Financing Sustainable Infrastructure in Indonesia
Presentation on Webinar on JCM Implementation in Indonesia 2020
30 September 2020

DISCLAIMER
This presentation has been prepared by PT Indonesia Infrastructure Finance (“IIF” or the “Company”) exclusively for yourbenefit and internal use, intended for discussion purposes only. All information contained in this presentation belongs to IIF andmay not be copied, distributed or otherwise disseminated in whole or in part without the prior written consent of IIF.

This presentation has been prepared on the basis of information that is believed to be correct at the time the presentation wasprepared, but that may not have been independently verified. IIF makes no express or implied warranty as to the accuracy orcompleteness of any such information.

IIF is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own

independent assessment of the contents of this presentation, should not treat such content as advice relating to legal,
accounting, taxation, technical or investment matters and should consult their own advisers. Nothing in this presentation isintended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities.

Neither the Company nor any of its directors, employees or representatives are to have any liability (including liability to any
person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (express orimplied) arising out of, contained in or derived from or any omission from the presentation, except liability under statute thatcannot be excluded.

2AGENDA

01 IIF Profile02 Project Finance Structure
03 Social & Environmental Principles04 Closing Remarks

AGENDA 1

IIF Profile

Company Profile
THE FOUNDER SHAREHOLDER’SOBJECTIVE

SHAREHOLDERS
As of 31 December 201914.90%
15.12%

30.00%

To establish a private non-bank ﬁnancial institution that
supports infrastructure projects in Indonesia

To increase private investment participation ininfrastructure sector

IIF’s Vision & Mission
To provide ﬁnancing for infrastructure in Indonesia and to work
closely with Infrastructure sponsors, ﬁnancial sector, and theGovernment of Indonesia to accelerate the construction of wellconceived, commercially viable infrastructure projects.

• To ensure investors’ requirements are reflected in contractualstructures and concessions.
• To pioneer the availability of various speciﬁcally designed
long term ﬁnancing instruments for infrastructure’s projects.
• To work with Indonesia’s ﬁnancial institutions and otherinstitutional investors to channel the public’s saving into thelong term development of Indonesia’s Infrastructure.

519.99%19.99%

IIF’s Rating

PT Fitch Ratings
Indonesia

PefindoAAA (idn)

idAAA

Mandated Infrastructure Sectors

6Drinking Water
Raw water intake facilities,
transmission network,
distribution network, drinking
water refinery plan.

Road
Toll roads and toll bridges.

Waste Water
Waste water treatment,collection and main sewage
system, and waste facilities
including transportation anddisposal facilities.

Irrigations
Raw water channels.

Telecommunication
Telecommunication networks.

Transportations
Sea ports, rivers or lakeports, airports, rail networks,
and railway stations.

Food Distribution
Infrastructure
Including warehousing.

Electricity
Power generation, powertransmission or distribution.

Oil and Gas
Oil and gas processing,storage, transportation,transmissions, anddistribution of oil and gas.

Management of IndustrialEstateLand acquisition,
construction and operation

Social Infrastructure
Infrastructure of waste
management systems,
renewable energy, energy
conservation, urban facilities,
educational facilities, sports
and arts facilities, regional
infrastructure, tourism,
health, penitentiary andpublic housing infrastructure.

Unique Business Model
Role as catalyst
Attract other financiers toco-finance

Advisory capability
Support public and private
sectors

Non-bank Financial Institution
Flexibility and innovative
financing structure

A UNIQUEFIRM ESTABLIHED
WITH A SPECIFIC
MANDATE

Project ﬁnancing capability
Rare capability in Indonesia
financing market

Long-dated liabilities
Ability to ﬁnance longtenor assets

International Standards on S&E Safeguards
Promoting sustainable project financing using
internationally-accepted standard

7

Strong link with theGovernment
In the forefront of regulatorychanges and pipelines

Support in All Stages of Project Development
Project Life Cycle

Business Division
ProjectPreparation

TenderProjectConstruction

ProjectOperation

FS Preparation
Transaction Advisory
Advisory
Services

PublicandPrivate
Institution

Policy Advisory
Economic and/or Financial Assessment
Financial Advisory
Strategy & Business Advisory
Senior & Subordinated Loan

Financing&Investment
ProductsFund
Based

Mezzanine & Equity Investment
NonFund
Based8

Refinancing

Guarantee
Stand-by FinanceEnd ofConcession

AGENDA 2

Project Finance Structure

Keys of Project Finance
Characteristic

Typical Project Finance Structure
Host
Government

Sponsor(s)Concession Agreement/
Permits and Authorizations/
Regulation

Input(e.g. gas)

SupplyAgreement

O&M
Contract

O&M Party

10

Lenders

Shareholders
Agreement

Project Company(e.g. power plant)
EPC
Contract

EPC
Contractor

Financial
Agreement

Offtake
Agreement

Output(e.g. power
supply)Insurance
Contract

InsuranceCompany•

Cashflow oriented•

Capital-intensive•

Highly leveraged•

Long term•

Independent entity with afinite life•

Non-recourse or limited
recourse financing•

Many stakeholders

Financing Process
Financial Close

Project Assessment

12

Know Your Client

1• Facility type• Facility amount and coverage• Interest rate & fees
• Securities/Collateral• General undertakings• Terms and conditions• Cash waterfall mechanism

Project Overview• Project structure and mechanics• Technology

3

Financial Overview

4

Due Diligence2

Financing Document• Technical aspects.
• Legal aspects.
• S&E aspects

3

Disbursement

5• Financial model••

Site Visit4611

Proposed Facility

Financing Structure

Condition Precedents
Drawdown documents

Review & Monitoring••

Periodic review
Fulfilment of S&E Corrective
Action Plan.

