On Wednesday, 29 March 2017, at Anantakupa Building, Ministry of Communication and Informatics signed Effective Financing between PT Bank BNI (Persero) and the Executing Enterprise (PT Palapa Timur Telematika). Following the two previous Packages of the Western and Central Packages that have been financed, the Eastern Package has finally obtained funding to finance the construction of the project. The financing of this project will be syndicated by PT Bank BNI (Persero), Bank ICBC Indonesia, Bank Papua, Bank Maluku Malut and Bank Sulselbar with total value of Rp 4 trillion.
The event was attended by KPBU project stakeholders such as the Ministry of Communications and Informatics (Kominfo) as Government Contracting Agency (GCA), PT Palapa Timur Telematika as the Implementing Enterprise formed by the consortium Moratelindo, IBS and Smart Telecom and Indonesia Infrastructure Guarantee Fund (IIGF) as the Infrastructure Guarantee Agency in providing government guarantee. Ministry of Finance as the provider of project preparation and transaction assistance facilities for PJPK, PT Bank Negara Indonesia (Persero) Tbk as Underwriter, Mandated Lead Arranger and Bookrunner, as well as Facility Agent, Security Agent and Settlement Agent of Palapa Ring East Package project, and syndicated Bank representative.
Palapa Ring was the first PPP project that implemented the Availability Payment (AP) scheme. This scheme was initiated by the Ministry of Finance and set forth in the form of Regulation of the Minister of Finance (PMK) Number 190 / PMK.08 / 2015 which was then refined to PMK Number 260 / PMK.08 / 2016.
AP is a periodic payment during the concession period based on the availability of infrastructure services that have been built by business entities. Components of fees payable by AP include the cost of capital, operating costs, and fair profit desired by the business entity. With this scheme the demand risk of the availability of infrastructure services will be fully borne by the Government through GCA, Ministry of Communications and Informatics. With these risks taken, business entities get a return on their investment if they can reach the service criteria as agreed in the Cooperation Agreement. For Palapa Ring, AP payments will be made through the Universal Service Obligation (USO) contribution fund.
In addition, Palapa Ring also received Project Development Facility (PDF) from the Ministry of Finance as stipulated in PMK 129 / PMK.08 / 2015 (that replaced PMK 265 / PMK.08 / 2015). For the East Package, the facility was given under the Master Agreement between the Ministry of Finance and the Ministry of Communications and Information Technology that was signed on 12 February 2016. The Ministry of Finance provided Project Preparation and Transaction Facilitation facilities. Provision of this facility was arranged through the mechanism of assignment to PT Sarana Multi Infrastruktur (PT SMI) until the Financial Close.
East Palapa Ring Package’s coverage covers 35 districts/ cities in East Nusa Tenggara, Maluku, Papua and West Papua with an estimated capital cost of Rp. 5.1 trillion and a network length of about 8450 Km. After the financial close the project will enter the construction period for 18 months and is targeted to start operating in September 2018. Through the East Package Palapa Ring Project – which is the last Package after the West and Central Package – the Government will assist the Indonesian people in equitable broadband access provision throughout Indonesia, especially in non-commercial areas. The presence of Palapa Ring will also provide new business opportunities for small and medium enterprises (SMEs) in remote areas, improve education through internet facilities and can improve people’s lives through digital economic activities.
This project is a series of government efforts in building the availability of fiber optic network service infrastructure as the backbone for the national telecommunication system and is a proof government commitment in fulfilling the needs of public infrastructure, especially the telecommunication sector and the acceleration of the implementation of the Strategic Infrastructure / National Priority Projects listed in Presidential Regulation no. 3 years 2016.