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A LEADING CATALYST IN FACILITATING INDONESIA’S INFRASTRUCTURE DEVELOPMENT
Financing Experiences
on Development
of Renewable Energy
in Indonesia
Emma Sri Martini President Director
PT Sarana Multi Infrastruktur (Persero)
Jakarta, 19 August 2015
The 4th Indonesia EBTKE ConEx 2015
2
Agenda
I. The Role of PT SMI in Developing Indonesia Renewable
Energy Infrastructure
II. Green Infrastructure Financing in Indonesia
PT SMI as a Catalyst in Accelerating
National Infrastructure Development
3
We are passionate to bring greater access
of infrastructure across Indonesia
archipelago
PT Sarana Multi Infrastruktur (Persero) (“PT SMI”)
was established in 2009 as a State-Owned
Enterprise under the Minister of Finance Regulation
No. 100/PMK.010/2009 on Infrastructure Financing
Companies.
PT SMI carries the duty of supporting the
Government’s infrastructure development agenda
for Indonesia through partnerships with private
and/or multilateral financial institutions in Public-
Private Partnership (PPP) projects. As such, PT SMI
can serve as a catalyst in accelerating infrastructure
development in Indonesia.
Ownership :
100% owned by the Government of Indonesia
Vision:
“To serve as catalyst in accelerating national
infrastructure development”
Mission:
1. To become a strategic partner that delivers
value added contributions to Indonesia’s
infrastructure development
2. To develop flexible financing products
3. To offer service excellence backed with good
corporate governance
PT SMI’s Support for Accelerating
National Infrastructure Development
Our Sector Focus
4
Electricity &
Energy Efficiency Road & Bridges Transportation
Regional
Infrastructure
Prison School Hospital
Market Tourism
Infrastructure Telecommunication Irrigation &
Waterway Oil & Gas
Waste Water &
Waste Management
Train Rolling Stock
Social Infrastructure
Water Supply
Renewable Energy
ADVISORY SERVICES PROJECT DEVELOPMENT
Funding Sources
State Additional Equity Injection Loans and Grants from
Domestic and Foreign
Capital Market
(Bond, Securities) Securitization
Infrastructure Financing
o Senior Loan o Banking Complementary
o Arranger & Underwriter o PPP Standby Lender* o Geothermal Financing*
Municipal Financing / Regional
Infrastructure Development
Fund (RIDF)*
FINANCING
• Mezzanine
• Equity
Investment
• Take Out Financing
• Promoter Financing
• Subordinated Loan
Public Sector Advisory o Municipal Training & Capacity
Building o Municipal Technical Assistance* o Donor Fund Management for
Municipalities*
Private Sector Advisory o Investment Advisory o Financial Advisory o Training & Capacity Building
(Commercial)
Project Development Facilities
(PDF) o PPP Project Development
• PPP Showcase Projects
• PPP Priority Projects
Donor Fund Management
5
Financing Performance, 2011 – 31 July 2015
*Current position
Sector Diversification
(IDR billion)
Total Project Cost IDR65 Trilion
Financing Portfolio
*Cumulative position
(IDR billion)
IDR7.5 trillion ± IDR65.2 trillion
Multiplier Effect 8.7 times Total Project Cost Financing Commitment
Electricity 28%
Road 20%
Oil and Gas 17%
Transportation 16%
Telecommunication 9%
Clean Water 5%
Irrigation 5%
525 1.196
3.087
4.262
5.689
1.158
2.222
4.477
5.577
7.476
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
2011 2012 2013 2014 30 July 2015
Outstanding
Commitment
3.366
17.993
17.070
9.167
17.609 65.205
-
10.000
20.000
30.000
40.000
50.000
60.000
70.000
s.d. 2011 2012 2013 2014 31-Jul-15 Total ProjectCost
Description
► Advisory activities was formed in 2012 to become the
"enabler" of financing and investing activities
► The role of the advisory activity is to assist project
owners in preparing bankable projects to be financed
both from the debt and equity
► Clients for advisory activities
State-Owned
Enterprise
Private
Company
Government
Agency/ Municipal
► Advisory products and activities are :
Financial
Advisory Capital
Structuring
Fund Raising
Financial
Restructuring
Merger and
Acquisition
Asset
Management
Fund
Management
Investment
Advisory Transaction
Advisory
Business
Planning
Financial
Feasibility
Training and
Capacity
Building Public Private
Partnership
Project
Finance
Credit
Analysis
Risk
Management
Project mandate, Capacity Building, and TA
Airport
Investment study of
Nusa Tenggara
International Airport
Airport
Financial advisor of
Airport, West Java
Trains
Study of train
leasing business
scheme for
Jabodetabek
Ports
Financial advisor for
a Port, Banten
Ports
Activity-based
costing for Tanjung
Perak Ports
Renewables E.
