A LEADING CATALYST IN FACILITATING INDONESIA’S INFRASTRUCTURE DEVELOPMENT
SMI Experiences in Financing Water Projects Jakarta, 28 May 2015
Indonesia International Water Week 1
SMI as a catalyst for national infrastructure development acceleration Establishment: 26 February 2009 Legality: Establishment: PP No 66/2007 jo PP No 75/2008 Business permit: KMK No. 396/KMK.010/2009 dated 12 October 2009
Ownership: 100% owned by Government of Indonesia Vision: A leading catalyst in the acceleration of the national infrastructure development
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Mission: To become a strategic partner with value added in developing Indonesia's infrastructure To establish flexible financing products To provide quality services which comply to good corporate governance
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SMI Services and Sector Focus Advisory
Financing & Investment
Financial Advisory Services Investment Advisory Services Training
Senior Term Loan Promoter Funding Take Out Financing Refinancing Bridge Loan Working Capital Loan Subordinated Loan Mezzanine Equity “Flexible financing facilities in term of tenors and products variance”
“Advisory services to commercial entities for structuring and optimalising of financing and investment program”
Project Development Capacity Building Programs Technical Assistance for Prioritization and Financing Modalities for Infrastructure Project Assistance for Investment and Financing Documentation PPP Project Development
“support to public sector in the development of infrastructure project, including project preparation for PPP”
Sector Focus Oil & Gas
Water Supply
Roads & Bridges
Waste Management
Hospital
Area Development
Sanitation Management
Transportation
Market
Water Resources
Power & Energy Efficiency
Tourism
Telekomunication
Prison
School
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SMI’s total project portfolio
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Oil Supply Base, Lhokseumawe, Aceh
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Road Reconstruction Project, Central Aceh
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Oil Supply Base, Belawan, North Sumatera
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Mini Hydro Power Plant Tara Bintang, North Sumatera
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Hydro Power Plant, Asahan, North Sumatera
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Mini Hydro Power Plant Tara Bintang, North Sumatera
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Hydro Power Plant, Humbahas, North Sumatera
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Mini Hydro Power Plant Lebak, Banten
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Water Treatment Plant, Bekasi
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Gas-Fired Power Plant, Tanjung Uncang, Batam
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Dompak Port, Tanjung Pinang Mini Hydro Power Plant Lebong, Bengkulu Bypass-B Road, Bandar Lampung
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Ciliwung River Normalization, Jakarta Electrical Substation at Kalibaru Port, Tanjung Priok
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Financing & Investment
35 Floating, Storage Offloading, Madura
Soekarno Hatta Airport Rail Link
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Coal Gasification Power Plant, West Kutai
Fuel Main Transit Terminal, Tuban, East Java
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Coal-Fired Power Plant, Tanah Grogot, East Kalimantan
Mud Flow Control Project in Sidoarjo, East Java
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Urban Flood Control System, Wonokromo, East Java
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Panaran Gas-Fired Power Plant, Batam
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River Kujang Drainase Project, Samarinda
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Container Port Project Development and Supporting Facilities at Palaran Port, East Kalimantan
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Tugu Station and Pedestrian Revitalization, Yogyakarta Ambarawa Southern Ring Road, Central Java
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LPG Storage Terminal, Semarang
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Bajulmati Reservoir, Banyuwangi
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Oil Refinery, Bojonegoro, East Java
Project Development
Bulk Port, Gresik
Umbulan Water Supply, East Java
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Mini Hydro Power Plant, Mobuya, North Sulawesi
Irrigation Project, Sangkup, North Sulawesi
Road Project, Klamono Kambuaya, Sorong
54 Bridge Wariki Project, Manokwari
