NDMP Vol 2

1
Network Development Master

Plan
Improving Indonesia's Inter-Urban Connectivity
Over the Next 20 Years
Volume 2: Implementation
Framework
INDONESIA INFRASTRUCTURE INITIATIVE
Network Development
Master Plan
Volume 2:
Implementation
Framework
CONSULTANT REPORT
INDONESIA INFRASTRUCTURE INITIATIVE
This document has been published by the Indonesia Infrastructure Initiative (IndII), an
Australian Government-supported project designed to promote economic growth in
Indonesia by enhancing the relevance, quality and quantum of infrastructure
investment.
The views expressed in this report do not necessarily reflect the views of the Australia
Indonesia Partnership or the Australian Government. Please direct any comments or
questions to IndII at enquiries@indii.co.id.
ACKNOWLEDGEMENTS
This report has been prepared by Aurecon and Cardno who have been engaged under
the Indonesia Infrastructure Initiative (IndII), a project managed by SMEC on behalf of
the Australian Government, as part of Activity T208.05 and T209.3.
Any errors of fact or interpretation are solely those of the authors.
Jakarta, 14 December 2016
IndII 2016
All original intellectual property contained within this document is the property of the Indonesia
Infrastructure Initiative (IndII). It can be used freely without attribution by consultants and IndII partners in
preparing IndII documents, reports, designs and plans; it can also be used freely by other agencies or
organisations, provided attribution is given.
Every attempt has been made to ensure that referenced documents within this publication have been
correctly attributed. However, IndII would value being advised of any corrections required, or advice
concerning source documents and/or updated data.
TABLE OF CONTENTS
ABBREVIATIONS AND ACRONYMS ............................................................................ V
SUMMARY AND RECOMMENDED ACTIONS ........................................................... VIII
CHAPTER 1: INTRODUCTION AND CONTEXT .............................................................. 1
1.1 Structure Of Network Development Master Plan .......................... 1
1.2 Summary Of Volume 1 ................................................................. 1
1.3 Purpose Of Volume 2 ................................................................... 3
1.4 Identification Of Implementation Actions..................................... 4
CHAPTER 2: POLICY FRAMEWORK FOR IMPLEMENTING EXPRESSWAYS ..................... 5
2.1 Principle 1: Expressways are a Distinct Category of Road .............. 5
2.2 Principle 2: Equal Treatment of Expressway Users ........................ 6
2.3 Principle 3: Portfolio Financing ..................................................... 6
2.4 Principle 4: Role Clarity ................................................................ 6
2.5 Principle 5: Autonomy with Accountability ................................... 7
CHAPTER 3: FINANCING AND FUNDING THE NETWORK DEVELOPMENT MASTER
PLAN .................................................................................................... 8
3.1 Introduction ................................................................................ 8
3.2 Estimated Unconstrained Investment .......................................... 8
3.2.1 Expressway Investment (Unconstrained) Key Assumptions . 9
3.2.2 Investment in Other Arterials (Unconstrained) ..................... 13
3.3 Private Sector Role In The Financing Of Expressways .................. 16
3.3.1 Delivery and Financing Options ............................................. 17
3.3.2 Private Sector Financing Strategy .......................................... 25
3.4 Government Role In The Financing Of National Roads ................ 27
3.4.1 Calculating the Network Development Master Plan Spending
Envelope................................................................................. 27
3.4.2 Note on Allocation of Expressways to SOEs .......................... 30
3.4.3 Budget Gap............................................................................. 30
3.5 Constrained Financing Plan ........................................................ 32
3.5.1 Expressway Financing Plan .................................................... 32
3.5.2 Expressway Roll-Out .............................................................. 33
3.5.3 Financing Other National Roads ............................................ 36
CHAPTER 4: INSTITUTIONAL AND ORGANISATIONAL REQUIREMENTS ..................... 37
4.1 Introduction .............................................................................. 37
4.2 Overview Of Roles And Responsibilities ..................................... 37
4.2.1 Role of Directorate General of Highways .............................. 38
4.2.2 Role of the Toll Regulatory Agency ........................................ 39
i
4.3 PLANNING OF CONNECTIVITY AND CAPACITY ........................................ 40
4.3.1 Enhanced Approach to Planning ............................................ 41
4.3.2 Organisational Implications ................................................... 42
4.4 PROJECT PREPARATION ................................................................... 43
4.4.1 Pre-Land Acquisition Preparation .......................................... 43
4.4.2 Land Acquisition ..................................................................... 44
4.4.3 Land Banking .......................................................................... 44
4.4.4 Treatment of Major Projects ................................................. 45
4.4.5 Improved Asset Management Through Road Asset
Management System ............................................................. 48
4.4.6 Assimilation of Expressway Section ....................................... 48
4.5 IMPLEMENTING EXPRESSWAYS: REFORM OF THE TOLL REGULATORY AGENCY 48
4.5.1 Organisational Restructuring ................................................. 49
4.5.2 Quality Assurance and Independent Quality Controller
Consultant Reform ................................................................. 51
4.5.3 Expressway Service Standards ............................................... 52
4.5.4 Toll Regulatory Agency Powers of Enforcement.................... 53
4.5.5 Financial Self-Sufficiency ........................................................ 54
4.5.6 Unlocking Institutional Potential ........................................... 57
CHAPTER 5: REGULATORY MEASURES .................................................................... 59
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LIST OF TABLES
Table 1-1: Network Development Master Plan Expressways and Other National Arterial
Roads Interventions 20152034 (km) ............................................................................... 1
Table 1-2: Network Development Master Plan Expressway and Other National Arterial
Roads Programs by Island (km) ......................................................................................... 2
Table 3-1: Duration of Expressway Project Activities ....................................................... 9
Table 3-2: Typical Expressway Preparation Unit Rates (Real 2016 Value)...................... 10
Table 3-3: RENSTRA Construction Unit Rates 20152019 (Rp Billion/km, Real 2016
Values)............................................................................................................................. 10
Table 3-4: Expressway Construction Unit Rates 2020 Onwards (Rp Billion/km, Real 2016
Values Excluding Contingency Risk) ............................................................................. 11
Table 3-5: Expressway Investment (Unconstrained, Rp Billion, Real 2016 Values
Excluding Contingency Risk) ............................................................................................ 12
Table 3-6: Summary of Expressway Investment Required by Island (Unconstrained, Rp
Billion, Real 2016 Values Excluding Contingency Risk) ................................................ 12
Table 3-7: Duration of Arterial Project Activities ............................................................ 14
Table 3-8: Other Arterial Construction Unit Rates by Island (Rp Billion/km, 2016 Values
Unconstrained)................................................................................................................ 14
Table 3-9: Summary of Other Arterial Investment Required by Island (Unconstrained, Rp
Billion, Real 2016) ........................................................................................................... 15
Table 3-10: Options for Surplus Build-Operate-Transfer Bid Parameters and Timing.... 21
Table 3-11: Summary of Financing Models ..................................................................... 23
Table 3-12: Calculation of Expressway Envelope (Rp Trillion, Real 2016 Values) ........... 27
Table 3-13: Budget Envelope Versus Expenditure Requirements for Expressways (Rp
Billion, Real 2016 Values) ................................................................................................ 31
Table 3-14: Estimated Expressway Program Cost (Constrained if Applicable, Rp Billion,
Real 2016) ....................................................................................................................... 33
Table 3-15: Expressway Projects Delivery Schedule and Anticipated Financing Model . 34
Table 4-1: Toll Regulatory Agency Summary Responsibilities ........................................ 50
Table 5-1: Legal Instruments - New Instruments, Amendments and Retractions .......... 60
Table 5-2: National Plan Regulatory and Legal Requirements Not Covered in Volume 2
......................................................................................................................................... 66
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LIST OF FIGURES
Figure 2-1: Policy Principle Set .......................................................................................... 5
Figure 3-1: Expressway Investment Required by Island ................................................. 13
Figure 3-2: Other Arterial Investment Required by Island .............................................. 16
Figure 3-3: Tariffs on Upcoming Toll Roads, April 2014 .................................................. 20
Figure 3-4: Framework for Selecting from Delivery and Financing Model Options ....... 26
Figure 3-5: Determining the Network Development Master Plan Expenditure Envelope
(Assumptions Shown for 2020+) ..................................................................................... 29
Figure 3-6: Projected Spending Envelope for Expressways (Rp Billion, Real 2016) ........ 30
Figure 3-7: Government Budget Envelope Versus Government Expenditure
Requirements for Expressways (Rp Billion, Real 2016)................................................... 31
Figure 4-1: Major Phases in Roads Project Cycle and Institutional Responsibilities....... 37
Figure 4-2: Asset Quality the Result of Project Life Cycle Approach .............................. 51
iv
ABBREVIATIONS AND ACRONYMS
AMDAL Environmental Impact Assessment
AP Availability Payment
APBN State Budget
ATP Ability to Pay
Bappenas National Planning Agency
BINTEK DGH Division that sets technical standards and techniques
BLT Build-Lease-Transfer
BLU Public Service Unit
BOT Build-Operate-Transfer
BPJT Toll Regulatory Agency
BPN National Land Agency
BUMN State-Owned Enterprises, Badan Usaha Milik Negara
Capex Capital Expenditures
COD Commercial Operation Date
CMEA Coordinating Ministry of Economic Affairs
DED Detailed Engineering Design
DGH Directorate General of Highways
EW Expressways
FBC Final Business Case
GCA Government Contracting Agency
GDP Gross Domestic Product
GoI Government of Indonesia
GR Government Regulation
v
IDR Indonesian Rupiah
IIGF Indonesia Infrastructure Guarantee Fund
IndII Indonesia Infrastructure Initiative
Km Kilometre
KPPIP Committee for Infrastructure Prioritisation
LLF Limited Liability Fund
LMAN National Asset Management Agency
MoF Ministry of Finance
MoT Ministry of Transportation
MPPU Major Projects Preparation Unit
NDMP Network Development Master Plan
NR National Roads
NRFPG National Roads Forward Planning Group
OBC Outline Business Case
O&M Operations and Maintenance
PBMC Performance-Based Maintenance Contract
PMI Independent Quality Controller Consultant
PMO Project Management Office
PPP Public Private Partnership
PUPR Ministry of Public Works and Public Housing, Kementerian

Pekerjaan Umum dan Perumahan Rakyat
RAMS Road Asset Management System
RENSTRA National Plan
ROW Right of Way
RUJPJJN National Roads Master Plan
vi
SOE State-Owned Enterprise
SPM Minimum Toll Road Service Standards
TM Transport Model
VGF Viability Gap Funding
WTP Willingness to Pay
vii
SUMMARY AND RECOMMENDED ACTIONS
The Network Development Master Plan (NDMP) advocates a planning, program and
implementation framework to deliver 4,782km of new expressways and other significant
national arterial road interventions to improve Indonesias inter-urban road connectivity
between 2015 and 2034.
The successful delivery of the NDMP to implement a strategic backbone of expressway

roads connected to the rest of the national road network will require refinements in the
way that the Government of Indonesia (GoI) finances and funds projects, and
clarification of roles and responsibilities to its road planning and delivery agencies.
Included in this Volume is information on a suggested financing plan to deliver the

expressway component of the proposed NDMP. Two sets of financial estimates are
provided: (i) an unconstrained investment cost for the total NDMP; and (ii) a
constrained or optimised financing plan that takes into account private sector delivery
and GoI affordability constraints.
In summary, over the proposed 20-year program it is estimated that Rp 666.5 trillion
(real terms, 2016 values) will be required to deliver the proposed expressway program.
GoI will need to fund approximately 24 percent of this 20-year investment cost with the
remainder of the costs to be met from the private sector and financing leveraged by
State-Owned Enterprises (SOEs). If long-term budget assumptions are used, then the
initial affordability analysis for GoIs share appears to be achievable over the period
20202034, but with affordability constraints in the current committed program from
20152019. Note that there is a shift in the cost burden to GoI towards the end of the
proposed 20-year program in 203034 when a greater share of State Budget (APBN)
funding is required. This situation may change as the investment program in later years
is confirmed and if pre-feasibility studies confirm any potential for more private sector
involvement.
To implement the proposed NDMP, particularly for expressways, this Volume provides
recommended targeted policy actions for the financing and funding, institutional and
regulatory processes that will be required to deliver the schedule of projects over the
next 20 years.
The five key policy principles underpinning the recommended actions are:
Principle 1: Expressways are a Distinct Road Category
Principle 2: Equal Treatment of Expressway Users
Principle 3: Portfolio Financing of New Expressway Roads
Principle 4: Role Clarity within GoI for Expressway Road Development
Principle 5: Autonomy with Accountability
The actions have the following three phases of implementation:
viii
Immediate: actions with no obvious constraints to quick implementation. These can
therefore be executed within the current (20152019) National Plan (RENSTRA)
period.
Medium-term: actions which require legal sanction above that which the Minister
can provide. Some of these could be attended to in the current RENSTRA period,
while some would roll over into the 20202024 period.
Later: actions that require a fundamental shift in policy, and which may be expected
to require further policy debate. The aim should be to carry out these actions by the
end of the next RENSTRA period (i.e. by 2024).
The recommended actions are listed below and are cross-referenced to the relevant
section of this Volume 2.
Action and Context Timing
CHAPTER 3: FINANCING THE NETWORK DEVELOPMENT MASTER PLAN
3.3 Private Sector Role in the Financing of Expressways
A1. In the medium term, most if not all of the benefits of Viability Gap Funding
(VGF) can be obtained by applying purely financial VGF. This approach
Later
would see GoI assume an outputs focus rather than concentrating on
managing inputs.
A2. Availability payment (AP) schemes are useful and effective in appropriate
circumstances; however, this form of contracting should be subject to a
Immediate
proper evaluation not just being seen as a replacement for VGF or similar
existing funding arrangements.
A3. Care should be taken to not overuse AP concessions and in so doing

Immediate
create an unmanageable compound financial obligation in future years.
A4. Create the legal framework for bidders to submit surplus-generating

proposals in their expressway bids (subject to the creation of a suitable
Medium Term
institutional framework to manage such surpluses so that these are
reinvested in the expressway system).
A5. A legal framework should be created for the Toll Regulatory Agency
(BPJT) to attach a toll collection agreement on any expressway project Immediate
that would otherwise not have been tolled.
A6. A national expressway toll strategy should be prepared. Medium Term
A6.1 Tolls should be able to be applied on all expressways (even if those roads Medium Term
are not Build-Operate-Transfer [BOT] or VGF concessions).
A6.2 A more definitive analysis of user benefit, ability to pay and willingness to Medium Term
pay should be carried out so that a tighter band of reference toll rates can
be determined.
ix
A6.3 Toll rate discounts and premiums should be partially indexed to reflect the Medium Term
actual effect of inflation on the concessionaires costs.
A6.4 The toll rates applied on future expressway concessions, including for Medium Term
concessions that are re-bid at the end of their terms, should fall within the
band of reference toll rates.
A6.5 Existing concessions should be systematically migrated to the reference Medium Term
tariff band, within the contractual frameworks of those concessions.
A7. The obligation to recommend a toll policy, and to also execute the policy
when approved, should vest with BPJT which should be structured and Medium Term
resourced appropriately.
CHAPTER 4: INSTITUTIONAL AND ORGANISATIONAL REQUIREMENTS
4.2 Overview of Roles and Responsibilities
A8. Best practice approach to managing a projects progress is to submit all

projects to a proper stage gate process, i.e. dividing them into stages or
Immediate
phases, separated by gates where a project is assessed and approved
(or turned back) to proceed to the next stage.
A8.1 There should be a clear, personal responsibility to manage a project and