Project preparation
for PPP project,
Jawa Barat
Biogas
Fund raising biogas
project in Riau
Renewables E
Financial advisor for
acquition of PLTMH
8 MW, West
Sumatera
Renewables E
Project preparation
for Wind Power in
cooperation with
UNDP
Renewables E
OBC preparation for
PPP project WTE
Batam City
Municipal
Project preparation
for PPP Project
Revitalization of
Tugu Station
Urban
Transport
Financial Advisor for
restructuring railway
in Bogor
Municipal
Capacity Building &
Infrastructure
project mapping
Municipal
Capacity Building &
Infrastructure
project mapping in
East Java
Others
Socialization
program, Capacity
Building for
municipal
Become “Enabler” to Accelerate Infrastructure Development
Advisory Business
Public
Service
Advisory Municipal
advisory
Business
Planning
Financial
Feasibility
6
Project Development Business SMI Assignment in Facilitating PPP Project Preparation Showcase
Description
► Project preparation (including PPP), is a
very important step before a project
being offered to investors or financed
► SMI assigned by the Government as the
facilitator for PPP project preparation
Showcase
Business Entity Central Govt/ Municipal
(PPP & Non-PPP))
► Stages of project development activities
Project
Development
Consultancy
Capacity
Building
► Partners for Project development activities
Assistance for
Project
preparation
& Transactions
The Umbulan Water Supply project
is a water supply project that utilizes
Umbulan Spring. The objective is to
distribute 4.000 liter/second of bulk
water from Umbulan spring to
Pasuruan, Sidoarjo, Surabaya and
Gresik (East Java) through the
development of pumping system and
a 96.7 km transmission system.
Project Cost : + IDR2 Trillion
The SHIA Railway PPP project aims
to provide a railway transportation
facility connecting Halim
Perdanakusuma and Soekarno Hatta
Airports. It is dedicated to be an
express rail with premium service,
targetting air passengers.
Project Cost : + IDR20 Trillion
Umbulan Water Supply SHIA Express Railway Project
On Going PPP Projects
7
Bajulmati Reservoir,
Banyuwangi
Batam Municipal Solid
Waste Management
Pumbiu River Bridge, West
Sulawesi
Soekarno Hatta Airport Rail
Link
Urban Flood Control System,
Padang, West Sumatera
Water Supply Project
Jakarta
Road Reconstruction Project
Central Aceh
Bypass-B Road, Bandar
Lampung
Underpass Project
Cibubur, Jakarta
Mini Hydro Power Plant,
Mobuya, North Sulawesi
Coal-Fired Power Plant
Tanah Grogot, East Kalimantan
Coal Gasification Power Plant,
West Kutai
Road Project, Klamono
Kambuaya, Sorong
Bridge Project
Kali Api, Manokwari
Dekai-Oksibil
Road Project, Papua
Hydro Power Plant
Asahan, North Sumatera
Mini Hydro Power Plant Tara
Bintang, North Sumatera
Hydro Power Plant, Humbahas,
North Sumatera
Mini Hydro Power Plant South
Solok, West Sumatera
Irrigation Project
Empat Lawang, South Sumatera
Mini Hydro Power Plant
Lebong, Bengkulu
Mini Hydro Power Plant
Lebak, Banten
Water Treatment & Supply
Project, Bekasi
