PPP Infrastructure Finance

Transcription

1 KEMENTERIAN PERENCANAAN PEMBANGUNAN NASIONAL/ BADAN PERENCANAAN PEMBANGUNAN NASIONAL PPP Infrastructure Finance Dr. Ir. Bastary Pandji Indra, MSP Director of Public Private Partnership Development National Development Planning Agency (Bappenas) Euromoney Indonesia Investment Forum Grand Hyatt, Jakarta, 26 November 2014 Slide 1

2 Indonesia Long-Term Development Plan and Targets Long Term Development Plan Targets To achieve a per capita income equivalent to a middle income country by 2025 Provision of basic infrastructure: o 100% of electrification ratio o 100% of access to clean water o 100% of access to social housing for low income communities Initiating to adopt nuclear as an alternative source of energy PDB Per Capita Comparison Countries Sourcer: IMF Data, 2012; in US Dollars Malaysia USD 16,794 Thailand USD China USD Philippines USD 4,410 Acceleration Of GDP Growth Projections Vietnam USD 3, PDB: USD 700 billion Per capita income USD 3, PDB: USD trillion Per capita income USD 14,250 15, PDB: USD trillion Per capita income USD 44,500 49,000 Indonesian long-term development plan has set a target to secure Indonesia s position as a middleincome country by reaching a GDP per capita of US$14,500 by the year

3 Connectivity CONDITION AND INFRASTRUCTURE TARGET Current Condition (2014) Target (2019) National Roads 94% 100 % Logistic Fund 23,5% 19,2 % Public Transport 23% 32% Basic Infrastructure Electrification Ratio 81.5% 96.6% Electricity consumption per capita* 843 kwh kwh Household gas network (SR) (SR) Adequate Drinking water access 68.5% 100% Adequate Sanitation access 60.5% 100% Unfit housing 10.1% 0% Housing Backlog 11.9 million 6.9 million Water Resistance Raw water capacity 51.4 M3/second 118.6M/second Storage Per Capita 62.3 M3/capita M3/capita Irrigation reservoirs 11% 20% surface irrigation network million Ha million Ha Capacity Design Flood 5-25 (annual) (annual) *) As a comparison of electricity consumption per capita : Vietnam kwh, Thailand kwh, Malaysia kwh, Jepang kwh, USA kWh 3

4 *angka belum termasuk pengembangan Sea Toll in support of World Maritime Program Cost (IDR billion) Explanation Sea Toll Regulation Framework: 1. Provision of soft loan facility for national ship 2. Financing through DAK for cruise ship provision 3. Adjustment of duty-free rule, PPN, PPH shipyard industry and supporting industries 4. More flexible rules regarding bank guarantee using ship 5. Accordance of Minister of Transportation Regulation No 7/2013 regarding liability classification for Indonesian Ship for reduce the cost of ship construction 6. Improvement of national ship industry by 40% (for new ship) 24 strategic ports 243,696 dredging, container terminal development, land Short sea shipping 7,500 ship, wells harbour, Bojanegara, Kenal, Pacitan, Cirebon General Cargo facilities and bulk 40,615 National port master plan Development of non commercial port 198, ports Development of other commercial port 41, ports Multimoda transportation to port 50,000 Access road,port train, coastal train. Shipyard industry revitalization 10, shipyards (not specify) Ships for the next 5 years 101,740 container ship, pioneering stuff, bulk carrier, tug & barge, tanker,ship to transport people Patrol boats 6,048 Patrol boat (class IA s/d V) Total 699,999

5 Estimated Funding Source for Infrastructure Development ( ) National State Budget + Regional Budget USD billion National State Budget + Regional Budget ( 50.02% ) Non-Government Funding USD billion USD billion SOE ( 19.32% ) Private ( 30.66% ) The figure shown describes CAPEX and rehabilitation (excluding operation and maintenance cost)

6 Estimated Infrastructure Investment Need ( ) Rp Trillion Sector State Budget 1 Local Budget SOE 2 Private 3 Total Roads Railways Sea Transportation Aviation Land Transportation (including ASDP) Urban Transportation Electricity Energy (oil and gas) Communication Technology and Informatics Water Resources Clean Water and Waste Housing TOTAL 2.215, , ,4 Percentage 40.14% 9.88% 19.32% 30.66% 100.0% 1) Estimated State Budget allocation 2) Estimated SOE s funding allocation 3) Maximum capacity of private through PPP schem 4) PT PLN only allocates IDR 250 Trillion, need State Equity Participation (PMN) Infrastructure investment needs is estimated around IDR 5519,4 Trillion USD 479,9 billion 6

7 Funding Source Category Funding Method Description Central Government APBN ODA Loan Country Bond Annual central budget allocated for infrastructure. Foreign currency based loan from donor. Bond issuance based on country credit rating. Government Funding Asset Liquidation APBD Fund generated from asset sales,securitization,ipo of BUMN. Annual regional budget allocated for infrastructure. Regional Government Municipal Bond Regional Direct Loan Cash pool+ operating CF Bond issuance based on municipal credit rating. Direct lending to regional gov t. Funded by SOE s liquid asset or operating cashflow SOE Funding PPP Funding Off-BS Funding Company Bond SOE Direct Loan Private Fund with Gov t support Availability Payment SOE Direct Loan with sovereign guarantee Vertical, Horizontal Split Bond issuance based on SOE credit rating. Donor s sub-sovereign loan. Commercial bank loan. Investor s equity with project finance + VGF and guarantee Investor s equity with project finance, based on multi-year annuity payment contract from central/regional gov t Donor or commercial bank loan based on sovereign guarantee Hybrid of above methods by splitting assets Other Financing Scheme Cross-sector package Trust Fund Others Hybrid of above methods by packaging linked projects Infrastructure fund/bond, Project bond and other financial pack