Immediate
steer it through the stage gates.
A9. Unsolicited toll projects should be analysed in the same manner as other
Immediate
roads projects before being handed over to BPJT for implementation.
A10. To avoid any doubt about responsibility, one coordinating area should be Medium Term
responsible for planning, preparation and investment decisions for all
expressways projects, with another functional area in GoI (possibly BPJT)
given responsibility to procure, execute and regulate expressways.
A11. Even though some expressways may not be directly financed from toll Medium Term
revenue, all expressways will be tolled under the principle of equal
treatment of expressway users.
4.3 Planning of Connectivity and Capacity
A12. The Directorate General of Highways (DGH) should be recognised as

mandated centre of excellence for roads planning, and should formalise
a consultation procedure with Ministry of Transportation, Bappenas,
Immediate
Coordinating Ministry of Economic Affairs/Committee for Infrastructure
Prioritisation (CMEA/KPPIP) and other interested entities to ensure
regular interaction, early enough in the planning cycle.
4.4 Project Preparation
x
A13. To ensure the continuation of the land purchase program, the current
funds and future allocations to BPJT Public Service Unit (BLU) should Immediate
ideally remain available for the purchasing of expressway land.
A14. DGH and BPJT should come to specific agreement with the National Land
Agency (BPN), previously responsible to execute land acquisition, and the
Immediate
National Asset Management Agency (LMAN) to ensure the seamless
transfer of ongoing and pending land purchase arrangements.
A15. GoI should review the current approach of procuring land on an as needed
basis, and implement proper land banking where rights of way are Immediate
acquired well in advance of (decades before) construction.
A16. An ownership function responsible for land bank assets should be

established in either DGH or BPJT. Given the commercial skills required
Medium Term
and the need to respond proactively to land requests as they arise during
construction, this function may be best suited for BPJT.
A17. The responsibility for major projects should in principle be centralised and
Later
not devolved to the lower, local balai level.
A18. DGH will be supported by means of a dedicated Major Projects

Preparation Unit (MPPU) which would be responsible for preparing both Immediate
expressway and other major arterial projects.
A19. The MPPU will be responsible for procuring and executing major, non-
Immediate
expressway, national arterial projects.
A20. DGH will approach development partners to financially support the

Immediate
creation and operation of the MPPU.
A21. In the future, there should be a defined hand-over of an expressway

project from the planning/preparation to the delivery phase, in the form of Immediate
a formal order placed by DGH with BPJT.
A21.1 DGH undertakes that there will in future be a minimum level of land
acqusition by GoI before awarding a concession. No unresolved land
Immediate
acqusition should still legally be more than a couple of months
outstanding.
A21.2 BPJT should implement an affordability check, i.e. a verification procedure

to confirm that any GoI financial support is available before signing the Immediate
concession.
4.4.5 Improved Asset Management
A22. DGH will continue rolling out and further developing a Road Asset
Immediate
Management System (RAMS) to include all asset types as a priority.
4.5 Implementing Expressways: Reform of Toll Regulatory Agency
xi
A23. In the future, the current relationship between the Independent Quality
Controller Consultant (PMI) and concessionaire should be divided, with Immediate
PMIs directly contracted to and paid by BPJT.
A23.1 The right of PMIs to access construction sites and inspect plans, designs Immediate
and records will be asserted in the concession agreements.
A23.2 PMIs should be paid market-related fees and rates. Immediate
A23.3 Best practice industry-wide methods of developing the contract

management and quality assurance industry should be identified and Immediate
applied in the near future.
A24. A Project Management Office (PMO) should be established in BPJT to

support developing the final business case (FBC) and delivering projects, Immediate
including providing oversight of and support to PMIs.
A25. The performance frameworks for expressways provided under different

Immediate
delivery models should be harmonised, where commercially possible.
A25.1 The future consolidated performance framework should be oriented to

outcome levels of service and make use of proven technologies so that
the tracking of service becomes real-time, and also to reduce the Immediate
requirement for subjective interpretation and audit of a concessionaires
performance.
A26. Amend the legal framework for toll concessions to enable BPJT to Medium Term
penalise a concessionaire for non-performance, and in extreme cases,
terminate the concession.
A27. The funding of BPJTs activities should shift from the general APBN Medium Term
towards the expressway user as the direct beneficiary of BPJTs services.
A28. The cost of overseeing the creation and operation of expressways should Medium Term
be recovered from expressway concessionaires and charged through to
the users of expressways.
A28.1 A PMI administration fee should be levied on expressway Medium Term

concessionaires, to be utilised by BPJT to remunerate PMIs who are
contracted by the agency directly.
A28.2 BPJTs cost of preparing and procuring an expressway project should be Medium Term
charged through as a procurement fee to the winning bidder.
A28.3 A periodic toll regulatory fee should be charged to all expressway Medium Term
concessionaires.
A29. To support the portfolio financing approach, BPJT should implement the
required management tools, including an expressway system financial Immediate
model, with the necessary predictive capability.
xii
A30. Should GoI decide to implement a National Road Agency function using
BPJT, then BPJT should prepare a working plan and budget, reflecting its
Immediate
enhanced expressway network management role, and including a
resource and revenue plan, for approval of the Minister.
A31. Also, BPJT should prepare procurement rules, including for the
Immediate
appointment of private professional advisors, for approval of the Minister.
A32. A set of regulations should be developed to give effect to the dormant

legal powers of the BPJT BLU, especially to unlock its ability to generate Medium Term
a revenue stream.
xiii
CHAPTER 1: INTRODUCTION AND CONTEXT

1.1 STRUCTURE OF NETWORK DEVELOPMENT MASTER PLAN
This report is Volume 2 of the inter-urban roads Network Development Master Plan
(NDMP). The NDMP is made up of three Volumes:
Volume 0: Executive Summary
Volume 1: Planning the Inter-Urban Network
Volume 2: Implementation Framework (this volume).
1.2 SUMMARY OF VOLUME 1
Volume 1 of the NDMP provides the planning framework for improving Indonesias inter-
urban road connectivity over the next 20 years. It sets out the planning issues, objectives
and procedures, and advocates a pipeline of prioritised expressway and other arterial
road projects that comprise the road network expansion program to provide
connectivity and mobility between key centres.
In addition, Volume 1 identifies that over the past two decades, lack of investment and
a fragmented and incremental approach to national road planning and delivery has led
to a significant lag and substantial shortfall in both the performance and capacity of the
main road network, especially inter-regional connectivity. Without the expansion of the
main road network, the Indonesian road system will not be able to support national
development aspirations, a national economic growth rate in excess of 5 percent per
annum, and an accelerated and expanded program of equitable regional growth. The
proposed network development plan (including current Directorate General of
Highways [DGH] National Plan [RENSTRA] commitments) is summarised in Table 1-1
(below).
Table 1-1: Network Development Master Plan Expressways and Other National Arterial Roads
Interventions 20152034 (km)
Program 201519 202024 202529 203034 Total
Expressway New Expressway 904 1,395 1,621 862 4,782
Widen existing to 7m
or construct new
7m - 803 1,593 1,995 4,391
national road at 7m
carriageway
NETWORK DEVELOPMENT MASTER

PLAN - VOLUME 2: IMPLEMENTATION 1
FRAMEWORK
Program 201519 202024 202529 203034 Total
Re-align existing
NR national road to dual - - 170 90 260
carriageway
Widen existing
2x2 national road to dual - 230 992 347 1,569
carriageway
TOTALS 904 2,428 4,376 3,294 11,002
In total 4,782km of new expressways are planned for the period 20152034. For other
national arterial roads, interventions will be in the form of widening of existing roads to
7m-wide carriageways or constructing new roads with 7m carriageways (7m in Table
1-1), re-aligning existing roads to dual carriageway standard (New Roads), and widening
existing roads to dual carriageways (2x2).
More detailed information on the proposed network development plan by island is

provided in Table 1-2 (below). This detailed table shows that most new expressways
(2,811km, or some 60 percent of the total expressway program) will be constructed in
Sumatera, with nearly all of the remainder (1,731km, 36 percent) constructed in Java.
The delivery of the expressway program increases in size progressively up to the 2025
29 period, with 3,920km of new expressways (82 percent of the total expressway
program) opening by the end of 2029.
Table 1-2: Network Development Master Plan Expressway and Other National Arterial Roads Programs
by Island (km)
Island Program 201519 202024 202529 203034 Total
Expressway 539 458 734 - 1,731
7m - - - 84 84
Java
New Roads - - 170 69 239
2x2 - 105 595 310 1,010
Expressway 225 897 847 842 2,811
7m - - 115 214 329

Sumatera
New Roads - - - 21 21
2x2 - 48 - 37 85
Expressway 40 - 40 20 100
Sulawesi
7m - - 360 211 571

2 PLAN - VOLUME 2: IMPLEMENTATION
FRAMEWORK
New Roads - - - - -
2x2 - - - - -
Expressway 99 - - - 99
7m - 43 204 590 837

Kalimantan
New Roads - - - - -
2x2 - 63 397 - 460
Expressway - 40 - - 40
7m - - 99 - 99
Bali
New Roads - - - - -
2x2 - 15 - - 15
Expressway - - - -
7m - 760 815 895 2,470

Other Islands
New Roads - - - - -
2x2 - - - - -
1.3 PURPOSE OF VOLUME 2
The successful delivery of the NDMP by 2034 will require refinements in the way the
Government of Indonesia (GoI) funds1, prepares and procures projects and a major shift
in how it assigns roles and responsibilities to its road planning and delivery agencies.
In this regard, the purpose of Volume 2 is to inform and recommend targeted policy
actions to implement the NDMP. Volume 2 also identifies the quantum of funding
required for the NDMP projects and the range of financing and funding instruments that
should be considered to lessen the financial burden on GoI. Specific actions are
formulated to provide a GoI policy framework for the financial, institutional and
regulatory processes that will be required to deliver the schedule of road infrastructure
projects in the NDMP.
The
term fund refers to the source that pays for the project, e.g. a toll tariff. Finance refers to an activity
that makes it possible to postpone paying for the project, e.g. a loan. GoI typically funds a project by paying
a contractor to build it, or by providing a subsidy to a concessionaire even if GoI obtained the funds by
borrowings from the general government borrowings The concessionaire typically finances the project by
taking out a loan on a project finance basis Section 3.3.1 discusses this distinction further.

FRAMEWORK
The 20-year duration of the NDMP is a timeframe that challenges GoI to critically assess
the current implementation framework for delivery, and the NDMP provides an
opportunity to make the case for change where required. The NDMP should not assume
business as usual, but lay the foundation for the long-term sustainability of the higher-
order roads network.
In this context, this Volume 2 outlines three procedural areas of implementation

(financial, institutional/organisational, and regulatory), governed by a set of five
integrated policy principles to guide and accelerate the execution of the NDMP. Volume
2 is therefore organised under the following four broad headings to provide a new way
forward for implementation:
Policy Framework for Implementing the NDMP
Financing and Funding the NDMP
Institutional and Organisational Requirements
Regulatory Requirements
1.4 IDENTIFICATION OF IMPLEMENTATION ACTIONS
Throughout Volume 2, actions have been recommended to successfully implement the

NDMP, mostly requiring a change in how expressways and other major road projects are
managed. Such actions may have to be formalised in appropriate legal instruments, and
therefore provide the motivation for most of the legal amendments and additions
included in Chapter 5.
The actions to give effect to the new policy direction to deliver the NDMP are listed at
the outset of this document, forming a prcis of Volume 2. Actions are date-stamped for
implementation with three phases of implementation suggested:
Immediate: actions with no obvious constraints to quick implementation. Legally, these

are all actions that can be sanctioned by existing legal instruments, or at least
instruments that do not require more than a Ministry of Public Works and Public
Housing (PUPR) Ministerial Regulation. These can therefore be executed within
the current (20152019) RENSTRA period.
Medium-term: actions which require legal sanction above that which the Minister can
provide, such as a Presidential Regulation or even a Law. Some of these could be
attended to in the current RENSTRA period, while some would roll over into the
20202024 period.
Later: actions that require a fundamental shift in policy, and which may be expected to
encounter internal (PUPR, DGH and/or Toll Regulatory Agency [BPJT]) or even
external (Ministry of Finance [MoF], Bappenas, House of Representatives) policy
debate. The aim should be to carry out these actions by the end of the next
RENSTRA period (i.e. by 2024).

FRAMEWORK
CHAPTER 2: POLICY FRAMEWORK FOR
IMPLEMENTING EXPRESSWAY
CHAPTER 2: POLICY FRAMEWORK FOR IMPLEMENTING

EXPRESSWAYS
This chapter describes the policy background and proposed framework for
implementing the expressway elements of NDMP. There are five key principles that drive
the overarching policy framework (see Figure 2-1 below). These principles are designed
to work together to form a package of policies that support the implementation of the
proposed investment in national roads.
Figure 2-1: Policy Principle Set
Expressways a Portfolio Autonomy

distinct road financing of with
class expressways accountability
Equal
treatment of
Role clarity
expressway
users
2.1 PRINCIPLE 1: EXPRESSWAYS ARE A DISTINCT CATEGORY OF ROAD
In the current approach to the definition of roads, arterial roads connect the most
important centres of activity. However, it is generally acknowledged that the present
arterial system is inadequate: it does not provide sufficient connectivity (direct links
between key centres) or mobility (high speed transit). The proposed approach, as set
out in NDMP Volume 1, will therefore be to develop an expressway network serving as
the strategic backbone for the other arterials and lower order roads.
The expressways will serve a main arterial function focusing on national economic
integration. They will be developed at the highest domestic design standard, providing
seamless connectivity between major economic growth areas and urban centres.
Expressways will be integrated with lower order roads, but will be a visibly unique,
contiguous, high-performance road network.

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2.2 PRINCIPLE 2: EQUAL TREATMENT OF EXPRESSWAY USERS
Expressways are specifically aimed at supporting the economy by improving transport

efficiency and reducing logistics costs. They are designed to provide the same high level
of service to road users wherever expressways are located.
With equal service expectations comes equal responsibility. Expressway users should
have a similar obligation to contribute to the cost of developing and operating
expressways. Since expressways are not social services funded from indirect taxes, it is
expected that users will be charged directly and fully for the service. Expressways should
therefore generally be positioned as Public Private Partnerships (PPPs), and the range of
PPP financing options should be expanded to ensure that appropriate financing solutions
are available for different circumstances. This approach will allow GoI to focus its
resources on priority national roads that require targeted government support.
Good pricing practice requires that the user who causes a cost also be responsible to pay
for it, and only it. But the costs and benefits of the expressway system arise from it being
an integrated network, which means that an expressway users obligation should also
be seen from a network perspective. Ideally therefore, as the expressway network grows
into a single system, it is anticipated that cost responsibility will be shared among users,
reflecting the network nature of the expressway system. This will promote a network
development approach compared to the current system where the financial
implications of expressway roads are assessed based on the performance of the
individual road.
2.3 PRINCIPLE 3: PORTFOLIO FINANCING
The equal treatment principle will give rise to the mature, high-demand links of the
expressway network generating financial surpluses; while emergent parts that are
economically viable in the long term could be in deficit financially due to low demand in
the early years. But the one-network approach implies that surpluses and deficits should
be bundled, offset and financed as one portfolio. Treating projects as part of a single
portfolio diversifies financial risk, supporting the aim of financial sustainability at the
network level and reducing recourse to State Budget (APBN) funding.
Additionally, a portfolio financing approach creates the opportunity to introduce

network-level financing, i.e. debt instruments (bonds, loans, etc.) for expressways as a
group and not just for an individual expressway project, which reduces risk and increases
attractiveness for major investors such as global pension funds.
2.4 PRINCIPLE 4: ROLE CLARITY
The development of roads goes through two broad phases: planning and
implementation. Although expressways form the discrete, upper (backbone) layer in the

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CHAPTER 2: POLICY FRAMEWORK FOR
IMPLEMENTING EXPRESSWAY
hierarchy of roads, they exchange traffic with the lower layers comprising, for example,
arterials, sub-arterials and urban roads. The respective roles and interactions need to be
assessed concurrently to achieve the best overall result, as demonstrated in NDMP
Volume 1.
Accordingly, road planning should be an integrated exercise carried out by one

coordinating body/functional unit. Since the topic is public roads, this unit should
probably be located in government.
Once a project has an individual identity, it should be implemented by the party best
equipped to manage the requirements of that project. In Indonesia today, identity
implies a sufficiently prepared project, including substantial, if not complete, land
availability (which is an obligation for which government has now assumed
responsibility).
Expressway projects are usually physically more complex than lower order roads. But
they are above all more complex commercially since they are often tolled. Applying the
equal treatment principle, in the future, expressways will increasingly be provided under
other PPP schemes as well. The structuring, financing and performance management
skills required to manage the expressway system are not typically found in the public
sector, but rather justify having a specialist agency of government.
2.5 PRINCIPLE 5: AUTONOMY WITH ACCOUNTABILITY
International evidence increasingly supports the management of the national roads

sector by means of a more independent agency of government. Such an agency would
have more employment, procurement and financial flexibility to the normal conditions
and constraints of the public service to provide access to the expertise required to
deliver a major investment program. In exchange for these privileges, however, the
agency would be subject to more demanding performance and governance obligations.
The result should be a more efficient road sector and reduced whole life roads
expenditure.
In Indonesia, the establishment of a best practice National Roads Agency should also
be the objective. However, converting the whole of DGH into such an agency in the short
term requires a process of consultation and acceptance of new policy which will take
time to implement.
In anticipation of converting to an agency, DGH should improve its planning and project
preparation capability for all national roads, as well as its implementation and oversight
ability for the non-expressway roads (which will remain its obligation). In the case of
BPJT, it is already a semi-independent badan providing some of the specialist
management skills required for the expressway network. BPJT therefore provides an
existing legal vehicle to start the institutional reform, focusing on the priority, high-order
expressway system.