Floating, Storage Offloading, Natuna, Riau Islands
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Marisa Port, Gorontalo
Bridge Project, Kali Api, Manokwari
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Grindulu Project, Madiun, East Java Bendo Reservoir, Ponorogo, East Java
Coal-Fired Power Plant Project, Gorontalo
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Mini Hydro Power Plant Banjarnegara, Central Java Pipeline Construction, Tuban, East Java
Wundulako Irrigation, Kolaka, Southeast Sulawesi
Arar Port Project, Sorong
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17 34 23 19 18 20 32 Sea Port, Cilegon 22 31 30 21 24 26 27 29 33 35 Wind Energy Power Plant, Sumba 25 28 45 and Lebak
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Coal Train, East Kalimantan
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Water Supply Project, Jakarta Underpass Project, Cibubur, Jakarta
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Bulk Port, Tuban, East Java
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Mass Rapid Transit Project, Surabaya
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Mini Hydro Power Plant South Solok, West Sumatera
Irrigation Project, Empat Lawang, South Sumatera
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Cikampek Palimanan Highway, West Java
Urban Flood Control System, Padang, West Sumatera
Batam Municipal Solid Waste Management
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Water Supply Project, Tangerang
Mini Hydro Power Plant, South Solok, West Sumatera
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Teraju-Batas Balai Bekuak Road, Sanggau
Investment Planning Project at Lombok Airport (Development)
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Pumbiu River Bridge, West Sulawesi
Logistic Indobarambai Gas Methane, Banjarmasin
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Gerak Tempe Reservoir, Wajo, South Sulawesi
Lampeong Waterway Project, North Barito
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Jeneponto-Bantaeng Road, South Sulawesi
Advisory Services
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Logistic Murphy Semai Oil, Fakfak
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Dekai-Oksibil Road Project, Papua Passenger Terminal Project at Supadio Airport, Pontianak, West Kalimantan • BTS Tower, Shelter throughout Indonesia • Working Capital in Telecommunication
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Financing Model in Water Industry
Financing Model: Corporate Finance
Characteristics Water Supply
Market or Offtaker
Payment
Project Owner / Sponsor
Repayment
Payment
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The Company has sustainable business activities
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The source of repayment is from company’s cashflow and it does not depend on one particular project
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Risk analysis is made based on historical performance and reputation
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Do not use SPV for financing purposes
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Mid-term tenors (range from 3 to 5 years)
EPC Contractor EPC services
Financing
Creditor
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Financing Model in Water Industry
Financing Model: Project Finance Characteristics: Sponsor
Recourse
Water supply
Market or Offtaker Payment
Repayment
Special Purpose Vehicle (SPV)
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Project has not operated yet
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The source of repayment is from the project itself
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Comprehensif Risk analysis is based on the Contract, Feasibility Study which contains a thorough due diligence in regulation, technical spesification and financial model
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Using SPV for Financing purposes
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Tend to need a recourse from sponsor such as completion guarantee, and cash deficiency support
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Long-term tenor (typically above 5 years )
Payment EPC services
EPC contractor
Financing
Creditor
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Financing Model in Water Industry Private Investor Project
Progress:
Negotiation phase
Construction phase
Equity
Project Finance
• The source of fund in this phase is using equity from Investor
• Financing from third party (Bank or Financial Institution) are common • Heavy analysis and due diligence in legal, technical and financial aspect (usually done by Independent consultants) • Recourse to sponsor • Drawdown of financing is based on construction progress • Strict Cash Waterfall
