POLICY AND PROGRESS

TOLL ROAD INVESTMENT PROGRAM

FEBRUARY 21st, 2006

INDONESIA TOLL ROAD AUTHORITY

MINISTRY OF PUBLIC WORKS

1
TOLL ROAD LAW AND REGULATION REFORM

1. Law (UU) no. 38/2004 on Road

2. Government Regulation (PP) no. 15/2005 on Toll Road
3. Ministry Public Works Regulation no. 295/2005 on
Indonesia Toll Road Authority
4. President Regulation no. 36/2005 on Land Acquisition for
Public Interest Development
5. President Regulation no. 67/2005 on Government and
Business Entity Partnership in Infrastructure Development
6. Ministry of Finance Decree no. 518/2005 on the Committee
of Risk Management for Infrastructure Development
7. Draft Concession Agreement which is more “Bankable” and
“Investor Friendly” has been finalized by Ministry of Public
Works, to be approved by Ministry of Finance (Committee of
Risk Management for Infrastructure Development)
2
 POLICY ON ACCELERATION
OF TOLL ROAD DEVELOPMENT

1. To prepare financial feasibility analysis, feasibility

study and environmental impact analysis study for
toll road tender investment
2. To conduct an open and transparent toll road tender
investment
3. To provide draft Concession Agreement which is
more “bankable” and “investor friendly”
4. To assist and facilitate land acquisition process with
Revolving Fund mechanism conducted by Public
Service Agency (Badan Layanan Umum), which is
being discussed with Ministry of Finance.

3
 Indonesia Toll Road Authority
(Badan Pengatur Jalan Tol)
On 28 June 2005, according to Ministry of
Public Works Regulation no. 295/PRT/M/2005,
the Indonesia Toll Road Authority was set up as a
non structural agency under the Minister and be
responsible to the Minister

4
 BPJT Tasks (1)
• To recommend initial tariff and tariff adjustment to the Minister;

• To takeover toll road development rights following the expiry of the

concession period, and to recommend further operation thereof to the
Minister;

• To takeover of temporary toll road development right that has failed

starting with the concession, for re-tendering of the development;

• To make preparations for the toll road development right which include
analysis of financial feasibility, feasibility study, and preparation of
environment impact assesment;

• To seek investment in toll roads through transparent and open tenders;

5
 BPJT Tasks (2)
• To assist in the land acquisition process if there is
guarantee of availibility of fund from the Enterprise
and to prepare the mechanism of the use thereof;

• To monitor the activities of planning and execution

of construction works as well as the operation and
maintenance of toll roads by the Enterprise; and

• To supervise the Enterprise of the fulfillment of all the

obligations under the toll road development
agreements and to report the results thereof
periodically to the Minister.

6
 BPJT – ORGANIZATION STRUCTURE
CHAIRMAN (MPW) BOARD

MEMBER MEMBER MEMBER MEMBER

(Ministry of Public Work) (Ministry of Finance) (Professional Association) (Academic Representative)

Secretary

Technical Division Investment Division Monitoring and General Affair

Supervision Division Division

Sub Div. Preparation Sub Div. Monitoring Sub Div. Financial

Sub Div. Study and Investment
Services Sub Div. Adm and HRD
Sub Div. Supervision
Sub Div. Data and
Tech. Information Sub Div. Monitoring Sub Div. Law and PR
of Investment

Professionals 7
 TOLL ROADS in OPERATION
No TOLL ROAD LENGTH OPEN TO INVESTOR
(KM) TRAFFIC

A TOLL ROAD MANAGED BY PT JASA MARGA (PERSERO)

