2022 State Budget: Fiscal Policy and Structural Reform
Efforts to Accelerate Infrastructure Provision
Limited Concession Scheme as an Alternative of Infrastructure financing
Presidential Regulation No 32/2020 about Infrastructure Financing through Limited Concession Scheme
Definition
Limited Concession Scheme of
Infrastructure Asset is the asset
concession agreement to improve
operations of Government assets (BMN)
and/or SOEs' assets to generate revenue
to improve similar project operations
and/or finance other infrastructure
provision
Infrastructure
Priority
Financing
Revenue generated by the LCS will be
used to fund the priority infrastructure
projects and/or national
infrastructure projects
strategic
Several adjustments on the substance of
Presidential Regulation Number 32/2020 will be
conducted, by considering the uncertainty
conditions of the assets affected by COVID-19
pandemic which causing the LCS quite difficult to
be implemented.
Source: Committee for Acceleration of Priority Infrastructure Delivery (KPPIP)
LCS Principles
LCS transfers concession rights from brownfield asset owned by
the Government and/or SOES to private sector to
maintain, and develop the assets;
operate,
As the rewards, Government and/or SOE will receive upfront
payment or annuity payment during the concession period
Future CAPEX during the concession period will be borne by the
concession holder to ease the Government and SOE budget burdens
Technical Criteria for the LCS assets
The asset has been fully operated for minimum 2 years
The asset needs to improve operation efficiency based on international
standard
Asset's useful life minimum is 10 years
For the SOE's asset, the asset must have positive cash flow for minimum 2
years in a row and has been audited at least 3 years in a row
For Government asset (BMN), the asset should be on the Ministry Financial report
that has been audited based on the Government Accountancy Standard in the
previous period
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