Cikopo-Palimanan Highway
West Java
Gas-Fired Power Plant,
Tanjung Uncang, Batam
LPG Storage Terminal,
Semarang
Mini Hydro Power Plant
Banjarnegara, Central Java
Umbulan Water Spring,
East Java
Advisory Services Project Development Financing Services
Teraju-Batas Balai Bekuak
Road, Sanggau
River Kujang Drainase
Project, Samarinda
Lampeong Waterway Project
North Barito
Bridge Wariki Project
Manokwari
Tugu Station and Pedestrian
Revitalization, Yogyakarta Grindulu Project
Madiun, East Java
Fuel Main Transit Terminal
Tuban, East Java
Ambarawa Southern Ring
Road, Central Java
Irrigation Project, Sangkup
North Sulawesi
Wundulako Irrigation
Kolaka, Southeast Sulawesi
Jeneponto-Bantaeng Road,
South Sulawesi
Gerak Tempe Reservoir
Wajo, South Sulawesi
Wind Energy Power Plant
Sumba and Lebak
Oil Refinery
Bojonegoro, East Java
Pipeline Construction,
Tuban, East Java
Coal Train, East
Kalimantan
Mini Hydro Power Plant Tara
Bintang, North Sumatera
Coal-Fired Power
Plant Project, Gorontalo
Dompak Port
Tanjung Pinang
Bulk Port, Tuban
East Java
Bulk Port, Gresik
Marisa Port,
Gorontalo Floating, Storage
Offloading, Madura
Floating, Storage Offloading
Natuna, Riau Islands
Mass Rapid Transit
Project, Surabaya
Logistic Murphy Semai Oil,
Fakfak
Arar Port Project
Sorong Container Port Project Development
and Supporting Facilities at Palaran
Port, East Kalimantan
Logistic Indobarambai Gas
Methane, Banjarmasin
Oil Supply Base
Lhokseumawe, Aceh
Oil Supply Base
Belawan, North Sumatera
• BTS Tower, Shelter
throughout Indonesia
• Working Capital in
Telecommunication
Sea Port, Cilegon
Mini Hydro Power Plant, South
Solok, West Sumatera
Investment Planning Project at
Lombok Airport (Development)
Panaran Gas-Fired Power
Plant, Batam
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31
Bendo Reservoir
Ponorogo, East Java
Ciliwung River Normalization,
Jakarta
Mud Flow Control Project
Sidoarjo, East Java
Urban Flood Control System
Wonokromo, East Java
Passenger Terminal Project
Supadio Airport
Pontianak, West Kalimantan 56
56
Expansion Project of Tanjung Priok
Port, Jakarta
57 Airport Development in the AP II
area of operatiion
Gas Pipeline Construction,
Batam
58
58
57
Electrical Substation at
Kalibaru Port, Tanjung Priok
Corporate Business Plan, Banten
Bus Rapid Transit (BRT) Trans
Pakuan, Bogor, West Java
Activity Based Costing, Tanjung
Perak Surabaya, East Java
59
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Portfolio Distribution
9
Total project cost of renewable energy projects amounted to ±IDR4,5 trillion
PT SMI is exploring opportunities in other renewable energy projects.
Financing Advisory
8 financing projects in
hydro and mini hydro
2 advisory projects in
wind energy
2 advisory projects in
waste to energy financing commitment
allocated to RE especially in
Hydro Power and Mini Hydro
Power.
1 ±IDR
trillion
225 MW
electrical power UNDP
in cooperation with PT SMI
to promote wind energy
projects in Indonesia.