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CHAPTER 3: FINANCING AND FUNDING THE NETWORK
DEVELOPMENT MASTER PLAN
3.1 INTRODUCTION
This chapter provides the proposed funding and financing strategy to deliver the NDMP.
It summarises the required investment in capacity improvements on an unconstrained
basis; that is, the full, economically justifiable program, unconstrained by delivery and
financing capacity of the various government and private parties.
For expressways, the investment will be shared between the private sector (based on
the financial viability of projects) and GoI (based on what it can afford). It is anticipated
that private participation delivery options will evolve towards a suite that covers all
public private risk sharing permutations seamlessly. There is also much potential to
introduce network-based financing to complement financing solutions for individual
projects.
For non-expressway national roads, GoI will remain responsible for funding the required
investment.
Considering the sum of expressway and non-expressway commitments, it therefore

needs to be confirmed that GoI can indeed afford its commitment to the NDMP, i.e. its
share of the expressway program and the full cost of the non-expressway program. This
unconstrained investment program may need to be adjusted to reflect affordability
limits set by the national budget. This chapter therefore concludes (see Section 0) by
summarising the investment required to deliver the expressway component of the
NDMP assuming investment costs are shared with the private sector and affordability
constraints apply to GoI.
3.2 ESTIMATED UNCONSTRAINED INVESTMENT
Volume 1 presented the justification of the expressway and other national roads in the
network development program, including the ideal scheduling of investments based on
strategic considerations and to respond to growing demand. This section outlines
investment costs for the proposed NDMP, including initial development costs. Note
again, this costing of the proposed investment program assumes that the required
investment is not yet constrained by any affordability considerations; that is, it is
presented on an unconstrained or needs basis.

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CHAPTER 3: FINANCING AND FUNDING THE
PLAN
3.2.1 Expressway Investment (Unconstrained) Key Assumptions
3.2.1.1 Expressway Scheduling
Once included in the National Roads Master Plan (RUJPJJN), the development of
expressway projects follows a standard sequence of activities, as shown in Table 3-1
(below). To date, the main time risk has been land acquisition. The 2012 Land Law now
limits the timeframe for acquisition to between one and two years (depending on
objections), and makes it the responsibility of GoI. To enable BPJT to deliver on the
expressway program, it is crucial that all or nearly all the land be acquired before DGH
transfers a project to it.
Table 3-1: Duration of Expressway Project Activities
Duration (years)
Milestone Activity
50 km > 50 km
Planning Document 2
Land Acquired 2
Final Business Case and Procurement 1
Construction 2 3
For projects with a road length of less than 50km, all construction has been assumed to
take at least two years. This is to ensure that there are two dry seasons during
construction, namely the first year for earthworks and the second year for paving. This
approach also avoids the typical single-year contract end-of-year rush to complete
projects during the December rainy season, resulting in poor quality construction.
Projects with a road length of greater than 50km are assumed to have construction
duration of at least three years.
3.2.1.2 Expressway Preparation
Importantly, early investment in project preparation and land acquisition is critical to

ensuring the pipeline of projects can be delivered on time. This seed investment is
essential to ensure the construction of projects can happen on time to relieve current
congestion and provide new capacity for future demand. Early, high-quality planning,
preparation and land acquisition will enable projects to proceed without delay when the
time comes for implementation. Preparation for projects to be constructed in the next
RENSTRA period (20202024) therefore needs to start as soon as possible.

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Table 3-2: Typical Expressway Preparation Unit Rates (Real 2016 Value)
Activity Basis Rate
Preparation % of Construction Costs 3.5%
Land Average Cost per m2 Rp 150,000
Note: Based upon typical international fees for planning through to schematic design. Rates for individual
projects may be higher or lower based upon project complexity.
3.2.1.3 Expressway Construction Unit Rates
For the 20152019 period, expressway investments were costed at the same levels as
provided in the current RENSTRA. These rates were updated in September 2016, as
obtained from BPJT for the RENSTRA projects it is developing in the period 20152019,
and shown in Table 3-3 (below). Except for one project2, all these projects are configured
as two carriageways with two lanes each (i.e. 2x2 see below). The unit rates shown
are for construction, including design and supervision, but excluding land cost and VAT.
The unit rates vary noticeably, reflecting a mix of planning-level rates and rates obtained
from non-solicited or competitive bidding.
Table 3-3: RENSTRA Construction Unit Rates 20152019 (Rp Billion/km, Real 2016 Values)
Average Unit
Island
Rate
Sumatera 91
Trans Java 48
Non-Trans Java 85
Sulawesi 122
Kalimantan 41
From 2020 onwards, the expressway program was costed based on unit rates estimated
from recent toll road construction outturn costs in Java. A base unit rate was determined
for each type of intervention (2x2 Reduced, 2x2 and 2x3 refer to Volume 1 and
the Note below Table 3-4). Base unit rates for Sumatera, Sulawesi, Kalimantan and Bali
are expressed as a factor of estimated unit rates for Java, to provide for differences in
geography and soil conditions. These unit rates include design, supervision and audit, as
well as project preparation, but exclude VAT. At this point in the calculation, a further
2 Kisaran - Tebing Tinggi in Sumatera, which is a 2x2 reduced configuration (2x2R).

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provision as a risk (cost-overrun) contingency3 is not yet added, but is included later on
when the affordability of the program is tested. It is important that pre-feasibility studies
be undertaken on projects from 2020 onwards to refine the accuracy of the construction
cost estimates.
Table 3-4: Expressway Construction Unit Rates 2020 Onwards (Rp Billion/km, Real 2016 Values
Excluding Contingency Risk)
Island Intervention Unit Rate
2x2 89
2x3 105
Java
+2 x 1 16
+2 x 2 61
2 x 2 Reduced 95
Sumatera
2x2 103
2 x 2 Reduced 91
Sulawesi
2x2 98
2 x 2 Reduced 91
Kalimantan
2x2 98
2 x 2 Reduced 86
Bali
2x2 94
Note: 2x2 refers to two carriageways with two lanes each (four lanes in total); 2x3 is two carriageways
with three lanes each (six lanes in total); +2x1 refers to adding one lane to each of two
carriageways (i.e. to convert a 2x2 into a 2x3); +2x2 refers to adding two additional lanes per
carriageway (eight lanes in total); and 2x2 Reduced refers to a 2x2 with some reduced design
elements (especially hard strips rather than paved shoulders)
3.2.1.4 Summary of Expressway Investment Required (Unconstrained)
In terms of the development scope identified in the summary table in Section 1.2 of the
total expressway length (4,782km), about one third (1,684km) is already included in
3 Project risk contingency of approximately 29 percent added, based on international guidelines for estimate
project risk contingencies for major transport and road projects (see UK Department for Transport
[November 2014], Transport Analysis Guidelines [TAG] UNIT A1.2 Scheme Costs, Table 8, Motorway
Projects, page 13).

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DGHs existing plans, while two thirds (3,098km) are additional projects identified in the
course of the planning process described in Volume 1.
The following summary shows the unconstrained investment cost of the proposed
expressway program from the current 201519 RENSTRA to 203034.
Table 3-5: Expressway Investment (Unconstrained, Rp Billion, Real 2016 Values Excluding Contingency
Risk)
Program 201519 202024 202529 203034 Total
DGH Committed 113,853 40,453 26,272 - 180,578
Additional New Investment 17,675 153,916 184,134 69,501 425,226
Total 131,528 194,369 210,406 69,501 605,804
In terms of the value of the total investment of Rp 605.8 trillion required for the
program, approximately 30 percent is DGH committed (i.e. Rp 180.6 trillion) and the
additional new investment program is Rp 425.2 trillion (or approximately 70 percent).
It should be noted that the values are stated in real (non-inflated) 2016 terms, excluding
any construction cost risk contingency. Also, the program has not been capped
(constrained) by any budget limitations.
Table 3-6: Summary of Expressway Investment Required by Island (Unconstrained, Rp Billion, Real 2016
Values Excluding Contingency Risk)
Island Sub-Total 66,439 91,085 58,242 - 215,766
Java DGH Committed 55,376 11,400 5,127 - 71,903
Additional 11,063 79,685 53,115 - 143,863
Island Sub-Total 50,966 98,720 147,045 66,974 363,705
Sumatera DGH Committed 44,835 29,054 21,144 - 95,033
Additional 6,131 69,666 125,900 66,974 268,671
Island Sub-Total 3,910 127 5,119 2,528 11,685
Sulawesi DGH Committed 3,910 - - - 3,910
Additional - 127 5,119 2,528 7,775
Island Sub-Total 9,731 - - - 9,731

Kalimantan
DGH Committed 9,731 - - - 9,731

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Additional - - - - -
Island Sub-Total 480 4,438 - - 4,918
Bali DGH Committed - - - - -
Additional 480 4,438 - - 4,918
Total 131,528 194,369 210,406 69,501 605,804
DGH Committed 113,853 40,453 26,272 - 180,578

Total
Additional 17,675 153,916 184,134 69,501 425,226
New
Figure 3-1 presents Table 3-6 as a graph, which illustrates clearly how the expressway
investment activity shifts from Java to Sumatera over the four periods.
Figure 3-1: Expressway Investment Required by Island
250,000
200,000
Bali
150,000
IDR billion
Kalimantan
Sulawesi
100,000
Sumatra
Java
50,000
-
2015-19 2020-24 2025-29 2030-34
3.2.2 Investment in Other Arterials (Unconstrained)
All arterials that are not classified as expressways will remain the responsibility of DGH
and would continue to be financed from APBN. These roads would be designed and
constructed using the approach of planning, preparation and design done under the
auspices of DGH. In section 0, the argument is presented that DGH should take more
active control itself over the preparation and delivery of the more significant (major)
projects. The schedule of other arterial project activities would be similar to that of
expressways, with an indicative duration of project activities as shown in Table 3-7
(below).

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Table 3-7: Duration of Arterial Project Activities
Milestone Activity Duration (years)
Planning/Preparation 1
Land Acquisition 2
Detailed Design and Procurement 1
Construction 2
Note that land acquisition may run concurrently with detailed design and procurement,
and project size will critically affect the duration of some activities.
3.2.2.1 Other Arterial Construction Unit Rates
The following table lists the construction unit rates for other arterials for the type of
intervention in the NDMP. The construction unit rates advised and used in the
calculation of program costs are the same for all the islands.
Table 3-8: Other Arterial Construction Unit Rates by Island (Rp Billion/km, 2016 Values Unconstrained)
7m: Widening to 7m 7.8
7m: New alignment of 7m 17.8

Java
NR: New alignment of 4 lanes 27.8
2x2: Widening to 4 lanes 22.2

Sumatera

Sulawesi

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Kalimantan

Bali
Note: Costs in 2016 prices. No allowance has been made for Contingency or Price Escalation.
3.2.2.2 Summary of Other Arterial Investment Required (Unconstrained)
As set out in Table 3-9 (below), the total cost of other arterial investments for all islands
is estimated at Rp 104.5 trillion for the period 20202034. Papua has the highest
investment in other arterials with Rp 45.1 trillion (43 percent of the total investment),
followed by Java with Rp 29.5 trillion (28 percent) and Kalimantan with Rp 18.4 trillion
(18 percent).
Most of the investment (approximately Rp 85.3 trillion or 81 percent of total investment)

will be expended on other arterials over the last 10 years of the program with Rp 47.3
trillion (45 percent of the total investment) in 2025 2029 and Rp 38 trillion (36 percent)
in 20302034.
Table 3-9: Summary of Other Arterial Investment Required by Island (Unconstrained, Rp Billion, Real
2016)
Island 202024 202529 203034 Total
Java 2,258 17,680 9,315 29,252
Sumatera 1,057 905 4,208 6,170
Sulawesi - 2,790 1,627 4,417
Kalimantan 1,701 10,277 6,468 18,446
Bali, NTB and

373 799 - 1,172
NTT

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Island 202024 202529 203034 Total
Papua 13,870 14,874 16,334 45,078
Total 19,258 47,325 37.953 104,535
Note: Costs of arterial network improvements include construction costs plus land only and exclude VAT,
preparation and construction supervision costs.
The NDMP assessed additional expressway requirements for the period 20152019 (refer to Table
3-5) but considered non-expressway requirements only from 2020 onwards.
The relative shares of expenditure are illustrated in Figure 3-2. For non-expressways, the
outer islands are more prominently represented than is the case for expressways (refer
to Figure 3-1).
Figure 3-2: Other Arterial Investment Required by Island
50,000
45,000
40,000
35,000 Papua
30,000 Bali, NTB &NTT
IDR billion
25,000 Kalimantan
20,000 Sulawesi
Sumatra
15,000
Java
10,000
5,000
0
2020-24 2025-29 2030-34
3.3 PRIVATE SECTOR ROLE IN THE FINANCING OF EXPRESSWAYS
The unconstrained investment costs summarised in the above sections show the total
program investment cost required without consideration of affordability factors and the
private sector assisting in the delivery and financing of the proposed NDMP.
Given finite resources within GoI, financing and delivering the proposed investment
program will need to be shared between GoI and the private sector. This section outlines
an approach to the private sectors potential role to assist the delivery of the proposed
NDMP, including proposing several new policy measures.

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3.3.1 Delivery and Financing Options
Delivery and financing options denotes the allocation of the responsibilities for
financing and funding the expressway projects. It is important to distinguish financing
from funding.
Financing refers to the application of funds commonly either as upfront capital or equity,
or debt spread over time. In contrast, funding refers to the source of funds that actually
pays for the project. Funding sources include either or a combination of general taxation
(disbursed to line ministries through APBN allocation) and user charging (e.g. tolls).
Delivery and financing options range from fully financed and funded by government in
the form of conventional procurement, through to fully financed and funded by the
private sector through build-operate-transfer (BOT) concessions.
3.3.1.1 Existing Delivery Options
Four delivery options are available to DGH to implement the proposed expressway
program. These delivery models are:
Build-Operate-Transfer (BOT) toll concessions have been the preferred way of
delivering expressways. The full commercial risk of financing, developing and
operating the road is transferred to a private sector concessionaire, who charges a
toll on the user, and without depending on any GoI financial contribution. Most
expressways have been developed as BOTs, but as the expressway network grows
there will be a share of projects that cannot be completely self-financed using BOT
schemes.
Viability Gap Funding (VGF) is an up-front GoI contribution to buy down the initial
investment to ensure that the private concessionaire earns an adequate return on
investment. VGF comes in two forms: financial VGF is a cash grant by MoF;
physical VGF is a roads section constructed by DGH/PUPR that is an in kind
contribution.
Roads constructed under conventional contracting arrangements. Usually DGH
does the design and a private or SOE contractor builds it (design-bid-build), but a
packaged design-build approach is also possible.
Availability PPPs (AP), involving the private sector in the financing, design,
construction, operation, and maintenance of major road projects. GoI makes an
annual service payment to the AP concessionaire subject to meeting defined
performance obligations. Service payments do not start until after construction is
completed and the asset is certified as ready for use.