Operational phase
Corporate Finance • • •
Tipically use to refinancing water project Analysis of payment-trackrecord from offtaker or endusers. Generally has less strict covenant than project finance
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What Creditor Sees in Financing Water Project Financial Aspects Variable
Note:
Proper historical financial statement
Financial statements from Investor, sponsor/ shareholder, PDAM (usually minimum 3 years)
Proper Financial projection that shows the ability of project/ investor to pay the debt
Robust Financial model
Payment Reliability from Offtaker / end users
• BOT scheme : payment from PDAM • Concession Scheme: payment from end users
Technical Aspects Variable
Note
Proper Feasibility Study
• Robust Feasibility study that consists of background, project cost estimate, technical aspect, legal aspect, financial aspect and environmental study
EPC contractors with good reputation
To mitigate the construction risks
Availability of Independent Consultants to supervise the project
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Preparation to Finance Water Sector Credit Worthiness Aspects for Water Sector Legal Aspects Variable
Note
Compliance to the regulation
The lender will conduct due diligence on legal aspects to ensure the project runs in accordance with the law/regulation
Documentation of tender process
The procurement process complies with the regulated standards/procedures
The contract must state clauses in regards to the cooperation
• Step in rights • Three parties agreement between lender, investor and PDAM shall contain the rights and obligations of each party
Environmental Aspects Variable
Keterangan
Ensure the project will not cause any environmental issues
Usually creditor will perform analysis in regards to the environmental issues
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Risk Mitigation Strategy RISK
Government
Political and regulation Risk
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Demand Risk
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Operational risk
Company
Both
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Environmental Risk
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Site Risk
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Engineering Design Risk
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Sponsor Risk
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Financial Risk
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Pipe connectivity Risk
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Interface Risk
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Force majeur Risk
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Asset ownership Risk
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Legal and structure Risk
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Experience and Lesson Learned
Description
Experience
Lesson Learn
• B2B between private and PDAM
• Project postponed due to improper tender process (BPKP report)
• Ensure the tender is well documented (by asking the cooperation of PDAM)
• Project postponed due to the agreement contains disadvantaged clauses forPDAM (BPKP report)
• Encourage PDAM to involve BPKP in reviewing the agreement
• Changes in water regulation
• Financing processes were cancelled because of changes in regulation
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Provide technical assistance to all regions including non-qualifying regions to improve capabilities & credit worthiness SMI's potential roles
One-stop infrastructure financial advisor
Catalyze infrastructure finance market (e.g. PDF)
Financing of national and regional infrastructure
Qualifying regions With track record of preparing projects
For these groups, SMI does not focus on providing assistance in advisory and project preparation
No track record of project preparation
Regions who do not qualify All regions
SMI provides technical assistance and support to PEMDAs to improve capabilities and pipeline of prepare projects, including: • Training • Capacity building • Screening & project prioritization • Development of funding model
Assist PEMDA with financing of project preparation from PDF, as well project preparation and tendering process.
Provide support to projects based on bankability • Non bankable: Issue province loans • Bankable: Support with a range of instruments such as debt securities, commercial loan and KPS
12 Source: Boston Consulting Group
Thank You
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Kondisi Eksisting Kerjasama Sektor Air Minum Model Bisnis Sektor Air Minum di Indonesia
KPS
Business to Business
Penanggung Jawab Proyek Kerjasama Pemerintah/Kepala Daerah (PJPK)
