of non-conformity with spatial plan and the unavailability of permits for national road diversion are needed in Cilacap Oil Refinery revitalization. The Spatial Arrangement in Regional Regulation of Kabupaten Cilacap No. 9 of the Year 2011 on the Regional Spatial Plan of Kabupaten Cilacap Year 2011-2031, part of Cilacap RDMP is located in the area designated for non-industry. In addition, part of the expansion area of Cilacap RDMP will also lie on a lane now used as a national road.

In order to expedite issues of non-conformity with spatial plan and diversion of national road groundplan, KPPIP facilitates coordination in adjusting the spatial plan and obtaining approval for national road relocation. Discussion Meeting held on 22 March 2017 on Conformity of Spatial Plan with RU IV Cilacap RDMP Development Plan was chaired by the Assistant Deputy of Spatial Plan and Economic Strategic Zone of the Coordinating Minister of Economic Affairs and involved all related Ministries/Government Agencies.

The meeting resulted in a decision that in principle and under complementary hierarchy, the location planned for the development of Cilacap RDMP has conformed with the Regional Spatial Plan of Central Java and of Kabupaten Cilacap to allow assessment of environmental documents, issuance of Environmental Permit, and permits for determination of location. The result of the meeting is used as the basis for the issuance of letter No. 149/200/IV/2017 concerning Conformity of RU IV Cilacap RDMP Development Plan with the Spatial Plan on 27 April 2017 by the Directorate General of Spatial Plan, the Ministry of AASP/Land National Agency to the Governor of Central Java which reinforced the result of the meeting held on 22 March 2017.

The first meeting involving several parties related to diversion of national roads in particular PT Pertamina, the Directorate General of Bina Marga, and the Ministry of Public Works and Public Housing (PWPH) was held on 3 April 2017. Following the bilateral coordination between PT Pertamina and the Directorate General of Bina Marga, letter No. TN 13.03. Db/369.1 on the Approval for Principles of National Road Relocation in Kabupaten Cilacap was issued on 27 April 2017 by the Directorate General of Bina Marga.

Following the issuance of both letters, the EIA process started by the issuance of SK No. SK.22/PKTL/PDLUK/ PLA.4/4/2017 from the Director General of Forest Planology and Environmental Governance of the Ministry of Environment and Forestry on Terms of Reference on Envinronmental Impact Analysis (KA-ANDAL). The EIA will be followed by EIA meeting in mid-2017 which will continue with the issuance of the Environmental Permit.

In order to carry out the mandate of Presidential Regulation No. 75 of the Year 2014 on Acceleration of Priority Infrastructure Delivery, KPPIP has identified the zones within Jakarta Sewerage System (JSS) which have the potential to adopt Public-Private Partnership (PPP) scheme. KPPIP provides the facility to grant the request of Water Resources Office (Dinas Sumber Daya Air) of the Provincial Government of DKI Jakarta in a letter concerning Request for Assistance in Gap Study and Feasibility Study on JSS on 1 September 2016, and the result is expected to provide an indication as to which zones are to be prioritized for preparation after Zone 1 and Zone 6 which are in progress.

The identification is focused on PPP potential considering budget constraints faced by the Central Government and the Provincial Government of DKI Jakarta to develop infrastructure using fiscal financing when JSS development, which is a prerequisite for Tanggul Laut Jakarta, can no longer be delayed. Identification is facilitated by the aid provided by Indonesia Infrastructure Initiative (IndII) who appointed Mott MacDonald consultant to conduct scoping study.

The scoping study concludes that JSS Zone 2, 5, 8, 9, and 4+10 have the potential to adopt PPP scheme because these zones demonstrate a quite high financial feasibility based on its potential revenue calculated using gross floor area method. JSS zones other than the ones mentioned above need to be financed by the State Budget or Regional Budget because they are considered to have a lower financial feasibility making them unattractive to be offered to private parties. Prioritization of the above-mentioned JSS zones requires further evaluation and adjustment to prioritization of zones needed to support Jakarta Sea Wall project.

