Preliminary study is the initial study conducted by the Ministry/ Head of Institutions/ Head of Region/ Director of State Owned Enterprise/ Director of Regional Owned Enterprise to provide the description of the requirement for the infrastructure provision and also its benefits if it is delivered under the cooperation with the Special Purpose Company (SPC) through PPP mechanism. It shall explain the plan of PPP form; plan of PPP financing and the source of the fund; also plan of PPP tenders which consist of schedule, process, and procedure. Furthermore, the Preliminary Study should consist of a study on:
1. Need analysis, includes:
a. Confirmation that the PPP has the technical and economic rationale based on the analysis of any available secondary data;
b. Confirmation that the PPP has sustained request and measured from insufficiency of service, whether in quantity or quality, based on the analysis of any available secondary data; and
c. Confirmation that the PPP has sufficient support from the relevant stakeholders, one of which is through Public Consultation.
2. Compliance criteria, includes:
a. Compliance with the prevailing laws and regulations, including determination of the Minister/ Head of Institution/ Head of Region/ SOE directors/ ROE Directors who will act as a GCA;
b. PPP compliance with the National/ Regional Mid-Term Development Plan and/or Strategic Plan of the Ministry/ Institution, Regional Government Working Plan, SOE/ ROE business plan;
c. PPP location compliance with the Spatial Plan (if needed in accordance with the type of Infrastructure needed to have cooperated); and
d. Relating to the infrastructure sector and inter-region (if needed in accordance with the type of Infrastructure needed, to have cooperated).
3. Deciding factor criteria of Value for Money of business entity participation, includes:
a. Private sector having an advantage on PPP implementation including risk management;
b. Ensuring the effectiveness, accountability and equitable distribution of service for the long-term;
c. Transfer of knowledge and technology; and
d. Ensuring fair competition, transparency, and efficiency in the procurement process.
4. Analysis of potential revenue and project fund scheme, includes:
a. User capability to pay;
b. Fiscal capability of the central government, regional government, SOE/ ROE in conducting PPP;
c. Other potential revenues; and
d. Perspective on government support.
5. Recommendation and follow-up plan, includes:
a. Recommendation of the form of PPP;
b. Recommendation on the main criteria of the business entities; and
c. Schedule plan of preparation and PPP transaction activity.