PDAM
Eligibilitas terhadap dukungan kelayakan
Tidak eligible
Eligible
Praktik kerjasama pengembangan SPAM dapat disesuaikan dengan kondisi yang ada di masing – masing daerah. Bentuk kerjasama lain yang merupakan turunan dari bentuk kerjasama di atas, seperti: • Skema BOT (Build – Operate – Transfer); dan • Skema konsesi
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Kondisi Eksisting Kerjasama Sektor Air Minum Indikator Kelayakan Keuangan Bisnis Sektor Air Minum
Internal Rate of Return (IRR) > cost of capital • •
Internal rate of return dari suatu proyek atau investasi adalah tingkat imbal hasil efektif tahunan yang membuat Net Present Value seluruh arus kas dari investasi/proyek menjadi nol Cost of capital adalah minimal imbal hasil yang di-require atas dana yang ditempatkan pada suatu investasi/proyek
DSCR =
EBITDA Pembayaran Hutang Pokok + Pembayaran Bunga
DSCR : Debt Service Coverage Ratio EBITDA : Pendapatan sebelum bunga, pajak, depresiasi dan amortisasi
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DSCR < 1, pandapatan tahun berjalan tidak mampu memenuhi kewajibannya kepada lender untuk tahun berjalan Proyek sangat tidak menarik bagi lender
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DSCR = 1, pendapatan tahun berjalan cukup untuk memenuhi kewajibannya, tetapi angka ini masih tergolong kurang menarik bagi lender karena lender masih memiliki risiko yang cukup tinggi
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DSCR > 1.2, proyek menghasilkan arus kas lebih dari cukup juga memiliki kelonggaran kas untuk membayar kewajibannya kepada lender dan dapat mengantisipasi jika ada gangguan cukup menarik bagi lender 16
Pemetaan Risiko dan Strategi untuk Melakukan Mitigasi Risiko Identifikasi Risiko – Risiko di Sektor Air Minum Pra konstruksi Konstruksi Operasi
Terdapat risiko Tidak terdapat risiko Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Hukum & struktur proyek
Politik & Regulasi
Pra konstruksi Konstuksi Operasi
Pendapatan & Permintaan
Kepemilikan aset
Operasional
Force majeur
Pra konstruksi Konstruksi Operasi
Lingkungan RISIKO
Desain, konstruksi & uji operasi
Interface
Konektivitas jaringan
Lokasi Finansial
Pra konstruksi Konstruksi Operasi
Sponsor Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Pra konstruksi Konstruksi Operasi
Risiko Pemerintah Risiko Pemerintah, BU, dan/atau Bersama Risiko BU 17
Menyiapkan Pembiayaan Sektor Air Minum Aspek – Aspek Kelayakan Kredit di Sektor Air Minum Aspek Finansial Variable
Keterangan
Laporan keuangan historis yang memadai
Laporan keuangan investor, sponsor/pemegang saham, PDAM minimal 3 tahun kebelakang
Proyeksi keuangan yang membuktikan kemampuan investor dalam membayar kewajiban terhadap lender
Dibutuhkan studi kelayakan yang baik untuk mendapatkan asumsi proyeksi keuangan yang dapat diandalkan.
Reliability Pembayaran dari Offtaker/pembayaran dari end-user
• Untuk pola BOT: analisa kemampuan membayar dari PDAM sebagai offtaker dan/atau data historis pembayaran • Untuk pola konsesi: analisa demand survey dan/atau data historis pembayaran dari end-user
Aspek Teknis Variable
Keterangan
Studi kelayakan yang memadai
• Studi kelayakan yang lengkap dengan memuat latar belakang kerjasama, estimasi biaya investasi, aspek teknis, legal dan finansial • Untuk kelengkapan dokumen, diharapkan prastudi kelayakan yang dilakukan oleh PDAM juga diberikan • Tambahan dokumen lain yang umumnya diperlukan adalah studi debit air (proyeksi debit air yang mencukupi selama masa kerjasama) serta AMDAL/UKL/UPL
Kontraktor EPC dengan reputasi baik
Untuk mengurangi resiko dalam tahap konstruksi
Tersedia konsultan independen untuk melakukan pengawasan dalam tahap konstruksi
Untuk mengurangi resiko dalam tahap konstruksi 18
Menyiapkan Pembiayaan Sektor Air Minum Aspek – Aspek Kelayakan Kredit di Sektor Air Minum Aspek Legal Variable
Keterangan
Pemenuhan terhadap peraturan perundangundangan yang berlaku
Kreditur akan melakukan legal due dilligence terhadap calon debitur untuk memastikan proyek berjalan sesuai dengan peraturan dan perundangan yang berlaku
Dokumentasi proses tender
Proses pengadaan kerjasama sudah sesuai dengan persyaratan dan prosedur yang berlaku
Tersedia beberapa klausul yang dibutuhkan dalam perjanjian kerjasama
• Step in rights • Three party agreement antara lender, investor danPDAM yangberisi hak dankewajiban masing-masing pihak dalam kerjasama
Aspek Sosial dan Lingkungan Variable
Keterangan
Memastikan lokasi untuk proyek yang yang akan dibangun telah mempertimbangkan kondisi sosial dan lingkungan.
Kreditur akan melakukan analisa dan konfirmasi mengenai dampak proyek terhadap kondisi sosial dan lingkungan pada lokasi pembangunan proyek
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