PT SMI’s Participation in Renewable Energy Projects Portfolio
10
PT SMI’s Participation in Renewable Energy Projects Project Location
Hydro Power Plant Asahan,
North Sumatera
Mini Hydro Power Plant
Humbang Hasundutan,
North Sumatera
Mini Hydro Power Plant
South Solok, West
Sumatera
Mini Hydro Power Plant
Lebong, Bengkulu
Mini Hydro Power Plant
Lebak, Banten
Mini Hydro Power Plant
Banjarnegara, Central Java
Mini Hydro Power Plant
Tara Bintang, North
Sumatera
Mini Hydro Power Plant
Mobuya, North Sulawesi
Wind Energy Power Plant,
Sumba, East Nusa Tenggara
and Lebak, Banten
Advisory Services Financing Services
1
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5
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6
9
7
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9
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Waste to Energy Project,
Batam and Nambo
10
Our Cooperations with Various Institutions
Project Development
Capital Market Products
CDIA
Capacity building
cooperation
IDX
Index SMinfra18 set
up that consist of 18
infrastructure stocks
IFC Research cooperation
of infrastructure
financing instrument
through long term
source of fund from
the capital market
MCA Indonesia
Infrastructure
financing program for
Green Prosperity
JBIC
Green infrastructure
financing program
Bank of Tokyo
Mitsubishi UFJ
Infrastructure
projects financing
and advisory
cooperation
PPP Development
Center – Russia
Capacity building
cooperation and
information sharing
Financing structure
development for Wind
Power Plant Projects
UNDP
Cooperation in
infrastructure projects
screening
Sidoarjo Municipal
Government and East
Kalimantan Provincial
Government
Joint marketing for
Advisory Services
Korea Development
Bank
11
AFD
Financing and
technical assistance
cooperation for
renewable energy
projects
Capacity Building / Knowledge Sharing - PPP
Advisory Services Development Cooperation
Partnerships in
Infrastructure
acceleration
development in Batam
Bintan Karimun (BBK)
BP Batam
Partnerships in
investment appraisal
of coal locomotive in
East Kalimantan
Kalimantan Railways
Pte.
Technical Assistance
for Waste Project
Management in Batam
with ADB-Bappenas
TA ADB - Bappenas
Renewable Energy Investment Promotion
Singapore Cooperation Enterprise and
Temasek Foundation
Capacity building and project preparation
cooperation for PPP projects
12
To Fill the Financing Gap in RE Projects, Indonesia Need RE
Funds Which are Managed by Intermediary Institutions
Intermediary
Institution
RE Projects and
Energy Efficiency
Financing
Grant
Hydro Power
• Senior Loan
• Mezzanine/ Subordinated
• Equity
• Technical Assistance
• Project Appraisal
• Project Assessment
*) In progress of application or acreditation RE = Renewable Energy EE = Energy Efficiency
(Green Facility)*
(RE and EE)* (RE and EE)*
(Wind Energy)
Others
Source of Funds
Biomass
Solar Power Wind Power
Energy Efficiency
(Green Prosperity)
13
UNDP Wind Hybrid Power
Generation Project
JBIC Green Climate
Funds AFD
Commercial
Banks AFD
JBIC Green Climate
Fund
Lending Entities
Solar Energy Wind Energy
Others
Projects
1
3
2
5
4
Business Model: Combination of Lending Activities & Grant
from Various Sources of Funding
Grant for project development
Technical assistance/ grant/ soft loan
Project seeking and project structure development
Lending entities seeking
Lending entities provide loans in accordance with the scope and portfolio
1
2
3
4
5
Others
14
Green Facility
Example: JBIC’s Green Facility Schemes to SMI
Multiple Projects
Single Project
JBIC
Co-financing
banks
SMI
Direct
Loan
Particular
Green Project
Investment
or
Sub-Loan
J-MRV
JBIC
Co-financing
banks
SMI
Direct
Loan
Green
Projects
Sub-Loan
J-MRV
Enegy
Efficiency (Industry, Power
& Water,
Transport)
Renewable
Energy
Others (Carbon Capture
Storage, etc)
Green Facility scheme;
o Japanese companies’ involvement in this scheme is not
necessarily required
o JBIC provides direct lending to PT SMI
o JBIC will provide technical assistance to assess project
feasibility and to implement J-MRV methodology
* JBIC-Measurement, Reporting, and Verification (J-MRV) Methodology
15
Initial Thoughts on Geothermal Fund Facility for Exploration Stage
Key principles of Geothermal Fund Facility utilization:
Strongly favorable for revolving mechanism
Implementation of stop/go mechanism to minimize risks
There are two possibilities from exploration and drilling stage that will benefit the Government:
1. Commercially successful
2. Database creation for the Government as intellectual property, that belongs to the Government and
no depreciation.