Main Assessment Items

Legal Aspect

1.
2.
3.
4.
5.
6.
7.

Corporate documents
Inter-party agreement
Concession agreement
Offtake Agreement
Supply and purchase agreement
Construction agreement
O&M contract

8. Financing agreement
9. Security document
10. Insurance policy
11. Tax status

Feedstock supply
Product demand
Site related characteristicEngineering design
Technology design/license
Material and equipment specification
Estimated total project cost8.
9.

TechnicalAspect

1.
2.
3.
4.
5.
6.
7.
1.

Social and Environmental
Management System
Labor and Working Conditions
Pollution Prevention and Abatement
and Climate Change
Community Health, Safety andSecurity/Dam Safety

5. Land Acquisition and Involuntary
Resettlement
6. Biodiversity Conservation and Natural
Resource Management
7. Indigenous People
8. Cultural Property and Heritage

Social &Environmental
Aspect

2.
3.
4.

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Safety engineering
Construction progress and S-curveanalysis
10. Construction contract
11. O&M contractSome Notable Renewable Power Plant Projects

Mini Hydro Power Plant in Sumatra
Picture▪ 2 x 6 MW minihydro power
plant in North
Sumatra▪ USD20 million
loan facility▪ 15 years tenor▪ Supported by
JCM funding

Hydro Power Plant in Sumatra
Picture13▪ 2x90 MW hydropower plan
located at North
Sumatera,Indonesia.
▪ USD 17.85
million loanfacility▪ 15 years tenor

Biomass Power Plant
Picture▪ 12 MW biomass
power plant inAceh.
▪ IDR 250 billion
loan facility▪ 12 years tenor▪ Supported by
JCM funding.

Wind Farm▪ Guarantee
Facility to financethe first WindPower Plant withcapacity of70MW.
▪ Guarantee
Facility USD 20million▪ 16,5 years
guarantee period

Gorontalo solar-powered power plant
Picture▪ 2MW Gorontalo
solar-powered
power plant▪ IDR 32 billion
loan facility▪ 8 years tenor

Geothermal Power Plant▪ Refinancing ofGeothermal
Power Plant withcapacity of 227
MW in WestJava.
▪ USD 38 million
facility.
▪ 4 years tenor

AGENDA 3

Social & Environmental Principles

IIF’s S&E Principles

Principle 1: Social & Environmental Assessment & Management System

Principle 2: Labor & Working Conditions

Principle 3: Pollution Prevention, Abatement & Climate Change

Principle 4: Community Health, Safety & Security/Dam Safety

Principle 5: Land Acquisition & Involuntary Resettlement

Principle 6: Biodiversity Conservation & Sustainable Natural Resource Management

Principle 7: Indigenous Peoples

Principle 8: Cultural Property & Heritage

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Sustainable Project Financing

S & E Due
Diligence

Corrective Action
PlanAt pre-financing stage, toidentify the projectaffected Social &Environment risks

Action points withtarget achievement
dates, implemented forproject lifetime

SustainableProjectDevelopment &Operation

Minimize risks and impact to S&E through mitigation action, which will benefit the project company byminimizing time-loss (i.e. project interruption), conflicts from workers and surrounding community, andlegal claims, whilst maintain good reputation.

16

Sample of S&E Issues in Mini Hydro Power Plant
▪
▪
▪
▪
▪
▪
▪
▪
▪

Upstream area
Land acquisition
Biodiversity study
Ecosystem services
Cumulative impact
Ecological flow
Transmission line area
Construction phase: mobilization & demobilization, landslide, sedimentcontrol, housekeeping, basecamp, health & safety, community safety.
Operation phase: operational safety, stakeholder engagement, hazardous
material and waste management.

Generic Corrective Action Plan
▪ Establishment of Social & Environmental Management System, which includes: grievancemechanism, stakeholder engagement plan, labor policies, organizational capacity & competency,
training program, emergency preparedness & response, environmental monitoring plan, andreporting.
▪ Appointment of dedicated person(s) to manage S&E aspects▪ Fatality report, including assessment on the causal and remedial/ improvement action.
▪ Regular reporting: S&E Annual Report, periodic regulatory report (e.g. implementation of RKL-RPL).

17

AGENDA 4Closing Remarks

Summary•

IIF is mandated to support the financing of commercially viable infrastructure projects.

•IIF requires project company to conduct sustainable project development, by following IIF S&EPrinciples.

•IIF welcomes cooperation with other financiers, especially those that shares the same concern onsocial & environmental issues.
IIF has financed 2 projects that use JCM mechanism, and open for further collaboration with JCM.

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