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3.3.1.2 Policy Issue Use of Physical Viability Gap Funding
Isolating specific sections for physical VGF should be considered appropriate where
government is assuming the responsibility for high-risk project elements which can
impact on delivery an example is government assuming the responsibility for land
acquisition.
However, care should be taken with the use of VGF as this approach may not transfer
asset lifetime risk to a concessionaire as intended under the BOT model. Ideally, the
concessionaire should trade off design and construction decisions to obtain a cost-
optimal project cost (lowest net present value). Transferring a pre-constructed section
that has not been optimised in this manner and the quality of which the concessionaire
cannot control or verify, will increase the overall cost of the project. Commercially, there
is usually private sector reluctance to accept third party completed works (which is
effectively a form of interface risk) unless there is sufficient transparency and due
diligence concerning such contributions. Also, there may be a residual risk to
government if required to make good the condition of any assets procured through
physical VGF that are then transferred to a BOT concessionaire.
Accordingly, government should consider if policy changes should be made to streamline

the application of physical VGF to high-risk project elements only and allowing the
eventual concessionaire to be involved in quality assurance of those assets that will be
delivered. Organisationally, streamlining the use of physical VGF may allow DGH to focus
more on outputs rather than inputs.
A1. In the medium term, most if not all the benefits of VGF can be obtained by
applying purely financial VGF. This approach would see GoI assume an outputs
focus rather than concentrating on managing inputs.
3.3.1.3 Policy Issue Using Availability Payment Requires a Value for Money Test
In 2015 under the auspices of Perpres no. 38/2015, the AP concession was introduced.
Like a BOT, a private concessionaire designs and constructs the asset, operates the asset
over its life and earns revenue only once the asset is operational. But in contrast with
BOT, the concessionaires revenue does not depend on tolls from users, but is a payment
by government subject to the asset actually being made available using defined
performance criteria.
Projects that lend themselves to AP will be those that have scope for innovation, can
bundle construction, operation and maintenance contracts, and therefore hold the
potential for risk transfer. Also, APs would be appropriate where there is a major benefit
to the public from improved services.

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Importantly, to be consistent with the proposed policy of equal treatment of expressway

users, the use of the AP scheme should not preclude separately charging road users a
fair charge through a separate tolling agreement.
From a cash flow perspective, AP schemes do allow government to postpone paying for
an investment that is originally financed by the private concessionaire. However, this
creates a financial risk in the form of long-term balance sheet liabilities, as the full cost
of an AP scheme is recognised on the Government Contracting Agency (GCA) and
hence government balance sheet when the asset is commissioned and service
payments are made by government.
In this context, use of AP schemes needs to be determined on a value-for-money basis

to ensure there are appropriate services benefits, risk transfer, and budget rules.
Internationally, evidence indicates that in well-developed
PPP nations the national share of public investment infrastructure using AP ranges from
520 percent. Implementation times, financing capacity, and contingent liability issues
for government appear to be factors behind this evidence.
A2. AP schemes are useful and effective in the appropriate circumstances; however,
this form of contracting should be subject to a proper evaluation and not just be
seen as a replacement for VGF or similar existing funding arrangements.
A3. Care should be taken to not over-use availability payment concessions and in so
doing create an unmanageable compound financial obligation in future years.
3.3.1.4 Policy Issue - Introducing Surplus-Build-Operate-Transfer Schemes
For projects with high financial viability, the present approach is for a bidder to propose
a toll rate, with the lowest rate winning the bid. BPJT tests the rate to ensure that it is in
line with the benefit users derive from the road as well as their ability to pay (ATP) and
willingness to pay (WTP).
Currently this ATP/WTP test is very general, as is evidenced by the wide range of tolls that exist in
that exist in practice.
Figure 3-3 (below) shows the wide spread of toll tariffs for proposed projects. Actual
tariffs for operational roll roads are spread even more.

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Figure 3-3: Tariffs on Upcoming Toll Roads, April 2014
1,600
1,400
1,200
Average
Rp/km (Class I)
1,000 Median
Trans-Java
800
Jakarta
600 Other Java
Sumatra
400
200
The current evidence indicates some toll roads are financially viable at rates far lower
than others. Therefore, if the lower tariffs were raised to average levels, surplus
revenue would arise, while the resultant rates charged would still fall within the ATP,
WTP and net benefit envelopes.
This approach to managing tariff levels to average levels allows for a policy to be
implemented where bidders can submit surplus-generating proposals in their bid offers
to government, potentially creating an available source of funding for expressway
development.
A4. Create the legal framework for bidders to submit surplus-generating proposals
in their expressway bids (subject to the creation of a suitable institutional
framework to manage such surpluses so that these are reinvested in the
expressway system).
The mechanism to unlock such surplus would be to state a reference toll rate in the
bid document, and to invite the bidder to propose a tariff above (standard BOT) or at a
discount to that level (Surplus-BOT). In practice, then, the winning concessionaire would
charge the reference toll rate and repatriate the discount to BPJT. This option can also
be described as a highest tariff share option.
There are a couple of variations on the theme of extracting a surplus at bidding stage, or
even thereafter. These are shown in Table 3-10 (below), in terms of decreasing order of
risk to concessionaire. Other options are:
Highest capital payment: against the background of a reference toll rate, the bidder
offers an up-front capital amount that BPJT can then redeploy to another
expressway concession.

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Highest lease payment: against the reference toll, the bidder offers an annual lease
amount (appropriately indexed) payable for the duration of the concession term.
The concession therefore is a build-lease-transfer (BLT).
Highest revenue share: this is similar to the highest tariff share, but expressed as a
percentage of revenue (not a tariff discount).
Table 3-10: Options for Surplus Build-Operate-Transfer Bid Parameters and Timing
Form Timing of Transfer
Highest capital payment Up-front, during construction phase
Highest lease payment
Highest revenue share During operations, ongoing for concession term
Highest tariff share
Introducing the Surplus-BOT concept requires the implementation of a network-wide

tolling policy, (see action recommendation A6 in Section 3.3.1.8). Also, for BPJT to be
able to capture the surplus revenue and reinvest these amounts in the expressway
system requires the institutional restructuring of BPJT (see action recommendation A32
presented in Section 4.5.6).
3.3.1.5 Other Sources of Surplus
Potentially, there are at least three further means of generating re-investable surpluses
in the expressway sector:
Government implementing toll collection agreements
In line with the equal treatment principle and the aim of not losing out on potential
revenue when applying AP concessions, BPJT could have the ability to apply a toll
collection agreement. Although aimed firstly at AP concessions, this agreement could
be applied to any non-BOT or non-VGF expressway, notwithstanding the background
construction and operations and maintenance (O&M) legal framework.
A5. A legal framework should be created for BPJT to attach a toll collection
agreement on any expressway project that would otherwise not have been
tolled.
This approach requires BPJT to be reconstituted as an expressway (i.e. not just toll
road) agency, and has the added benefit of legally bringing all expressways under BPJTs
mandate. This may mean some changes to the current DGH structure.

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Potential for asset recycling
This opportunity arises at the end of a concessions term when it can be re-concessioned
(an expressway is part of the public transport network and would therefore not be
considered for an outright sale). At this point, there may be some investment required
to refresh the road asset, but this should be far less than its replacement cost.
Therefore, the cost-recovering tariff required should be lower than the reference toll
rate; or, an opportunity arises to extract value up-front via for example a capital
payment; or value extraction during the operating period in the form of a lease. Other
variations could also be considered, for example bidding the expressway out under a
performance-based maintenance contract (PBMC) a contract for maintenance only
and applying a separate, parallel toll collection agreement.
Land Banking Benefits
Thirdly, under the discussion of BPJTs future roles and organisation (refer to Section
4.5), it is proposed that BPJT manages banked land prior to construction, with the
appropriate delegated responsibilities to buy and hold land required for expressway
development. Potentially, for land banked that is not subsequently used, these land sale
proceeds could provide a further revenue source to be reapplied to expressways.
However, adopting this policy measure would require GoI parties to recognise that they
would be accepting a degree of property risk this may not be seen as a core business
function for some government agencies.
3.3.1.6 Additional Financing Options and Support
Should GoI decide a future policy to increase BPJTs financial autonomy, then BPJT could
provide direct support to an expressway project. A reference model could be a
guarantee arrangement provided by the Indonesia Infrastructure Guarantee Fund (IIGF).
Through the Limited Liability Fund (LLF), IIGF would effectively guarantee the rate of
traffic growth during the roads ramp-up phase. A shortfall against projected traffic is
quantified in terms of revenue lost, where such loss is capitalised as a loan, and that loan
must then be repaid by the concessionaire within a specified period after ramp-up.
BPJT could avail a similar amortisation payment, that is, providing temporary support
to an expressway project by shaping project costs to fit the demand profile closer. In
other words, during the traffic ramp-up period a facility would be made available to the
concessionaire to supplement the revenue shortfall until such time that traffic stabilises.
The IIGF LLF would therefore only be drawn on in as far as actual traffic ramp-up falls
short of the forecast underlying the amortisation payment facility.

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3.3.1.7 Overview of Delivery Models and Support Mechanisms
The following Table 3-11 summarises the existing and proposed delivery models and
financial support approaches. The grey cells indicate the additional measures proposed
above that could complement existing modalities. However, notwithstanding the
potential benefits of expanding the range of delivery options, for purposes of financing
the NDMP only existing delivery options have been applied. In later years, as the NDMP
is revised and updated, it is expected that these additional options will also be
considered.
Table 3-11: Summary of Financing Models
Instrument GoI Contribution Bid Parameter
Category Type Form Timing Form
Highest capital
payment
Highest lease payment

Surplus BOT - -
BOT
Highest revenue share
Highest tariff share
Standard BOT - - Lowest Tariff
Physical VGF (DGH) Grant Construction Lowest VGF

VGF
Financial VGF (MoF) Grant Construction Lowest VGF
Delayed Support Amortisation Payment Loan Post- Smallest loan

commercial
operation
date (COD)
Availability payment Payment Post-COD Lowest AP
Conventional Payment Construction Lowest Cost
3.3.1.8 Policy Issue Introducing a National Toll Policy
To accommodate the proposed new financing and support models, but also to condense
the excess number and the variability of existing toll rates, consideration should be given
to formulating a comprehensive expressway toll policy.
A6. A national expressway toll strategy should be prepared.

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The range of toll rates is essentially bounded based on two considerations:
Toll rates are capped to ensure that users derive benefit from the road.
Toll rates should be at least a certain minimum level to provide a reasonable return
to the concessionaire.
Since expressway users have similar profiles, the first consideration above applies across
the expressway system. However, although the range of toll rates will therefore be
narrowed to a reference band, it would probably be overly dogmatic to strive for a single
rate across the whole system (a single reference rate). For example, rates may differ in
that band between islands, or in close proximity to competing road alternatives.
The second consideration above is unique to a specific road, and could therefore cause
a financial shortfall or create a surplus. The expressway network as a system should
ideally match any shortfalls and surpluses.
Accordingly, the key principle contained in the national toll policy would be the ability of
government to apply tolls on all expressway roads.
A6.1 Tolls should be able to be applied on all expressways (even if those roads are not
BOT or VGF concessions).
An important consideration in extending toll collection across the expressway network

is that inter-operability should be maintained. In support of expressways providing a
standardised and seamless level of service, the techniques of tolling should also
converge to a common platform. That implies making use of state-of-the-art
technologies that apply standard data exchange specifications.
A6.2 A more definitive analysis of user benefit, ability to pay and willingness to pay
should be carried out so that a tighter band of reference toll rates can be
determined.
Currently, toll rates are indexed to the general rate of inflation. Since a part of the
concessionaires cost, specifically most of the capital cost, is a sunk cost at the
completion of construction and not subject to future inflation, the indexing of toll rates
to inflation has the effect of artificially overinflating toll rates over time.
A6.3 Toll rate discounts and premiums should be partially indexed to reflect the actual
effect of inflation on the concessionaires costs.
A6.4 The toll rates applied on future expressway concessions, including for
concessions that are re-bid at the end of their terms, should fall within the band
of reference toll rates.

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PLAN
Lowering tariffs for those BOT and VGF concessions that have toll levels above the
reference band may jeopardise the financial position of the concessionaire. These rates
will have to be reconsidered progressively over time, as partial indexation plays out and
contracts come to the end of their terms. It should be less complex to systematically
increase the toll rates of low-tariff concessions.
A6.5 Existing concessions should be systematically migrated to the reference tariff

band, within the contractual frameworks of those concessions.
Presently, BPJT does background investigations into tariffs before awarding toll
concessions, but the actual approval of the toll rate is the prerogative of the Minister of
PUPR or the President. Once operational, toll rates are subject to review and approval
by the Minister.
The trend internationally is to house investigation and review skills in a tariff (and service
level) regulator. The regulator should be sufficiently close to government, but also
independent enough to attract the required skills in the first place, and to make
independent tariff findings and recommendations to government.
A7. The obligation to recommend a toll policy, and to also execute the policy when
approved, should rest with BPJT which should be structured and resourced
appropriately.
3.3.2 Private Sector Financing Strategy
3.3.2.1 Selecting Delivery and Financing Model
At the planning stage, each expressway project is assessed for the most appropriate
delivery mechanism, as shown in Figure 3-4. The planning process itself identifies and
prioritises economically viable expressway projects. Those that are also financially viable
(i.e. with projected financial returns above a pre-determined hurdle rate) are
categorised into outright viable vs. marginally viable. In both cases demand risk is
transferred to the concessionaire. The outright financially viable projects are designated
for delivery via BOT and the marginal ones set aside for VGF support. Projects that are
projected to make surplus profits can be considered for Surplus-BOT.
Non-financially viable projects are selected for AP delivery partly based on project
characteristics (the potential to achieve cost reductions from a lifetime construct-
maintain-operate perspective) and government financing portfolio conditions (ensuring
sufficient future budget flexibility). The remainder of the projects should be delivered
conventionally.

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3.3.2.2 Allocating Cost Responsibility
Government is always responsible for project planning, environmental impact

assessment (AMDAL), all land acquisition (in future), and project procurement. If the
project is procured as a traditional construction contract, government carries the cost of
the detailed engineering design (DED) that under a BOT scheme would be privately
financed by a concessionaire.
However, for the construction and O&M costs, the mix of delivery options used changes
the nature and size of governments funding obligations. If procured via AP schemes,
there is no up-front capital cost to government but it makes ongoing service payments
that include the amortised cost of construction and for O&M obligations.
By making VGF available, government makes an up-front contribution to construction

cost but has no ongoing O&M obligation. For BOT, government has no further funding
obligations once a road project is awarded to a concessionaire.
The decision framework to select from the different delivery options is shown in Figure
3-4.
Figure 3-4: Framework for Selecting from Delivery and Financing Model Options
Note: For VGF, the project would need to be financially viable within the allowable level of VGF, i.e.
certainly below 50 percent of capital cost
The effect of applying different delivery options is that the financing cost of the
expressway program is shared between government and the private sector; that is,
government is not responsible to fund the whole expressway program, and instead can
share the funding obligations and risk.

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3.4 GOVERNMENT ROLE IN THE FINANCING OF NATIONAL ROADS
This section considers whether governments share of the proposed investment costs is
affordable by estimating a spending envelope based on macro-expenditure assumptions
using a long-term program approach. The purpose of estimating a spending envelope is
to determine whether the allocation to government can realistically be achieved. If a
shortfall is projected, the spending plan should be adjusted accordingly downwards. If
not all of the budget is required, this is an indication that resources could possibly be
reallocated. However, it must be stressed that the estimation of the future envelope is
a process of approximation only providing an indicative budget path across the overall
road development program.
3.4.1 Calculating the Network Development Master Plan Spending Envelope
As yearly budget allocations that GoI provides for roads are only known shortly before
the year of expenditure, some long-term program assumptions have to be made to
obtain a budget projection for the 20-year scope of the NDMP.
It is noted that forecasting program spending requirements takes a long-term view that
effectively smoothes out budget variations that can occur on a year-by-year basis.
The process followed is similar to how the national budget would be formulated using
expenditure forecasts determined with reference to the national economy. The key
assumptions are indicated in red in Figure 3-5 and the details are shown in Table 3-12.
The base capital expenditure on national roads is derived from assuming a growth of the
national economy at just below recent growth rates, and stable ratios of public budget
to GDP. To that base is added a provision for SOE-delivered expressways. In the past,
this allocation has been quite variable. In the projection shown below, it assumed that
this parallel (i.e. not via PUPR budget) set aside for expressway will continue. The level
has been set based on the actual allocation of projects to SOEs during the current
RENSTRA period (201519) and the next RENSTRA periods (202024). Thereafter, a
nominal allocation is made to SOE delivery. Lastly, a provision is made for expressway
land acquisition. Although expressed as a percentage of expressways (EW) expenditure
in the table below, it is shown as a stable, real annual amount. This assumption reflects
both the actual land acquisition requirement and the need to systematically develop the
portfolio of banked land.
Table 3-12: Calculation of Expressway Envelope (Rp Trillion, Real 2016 Values)
Historic Projected
Item
2013 2014 2015 2016 2017 2018 2019 2020+
GDP Growth (real; %) 5.6 5.0 4.8 4.9 5.3 5.5 5.8 5.0

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Historic Projected
Item
2013 2014 2015 2016 2017 2018 2019 2020+
National Budget as % of GDP 19.1 18.6 17.4 16.6 16.4 16.9 16.9 18.5
PUPR as % of National Budget 4.6 4.6 4.0 5.0 5.0 5.0 5.0 5.0
Roads % of PUPR Budget 50 48 71 43 40 45 45 45
% of Roads 5.0 3.1 6.7 6.4 5.5 5.5 5.5 5.5

DGH Budget
Expressways
Rp. trillion 1,9 1,3 3,8 2,9 2,3 2,9 3,1 3,5
% of DGH EW 103 0 221 182 0 0 0 54

SOE Toll
Roads
Rp. trillion 2,0 - 8,5 5,3 0,0 0,0 0,0 1,9
% of EW and SOE 0 0 24 37 130 103 97 65

Land for EWs
Rp. trillion - - 3,0 3,0 3,0 3,0 3,0 3,5
Total EW Rp. trillion 3,9 1,3 15,3 11,2 5,3 5,9 6,1 7,0
Budget
Source: For historic data APBN and DGH DIPA. For projection IndII NR Policy Team
The process described above and summarised in Table 3-12, is shown as a flow diagram
in Figure 3-5 below. The figure shows the process of progressively filtering the national
economy (GDP) through taxation, down to budget allocations (expressways in this case).
Note that the assumptions highlighted in the last column in Table 3-12 are the ones
shown in the red circles in Figure 3-5.

