Viability Gap Fund or VGF is a government support in the form of contribution of some of the construction cost, given in cash to a PPP project that already economically viable but has not had a financial feasibility. VGF can be given when there is no other alternative to make the PPP project financially feasible. Local Government can contribute to the provision of this support after obtaining the approval of Local Parliament.
- Reduces the project cost to be borne by private parties.
- Increases the financial feasibility of PPP projects that attract interest and participation of the private sector.
- Increases the certainty of the procurement of project company in accordance with the quality and the planned timeline.
- Delivers public service at an affordable tariff for the community.
PPP Project that can be granted with VGF is a project that:
- Has met the economic viability but has not met the financial feasibility.
- Implements the user pay principle.
- Has a total investment cost not less than IDR 100 billion.
- Held by a project company which obtained through open and competitive bidding process.
- Had the scheme of assets transfer and/ or transfer of assets management from the project company to the GCA at the end of the period of cooperation.
- Had prepared a comprehensive pre-feasibility study:
- Lists the optimal risk sharing
- Has concluded that the project is feasible in terms of technical, legal, environmental, and social aspects;
- Shows that the PPP project becomes financially feasible with the support.
- VGF In Principle Approval.
VGF In Principle Approval GCA submits a proposal for VGF in principle approval (UPPDK) to the Minister of Finance after completing the OBC before implementing Pre-qualification.
- Persetuan Besaran Dukungan Kelayakan
PJPK menyampaikan usulan persetujuan besaran dukungan kelayakan (UPBDK) kepada Menteri Keuangan setelah melaksanakan Prakualifikasi dan sebelum melakukan tahap Request for proposal (RFP).
- Persetujuan Final Dukungan Kelayakan
PJPK menyampaikan usulan persetujuan final dukungan kelayakan (UPFDK) kepada Menteri Keuangan setelah menetapkan Badan Usaha Pemenang Lelang.
- Surat Dukungan Kelayakan
PJPK menyampaikan laporan kepada Menteri Keuangan mengenai pendirian BUPPKS/Badan Usaha Pelaksana KPBU dan rencana penandatanganan perjanjian kerja sama.
VGF is disbursed to be given to the project company by installments. There are two alternatives of the disbursement that can be done:
Supporting Documents for VGF:
- During the construction
In accordance with the stage of completion of the project construction, which has been agreed in the PPP agreement.
- After the commercial operation date as agreed in the PPP agreement.
- PPP Agreement
- VGF Letter
- Summary of VGF Terms & Conditions
- Verified proof of performance achievement
- GCA’s approval of verification result
- Statement from the project company that achievement of the performance is correct and accountable
The legal basis for Viability Gap Fund in Indonesia is based on:
- Presidential Regulation No. 38 of 2015 on Public-Private Partnership in Infrastructure Provision
- Minister of Finance Regulation No. 223/PMK.011/2012 on Provision of Viability Gap Fund
- Minister of Finance Regulation No. 143/PMK.011/2013 on Guidance of Provision of Viability Gap Fund
- Minister of Finance Regulation No. 170/PMK.08/2015 on the Amendment of Minister of Finance Regulation 143/PMK.011/2013
- Minister of Finance Decree No. 340/KMK.011/2013 on Establishment of the VGF Committee
- Minister of Finance Decree No. 782/KMK.08/2015 on the Amendment of Minister of Finance Decree No. 340/KMK.011/2013