1 Jagorawi 59,00 1978 PT Jasa Marga
2 Semarang 24,75 1983-1998 PT Jasa Marga
3 Jakarta - Tangerang 33,00 1984 PT Jasa Marga
4 Prof. Dr. Sedyatmo 14,30 1985 PT Jasa Marga
5 Surabaya - Gempol 49,00 1986 PT Jasa Marga
6 Belmera 42,70 1986 PT Jasa Marga
7 Jakarta - Cikampek 83,00 1988 PT Jasa Marga
8 Dalam Kota Jakarta 23,55 1989-1996 PT Jasa Marga
9 JORR 16,77 1990-2005 PT Jasa Marga
10 Padalarang - Cileunyi 64,40 1991 PT Jasa Marga
11 Palimanan - Plumbon - Kanci 26,30 1998 PT Jasa Marga
12 Pondok Aren - Bintaro Viaduct - Ulujami 5,55 2001-2003 PT Jasa Marga
13 Cikampek - Padalarang 58,50 2003-2005 PT Jasa Marga
Sub Total 500,82
B TOLL ROAD MANAGED BY PRIVATE COMPANY
1 Tangerang - Merak 73,00 1983-1996 PT Marga Mandalasakti
2 Ir. Wiyoto Wiyono, MSc (Cawang - Tj. Priok) 15,50 1990 PT CMNP
3 Surabaya - Gresik 20,70 1993-1996 PT Margabumi Matraraya
4 JORR S (Pd. Pinang - Taman Mini) 14,25 1995-1996 PT Jalan Tol Lingkar Luar Jakarta
5 Harbour Road (Pluit-Ancol-Jmbt Tiga) 11,55 1995-1996 PT CMNP
6 Ujung Pandang Stage I 6,05 1998 Bosowa Marga Nusantara
7 Serpong - Pondok Aren 7,25 1999 PT Bintaro Serpong Damai
Sub Total 148,30
Grand Total 649,12

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 TOLL ROADS CONSTRUCTED by GOVERNMENT
and PT. JASA MARGA

Length Cost Construction Status

No Description/Project
Plan
(km) (Rp billion) January 2005 February 2006
A Construction by Government
1 Tanjung Priok Access 12.10 3,400.00 2007 - 2009 Finalization of C Agreement Preparation for FED
2 Surabaya - Madura Bridge 5.40 700.00 2004 - 2009 Construction Construction
Sub Total 17.50 4,100.00
B Implemented by PT. Jasa Marga
1 JORR W2 North (Ulujami - Kebon Jeruk) 7.00 687.00 2006 - 2008 Preparation of Land Acquisition Land Acquisition Process
Main Road and Kalimalang IC
2 - JORR E2 (Cikunir-Cakung) 9.07 Construction
finish in April 2006
- JORR E3 (Cakung - Cilincing) 3.10 750.00 2005 - 2007 Construction Cakung Drain finish April 2006
3 Cikampek - Padalarang Stage II 40.00 1,700.00 2004 - 2005 Construction Operation
Mayor of Bekasi's Decree for
Consruction and Land
4 JORR E1 North 8.40 324.00 2004 - 2005 Land Acq. Construction finish in
Acquisition
April 2006
5 Palimanan - Plumbon (Additional Lane) - 60.00 2004 - 2005 Construction Operation
6 Cibitung - Cikampek Widening - 366.00
Lane A finish in April 2006, Lane
- Cibitung - Cikarang 2005 - 2006 Tender Preparation
B finish in Des 2006
- Cikarang - Cikampek 2007 - 2009 - -
7 Surabaya - Gempol Widening - 140.00 2005 - 2006 Construction Preparation Construction
8 Sedyatmo Widening - 410.00 2006 - 2008 - Tender Preparation
Sub Total 67.57 4,437.00

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EVALUATION on 1996–1997’ TENDER RESULT

Length Cost
No Construction Status
Project Investor
Period
(km) (Rp billion) January 2005 February 2006
C1 Implemented by Investor On Going
1 Waru (Aloha)-Wonokromo-Tg.Perak 18.40 3,107.00 2005 - 2008 PT Margaraya Jawa Tol Review FED, Finalization RTRW FED finish, Negotiation under process

SS Waru - Tg. Perak Tahap I Land Acquisition (main problem at

2 13.50 669.00 2005 - 2008 PT Citra Margatama Sby Construction and Land Acquisition
(Bandara Juanda) SIER area & resident)

3 Gempol - Pandaan 14.00 526.00 2005 - 2008 PT Margabumi Adhikaraya FED finish, Negotiation under process
4 Ciranjang - Padalarang 33.00 1,824.00 2005 - 2008 Bina Puri Holding Bhd. Process to set up New SPV
Review FED and Land Acquisition
5 Bekasi - Cawang - Kp. Melayu 21.00 3,648.00 2005 - 2008 PT Kresna Kusuma Dyandra Marga FED finish, Negotiation under process

