Following the completion of Umbulan SPAM Project’s tender process in February 2016, the signing of PPP Agreement between the Provincial Government of East Java as GCA and Business Entity could not been done until May 2016.
This matter results from the incomplete requirements in the form of approval on Detail Engineering Design (DED) of Umbulan SPAM Project by all affected Regional Water Drinking Companies (PDAM), namely PDAM Gresik Regency, PDAM of Surabaya City, PDAM of Sidoarjo Regency, PDAM of Pasuruan City, and PDAM of Pasuruan Regency.?In regards to DED approval, only PDAM of Pasuruan Regency has not provided its approval.
Through KPPIP’s Ministerial Level Coordination Meeting on 17 July 2016, KPPIP facilitates discussion to reach an agreement among the Provincial Government of East Java, Regent Government of Pasuruan, PDAM of Pasuruan, and the Ministry of PWPH as well as participates actively in communicating with the Governor of East Java to ensure all requirements that GCA is responsible for the signing of PPP agreement are fulfilled. The signing of PPP agreement itself was conducted on 22 July 2016.
KPPIP assists the acceleration process of financial close by holding Umbulan SPAM’s weekly meetings chaired by the Deputy VI of the Coordinating Minister of Economy Affairs as the Head of KPPIP’s Implementation Team. KPPIP also conducted Coordination Meeting at KPPIP’s Ministerial Level on 21 November 2016 when deadline for the acceleration target of financial close was nearing.
The meeting discussed the efforts taken to meet the requirements?for financial close such as the allocation of Special Allocation Fund (DAK) for the development of Umbulan SPAM’s distribution network?in Pasuruan Regency, and it also discussed amendment to PPP agreement between GCA and Business Entity to allow the acceleration of financial close.
In relation to the allocation of DAK for the development of Umbulan SPAM’s distribution network in Pasuruan Regency, KPPIP works with the Deputy of Infrastructure, Bappenas; Deputy of Regional
Development, Bappenas; Directorate General of Cipta Karya, the Ministry of PWPH; as well as the Directorate General of Fiscal Balance, Ministry of Finance. The outcome of this coordination by KPPIP is that the three ministries issued letter of commitment on Umbulan SPAM Project to allocate DAK for the development of forward distribution network in Pasuruan Regency.
With regard to amendment of PPP agreement between GCA and Business Entity, KPPIP works closely with GCA Team led by the Governor of East Java and the Head of BPPT of East Java, PT Sarana Multi Infrastruktur as the project owner of project development facility, PT Indonesia Infrastructure Guarantee Fund as the risk guarantor, PT Indonesia Infrastructure Finance as the lead arranger, and PT Meta Ardhya Tirta Umbulan as the business entity.
KPPIP plays a role as the mediator in negotiations over matters such as condition precedent and its modification to condition subsequent of nancial close. These modifications can promote the acceleration of financial close from 1 year to 6 months since the signing of PPP agreement. Umbulan SPAM’s financial close was successfully fulfilled on 30 December 2016.