The study has been submitted to Regional Development Planning Agency (Bappeda) and Water Resources Office (Dinas Sumber Daya Air) of the Provincial Government of DKI Jakarta who will follow up by conducting prioritization of JSS zones in June 2017 and involving other stakeholders in the process. The result of prioritization will be available in July 2017.

With reference to the Letter of the Minister of Public Works and Public Housing Number KU.0901- Mn/784 dated 23 August 2016 on Operation of Trans Sumatera Toll Road to the President Director of PT Hutama Karya (Persero), the Minister of Public Works and Public Housing appointed PT Hutama Karya (Persero) to build three additional sections in stages to Trans Sumatera Toll Road, namely Aceh-Medan Toll Road, Padang-Pekanbaru Toll Road, and Tebing Tinggi-Parapat Toll Road.

As a result of the addition of sections, adjustment to the existing SLA is required to accommodate the addition by the Regional Government which also requires involvement of other governors, namely the Governor of West Sumatera and the Governor of Aceh.?As a follow-up to this matter, KPPIP plays an active role in coordinating the drawing up of the revised documents and also the stakeholders involved. As an initial step, KPPIP formulates strategies and conducts analysis of the various options related to adjustment to this SLA. In addition, KPPIP also holds discussion on the substance of the revised SLA. Based on the result of the discussion that has been held, it is agreed that adjustment to SLA will be made by:

1. Revising the existing SLA thoroughly and covering revision based on Presidential Regulation No. 117 of the Year 2015 and asking all parties involved both the existing and new ones for re-signing.
2. “6 Parties” SLA is drawn up concurrently which will only bind the Ministry of Finance, the Ministry of Public Works and Public Housing (PWPH), the Ministry of SOE, the Provincial Government of Aceh, the Provincial Government of West Sumatera, and PT Hutama Karya (Persero) without nullifying the existing SLA.

The “6 Parties” SLA prepared simultaneously with the Existing SLA is drawn up due to the considerations that an official document is now needed to affirm the Regional Government’s commitment especially in license related to land procurement and loan application to Asian Infrastructure Investment Bank (AIIB) for sections of Pekanbaru – Padang Toll Road to the value of Rp 5 Trillion. It is expected of “6 Parties SLA” to complete earlier than revision to the Existing SLA.

For the purpose of supporting the efficiency of licensing process of railway operation, the Government makes revision to the Government Regulation No. 56 of the Year 2009 on Railway Operation. In the earlier Government Regulation (GP) the mechanism to determine the Business Entity as the operator of public railway facility based on its source of investment has not yet been decided. This matter has impact on the lack of private party’s interest in acting as the initiator of the operation of public railway infrastructure.

The unregulated mechanism for determining Business Entity as the operator of public railway infrastructure requires the proposing Business Entity to go through bidding conducted by the Government although all investment for infrastructure development is sourced from the Business Entity’s fund.

Given this matter, the Government made revision to the Government Regulation No. 6 of the Year 2017 concerning the arrangement for determining Business Entity operating public railway infrastructure according to the project’s source of fund which is: (1) by tender or direct appointment if part or all investment is sourced from State /Regional Budget, (2) by not conducting tender if all investment is not sourced from State/Regional Budget and guarantee is not given by the Government, or (3) by appointment if no Business Entity is interested because the project is not financially feasible. Determination of Business Entity without holding tender is possible after Business Entity files an application to the Minister, Governor or Head of District/ Mayor according to their respective authority.

Under this revised Government Regulation, Business Entity can be determined as the operator of public railway infrastructure without tender if all of its investment is not sourced from State/ Regional Budget and does not require guarantee from the Government. In the future, the interest of Business Entity, especially that of private party, in the operation of public railway infrastructure is expected to grow.