Sub Total 99.90 9,774.00

C2 Review on 1997 Tender Result
1 Cikampek - Palimanan 116.00 6,313.00 2005 - 2008 PT Lintas Marga Sedaya Process of Consent to continue Business Plan has been negotiated,
2 Surabaya - Mojokerto 37.00 1,488.00 2005 - 2008 PT Marga Nujyasumo Agung Finalization Draft CA
Finalization of Legal Aspect
3 JORR Seksi W1 8.65 800.00 2005 - 2007 PT Jalantol Lingkar Baratsatu Evaluation on Business Plan
4 Ciawi - Sukabumi 60.40 3,776.00 2005 - 2008 PT Bukaka Marga Utama Evaluation of Legal Aspect
5 Kanci - Pejagan 35.00 1,334.00 2006 - 2009 PT Bakrie Investindo
6 Pejagan - Pemalang 57.50 2,478.90 2006 - 2009 PT Sumber Mitra Jaya
7 Pemalang - Batang 39.00 1,474.10 2006 - 2009 PT Sumber Mitra Jaya
8 Semarang - Batang 75.00 3,190.50 2006 - 2009 PT Marga Setiapuritama Review Proposal
Business Plan has been negotiated,
9 Kertosono - Mojokerto 41.00 1,627.60 2006 - 2009 PT Hanurata Coy Ltd
Finalization Draft CA
10 Pasuruan - Probolinggo 56.30 1,726.30 2006 - 2009 PT Bukaka Teknik Utama
11 Pandaan - Malang 37.60 1,547.60 2006 - 2009 PT Setdco Marga Nusantara
12 Gempol - Pasuruan 32.00 1,462.00 2005 - 2008 PT Jasa Marga
13 Semarang - Solo 75.70 3,838.00 2005 - 2008 PT Jasa Marga Finalization of Ministry' Assignment
14 Bogor Ring Road 11.00 664.00 2005 - 2008 PT Jasa Marga
Sub Total 682.15 31,720.00

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 TENDER BATCH 1
Length Cost Construction Status
No Project/Investor
(km) (Rp billion) Period January 2005 February 2006

C3 B. Tender Investment Batch I

1 Medan - Binjai - - 2006 - 2007 Prequalification Retender on Batch II
2 Cileunyi - Sumedang - Dawuan - - 2006 - 2008 Prequalification Retender on Batch II
Depok - Antasari (Consortium Citra
3 Waspphutowa = CMNP, Waskita, PP, HK and 21,7 1.535,00 2006 - 2008 Prequalification
Bosowa)
Preparation of
Performance Bond
Cinere - Jagorawi (Consortium Translingkar
4 Kita Jaya = Transindo Karya Investama, 14,7 1.192,10 2007 - 2008 Prequalification
Waskita, JLJ and Kopnatel Jaya)

5 Cikarang - Tanjung Priok (part of JORR 2) 34 2.300,00 2008 - 2008 Prequalification Negotiation
Makassar Section IV (PT Bosowa Marga Preparation of
6 11,6 436 2006 - 2007 Prequalification
Nusantara and PT Bosowa Investama) Performance Bond
Sub Total 82 5.463,10

NOTES:
™ Prequalification of Tender Investment Batch I is followed by 35 Consortiums (20 foreign companies and 15 local companies).
™ 18 eligible Consortiums received tender document and attended the Aanwijzing (explanation meeting) and site visit.
™ Aspects to be bid are toll tariff with fixed concession period.
™ Land acquisition cost to be provided by Investor.
™ Compensation can be given are extension of concession period and/or initial tariff adjustment.
™ Draft CA is subject to be approved by MoF (Committee of Risk Management for Infrastructure Development).
™ Review on investment parameter due to fuel price increase is subject to be confirmed by MoF. 11
 TENDER BATCH 2
Status : February 2006
ESTIMATED STATUS
No. PROJECT LENGTH (km) INVESTMENT COST CONSTRUCTION PLAN
(Rp. billionr) January 2005 February 2006