8 Creative Financing ** Reguler * Infrastructure Financing Scheme Criteria Project Feasibility Financing Scheme 1 Economically Feasible but Financially not Feasible Government Government National Budget (APBN) *Are preffered for eastern Indonesia, rural area and border area 2 Economically Feasible but Financially not Feasible Private Government Hybrid Financing 3 Economically Feasible and Financially Marginally Feasible Government Private Private PPP with Government Support (VGF) or other Creative Financing such as PFI, PBAS, Infrastructure Bank, Land Bank, etc) 4 Economically and Financially Feasible Private Private Regular PPP 5 Economically Feasible but Financially not Feasible ** Are preffered for western Indonesia and urban area Operation and Maintenance State-Owned Enterprise State-Owned Enterprise Construction State-Owned Enterprise Assignment 8

9 STRATEGIC FUNDING Government Funding Project A ODA/ Country Bond 100% Public State Budget Construction financed by Government through EPC contract Operation and maintenance will be conducted by Government, SOE or Private sector PPP Scheme Project B Governemnt Support (VGF etc.) Private Funding Construction financed by Government and Private sector through PPP scheme Operation and maintenance will be conduted by Private sector Strategic Funding Project C1 ODA/ Country Bond 100% Public State Budget Project C Govt. support (e.g. VGF etc.) Project C2 Private Funding Project has some components The combination of an integrated financing configuration between Governemnet, PPP scheme, B to B and EPC contract 9

10 Infrastructure Financing Scheme other than PPP and State/Regional Budget INSTITUTIONAL APPROACH State-Owned Enterprise Assignment (e.g. assignment concept of Hutama Karya in Trans Sumatera Highway Project) which is supported through government capital participation and direct-lending guaranteed by the government. Private Infrastructure for projects that have good economical and financial feasibility. Community-based Infrastructure especially small-scale infrastructure project. Infrastructure Bank to manage project development revolving fund and fund management from infrastructure bond and government support fund. Land Bank for land acquisition and infrastructure development. Land Capping: government support to reduce the risk due to the unpredicted and unavoidable increasing land price. Land Acquisition Fund : Provide bridging finance for land acquisition. Government will make special allocation for this funding. REGULATIONAL APPROACH Infrastructure Bond, bonds whose use is reserved only for the financing of infrastructure projects. Private Finance Initiative (PFI) multi-year contract financing for 15 to 30 years. Imposition of tariff/cost of access to the use of infrastructure such as Electronic Road Pricing (ERP). 10

11 Viability Gap Fund (VGF) 11

12 Performance-Based Annuity Scheme (PBAS) Investment Cost Annuity Payment O & M Cost Performance-Based Procurement (PBAS): Government pays for the quality of service agreed Winning bidder will get annual payments from government over the concession period as long as bidder can construct, operate and maintain at the standards of quality and service stated in the agreement. Project with economically viable but financially marginal (low) Assessment Criteria for Evaluating a PBAS Pilot Stage 1 Stage 2

13 Availability Payment Goverment/ Contracting Agency (CA) Availability Payment Project/Business Entity Government instrument to improve project feature Availability Payment describes the revenue stream which support Business Viability Government/CA as counterparty neutralize billing risk, demand risk and tariff risk Source : Ministry of Finance Government instrument to improve quality of infrastructure provision Performance Base Contract Reward & Punishment Mechanism Public Service Satisfaction Index Public-Private Sector Goal Alignment Government Risk Mitigation Operational cost fluctuation Risk Operational Technical Risk Government Asset Quality Risk Asset residual Value Risk

14 Sale-and-Lease-Back Asset sales to finance the construction or long-term lease contracts to improve infrastructure service. Government (Lessee) Sale of Asset Lease Private (Lessor) Government sells certain assets and lease it back or buy the output from the private sector who buy the asset Pros: + Tapping new sources of funds + Reduced cost of borrowing + Reduced risk + Circumventing restrictions debt covenants off-balance sheet financing Cons: Political impact of state assets sale Government forgoes residual asset value. 14

15 State Equity Participation (PMN) PMN will improve the SOE s (corporate) financial capacity but will NOT improve project profitability or commercial viability PMN is appropriate if the SOE is assigned to undertake bundling projects that require larger financing, provided that: The bundling will improve or make the project commercially viable (Trans Java Toll Road?) The bundling allows cross-subsidization between project components but the overall commercial viability remains

16 Private Finance Initiative (PFI) Government Authority Sponsor Payment for cost of public services over the contractual Government Project Team PPP Project Agreement Advice Advisors to Agency PUBLIC Sector PRIVATE Sector PPP Co. Consortium SPV Debt Finance Debt Providers Advisors & Consultants to the SPV Advice Due Diligence (Special Purpose Vehicle) Equity Finance Equity Partners Design Team & Architect Design & Construct Contractor 16 Facilities Manager, Operator Specialist Operator Services 16

17 Infrastructure Bond Government reviews the opportunity to issue infrastructure bond as an alternative financing infrastructure development The main objective of the infrastructure bond issuance is to empower and finance infrastructure projects initiated by the government such as roads, electricity projects, bridge projects,etc, as well as to reduce the portion of the foreign debt by using loan from the financial markets National banking sector and non-bank financial institutions are still not fully support the government's plan to issue infrastructure bonds due to it is still low interest of the public to buy infrastructure bonds and infrastructure bonds are not in demand by financial markets 17

18 THANK YOU DIRECTORATE OF PUBLIC PRIVATE PARTNERSHIPS DEVELOPMENT MINISTRY OF NATIONAL DEVELOPMENT PLANNING JL. TAMAN SUROPATI NO. 2 JAKARTA TELP : WEBSITE: pkps.bappenas.go.id pkps@bappenas.go.id