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Figure 3-5: Determining the Network Development Master Plan Expenditure Envelope (Assumptions
Shown for 2020+)
GDP +5%
x18.5%
APBN
x5%
PUPR BUMN LMAN
x45%
National
Roads
x73% x5.5%
Capex Other Capex Capex SOE Land

Nat. Roads Expressways x54% Expressways X65% Acquis.
Figure 3-6 below summarises the composition of the projected GoI budget envelope for
expressways. It should be noted that all the constituent components are in the hands of
other ministries, i.e. the allocation for expressways (and other roads) expenditure is not
determined by PUPR/DGH.
To link the flow chart of Figure 3-5 with the resultant budget envelopes in Figure 3-6,
the origins of the three funding streams (APBN via PUPR/DGH, the Ministry of State-
Owned Enterprises (BUMN) and National Asset Management Agency [LMAN]) are shown
in the same colours in the two figures.

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Figure 3-6: Projected Spending Envelope for Expressways (Rp Billion, Real 2016)
60,000
50,000
D. Land budget for EW development

40,000
IDR Billion
C. SOE Toll Roads - State equity

30,000 contribution
B. DGH - EW construction budget

20,000
Total Government Budget

10,000
-
2015-19 2020-24 2025-29 2030-34
Period
3.4.2 Note on Allocation of Expressways to SOEs
A part of the NDMP budget envelope is expressway expenditure by SOEs. As shown in

Figure 3-5, that amount is calculated with reference to DGHs expenditure on
expressways, although the actual flow of funds as indicated by dotted lines occurs
through BUMN.
The way of calculating the SOE-related amount is not directly linked to the future role of
SOE contractors/concessionaires. Notwithstanding the already existing and proposed
delivery models discussed above, GoI has the prerogative to assign an expressway
project to a SOE. In the past, projects across the range of financial feasibility were
assigned in this manner, so that there today exist BOT and non-BOT SOE concessions.
The present national policy position is that only projects that are not financially feasible
will be assigned. Later GoI will channel support (financing, guarantees, etc.) to that non-
feasible project via the SOE.
The decision to make use of SOEs in the economy is a policy decision made by
government. However, once assigned, the SOE should be subject to the same
performance, toll level and other obligations as would apply to any other concessionaire.
3.4.3 Budget Gap
Figure 3-7 and
Table 3-13 below show GoIs expenditure obligation after applying the financing strategy
compared with the available budget envelope. The totals shown are in real and 2016
values. For the committed program, no allowance is made for price contingency;

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however, for the additional program (identified in Volume 1), a price risk contingency is
now provided.
Indications are that the budget envelope should mostly be sufficient to afford the
portion of expressway costs (land, preparation, and capital contributions) allocated to
GoI. However, in the first RENSTRA period (201519) the expenditure plan exceeds the
projected budget. It should be noted that most of the expenditure is on the committed
program (refer Table 3-6), and the budgets of at least two (2015 and 2016) of the five
years cannot be changed anymore. In practical terms, affordability for the 201519
period will need to be managed by reviewing either the expenditure plan and/or budget
envelope (the latter through additional investment, including possibly GoI or multilateral
loans).
Moreover, at the end of the proposed investment cycle in 20302034, and as a greater
share of expressway projects is developed with conventional and AP procurement (i.e.
approaching the international benchmark of AP schemes 20 percent of capital
investment programs), the budget affordability envelope is not exceeded.
Figure 3-7: Government Budget Envelope Versus Government Expenditure Requirements for
Expressways (Rp Billion, Real 2016)
60,000
50,000 Conventional
SOE
IDRbill (risk adjust.)
40,000
VGF
BOT
30,000
Other
20,000 GOI Preparation
AP
10,000
Expressway Budget
0 AP Budget
2015-2019 2020 - 2024 2025-2029 2030-2034
Period
Table 3-13: Budget Envelope Versus Expenditure Requirements for Expressways (Rp Billion, Real 2016
Values)
2015 2020 2025 2030

Component
19 24 29 34
Investment Required
A. GoI investment required 46,684 35,698 36,893 41,794

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2015 2020 2025 2030
Component
19 24 29 34
Core Funding Sources
B. DGH - EW construction budget 15,060 19,615 25,721 33,107
C. SOE Toll Roads - State equity contribution 13,800 10,562 12,638 3,495
D. Land budget for EW development 15,000 17,500 10,000 10,000
E. Total GoI core sources and leveraged borrow (B + C

43,860 47,678 48,359 46,603
+ D)
Surplus/Deficit based on core funding sources (E - A) (2,824) 11,980 11,467 4,808
3.5 CONSTRAINED FINANCING PLAN
The expressway and other national arterial development plans that have been tested
against the available GoI budget as set out above are referred to as the constrained
plans.
3.5.1 Expressway Financing Plan

Using the decision framework in Figure 3-4 to allocate delivery and financing models,
and incorporating the funding role allocation between GoI and other parties, the total
financing cost for the inter-urban expressway program is about Rp 666.5 trillion as
outlined in

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Table 3-14.
This financing amount exceeds that of Table 3-6 because of the financing costs involved
with all the other delivery models except for conventional procurement, and because of
the risk adjustment applied to the additional program. This applies to private (BOT, VGF-
BOT and AP) projects as all these delivery models attract interest costs during
construction.
Over the 20 years, GoI is projected to be responsible for financing Rp 161.1 trillion or
approximately 24 percent of the cost expressway program via PUPR/DGH, and possibly
a further 26 percent via BUMN and SOE delivery. The SOE share is dependent on GoIs
general policy (i.e. not roads policy specifically). If the SOE share goes down (or up), it is
anticipated that the PUPR share will expand (or contract) so that the overall APBN
envelope (i.e. 50 percent of expressway expenditure) will still be available.

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Table 3-14: Estimated Expressway Program Cost (Constrained if Applicable, Rp Billion, Real 2016)
Component 2015-19 2020-24 2025-29 2030-34 Total
GoI via PUPR 46,684 35,698 36,893 41,794 161,069
GoI via SOE 24,062 12,274 119,685 18,402 174,423
Private Sector 72,117 171,645 87,250 - 331,013
Total 142,864 219,617 243,829 60,196 666,505
GoI % of Total 33 16 15 69 24
Note: GoI contribution includes project preparation (planning, AMDAL, land, procurement), as well as
contributions to VGF, AP payments, and conventional construction projects. Private sector includes
private (BOT and VGF) investments but excludes AP financing (as these financing costs are paid for
by GoI through the AP payment obligations)
3.5.2 Expressway Roll-Out
The projected expressway delivery schedule is presented in Table 3-15 below. Much of
the first tranche of projects reflects the plan in the RENSTRA 20152019. The opening
dates and financial models shown for these projects are as per the latest programming
by BPJT for toll concessions; that is RENSTRA BOT and RENSTRA VGF or projects
assigned to SOEs (RENSTRA SOE).
The indication of delivery model for the non-RENSTRA projects is based on the project
characteristics obtained from the roads planning process (as reported in NDMP Volume
1). The delivery models shown in Table 3-15 should be treated as indicative only,
especially for the later years of the expressway program.

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Table 3-15: Expressway Projects Delivery Schedule and Anticipated Financing Model
Ref. Name Km Island Type Opening 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

1 Semarang-Solo Sections AB and BC - Java RENSTRA BOT 2015
2 Gempol - Pandaan - Java RENSTRA BOT 2015
3 Kertosono-Mojokerto Section BC, CD and DE 26.1 Java RENSTRA BOT 2017
4 Mojokerto Surabaya Section AB2, BC and CD 18.1 Java RENSTRA BOT 2017
5 Solo-Ngawi Sections AB and BC 21.8 Java RENSTRA VGF 2018
6 Solo-Ngawi Sections CD and DE 68.3 Java RENSTRA BOT 2018
7 Semarang-Solo Sections DE and EF 32.1 Java RENSTRA VGF 2018
8 Gempol-Pasuruan 34.1 Java RENSTRA BOT 2018
9 Semarang-Solo Sections CD1, CD2 and CD3A 15.4 Java RENSTRA BOT 2018
10 Semarang-Solo Sections CD3B 2.2 Java RENSTRA VGF 2018
11 Palembang Sp. Indralaya 24.5 Sumatera RENSTRA SOE 2018
12 Medan - Binjai 17.0 Sumatera RENSTRA SOE 2018
13 Batang-Semarang 75.0 Java RENSTRA BOT 2019
14 Ngawi-Kertosono Sections CD2 and DE 38.2 Java RENSTRA VGF 2019
15 Ngawi-Kertosono Sections AB, BC and CD1 48.8 Java RENSTRA BOT 2019
16 Bakauheni - Bandar Lampung 88.3 Sumatera RENSTRA SOE 2019
17 Medan-Lb. Pakam-Tebing Tinggi Sections AB and BC 18.0 Sumatera RENSTRA VGF 2019
18 Balikpapan - Samarinda Sections BC, CD and DE 66.1 Kalimantan RENSTRA BOT 2019
19 Manado - Bitung Sections AB 14.0 Sulawesi RENSTRA BOT 2019
20 Manado - Bitung Sections BC 26.0 Sulawesi RENSTRA VGF 2019
21 Balikpapan - Samarinda Sections AB and EF 33.2 Kalimantan RENSTRA VGF 2019
Medan-Lb. Pakam-Tebing Tinggi Sections CD, DE, EF,
22 44.0 Sumatera RENSTRA BOT 2019
FG and GH
23 Cileunyi-Sumedang-Dawuan Sections AB and BC 28.5 Java RENSTRA VGF 2019
24 Ciawi - Sukabumi 54.0 Java RENSTRA BOT 2019
25 Pejagan - Pemalang Section CD and DE 37.3 Java RENSTRA BOT 2019
26 Pemalang-Batang 39.2 Java RENSTRA BOT 2019
27 Kayu Agung-Sp.Indralaya 33.5 Sumatera Conventional 2019
28 Pekanbaru - Dumai 135.0 Sumatera RENSTRA SOE 2020
29 Pandaan-Malang 40.0 Java RENSTRA BOT 2021
30 Yogyakarta - Solo 40.5 Java BOT 2021
31 Pasuruan - Probolinggo 31.3 Java RENSTRA BOT 2021
32 Bandar Lampung - Terbanggi Besar 66.7 Sumatera RENSTRA SOE 2022
Cileunyi-Sumedang-Dawuan Sections CD, DE, EF
33 30.0 Java RENSTRA BOT 2022
andFG
34 Serang - Panimbang AB 29.5 Java RENSTRA VGF 2022
35 Serang - Panimbang BC and CD 54.4 Java RENSTRA BOT 2022
36 Sukabumi - Padalarang 62.0 Java BOT 2022
37 Palembang-Betung 78.5 Sumatera RENSTRA BOT 2022
38 Probolinggo - Banyuwangi 170.4 Java BOT 2023

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Ref. Name Km Island Type Opening 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
39 Kisaran - Tebing Tinggi 60.0 Sumatera RENSTRA SOE 2023
40 Tabanan - Denpasar 19.0 Bali AP 2023
41 Palembang - Tanjung Api-Api 70.0 Sumatera RENSTRA SOE 2023
42 Soka - Tabanan 21.0 Bali Conventional 2023
43 Pekanbaru - Padang 218.0 Sumatera BOT 2024
44 Dumai - Kisaran 268.5 Sumatera BOT 2024
45 Tasikmalaya - Wangon 97.5 Java BOT 2025
46 Cileunyi - Tasikmalaya 71.0 Java BOT 2025
47 Wangon - Yogyakarta 155.0 Java BOT 2026
48 Semarang - Rembang 105.5 Java BOT 2027
49 Yogyakarta - Bawen 71.0 Java BOT 2027
50 Rembang - Surabaya 160.5 Java BOT 2028
51 Wangon - Brebes 73.5 Java VGF 2028
52 Sp. Indralaya - Bengkulu 311.5 Sumatera SOE 2028
53 Terbanggi Besar - Kayu Agung 185.0 Sumatera RENSTRA SOE 2029
54 Medan - Sibolga 245.0 Sumatera SOE 2029
55 Binjai - Langsa 105.5 Sumatera SOE 2029
56 Makassar - Takalar 40.0 Sulawesi Conventional 2029
57 Rengat - Pekanbaru 144.5 Sumatera VGF 2030
58 Betung - Jambi 154.5 Sumatera SOE 2031
59 Langsa - Lhokseumawe 145.5 Sumatera Conventional 2032
60 Jambi - Rengat 197.5 Sumatera AP 2033
61 Sigli - Banda Aceh 98.5 Sumatera SOE 2034
62 Lhokseumawe - Sigli 102.0 Sumatera Conventional 2034
63 Manado - Tomohon 20.0 Sulawesi Conventional 2034
Completed freeways (km) 904 1,395 1,621 863
Cost of Preparation, including land (Rp Billion Cost) 16,815 19,402 8,921 180
5 years
Cost of Construction APBN (Rp Billion Cost) 29,869 16,295 27,972 41,614
Cost of Construction Other (Rp Billion Cost) 96,180 183,919 206,936 18,402
Cost of Preparation, including land (Rp Trillion Cost) 2.70 2.17 3.64 4.32 3.98 2.71 3.29 4.36 5.36 3.69 2.28 2.01 1.88 1.79 0.97 0.18 - - - -
Annual Cost of Construction APBN (Rp Trillion Cost) - 2.91 13.72 10.95 2.29 4.50 5.99 5.03 0.39 0.39 2.00 3.69 7.16 6.73 8.38 7.90 11.09 6.37 11.15 5.11
Cost of Construction Other (Rp Trillion Cost) 4.21 17.02 9.36 25.57 20.03 28.21 44.94 42.50 41.89 26.37 40.54 56.10 56.83 40.39 13.07 6.41 3.59 3.98 4.41 -
Legend
Planning Document
Land Acquisition
Procurement
Construction Stage 1
Construction Stage 2

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CHAPTER 4: INSTITUTIONAL AND ORGANISATIONAL
REQUIREMENTS
3.5.3 Financing Other National Roads
Non-expressway arterials will be constructed using APBN budget funding and applying
the DGH conventional contracting system. Therefore, no commercial risk-transferring
approaches have been considered for non-expressway arterials.

