PII named PDF executor for the first railway project in Sulawesi
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Investor Daily - PII jadi pelaksana PDF proyek KA pertama di Sulawesi
12 January 2023
By: Dany Saputra and Hendra Wibawa
Makassar – PT Penjaminan Infrastruktur Indonesia (Persero) or PII is participating in the first railway project in South Sulawesi, which is Makassar-Parepare Railway. In the project that uses the public-private partnership (PPP) scheme, PII acts as the executor of the project development facilities.
“In Makassar-Parepare Railway PPP project, PII is appointed by the Finance Ministry to provide the project development facilities. The facilities are prepared by the Finance Ministry through Finance Minister Regulation Number 180/PMK.08/2020 on Facilities for the Preparation and Implementation of Transactions in Public and Private Partnership Projects in the Provision of Infrastructure,” PII Business Director Andre Permana said in Makassar, South Sulawesi on Wednesday (11/1/23).
In the regulation, PII’s purpose as the government contracting agency (PJPK) is to prepare the pre-feasibility study and tender documents, as well as to accompany PPP project transactions to achieve financial close.
In detail, Makassar-Parepare Railway PPP project that is constructed by PT Celebes Railway Indonesia (CRI) as the implementing business entity (BUP) adopts the build-operate-transfer (BOT) scheme with an investment value of Rp988.5 billion and an operating cost of Rp971.5 billion with a concession period of 16 years from the commercial operation date of phase 1. This project that uses the availability payment scheme will serve an area that includes five regencies/cities in South Sulawesi, namely Maros Regency, Pangkajene and Islands Regency, Barru Regency, Makassar City, and Parepare City.
Moreover, until now, trial for Maros Station-Garongkong extraordinary railway is still continuously conducted, and the public can try it for free from Mangilu Station to Garongkong Station.
“Makassar-Parepare Railway is a mode of transportation that has been awaited by the people in South Sulawesi that can finally be realised through the application of a new financing scheme to provide government infrastructures, which is PPP. It is also thanks to the support and cooperation of the PJPK, Finance Ministry that has provided the fiscal tools, BUP, investors or lenders, as well as other stakeholders,” Andre Permana explained.
Makassar-Parepare Railway project is expected to benefit and impact the economy along the route in South Sulawesi as an alternative transportation that can save travel time and operating costs, especially for logistics. It can also support the achievement of the eighth sustainable development goal, decent work and economic growth. Moreover, for the construction of Makassar-Parepare Railway in South Sulawesi, the PPP scheme finances the construction, testing, as well as completion of the railway facilities of Makassar-Parepare Railway.
With this financing obtained, the infrastructure of Makassar-Parepare Railway can be realised to serve the transportation and logistical needs of the people as well as to increase economic growth in South Sulawesi.
Furthermore, in this PPP project, the availability payment facility is available to make the payment based on the availability of the infrastructure service that is in line with the quality and/or criteria that have been set in the PPP agreement. Payment is made after the infrastructure project operates.
Through the availability payment scheme, the government will pay the business entity for the investment, operating cost, and profit based on a thorough calculation that is in line with the feasibility study result and business offer. The business entity will be provided a concession to operate the service for a certain period.
After the cooperation period is completed, Andre added that all assets would belong to the government. Besides accelerating the infrastructure provision program, the availability payment scheme will also grow and strengthen the trust of business entities in the government. In terms of state financial management, the AP scheme will also contribute to financial stability. Thanks to the regular payment, financing flow from the APBN (state budget) every year can be planned better. In the long term, state expenditure stability will help the budget planning process and the overall construction financing allocation.
Andre also mentioned that PII’s support as the fiscal tool of the government in PPP projects was the company’s commitment to supporting infrastructure constructions through creative financing to maintain the stability of the APBN. In the future, Andre continued that PII was waiting for similar mandates in other infrastructure construction projects, especially ones that will provide major benefits to the people.