C3 B. Tender Investment Batch II 374.60 22,722.00 PQ Result

1 Tol Tangerang/Merak - Tol Serpong 24.81 2,457.00 2006 - 2009 6 Bidders, 4 qualified
2 Tol Tangerang/Merak - Tangerang - Tol Sedyatmo 25.00 2,475.00 2006 - 2009 5 Bidders, 3 qualified
3 Tol Serpong - Cinere 12.39 1,227.00 2006 - 2009 5 Bidders, 4 qualified
4 Tol Jagorawi - Tol Jakarta/Cikampek 27.10 2,684.00 2006 - 2009 5 Bidders, 3 qualified
5 Pasirkoja - Soreang 15.00 520.00 2006 - 2008 2 Bidders, 1 qualified
6 Pekanbaru - Kandis 40.00 2,000.00 2006 - 2009 2 Bidders, 0 qualified
7 Bakaheuni - Terbanggi Besar (Tegineneng-Babatan, Lampung) 51.00 2,800.00 2006 - 2009 Identification of Tender 1 Bidder, 0 qualified
8 Serangan - Tanjung Benoa (Bali) 7.50 515.00 2006 - 2009 Requirement 1 Bidder, 0 qualified
9 Medan - Kualanamu - Tebing Tinggi 60.00 2,600.00 2006 - 2009 1 Bidder, 0 qualified
10 Cileunyi - Sumedang 25.00 1,839.00 2006 - 2008 No Bidder
11 Semarang - Demak 25.00 841.00 2006 - 2008 No Bidder
12 Medan - Binjai 15.80 964.00 2006 - 2008 No Bidder
13 Manado - Bitung 46.00 1,800.00 2006 - 2009 No Bidder

PREQUALIFICATION PROCESS
™ 133 investor companies/association/embassy representative have taken the prequalification document
™ Nationality of the candidates : Indonesia, China, Australia, Korea, Malaysia, Sweden, Germany and India
™ Prequalification of tender investment Batch II is followed by 16 Consortiums from Indonesia, Malaysia, India,
Korea and Australia, while the PQ result has been announced on 20 January 2006
™ Medan – Binjai and Cileunyi – Sumedang toll road have no bidder on tender Batch 1 and 2
™ Tender process is planned to start in February 2006, however it is being suspended due to the draft Concession
Agreement has not been approved by the Committee of Risk Management, MoF (Tender Document is ready
to deliver)
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 TENDER BATCH 3

ESTIMATED STATUS
No. PROJECT LENGTH (km) INVESTMENT COST CONSTRUCTION PLAN
(Rp. Billion) January 2005 February 2006

C3 C. Tender Investment Batch III 538.30 23,229.00

1 Palembang - Indralaya 22.00 497.00 2006 - 2009
2 Cilegon - Bojonegara 8.80 400.00 2006 - 2009
3 Sukabumi - Ciranjang 31.00 1,483.00 2006 - 2009
4 Jogja - Solo 45.00 1,970.00 2006 - 2009
5 Solo - Mantingan 58.00 2,849.00 2006 - 2009 Preparation of Tender Batch III
Identification of Tender
6 Mantingan - Ngawi 27.00 1,100.00 2006 - 2009 (Feasibility Study and
Requirement
7 Ngawi - Kertosono 84.00 3,629.00 2006 - 2009 Environmental Study)
8 Bandara Juanda - Tanjung Perak 23.00 750.00 2006 - 2009
9 Probolinggo - Banyuwangi 156.00 6,086.00 2006 - 2009
10 Kandis - Dumai 50.00 2,000.00 2006 - 2009
11 Sumedang - Dawuan 33.50 2,465.00 2006 - 2009

PREPARATION OF TENDER BATCH 3

™ Feasibility Study has been finalized in 2005
™ Environmental Assessment is under process by using Government budget FY 2006
™ Tender Document including draft C A is under process referring to Batch 2 Tender Document

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Thank You

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 PROGRESS and SCHEDULE
C 1; Implemented by Investor on Going (status Feb 2006)
No Description Remarks
1 Letter of Award 1996 – 1997
2 Concession Agreement with PT. Jasa Marga 1996 – 1998
3 Final Engineering Design Finished
4 Technical Audit by MPW Under Process
5 Prepare New Business Plan March – April 2006
6 Negotiation April – May 2006
7 Sign New C A with Minister of Public Work Approx. June 2006
8 Land Acquisition 2006 – 2007 (+ 2 years)
9 Construction 2007 – 2009
10 Operation 2009
Note:
SS Waru – Tanjung Perak I is in construction stage, but some delay due to land acquisition
Ciranjang – Padalarang is in setting up new Consortium
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 PROGRESS and SCHEDULE
C 2; Evaluation on 1996/97 Tender Result (status Feb 2006)

No Description Remarks
1 Letter of Award 1996 – 1997
2 Negotiation w/ new Business Plan Finished in February 2006
3 Signing Concession Agreement Under Process;
-5 links will be signed end of Feb 2006
-Other links still on new SPV process
4 Final Engineering Design + Environmental 2006 – 2007 (1 year)
Assessment
5 Land Acquisition 2006 – 2008 (+ 2 years)
6 Construction 2007 – 2009
7 Operation 2009