There is a need for comprehensive geothermal sector regulation that accommodate the Geothermal Fund
Facility mechanism utilization
Fund recovery by the winning bidder
Loan or
Equity
investment
Exploration and Delineation
Government Drilling Construction & Production Drilling
Failure in
Tender
MoE
MoE obtain
Property
rights Performance Bond Recall
by MoE
Financial
close Tender
Successful exploration Tender
Success
Failure in
exploration Failure
Financial close success
Retender
Lenders/
SMI
In Term of RE Fund, PT SMI Provides Models in Enhanching
Renewable Energy Projects
Co-financing Model
Renewable
Energy
Fund
SMI
Projects
Loan
repayment Loan
repayment
Loan
Co-financing
Fund Management
Renewable
Energy
Fund
Projects
Special/
Escrow
Account
Loan
revolving Loan/
Grant
Assign for fund
manager
Capacity Building
Programme
Advisory: to structure the
project & to manage TA
Grant
Training/ TA Coordinator
SMI
Fund
management
Fund
disbursement
16
17
Agenda
I. The Role of PT SMI in Developing Indonesia Renewable
Energy Infrastructure
II. Green Infrastructure Financing in Indonesia
18
108,5%
94,5% 91,3% 91,1% 90,5%
88,1% 85,7% 85,3% 84,3%
75,9%
0,0%
20,0%
40,0%
60,0%
80,0%
100,0%
120,0%
92%
Return
Risk
Tenor
Investment
Amount
Low Project IRR
Higher Risk
Long Term
Large Scale
Banking Limitations in Infrastructure Financing
Banking LDR almost reach its limit, disincentivizing banking sector to finance
infrastructure projects
Characteristic of Infrastructure Investment LDR of 10 Largest Banks in Indonesia
1
2
3
4
Central Bank Regulation No.
15/15/PBI/2013 limits banking LDR of
maximum 92%
19 Source: Agency for The Assessment and Application of Technology, as of 2013
National Energy Mix
2013 2025’s Target (Basic Scenario)
NRE= New & Renewable Energy
Energy Source Installed capacity Resource Potential Undeveloped Potential (%)
Hydropower 7,059 MW 75,760 MW 91
Geothermal 1,341 MW 28,617 MW 95
Mini-hydropower 512 MW 768 MW 33
Biomass 1,364 MWe 13,662 MWe 90
Solar 42.8 MW 4.8 kWh/m2/day -
Wind 1.3 MW 3-6 m/s -
Ocean - 1,650 MW 100
Renewable Energy Potential in Indonesia
Oil 38%
Coal 23%
Gas 17%
Firewood 15% NRE
7%
Oil 30%
Coal 36%
Gas 13%
Firewood 7% NRE
14%
National Energy Mix Strategy is Supported
by Diversified Renewable Energy Sourcing in Indonesia
20
Lenders’ Concerns in Implementing
Renewable Energy Project
Challenges
Access to site condition
Availability of logistics
facility (ports, road
availability)
On-site main resources
(annual data is not
available)
Availability of local
construction company
and material
Risks
Factors
Land/site contractual risk
Capital cost over-run:
licenses, logistics
(transport facilities),
construction delay, grid
interconnection, etc
Technology: life-time and
efficiency of module and
equipment, grid reliability
Financial viability of PLN
(long-term PPA)
Disasters: flood, fire,
earthquake
Tariff
Existing FiT does not
attractive enough for the
investor to cover risk and
gain expected financial
return > 15%
Technology supply relies
mainly from offshore
Barier to
Entry
Capacity and technology
transfer: inexperience
local investor to build
and operate utility scale
plants needs experience
partner
Low learning curve, slow
market penetration
Limited access to most
efficient technologies
To minimize the use of diesel fuel in power plant (which is more expensive, about IDR3,000-4,000/kWh), the
Indonesian Government has set Feed in Tariffs (US$) to boost the investment in renewable energy
Energy Tariffs (US$) Regulations
Solar 25-30 Cents/ kWh Minister of Energy and Mineral Resources No.
