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Project Selection Criteria In Public Private Partnership

By Randy

Public Private Partnership or PPP is a cooperation between the government and the private sector in establishing something for the country  involved. PPP is usually a terms of cooperation for infrastructure development in the country. If done right, PPP can benefit both parties. For the country itself it can gives the lowest cost  of infrastructure development. While the private sector gets a very good profit from it. However, sometimes the private sector needs to consider which projects is beneficial for them. And it is the duty of the government to provide the information for these private sector which will be the their investor and builder.

 

In my home country, Indonesia, for example, to provide comprehensive information for the investors, all eligible projects is compiled and published annually in Indonesia’s PPP book.  All the projects in the PPP book have complied to the standard of BAPPENAS (Badan Pembangunan Nasional) Regulation No 3/2012 and 6/2012 and categorized according to the planning stages. The 3 different planning stages in the PPP book are as follows.

 

First Stage : Potential Project

An infrastructure project is categorized into potential planning stage if it is in line with either regional or national development plan. In order to be eligible as a potential project, a preliminary study regarding the importance and significance of the project must be available. Even though the project is not urgent, it still must have a clear planning of the area where the project will be developed as well as the cost estimate of the land acquisition. So everyone will know if that project is good to go or not. But, as good as potential, this stage is still need a lot of research.

 

Second Stage : Prospective Project

Prospective project is more likely to be developed earlier than potential project. Therefore, more solid information and data must be provided during the project preparation. The first thing that has to be clear in this planning stage is the economy significance and feasibility of the project. Moreover, environmental assessment must also be done and the project will be eligible to go into the PPP book if it complies with Environmental Impact Assessment Standard. And more importantly, the Government Contracting Agency also have to prepare and identify what kind of support this project needs from the government, so they can offer the tender to the private sector.

 

Latest Stage or Ready to Offer Project

Ready to offer project is divided again into two different categories. The first one is the solicited project and the second one is unsolicited. To make it into the book, solicited project must possess stakeholder’s endorsement. Meanwhile, the unsolicited project must be approved by Government Contracting Agency. Since this project is ready to develop once it finds investors, the PPP agreement and all the environmental assessment must be ready.

 

That is the 3 different planning stages in Indonesia Public Private Partnership books. It is up to private sector or investor to find out which project is in their interest to develop. In Indonesia, the government can only provide 30% of the overall funding for infrastructure project. The government understand that infrastructure project can takes a lot of money and effort even for the private sector. So, the government established a state owned enterprise to aide the private sector in the infrastructure project.

 

The company is called PT Sarana Multi Infrastruktur or PTSMI. PTSMI’s main task is to provide financing for infrastructure project under the supervision of Minister of Finance of Republic of Indonesia. Other than financing, PTSMI also provide advisory and project development service. But, PTSMI is only provide its service to infrastructure project and none other.

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indonesia, indonesia, infrastructure, infrastructure, financing, financing, public private partnership, public private partnership, government agenda, government agenda,

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