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REQUIREMENTS
4.1 INTRODUCTION
To achieve the road capacity improvements in the NDMP by 2034, the current output
rates need to be accelerated, requiring changes to the current approach to and
organisation of road delivery.
4.2 OVERVIEW OF ROLES AND RESPONSIBILITIES
There is a fairly standard sequence of activities required to create a road or add capacity
(e.g. through widening or extension of current roads), as shown in Figure 4-1. The
process starts with network planning (i.e. the creation of the RUJPPJN), the identified
projects need to be properly prepared, each project is procured, and then executed.
The overall process logic is that as a project moves from concept to reality, project details
are refined and risks better understood and mitigated. There are small variations in the
order of activities. If delivered using a BOT concession, the project is procured and the
appointed concessionaire carries out design and construction using private finance and
then collects user toll revenue. If conventionally procured by DGH, the design is usually
carried out before procurement (the solid red arrows in Figure 4-1). However,
sometimes procurement happens first with design and construction bundled thereafter
(dotted red arrow).
Figure 4-1: Major Phases in Roads Project Cycle and Institutional Responsibilities
DGH: Major Roads BPJT: Expressways

Project Final Business
National Roads Land
Planning Case Procurement Execution Regulation
Master Plan Acquisition
Document (Final PFS)
Prepare Planning Select Final Delivery Negotiation &

Finalise RUJPJJN Acquire Land O&M
Document Model Financial Close
Objections to Confirm MOF Conduct Final Commercial

Consultation Obtain AMDAL
Decree & Approval Budget Envelope Tender Operations Date
Obtain Decree on Confirm FIRR, VFM,

Prepare Draft Select final Due Diligence by
Project Location required GOI Construction
RUJPJJN alignment shortlisted bidders
(SP2LP) support
Prepare Outline
Review studies, Public Consultation Carry out Market Conduct Pre- Obtain any other
Business Cases
Basic Design & Objections Sounding Qualification Approvals & Permits
(Initial PFS)
Prepare Tender
Initial Study
Package
Carry out any

Do Detailed Design
further studies
DGH: Non-Expressways

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REQUIREMENTS
While the standard policy is for projects to proceed using the above project development
cycle, some projects are fast-tracked for policy and/or priority reasons. This happens in
the case of projects that are prioritised outside the normal planning process, and often
in the case where projects are assigned to SOEs or earmarked in other ways. The effect
is that the project does not develop progressively through the normal project
development cycle, potentially resulting in technical and/or commercial issues requiring
attention.
To implement quality control through the project development cycle, best practice
approaches adopt a series of review gates to assess the readiness of projects to
proceed to the next stage of development. Implementing a review gate assurance
policy will allow DGH to monitor the progress and readiness of both planned and
unplanned projects.
A8. Best practice approaches to managing a projects progress is to submit all

projects to a proper stage gate process, i.e. dividing them into stages or phases,
separated by gates where a project is assessed and approved (or turned back)
to proceed to the next stage.
Such stage gating should apply equally to planning and preparation by DGH as well as
implementation of expressways (BPJT) and other national roads (DGH).
The risk of stage gating a project is that it then gets relayed from one point of
responsibility to the next. Although it is clear what stage the project has reached in the
cycle, there is a risk of lack of ownership of the project. It is therefore important that a
specific person be assigned the responsibility to guide a project through all the stages
performed by an entity.
A8.1 There should be a clear, personal responsibility to manage a project and steer it
through the stage gates.
4.2.1 Role of Directorate General of Highways
By identifying the process steps in the project development cycle, Figure 4-1 shows the
division of roles between the two major public institutions in the roads sector, namely
DGH and BPJT.
DGH is the coordinator of the national roads sector, which it executes under its
responsibility to plan the national road network. Even though there are hierarchical
layers (classes) of roads, their integrated nature requires that a single, overarching plan
guide the development of the road network. Creating such a plan (RUJPJJN) is also a
specific legal obligation of DGH.

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There are, however, situations where DGHs role as the national roads planner is
potentially bypassed. These include other arms of GoI introducing and prioritising roads
(refer to Planning Roles in Section 4.3.1.1 below), but also the case where unsolicited
toll road bids are presented to and adjudicated by BPJT (without those projects being
tested first for their network impacts or their preparation measured against DGHs usual
norms).
These projects may enhance or disrupt the national network, and should therefore be
subjected to the same tests DGH carries out on projects that it initiates itself or are
brought to it by others. Furthermore, for unsolicited projects, there are also preparation
activities for those projects (like land acquisition) which DGH has the obligation to
oversee. This should require DGH to have a review role for unsolicited toll projects to
ensure there is alignment with the objectives of the national road network.
A9. Unsolicited toll projects should be analysed in the same manner as other roads
projects before being handed over to BPJT for implementation.
In addition to a coordination role, DGH also has an execution role, although this role
does not extend as far for expressways as it does for other national roads.
First, DGH prepares the projects comprising the roads plan. This entails the necessary
physical design of the project so that the environmental and social assessments can be
executed and land obtained. Second, DGH also executes those non-toll/non-concession
projects not allocated to BPJT. These are sometimes managed by DGH centrally, but
generally more locally through the balai. Maintenance of non-expressway national roads
is also carried out by balai. Not shown in Figure 4-1 is DGHs role in setting technical
standards and techniques (the BINTEK function, which is currently not well defined
within DGH).
4.2.2 Role of the Toll Regulatory Agency
In the course of preparing the roads plan, DGH assesses the commercial prospects of a
road. If deemed to be a toll road outright (i.e. not requiring GoI support), it transfers that
project to BPJT for implementation.
However, an area of role uncertainty exists presently in that DGH may decide to develop
a portion of that project itself and hand the physical works over to the concessionaire as
GoIs form of support. This role uncertainty may become even more unclear as additional
non-toll PPP delivery mechanisms are introduced which are not clearly assigned in the
Road Law.
To address this role uncertainty, consideration should be given to reviewing the role
responsibilities for expressway road delivery, with the view to ensuring there is clarity
about which functional area in GoI is responsible. The outcome of this review may decide

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REQUIREMENTS
if DGH should focus on planning, preparation and investment decisions, and BPJT should
procure, execute, and regulate expressways
A10. To avoid any doubt about responsibility, one coordinating area should be
responsible for planning, preparation and investment decisions for all
expressways projects, with another functional area in GoI (possibly BPJT) given
responsibility to procure, execute and regulate expressways.
Should GoI decide to implement the above action recommendation, BPJT with its current
legal form and mandate (which is restricted to toll roads), is not empowered, designed
or resourced to carry out this responsibility. Therefore, the concept of transforming BPJT
into a proper, autonomous expressway authority is outlined in Section 4.5 below.
Although expressways are not defined in law as having to be toll roads, the intention is
to combine the definitions so that all toll roads are indeed expressways. This outcome
should formalise expressways to be designed to provide the highest degree of
connectivity and mobility; that is, the highest level of service of all roads classes. In
exchange for a comparable service level, the users of expressways should be expected
to make a similar financial contribution for expressways.
Note, this does not mean all expressway roads would be levied with a toll rather, the
intent is to provide GoI with the ability to levy a toll on an expressway standard road
sometime in the future, if so decided. There may be circumstances where GoI chooses
to implement a zero toll for a period to attract demand and encourage use.
A11. Even though some expressways may not be directly financed from toll revenue,
all expressways will be tolled under the principle of equal treatment of
expressway users.
4.3 PLANNING OF CONNECTIVITY AND CAPACITY
The preceding sections outline the broad role division between DGH and BPJT in the
development of expressway roads. Thus, consideration will need to be given to each
entitys specific responsibilities, and required change in approach and organisational
structure.
As a reference point, the project development cycle set out in Figure 4-1 provides a
useful guide concentrating firstly on the national roads plan prepared by DGH.
Some of the weaknesses of the current road system are related to planning done on a
tactical rather than strategic basis. The tactical planning approach has been:
Short-term, with a maximum five-year planning horizon

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Fragmented, focusing on individual sections of roads rather than network or system-
wide planning and configuration
Incremental, by reinforcing and adding lanes to existing roads that should be
functionally realigned or supplanted
Planning has been impaired in the past by the shortcomings of available analytical and
predictive tools adopted by DGH, as well as the lack and low reliability of planning data
on road condition, traffic and other roads-related information.
Addressing these current weaknesses in the planning process for national roads has the
potential to deliver a modern standard road network with a clear hierarchy of functions,
sufficient capacity and efficient performance.
4.3.1 Enhanced Approach to Planning
4.3.1.1 Planning Roles
Under an enhanced planning approach, there will be one national roads plan (RUJPJJN)
that shows how the network will be developed by adding links and capacity, fully
integrating traffic movement between the different hierarchies of roads.
However, to be successful with reform measures, the identification and prioritisation of

roads projects will need to be recognised by all agencies as falling under the
responsibility of DGH. Traditionally, in addition to DGH planning, roads projects have
been pinpointed by the Ministry of Transportation (MoT) (National Infrastructure Plan),
Bappenas (Medium Term Economic Infrastructure Strategy) and Committee for
Infrastructure Prioritisation (KPPIP) (National Strategic Projects).
One of the underlying principles of the NDMP is that the expressway plan must be
developed systematically, considering the integrated nature of the road network and
with the goal of addressing specific development and land use objectives. Setting the
development objectives is the duty of other ministries and entities; preparing the roads
response is the obligation of DGH. DGH is being empowered to carry out roads planning
on a best practice basis. It has a duty to obtain others inputs to its plan and to provide
them an opportunity to influence the result, but it is not useful to have these entities
defining competing lists of projects if DGH is the mandated centre of excellence for roads
planning.
A12. DGH should be recognised as mandated centre of excellence for roads planning,
and should formalise a consultation procedure with MoT, Bappenas,
CMEA/KPPIP and other interested entities to ensure regular interaction, early
enough in the planning cycle.

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As the new planning approach stabilises and as progress is made with rolling out the
expressway system, the project pipeline will in any case stabilise with new projects being
added progressively longer in advance. This natural evolution will allow other ministries
to introduce new potential road projects as identified, but in the context of a disciplined
national roads planning framework.
4.3.1.2 Enabling the Planning Function
Volume 1 demonstrated the merit of a systematic planning process with a clear rationale
for project selection, and supported by automated, integrated and predictive planning
procedures and tools.
At the heart of this approach are the Transport Models (TMs). Such software makes it
possible to analyse and estimate the impacts of a wide range of infrastructure
improvements and operating policies. TMs have been developed, suitable for the
assessment of inter-urban travel on national roads, for the islands of Java and Sumatera.
The long-term sustainability of a modelling capability will require training, guidance, and
experience in application, coupled with the opportunity to exchange knowledge through
a user group forum. The intention is that the Indonesian private sector will play a key
role in the future forward planning and delivery of the RUJPJJN. It is envisaged that their
participation will be in the form of commissions by DGH to provide detailed modelling
support services, such as maintaining and updating the models and undertaking scenario
tests and producing standardised outputs for interpretation by DGH. Further, for the
forward planning objectives of this activity to be sustainable in the long term, a
continuing supply of local transport planning professionals is required.
4.3.2 Organisational Implications
The need for a clearly defined single entity responsible for road planning and
programming at the national level is a key element of the development of such
integration. The intention is to form a National Roads Forward Planning Group (NRFPG)
within DGH with explicit responsibility for RUJPJJN development, revision, programming
and coordination with GoI entities, such as BPJT.
The NRFPG would fulfil a role that is at present lacking within the administrative
structure, namely the provision of a focal point for facilitating decision-making and
action.
Also, the NRFPG would be expected to internally update the various land use, socio-
economic and traffic data held by the Directorate to reflect the evolving pattern of
development, and to manage updates and verification of the phased implementation of
the RUJPJJN.

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It is proposed that the NRFPG to be located within DGHs Sub-Directorate of Integrated
Planning and Network Development.
4.4 PROJECT PREPARATION
The second gate of project preparation is a responsibility that currently is the

responsibility of DGH.
A project is properly prepared when its Outline Business Case (OBC, or initial Pre-
Feasibility) is documented, the Project Planning Document is concluded (including final
route selection and position of the centre line, sufficient design to locate the junctions
and determine the required road reserve and an approved Environmental Impact
Assessment [AMDAL]), the Decree on Project Location is approved and land titles have
been obtained.
Various recent toll concessions have stalled because the projects were not sufficiently
ready mainly due to land acquisition issues. Further, some projects were not sufficiently
prepared, requiring adjustments to land requirements after the project was let out, or
concessions were signed with low levels of land availability or over ambitious land
acquisition obligations on the concessionaire.
Given that land acquisition issues can be the major bottleneck to development and
delivery of road projects, strengthening project processes to address land acquisition
issues should continue to be a major reform priority.
4.4.1 Pre-Land Acquisition Preparation
Consistent with project preparation including pre-feasibility and preliminary design,

there should also be a focus on pre-land acquisition preparation. This enhanced
process of land acquisition will provide route selection with centreline defined
sufficiently to determine required road reserve and commence land acquisition.
This stage should also include initial survey work and some site investigation. The level
of pre-preparation review should be sufficient to conduct an economic evaluation and
inform an initial decision on viability of private sector participation options.
Therefore, a project and the accompanying pre-acquisition land package should be

sufficiently well developed and planned before being handed over to BPJT. A key test for
the quality of preparation is whether such a fundamental change in location or design
has to be made later on that the project requires a revision of the AMDAL and/or an
approval for land location renewal. Applying a stage gate approval process (refer to
action A8) and formalising the major project as an order (as envisaged in action A21
below) will increase the scrutiny of projects and go some way to addressing future
project bottlenecks caused by land pre-acquisition issues.

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4.4.2 Land Acquisition
Recent reforms to the land acquisition policy will improve the delivery of national road
projects, placing the obligation to acquire land on GoI itself and regularising the process
of designation, valuation and objections.
Whereas the purchase of land was previously financed by the relevant implementing
ministry, GoI has now created LMAN to procure land for all ministries and agencies
involved in infrastructure development. It has also availed a significant budget to this
agency. Note that clarification may be required to confirm whether the funds already
assigned to the BPJT Public Service Unit (BLU) for land will remain available for
expressway land, or be subsumed in the funds of LMAN.
A13. To ensure the continuation of the land purchase program, the current funds and
future allocations to BPJT BLU should ideally remain available for the purchasing
of expressway land.
A14. DGH and BPJT should come to specific agreement with the National Land Agency
(BPN), previously responsible for executing land acquisition, and LMAN to ensure
the seamless transfer of ongoing and pending land purchase arrangements.
4.4.3 Land Banking
GoI has in the past procured land on a just-in-time basis, often after concessions had
already been concluded and even after construction had started.
To protect the expressway program, the land acquisition policy should be proactive and
establish a land surplus. This implies earmarking the land that will be required in
future, so that further development on that land is sterilised and sale of the land can
only take place under defined conditions. Land for projects such as expressways, which
contribute to defining the future pattern of land use, should be impaired in this manner
well (even decades) ahead of construction. Such land banking is supported in GoIs one-
map policy supported by Presidential Regulation no. 9/2016 which envisages planning
data from all ministries to be combined in one GIS database. DGH should contribute to
this important initiative and make use of it.
The benefit of procuring land well ahead of time, under less time pressure and at not-
yet-inflated prices, will exceed the holding cost associated with any land bank. And to
enable land banking, project planning and preparation will have to be accelerated.
A15. GoI should review the current approach of procuring land on an as-needed basis,
and implement proper land banking where rights of way are acquired well in
advance of (decades before) construction.

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Although LMAN is referred to as a land bank, its banking role appears to be in terms
of providing finance (i.e. a supplier), not to bank land as considered in action A15 above.
If a land bank ownership function is established by GoI, then this role will need to be
assigned to either DGH or BPJT. Under a future mandate the government agency owning
the land bank function should be self-financing and commercially autonomous (refer to
Section 0) so that it can respond to market conditions in a timely manner. This includes
the potential role of limited trading in surplus land that is deemed not required for road
developments, allowing such land proceeds to be a source of additional road funding.
From a skills perspective, the best suited government agency would appear to be the
functional unit that is experienced in shaping and managing road concession packages
and interacting with financing institutions and concessionaires. Further, being able to
influence the injection of land as required suggests that BPJT would be a possible
candidate to fill this role.
A16. An ownership function responsible for land bank access should be established
in either DGH or BPJT. Given the commercial skills required and the need to
respond proactively to land requests as they arise during construction, this
function may be best suited for BPJT.
4.4.4 Treatment of Major Projects
4.4.4.1 Concept of Major Projects
Underlying the NDMP is a sense of urgency to catch up with other countries and improve
the roads network connectivity. As set out in Volume 1, that means adding capacity to
the backbone network and making prudent interventions in the arterial network
supporting the backbone. This approach implies targeting those major projects that will
make the biggest difference.
All the capacity expansion projects included in this NDMP are major projects. The
projects are all on national arterials (including expressways), and all provide additional
lane-kilometres. A major project is quite complex, large and unique, involving a new
alignment or at least substantial additional land-take.
The simpler, more frequent types of maintenance are clearly not major projects (i.e.
routine and periodic maintenance). However, complex preservation interventions can
be challenging, including rehabilitation and reconstruction. Incremental carriageway
widening (which adds capacity but not lanes) is of a similar complexity. These
preservation or widening activities are included in this NDMP. These interventions
should also be treated as a type of major project in terms of their preparation and
implementation.