17 Year 2013
Geothermal* 12-25 Cents/kWh*** Minister of Energy and Mineral Resources No.
17 Year 2014
Hydro**
8-9 Cents/kWh
Minister of Energy and Mineral Resources No. 3
Year 2015 (Direct Appointment & Direct
Selection)
1st year – 8th year
10.80-14.40 Cents/kWh
9th year – 20th year
6.75-9.00 Cents/kWh
Minister of Energy and Mineral Resources No.
19 Year 2015
Biomass* 9-19 Cents/kWh Minister of Energy and Mineral Resources No.
27 Year 2014
21
Government Support in Renewable Energy
Investments in Indonesia
*) If set in IDR, 1US$ = IDR12,500, range is subject to location, except for solar energy which is subject to the percentage of local content
**) Range is subject to location, capacity factor, and source of hydro power
***) In 2015 only
22
Establishment of Renewable Energy Fund Basic Framework
Renewable
Energy
Fund
Minihydro
power
plant
Solar PV
Wind farm
Waste to
Energy
POME
Biogass
Biomass
etc
Bridging
development
fund
(corporate
equity)
Pooling
Fund (Trust
Fund)
Direct
Placement
Mutual Fund
Limited
Partners
(instruments) Allocation
SMI
MoE
Donors
Climate
Funds
etc
Investors
Dana
pensiun
etc
General Partners
(sources of funding)
Project
Development
Project
Development
Mezzanine/
Sub-debt
Equity
RE Fund
Function
Project
Development
Mezzanine/
Sub-debt
Equity
Roadmap
2016 2017 2018-
onward
23
Renewable Energy (RE) Fund Structure
Bridging development fund Pooling Fund (Trust Fund) RDPT (EBA)
SMI
Bridging
development
fund
Pro
ject
develo
pm
ent
Debt
financin
g
Equity
financin
g
Renewable Energy Projects
- Including Geothermal
Cost
recovery
Donors
Pooling
Fund (Trust
Fund)
Pro
ject
develo
pm
ent
Debt
financin
g
Equity
financin
g
Cost
recovery
Climate
Fund Etc. Investors Dana
pensiun Etc.
RDPT
(EBA)
Bridging
development
fund
Asset
Management Co. SMI
Pro
ject
develo
pm
ent
Debt
financin
g
Equity
financin
g
Renewable Energy Projects
- Including Geothermal
Renewable Energy Projects
- Including Geothermal
24
The Conclusion Shows that RE is
a Promising Sector for Investment
High power
demand and low
electrification ratio Abundance of new
energy and RE
potential resources
National energy
policy (energy mix)
& incentives
Indonesian high
economic and
industry growth
Rational tariff for
commercially
investment
Land acquisition
issues and long
chain of bureaucracy
Lack of infrastructure
Investment issue
and subsidy scheme
Limited information
and awareness
Need for more
expertise
High
Low
Low
High
Mark
et
Dri
vers
M
ark
et
Restr
ain
ts
A LEADING CATALYST IN FACILITATING INDONESIA’S INFRASTRUCTURE DEVELOPMENT
THANK YOU FOR YOUR
KIND ATTENTION Disclaimer
All information presented were taken from multiple sources and
considered as true by the time they were written to the knowledge of
PT Sarana Multi Infrastruktur (Persero). PT Sarana Multi
Infrastruktur (Persero) can not be held responsible from any
inacuracy contained in the material.
PT SMI follows all internal and external guidelines and regulations
that govern the evaluation process on determining the financing
feasibility of an infrastructure project. Every decision to finance or
not to finance a project is therefore based on a responsible and
thorough due diligence process.
Any complaint in the process of financing irregularities can be
submitted to:
Ms. Astried Swastika
Corporate Secretary PT SMI
Tel : +62 21 5785 1499
Fax : +62 21 5785 4298
Email : [email protected]
Public complaints on PT SMI service will be kept strictly confidential
and handled by a special committee to ensure that complaints are
addressed appropriately.