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 PROGRESS and SCHEDULE
Tender Batch 1 (status Feb 2006)
No Description Remarks
1 Tender Batch 1 Finished July 2005
2 Letter of Award by Minister of Public Work Finished October 2005
3 Concession Agreement Under Process;
-3 links will be signed end of Feb 2006
-1 links is under negotiation process
-2 links have no Bidder
4 Final Engineering Design + Environmental 2006 – 2007 (1 year)
Assessment
5 Land Acquisition 2006 – 2008 (+ 2 years)
6 Construction 2007 – 2009
7 Operation 2009
Note:
Makassar Section IV is in Land Acquisition Process (95% finished), the Construction stage
will be in 2006 – 2007.
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 PROGRESS and SCHEDULE
Tender Batch 2 (status Feb 2006)
No Description Remarks
1 Prequalification Finished January 2006;
4 of 13 links has more than 3 qualified bidders
2 Tender Process Under Preparation of Tender Document,
waiting for MoF’ approval on draft CA,
3 Bid Preparation + Evaluation Approx. March – June 2006
(Assumption: MoF’ approval on draft CA at the
end of Feb 2006)
4 Letter of Award Approx. July 2006
5 Signing Concession Agreement Approx. September 2006
6 Final Engineering Design 2006 – 2007 (1 year)
7 Environmental Assessment 2006
8 Land Acquisition 2006 – 2008 (+ 2 years)
9 Construction 2007 – 2009
10 Operation 2009 - 2010
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 PROGRESS and SCHEDULE
Tender Batch 3 (status Feb 2006)

No Description Remarks
1 Preparation of Prequalification Under Process; Review FS finished,
Environmental Assessment in on going
2 Prequalification Process Approx. October 2006
3 Tender Process Approx. January 2007

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Subsequent Action (from Tender Batch 1)

• Programs for Medan–Binjai and Cileunyi–Sumedang, which

has no Bidder on Tender Batch 1 and 2:
– Review on technical and financial feasibility. The result
will be taken into consideration on the next plan.
– If the result is not feasible, the following actions can be
considered:
• Government subsidize on part of investment cost
• Construction by Government, Operation and Maintenance will
be tendered for Business Entity
• Review on other funding scheme; bundling with other
investment to increase feasibility
• Suspension of construction until the project feasible.

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 Subsequent Action (from Tender batch 2)

• For Tender Batch 2 which has no Bidder:

– Review on other funding scheme
– Re-Prequalification in the near future

Subsequent Action (for Tender batch 3)

• Tender Batch 3,
– Review on time frame of Prequalification process
– Some links can be offered together with Batch 2 toll links
that has no Bidder and subject to re-prequalification
– Review on other funding schemes.
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 Concession Agreement (Previous)
• CA was not ‘bankable’ from the investor point of view due to:
– Risk sharing between Government and Investor was unbalance
– Government default was not adequately addressed
– Not based on international best practice
– High risk on the Lenders

Concession Agreement (New)

– Optimal Risk sharing
– Default by Private Sector will be severely penalized
– Default by Government will be adequately compensated
– Lenders protected based on actual ‘value of work’
– Based on international best practice
– It requires endorsement of Ministry of Finance
22
Direct and Contingent Risk of Government:
1. Land Acquisition; cost and time delay
2. Default by Concessionaire
3. Change of scope requested by Government
4. Operational variations imposed by Government
5. Default by Government (including
expropriation)
6. Force major (including change of law)

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Bankable Offer vs Bankable Project
BANKABLE OFFER
– The offer must meet international best practice
– The offer must meet market’s expectation
– The must be procured correctly

BANKABLE PROJECT
– The project’ feasibility must be clear and correct
– The project must have benefit cost analysis

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Summary of Risk Allocation in New CA:
– Liabilities can arise at different stage
– Overall exposure to Government not base on simple
aggregation of liabilities
– Many of the liabilities are mutually exclusive
– Some liabilities are a consequence of Government wish
to retain control over outcomes – e.q. toll tariff
adjustment

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New Concession Agreement; Conclusion:

– Risk allocation is consistent with international best

practice
– Fair trade offs between avoidance of risk and
commercially viable and bankable CA
– Except for Government default, liabilities can be limited
or managed
– MoF should endorse the new CA but control its usage
bay being selective on the project that it can be used for

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