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REQUIREMENTS
4.4.4.2 Centralising Major Projects
Preparation of major projects to a high and consistent standard requires specific skills,
resources and experience. The most effective way to provide this is to establish a
dedicated unit to manage preparation of all major projects. A single central unit can
maximise effective use of resources and provide the required outputs on a scheduled
basis. The unit will procure and manage teams of consultants to carry out this work.
A17. The responsibility for major projects should in principle be centralised and not
devolved to the lower, local balai level.
4.4.4.3 Creation of Major Project Preparation Unit
The preparation of expressway projects is currently carried out centrally by DGH.

However, the scale of the NDMP is substantially bigger and projects now have to be
prepared further than before, placing a significant additional burden on DGH.
A18. DGH will be supported by means of a dedicated Major Projects Preparation Unit
(MPPU) which would be responsible for preparing both expressway and other
major arterial projects.
The MPPU will support DGH by means of additional, external but temporary resources
and skills. The MPPU will attend to the planning and preparation of expressways up to
the point where the expressway order is placed with BPJT. It will similarly support other
major national arterials, but in this case also assist with detailed design, procurement
and contract oversight.
A19. The MPPU will be responsible for procuring and executing major, non-
expressway, national arterial projects.
The MPPU unit will procure and direct consultants to undertake the required survey,
design and document preparation. In the first instance, it is likely that there will be a
need to rely on some international consultant inputs.
A20. DGH will approach development partners to financially support the creation and
operation of the MPPU.

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4.4.4.4 Handing Over Projects to the Toll Regulatory Agency: The Expressway Order
BPJT is the entity responsible for contracting toll roads, and potentially in the future also
any expressway since all expressways may be tolled (refer to Section 4.2.2 above, noting
some expressway roads may have a zero toll applied for a set time). In the past BPJT
has relied heavily on DGH for technical support and the lines of responsibility between
DGHs project preparation role and BPJTs execution role may not have been clear to all
relevant parties.
A21. In the future, there should a defined hand-over of an expressway project from
the planning/preparation to the delivery phase, in the form of a formal order
placed by DGH with BPJT.
That expressway order is timed to be made after land acquisition (so that all right of
way [ROW] issues are settled and the order is therefore not subject to major preparation
uncertainties), but before procurement (so that BPJT can package the transaction itself).
The order therefore cleanly differentiates on the one hand DGHs role of identifying
(initial study), assessing (OBC), prioritising (with KPPIP and others in GoI) and preparing
(including AMDAL and land acquisition) all expressway projects, and on the other BPJTs
role of refining preparation, preparation of project documentation, procurement,
implementing and managing all expressway projects.
BPJT needs to formalise how it develops the project final business case (FBC) to ensure
that the project is properly defined. Specifically, it must avoid the risk of land relocation
renewal or any other fundamental change in design that has AMDAL and land
implications.
A21.1 DGH undertakes that there will in future be a minimum level of land acquisition
by GoI before awarding a concession. No unresolved land acquisition should still
legally be more than a couple of months outstanding.
What also happens all too often is that an expressway project requiring GoI support
funding is let out, only to discover later that the funds are actually not available. This
happens particularly in the case of physical VGF contributions developed by DGH and
funded from APBN, for which sections are then not available in a timely way for
incorporation into the relevant toll road.
A21.2 BPJT should implement an affordability check, i.e. a verification procedure to

confirm that any GoI financial support is available before signing the concession.

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4.4.5 Improved Asset Management Through Road Asset Management System
The NDMP does not deal with the maintenance of roads once created. In the case of
expressways, maintenance is done by the concessionaire, but for other national roads,
this responsibility remains with DGH. The reason for referring to national roads
maintenance here is two-fold: first, it consumes a substantial part of the DGH budget,
and, second, improving the efficiency of maintenance creates the opportunity to shift
some recurrent spending to construction and therefore increase the NDMP affordability
envelope. Also, early indications are that introducing a Road Asset Management System
(RAMS) could reduce preservation budgets significantly (possibly by up to 20 percent)
over time as it is rolled out nationally.
Such efficiency gains will emanate from the implementation of the new RAMS. RAMS
furnishes a much higher resolution of analysis of the road condition (at the lane rather
than link level), and intervention requirements can therefore be shaped in a much more
bespoke fashion.
A22. DGH will continue rolling out and further developing RAMS to include all asset
types as a priority.
4.4.6 Assimilation of Expressway Section
Addressing the arrangements for the expressway delivery roles between DGH and BPJT
and consolidating the delivery of expressways under BPJT (action A10) will require a
review of the role of the construction of expressway sections by DGH. This review could
result in DGHs expressway section handing over construction activities to BPJT but, in
return, assuming more responsibility and control of pre-construction activities of
proposed expressway roads.
4.5 IMPLEMENTING EXPRESSWAYS: REFORM OF THE TOLL REGULATORY AGENCY
Executing the expressway program is both urgent and vital and operationally will require
a clear line of command-and-control, which implies a single point of control by a body
that has the necessary institutional autonomy and authority and is properly resourced
organisationally and financially.

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4.5.1 Organisational Restructuring
4.5.1.1 Toll Regulatory Agency Functions
BPJT has two fundamental roles. First, as a GCA it is responsible to deliver toll roads (in
future all expressways) on time as per the RUJPJJN schedule and in terms of the orders
received from DGH, and such expressways shall be developed efficiently to minimise the
required toll rate. In this role, BPJT would also reduce the financial burden on GoI.
Second, as regulator of expressways, BPJT must ensure that the road concessions remain
compliant with the infrastructure, operational performance and toll level requirements
contracted for.
4.5.1.2 Future Toll Regulatory Agency Organisation
BPJT currently is not organised around the expressway project life cycle; it is
understaffed and it relies on DGH for key technical skills. The entity needs to be aligned
to its three core responsibilities:
Least cost, which primarily entails confirming the final business case and verifying
the suitability of the concession financing model (BOT, VGF, etc.) as nominated by
DGH. There are two further areas where BPJT can add value and reduce the overall
cost of the expressway portfolio. One is to manage and optimise the use of banked
land prior to construction (as foreseen under action A16). The other is to act as
expressway bank by utilising surpluses (as proposed earlier in this chapter) to
support non-financially self-sustaining roads in the rest of the expressway system,
and in so doing, relieve pressure on the APBN.
Project delivery, which includes preparing project documentation, carrying out
procurement, and overseeing implementation (construction). This last aspect, the
quality of implementation, is an area that requires reform even before a general
reorganisation of BPJT is carried out.
Compliance, including the regulation and enforcement of asset condition and
operational service level. Improvements to the current BPJT Minimum Toll Road
Service Standards (SPM) are addressed in Section 4.5.3 below. Presently, toll rate
levels are established as part of the contract award process and tied to inflation
thereafter. Implementing a system-wide toll strategy as raised earlier would imply
making BPJT responsible in future to set and regulate toll levels.
Table 4-1 summarises the core functions required of BPJT. For clarity, some specific
functions that BPJT is not responsible for include project identification and prioritisation
(done by DGH), land acquisition (now the responsibility of LMAN), or original expressway
design (which is done by the expressway concessionaire but overseen by BPJT).
With the potential introduction of Toll Collection Agreements, it is also not the intention
that BPJT itself manages tolling or collects tolls; this role can be outsourced to a third
party. Also, not shown in Table 4-1 are the non-core supporting functions that BPJT

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would require such as strategic and annual business planning, legal services, liaison,
human resources, financial administration, ICT and assurance.
Table 4-1: Toll Regulatory Agency Summary Responsibilities
Core
Sub-Aspect Function Short Description
Responsibility
Right of Way Maintaining ROW prior to construction,

Maintenance preventing occupation
Land
Property Adding value to reserve prior to construction by
Management allowing selected, temporary land use
Assessing performance opportunity and

associated performance specifications;
Delivery Model assessing project for appropriate delivery
model by applying delivery model selection
rules
Least Cost
Business
Case Estimation/ Converting Expressway Order into more
Benchmarking precise design, roll-out plan and costing
Updating plan-level budget based on revised

Expressway
figures, determining MoF exposure/requirement
Budget
and need for debt
Manage toll-derived revenues and any other

Funds
Treasury form of income not immediately/directly
Management
expended on expressways
Preparing concession agreements and

Documentation
associated specifications, addenda, etc.
Project Delivery Procurement Placing contract on the market
Overseeing construction and execution of

Implementation
expressway contractual obligations
Infrastructure Regulating compliance with physical standards
Regulating compliance with expressway

Performance
Compliance performance standards
Regulating compliance with toll levels, including

Toll
toll determination
In terms of how BPJT should be organised internally, the principle of project ownership
embedded in action A8.1 is fundamental. To restate the case: a project should not just
drift from stage to stage but should be actively managed and driven along. That implies
someone should own the project throughout its life. This understanding argues for a
matrix-type organogram where project sponsors (supported by their project teams)

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steer the project along making use of the expertise made available by skills pool
managers. The project sponsor is the face of the project; the pool managers define the
body of work/skills to support the project sponsor.
4.5.2 Quality Assurance and Independent Quality Controller Consultant Reform
The critical and pressing area of insufficient capacity in BPJT relates to project delivery.
It is generally recognised that monitoring and supervision by BPJT and DGH requires
strengthening. The immediate focus should therefore be on improving and assuring the
quality of the road assets constructed.
At the outset, it should be recognised that the asset quality achieved depends on the full
project development process, not just supervision (refer to Figure 4-2). This requires
implementing a project life cycle approach, i.e. managing the project as a single output
through FBC, documentation, procurement, construction, and operation and
maintenance. This approach implies single-point responsibility of an internal project
manager, setting up Standard Operating Procedures (including stage gate reviews) and
improved documentation to systematically capture project intelligence throughout the
projects life.
Figure 4-2: Asset Quality the Result of Project Life Cycle Approach
Programming Execution Compliance
Land Toll
Expressway Order
Business Case Documentation

DGH
Procurement
Construction Condition
Funds Management Performance

BPJT
Asset quality assurance is presently overseen by PMIs (independent quality controller

consultants). But given BPJTs limited resources, they are contracted and paid for by the
concessionaires and therefore potentially compromised. Introducing PMI and other fees
(refer to action A28) in the framework of a more financially autonomous BPJT will allow
and ensure PMIs assert themselves in an independent role and will improve quality
assurance.
A23. In the future, the current relationship between the PMI and concessionaire
should be divided, with PMIs directly contracted to and paid by BPJT.
A23.1 The right of PMIs to access construction sites and inspect plans, designs and
records will be asserted in concession agreements.

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A23.2 PMIs should be paid market-related fees and rates.
Lastly, the compliance industry needs to be developed by professionalising the contract

management function (for the contractor) and building capacity in the PMI industry.
A23.3 Best practice industry-wide methods of developing the contract management

and quality assurance industry should be identified and applied in the near
future.
4.5.2.1 Introducing a Project Management Office
Under the theme of quality assurance, it is recommended that a Project Management

Office (PMO) be established to fill key skills and capacity requirements. The PMO will
play a similar supporting role as the MPPU to DGH. It will steer projects to completion
by establishing standards, tools and processes for project delivery, and by coordinating
between projects. It may have a mandate to expedite delivery of specific projects. The
PMO will be an external party providing individuals to fill specific, key positions in the
BPJT organogram. There will be phased step-out dates and diminishing decision-making
as BPJT itself grows into its quality assurance role.
A24. A Project Management Office (PMO) should be established in BPJT to support

developing the FBC and delivering projects, including providing oversight of and
support to PMIs.
In terms of shaping and sizing the PMO, it should be staffed by a core group of specialists,
representing both international best practice as well as local experience. Initially, the
PMO would also include one or two PMI teams, but these would be phased out as the
domestic PMI industry becomes more empowered and active.
4.5.3 Expressway Service Standards
Once constructed, expressways must comply with minimum service standards. For toll
roads, these are currently specified in the SPM. The SPM covers selected aspects of road
asset condition and road operational performance. For AP, a measurement and payment
mechanism framework has been developed for operational performance (i.e. for road
availability).
The aim is to provide expressway services at a standardised and high level of service.
Therefore, it is important that the assessment of expressway performance be done on
the same basis, notwithstanding the delivery model applicable (e.g. BOT or AP). The toll
SPM and AP approaches should therefore be migrated to a common performance
framework, where this is commercially possible.

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Creating that framework will be an opportunity to apply the most recent thinking in
roads performance assessment. Whereas performance has in the past typically been
determined based on an index of subjectively selected input (e.g. response time to
accidents) and output (e.g. occurrence of accidents) indicators, the movement now is
towards assessing performance on an outcome (results) basis. Under this active-
management performance measurement approach the focus is on vehicle speeds and
congestion, that is, the same approach to level of service on which the capacity planning
in Volume 1 is based (i.e. reduction in journey time). Active management has become
more practicable with the improvement of vehicle location technologies such as radio
frequency identification, object detection, and even satellite-based navigation, and can
be linked to electronic toll collection systems.
A25. The performance frameworks for expressways provided under different delivery
models should be harmonised, where commercially possible.
A25.1 The future consolidated performance framework should be oriented to outcome

levels of service and make use of proven technologies so that the tracking of
service becomes real time, but also to reduce the requirement for subjective
interpretation and audit of a concessionaires performance.
4.5.4 Toll Regulatory Agency Powers of Enforcement
BPJT currently has limited powers of enforcement over toll roads once operational for
which this shortcoming will persist when its remit is increased to expressways in general.
It may only advise the Minister to withhold a toll increase for a short period. The main
enforcement limitations are that it has no sanction over non-performance or
underperformance in terms of the SPM, it has no grounds to reduce toll rates or limit
rate increases, and it also does not have the ultimate sanction of terminating a
concession agreement (except if the concessionaire cannot fulfil its financial obligations
any longer).
The new AP contract makes it possible to withhold payment for non-performance. This
is an obvious principle that should be extended to expressway concessions in general.
A26. Amend the legal framework for toll concessions to enable BPJT to penalise a
concessionaire for non-performance, and in extreme cases, terminate the
concession.

FRAMEWORK
REQUIREMENTS
4.5.5 Financial Self-Sufficiency
BPJT is currently fully reliant on limited APBN appropriations to fund its activities, and its
budget is too low for it to fulfil its current functions effectively. It will be subject to the
same types of budget restrictions currently being applied to PUPR as a whole. This is
notwithstanding its growing work load and expectations of accelerating the expressway
program. A definitive estimate of BPJTs operating expenses to oversee the existing
portfolio of toll roads and its expenditure requirements to launch its future program is
not available. Circumstantially, an indication of how limited its resources are is that BPJT
is not able to pay for independent quality control from its own budget, but rather has to
rely on concessionaires to employ PMIs.
Notwithstanding the required versus available budget amounts, it is the expressway user
that primarily benefits from BPJTs services. BPJT is essentially looking after the users
interests by procuring, overseeing and regulating expressway projects, ensuring good
value for money and upholding operational performance standards. As emphasised in
Principle 1 in Chapter 2, expressways are the top layer in the national roads system. They
provide high connectivity and mobility, and are sized and operated to provide a superior
level of service to the road user. Expressways are therefore not social roads, but rather
roads that serve economic interests directly for both private individuals and private
organisations and entities.
Based upon established Indonesian road policy, such roads should not be paid for by the
general taxpayer, but rather by the direct beneficiaries. This has effectively been the
case to date, with major roads delivered as tolled concessions. There is therefore a
strong argument to make to shift the responsibility to pay for BPJTs services from the
general taxpayer via APBN, to the direct beneficiary the expressway user. Establishing
this linkage will protect BPJT from the recent downward funding cycles in APBN, reduce
cross-subsidisation from the general taxpayer to the expressway user since users who
can pay will be required to pay, increase BPJTs accountability to its clients, and ensure
a sufficient income stream given the growing expressway program.
A27. The funding of BPJTs activities should shift from the general APBN towards the
expressway user as the direct beneficiary of BPJTs services.
4.5.5.1 Introducing a Concession Administration Fee
There are both existing services and future potential services that BPJT will deliver which
relate to a specific expressway. These services all relate to ensuring that the project
complies with its legal obligations. It is therefore reasonable to expect the project itself
to internalise and pay for such services.

