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RISK MANAGEMENT IN TRANSPORT PPP PROJECT IN INDONESIA
MINISTRY OF TRANSPORTATION
REPUBLIC OF INDONESIAANKARA, 3 OCTOBER 2019
FINANCING INFRASTRUCTURE DEVELOPMENT 2020-2024
444.564.054,55 USD
164.512.842,53USD
93.327.411,30 USD
186.723.800,72USD
1. Makassar Pare-pare Railway
1. Komodo, Airport
1. The Development of Ferry Port in West Papua Province
1.TOD Poris Plawad, Tangerang (unsolicited)
2.Bau Bau Port3.Proving
Ground BPLJSKB Bekasi
Preliminary study
Outline Business Case(OBC)
Final Business Case(FBC)
PQ Request forProposal
Bid AwardPPP Agreement
SigningFinancial Close
TenderPreparation
1. The Development of Ferry Port in West Papua Province
2. Motor Vehicles Weighing Facilities in Sumatera and Java Island
3. Development of Mengwi Terminal Type A
4. Anggrek Port 5. Wanci Port 6. Banggai Port 7. Belang-belang Port 8. Kaimana Port 9. Serui Port 10. Saumlaki Port 11. Labuan Bajo Port 12. Namlea Port 13. Tahuna Port 14. Tobelo Port 15. Dobo Port 16. Pomako Port 17. Siantar-Parapat Railway18. Tanjung-Banjarmasin Railway19. Bandung City Railway20. Kertajati Airport Railway21. Maminasata Railway22. Lahat-Tarahan Railway23. Cibungur - Tanjung Rasa Railway24. Mengwitani – Singaraja Railway 25. Medan – Binjai – Deli Serdang
Railway26. LRT Cibubur – Bogor 27. MRT Service Extension28. Jakarta Elevated Loop Line 29. TOD JatiJajar30. TOD Baranangsiang 31. TOD Pondok Cabe 32. New Bali Airport 33. Singkawang Airport 34. Juwata Tarakan Airport
PLANNING PREPARATION TRANSACTION CONSTRUCTION OPERATION
PPP PROJECT IN TRANSPORTATION SECTOR
4 Projects
14 Projects
8 Projects
13 Projects
Airport
Port
LAND & BPTJ
Railway
36
TOTAL 40 PROJECTS
THE IIGF’s ROLE IN INFRASTRUCTURE PROJECT DEVELOPMENTThroughout PPP Process
TYPICAL RISK ALLOCATION COVERED BY IIGF
SCOPE OF ACTIVITIES IN RISK MANAGEMENT
RISK IDENTIFICATION• Project risk is any event that might occur that could
cause Project losses and / or project stakeholders• Every project has project risks, both those that are
undertaken by the Government itself or Cooperated with business entities
• The risk identification process is carried out in all aspects: legal, technical, financial, economic, social cultural, environmental and political
Risk Identification
Risk Assessment / Evaluation
Risk Allocation
Risk Mitigation Plan
The main activities of
risk management
RISK IDENTIFICATIONPlanning
Preparation
Transaction
Construction
Operational
There are risks at every stage of the project, so it needs to be identified from the beginning so that they can be managed according to each stages
• Location risk• Design, construction
and operation test risks
• Sponsor risk• Financial risk• Surgical risk• Income risk
• Network connectivity risk
• Interface / interface risk
• Political risk• Force majeure risk• Asset risk
Risk categories based on the results of project identification can be grouped as
follows:
a. The value or amount of risk depends on twofactors:• The frequency or probability or
possibility of occurrence of risk.• Impact or amount of loss if risk occurs.
b. Assessment can be done in a qualitative orquantitative way.
c. The results can be plotted into the RiskImpact Matrix.
RISK ASSESSMENT / EVALUATION
Possibility
The Consequences
Not important
Light Medium Big Serious
Almost certain
Medium Medium High High Highest
Very likely Low Medium Medium High Highest
Likely Low Medium Medium High High
Rare Low Low Medium Medium High
Unlikely Low Low Low Medium Medium
RISK ALLOCATION
The purpose of risk allocation:Provide incentives for the party (Government or Business Entity) who is most efficient at managing risk.The result is that project risk costs will fall.
The principle of risk allocation:Every risk must be allocated to those who:Have a better ability to control the possibility of riskHave a better ability to manage the impact of the riskHave the ability to bear the risk with the lowest risk cost
The result of the risk allocation analysis is the risk allocation matrix.
The process of determining the risk allocation:
First study Consultation PJPK stipulated
Consideration:
a. Matrix Simulation Of Risk Allocation b. Continuity of a projectc. Generate a lower risk premium and lower project costs so that it has a positive impact on the project stakeholders
Example of a mitigation and risk management plan table in a project.
Mitigation and Risk Management Plan
Risk Categories and Risk Events
Description Public Private TogetherMitigation
Strategies According to Best Practice
Location RiskDelay and increase in land acquisition costs
Delay and increase in costs due to the prolonged land acquisition process
√
The government provides project land before the procurement process
Land cannot be acquired
The failure to obtain the project land location because of the prolonged land acquisition
√
Clear legal status and procedures for project land acquisition
Difficulties in unexpected location conditions
Delay due to uncertainty of location conditions
√
Historical data on land use and land investigations
RISK, DESIGN, CONSTRUCTION, AND OPERATION TESTConstruction completion is too late
include delayed access to location √
Reliable contractor and standard contract clauses
Increase in construction costs
√
Agreement on certain price escalation factors in the contract
SPONSOR RISKPoor sub-contractor performance √
Credible sub-contractor selection process
Business entity default
Business entity default that leads to termination / step in by financier
√
The consortium is supported by credible and solid sponsors
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MINISTRY OF TRANSPORTATIONREPUBLIC OF INDONESIA
Jl. Medan Merdeka Barat 8 N0. 8, Jakarta Pusat 10110Tlp : +6213504601
Fax : +621 3504601