Solicited Projects

The process for government solicited infrastructure PPP projects in Indonesia has four phases: planning, preparation, transaction, and contract management. In the first phase, the government contracting agency identifies potential projects for private sector participation in accordance with government policies and objectives for infrastructure, and in terms of available resources and project timing. The contracting agency then assesses the potential project's priority, using the following criteria:

• clarity of the PPP project's description;

• obstacles to using the main resources for implementing the project;

• clarity of the results of the project's inputs;

• social and environmental impacts;

• potential for sustainable demand;

• ease of land acquisition and resettlement;

• government's ability to support the project;

• institutional readiness; and

• whether the project is included in the government's strategic priorities and planning for infrastructure.

In the project preparation phase, the government contracting agency studies possible risks for a project being a PPP and the project's social benefits. This phase has two steps: the first outlines the case to be made for the project as a business proposition. Here, a legal and technical assessment of the project and a prefeasibility study are carried out. A preparation-of-readiness study is done in the second step, focusing on the availability of land. The contracting agency prepares a list of land compensation or expropriation that defines the land needed for the project.

The transaction phase covers procurement planning and implementation. In this phase, the government contracting agency completes the prefeasibility study and prepares the procurement plan for public tender. The contracting agency then forms a procurement committee of experts, which arranges a procurement schedule and a procurement-notices concept. Here, the agency sounds out investor interest to present an attractive project package to potential investors. The committee also prepares a self-estimated price for the project, and the prequalification and procurement documents. A winning bidder is then selected using the procurement steps shown in Figure 12.2.

Figure 12.2: PPP Procurement Process for Solicited Proposals in Indonesia

PPP = public-private partnership.

Source: National Development Planning Agency. 2015. 2015 PPP Book. Jakarta.