FRAMEWORK
A28. The cost of overseeing the creation and operation of expressways should be
recovered from expressway concessionaires and charged through to the users of
expressways.
For clarity, such an administration fee is not tied to the potential or actual commercial
performance of the concession, i.e. it does not fluctuate with the concessionaires
financial results. It is a flat fee an overhead charged to all concessions to compensate
BPJT for road development obligations on behalf of GoI.
Apart from background administration, the costs that BPJT incurs are for quite discrete
services (following the categories of activities shown in Figure 4-2). Initially, these costs
are to prepare a project and procure it. Then the focus is on delivery, i.e. ensuring the
quality of construction. Last, the project must be regulated over its life. Each of these
activities can be packaged into a discrete charge.
A phased transition towards financial autonomy for BPJT is foreseen, should GoI decide
on an enhanced expressway role for BPJT. Should that scenario eventuate, that means
that the concession administration fee can also be introduced incrementally. As noted
in Section 4.5.2, an immediate priority is ensuring the independence of the PMIs. PMIs
are currently paid by the concessionaire who capitalises this cost and recovers it from
the expressway user. So, instituting a PMI fee will just replace an existing payment
mechanism, not create a new charge.
A28.1 A PMI administration fee should be levied on expressway concessionaires, to be

utilised by BPJT to remunerate PMIs who are contracted by the agency directly.
Also, BPJT incurs substantial costs to prepare project documentation, market a project
and procure it. Concessionaires carry their own bid preparation cost, but it is quite
common internationally for the winning bidder to pay an amount to the government
contracting agency. An amount may even be payable to the losing shortlisted bidder/s
to ensure everyone puts in a well-prepared bid to maximise the competitive bidding
process for the benefit of government. As a minimum, the cost of a competitive bidding
process should ultimately be recouped from the winning bidder.
A28.2 BPJTs cost of preparing and procuring an expressway project should be charged
through as a procurement fee to the winning bidder.
After commissioning, the ongoing infrastructure, operations and tariff regulation require
internal BPJT resources and also specialist external skills, especially as the road asset
ages and deteriorates. An asset lifetime regulatory regime should be paid for by an
income stream of similar length.
A28.3 A periodic toll regulatory fee should be charged to all expressway

concessionaires.

FRAMEWORK
REQUIREMENTS
4.5.5.2 Future Financial Management of Expressway Sector
Over and above the concession administration fees, under an enhanced role mode it is
also foreseeable that BPJT will in future receive concession surpluses in the form of
capital payments, lease payments, revenue shares and/or tariff share (refer to action
A4). These types of surpluses would arise because of asset recycling (Section 3.3.1.4) and
the implementation of the toll strategy (refer to action A6). Also, BPJT could receive the
proceeds from toll operating agreements.
This income stream will increasingly position BPJT to act as financing intermediary in the
expressway sector by pairing surpluses and deficits. Typical applications of the surpluses
would take the form of:
Utilising up-front capital payments from one project to provide financial VGF to
another project
For an AP concession, temporarily making the annual service payments until such
time that revenue from the (separate) toll operating agreement is sufficient to meet
the full cost of annual service payments
Compensating concessionaires for legitimate claims (e.g. temporary toll discounts
required from time to time).
Surplus would also unlock the PPP guarantee arrangement provided by IIGF. Crucially, to
back up the LLF (refer to Section 3.3.1.5), IIGF enters into a recourse agreement with the
GCA (BPJT in the case of expressways), which means the GCA underwrites the
concessionaires obligations to repay the LLF. Presently, BPJT can underwrite the
arrangement in kind (by committing to extend the concession term, increase the toll
rate, etc.), but does not have the income or funds to underwrite it financially.
Enabling BPJT to capture and reallocate surpluses will mean that financial proceeds from
expressways will be retained for application to expressways. The equal treatment
principle will also imply equal benefit.
Critically, it must be noted that the surpluses discussed here currently are either not
realised at all (where toll levels are below fair, benefit-based levels) or are retained by
toll concessionaires (in the cases where fair toll levels exceed cost-recovering levels).
Therefore, such surpluses do not in any case accrue to APBN at present, and capturing
these under BPJT will therefore not be a loss to APBN.
The management of income and funds contemplated above implies that BPJTs financial
management approach will evolve from being purely project-based, to a portfolio
approach where the income stream from one project also affects the financing
arrangements on another. There is obviously a risk of not achieving this balancing act.
Fortunately, there is a predictable pipeline of expressway concessions coming on-stream
and reaching the end of their terms, allowing the financing portfolio approach to be
rolled out incrementally.

FRAMEWORK
A29. To support the portfolio financing approach, BPJT should implement the required
management tools, including an expressway system financial model, with the
necessary predictive capability.
4.5.6 Unlocking Institutional Potential
As has been the experience in various other countries, and in other sectors in Indonesia,
it is possible that part or all of the national roads management function may eventually
migrate out of government proper and be housed in a semi-autonomous, specialist
entity. The creation of a national roads entity is an ambitious undertaking and can only
happen with the necessary political sponsorship. It is therefore recommended to start
the migration by focusing on BPJT first. Singling out BPJT in this manner demonstrates
the seriousness of delivering the NDMP.
BPJT is currently designated as a full BLU (Public Service Unit), with full denoting that
it can undertake all the potential functions of a BLU. The aim of the BLU legal form is to
foster efficiency and flexibility in the delivery of public services.
A BLU provides public services in a semi-commercial manner but without a profit motive.
This means that it may receive revenue and income (apart from transfers from the state
budget), keep this in its own bank account and utilise it for its own needs. It may employ
staff as civil servants or private employees. It may set its own procurement rules. A BLU
may also be managed by a non-civil servant (i.e. a private professional). Noticeably, a
BLU may borrow on a short- or long-term basis, subject to specific approval procedures.
In exchange for these liberties, it remains accountable to an originating GoI institution

(PUPR in the case of BPJT BLU) to whom it submits its working plan, budget, financial
statements and performance results.
A30. Should GoI decide to implement a National Road Agency function using BPJT,
then BPJT should prepare a working plan and budget, reflecting its enhanced
expressway network management role, including a resource and revenue plan,
for approval of the Minister.
A31. BPJT should prepare procurement rules, including for the appointment of private
professional advisors, for approval of the Minister.
These competencies of a BLU are sufficient to achieve the aims of implementing a

portfolio financing approach to the expressway network, and to attract the types of skills
required by a sophisticated network manager. In terms of the requirements raised in this
Volume 2, it is endowed to:
Receive transaction fees from bidders to pay for the cost of procuring toll
concessions

FRAMEWORK
REQUIREMENTS
Receive the fees that concessionaires currently pay to PMIs, so that BPJT can pay the
PMIs directly
Receive regulatory fees from the concessionaires over the life of concessions, so that
BPJT can utilise those fees to pay for its expenses like inspections, setting toll levels,
etc.
Receive surpluses from concessions in whatever forms, e.g. up-front payment by a
concessionaire, or revenue claw-back during the life of a concession
Borrow, i.e. take up a loan or issue a bond
However, before these actions are undertaken, some need to be specifically provided
for in the appropriate legal instruments (GoI and MoF regulations).
A32. A set of regulations should be developed to give effect to the dormant legal
powers of the BPJT BLU, especially to unlock its ability to generate a revenue
stream.

FRAMEWORK
CHAPTER 5: REGULATORY MEASURES
This chapter summarises the legal principles/changes required to give effect to the
RUJPJJN and NDMP.
That is, this summary does not prescribe detailed drafting but instead outlines the
basic principles and consequential actions to implement the necessary changes for
financing and institutional arrangements proposed in Chapters 3 and 4 respectively.
The columns that comprise the following table describe the following:
Theme/Topic: section or sub-section heading and number in this Volume
Reference: the principle(s) in Chapter 2 and the discussion reference point in
Chapters 3 and 4 to which the Theme/Topic is aligned
Instrument: the Government Regulation (GR) and Law that specifically relate to the
Theme/Topic
Action (either N/A/R): the action that is proposed to be taken where:
N = New instrument
A = Amendment to existing instrument
R = Retraction to existing instrument
Comment: brief description, where appropriate, of the rationale for the listed action.

FRAMEWORK
Table 5-1: Legal Instruments - New Instruments, Amendments and Retractions
Action
Theme/Topic Reference Instrument Comment
N/A/R
To provide more detailed description on primary

arterial (Jalan Arteri Primer) to introduce main
primary arterial class
Note:
Under the RENSTRA of DGH, the amendment
Government Regulation on GR no. 34/2006 to accommodate further
5.1 ROADS CLASSIFICATION Principle 1 A
(GR) 34/2006 on Roads sub-classification on Arterial Roads is expected
to be completed by 2017. We also note that
PUPR has provided further sub-classification on
Primary Collector Roads in the Ministry of
Public Roads no. 3/PRT/M/2012 on Guideline to
Determine Function and Status of Roads
without amending GR no. 34/2006.
5.2 AMENDMENTS RELATED TO DELIVERY

AND FINANCING OPTIONS
PUPR Regulation no. To introduce AP as an option for PPP in

5.2.1 INTRODUCE AVAILABILITY PAYMENT Principle 2 13/PRT/M/2010 (as expressway program as well as to provide
A
MECHANISM IN PUPR 3.3.1.2 amended) on Guideline on procurement guidelines for expressway AP
PPP for Toll Road Sector projects

FRAMEWORK
Action
N/A/R
Principle 2 GR no. 15/2005 (as

5.2.2 INTRODUCE SURPLUS-BOT AND OTHER
FORMS OF SURPLUS AND 3.3.1.3 amended) on Toll Roads A To introduce the concept of surplus BOT
CONCESSION FEE ARRANGEMENT
3.3.1.4
PUPR Regulation no.

13/PRT/M/2010 (as To provide the mechanism for procurement,
A
amended) on Guideline on calculation and payment of surplus BOT
PPP for Toll Road Sector
GR no. 38/2012 on Non-Tax To provide the surplus BOT as one of the Non-
A
GoI Revenue under PUPR Tax GoI Revenue streams
PUPR Regulation no.

01/PRT/M/2010 (as
amended) on Organisation To provide broader scope of works of the BLU
A
and Working Procedure of to manage and utilise the surplus BOT funds
BLU for Financing within
BPJT Secretariat
Principle 2 and Principle

5.2.3 PROVIDE FOR NATIONAL TOLL POLICY 3 Law no. 38/2004 on Roads A To revise the toll tariff escalation formula
3.3.1.7
PUPR Regulation no.

Principle 2 13/PRT/M/2010 (as To provide an option to appoint toll collection
5.2.4 APPLY TOLL COLLECTION AGREEMENT A
3.3.1.4 amended) on Guideline on operator in expressway PPP project

FRAMEWORK
Action
N/A/R
BPJT procurement To provide the procedure on appointment of toll

N
regulation collection operator
PUPR Regulation no.

To provide the provisions on expressway order
13/PRT/M/2010 (as
5.2.5 EXPRESSWAY ORDER A to enable BPJT to carry out the procurement
amended) on Guideline on
process for expressway
GR no. 34/2006 on Road A To allow PPP for roads other than expressways
5.2.6 PPP FOR NON-EXPRESSWAY ROAD

PUPR Regulation on PPP To provide the guidelines on PPP for roads
N
for non-expressway road other than expressways
5.3 BPJT INSTITUTIONAL AND

ORGANISATIONAL REFORM
To allow BPJT to obtain assignment for all

GR no. 15/2015 on Toll
A expressways (excluding planning that will
Road (as amended)
remain with DGH)
5.3.1 ASSIGNING EXPRESSWAYS TO BPJT Principle 4
PUPR Regulation no. Adjustment of BPJT tasks due to the
A
43/PRT/M/2015 on BPJT assignment

FRAMEWORK
Action
N/A/R
PUPR Regulation no.

15/PRT/M/2015 on Adjustment of DGH tasks due to the
A
Organisation and Working assignment
Procedure of PUPR
PUPR Regulation no.

11/PRT/M/2006 on Division
Adjustment of the division of tasks between
Tasks in Toll Road A
DGH and BPJT due to the assignment
Development between DGH,
BPJT and Project Company
PUPR Regulation no.

15/PRT/M/2015 on
A
Organisation and Working
Procedure of PUPR
Principle 4 and Principle PUPR Regulation no.

5 A To provide the division of tasks between DGH
5.3.2 UPDATE DGH-BPJT RELATIONSHIP 43/PRT/M/2015 on BPJT
and BPJT on expressway development
4.2.1, 4.2.2
PUPR Regulation no.
Tasks in Toll Road A
Development between DGH,
BPJT and Project Company
PUPR Regulation no.

5.3.3 TOLL ROAD LAND ACQUISITION (BANK 15/PRT/M/2015 on To allow BPJT to manage the banked land
4.4.2 A
LAND) Organisation and Working Note:
Procedure of PUPR

FRAMEWORK
Action
N/A/R
We note that GoI has established
MPU Regulation no.
A Lembaga Manajemen Aset Negara
43/PRT/M/2015 on BPJT
(LMAN) within MoF. This institution shall
have the task to manage GoI assets that
have been assigned to this institution. We
also note that GoI is under discussion to
establish institution or process for land
PUPR Regulation no. banking.
Tasks in Toll Road A Should the LMAN or land banking
Development between DGH, institution be authorised to manage the
BPJT and Project Company land for infrastructure development, then
the management of land required for
expressways can be managed by this
institution.
5.3.4 RESTRUCTURE BPJT INTERNAL PUPR Regulation no.

4.5 A To provide for the internal restructuring of BPJT
ORGANISATION 43/PRT/M/2015 on BPJT
MoF Regulation no.

223/PMK.011/2011 on
To provide for new PMI arrangement and
Financial VGF and MoF
A charging regime relevant for a PPP project with
Regulation no.
5.3.5 INTRODUCING NEW PMI financial VGF
4.5.2 143/PMK.011/2013 on
ARRANGEMENT
Guidelines on Financial VGF
BPJT procurement To provide the procedure on appointment of

N
regulation PMI by BPJT

FRAMEWORK
Action
N/A/R
PUPR Regulation no.

01/PRT/M/2010 (as
amended) on Organisation
5.3.6 REFORM BPJT BLU 4.5.5.2 A To provide broader scope of works of the BLU
and Working Procedure of
BLU for Financing within
BPJT Secretariat
PUPR Regulation no.

15/PRT/M/2015 on
5.3.7 ESTABLISHMENT OF MPPU 4.4.4.3 A To establish MPPU within DGH
Organisation and Working
Procedure of PUPR
5.4 ROAD LAW
In the long term, any fundamental refinement on

road provisions, including the road class and
5.4.1 REFINEMENT OF ROAD LAW Law no. 38/2004 on Roads A
institutional, need to be accommodated by
amending the Road Law.

FRAMEWORK
Under DGHs Strategic Plan for 2015-2019 (Rencana Strategis Direktorat Jenderal Bina
Marga 20152019), DGH has indicated that it will prepare the new road regulations.
However, these RENSTRA regulations have not been discussed in this Volume 2, and are
briefly described in the following table. The regulations listed are all under the
responsibility of the PUPR.
Table 5-2: National Plan Regulatory and Legal Requirements Not Covered in Volume 2
Theme/Topic Reference Related Authorities
5.5 RENSTRA Regulatory and Legal

Requirements
5.5.1 Preparation of Presidential Implementing regulation of Law no. MoF, Ministry of Home Affairs and
Regulation on preservation fund and 38/2004 on Road and Law no. Bappenas
grant mechanism for regional roads 22/2009 on Traffic and Road
Transportation
5.5.2 Preparation of Ministerial Mandate of Law no. 22/2009 on MoT, National Police Department,
Regulation on guidelines to determine Traffic and Road Transportation and Transportation Office of Regional
road class GR 79/2013 on Traffic and Road Government
Transportation Networks
5.5.3 Preparation of Ministerial Implementing regulations of Law no. MoT

Regulation on minimum service 38/2004 on Road and GR no.
standards for national roads 34/2006 on Road
(excluding expressways)
5.5.4 Preparation of amendment on Mandate of presidential direction MoT, National Police Department,
Ministerial Regulation on Procedure (instruksi presiden) no. 4/2013 on Transportation Office of Regional
and Requirements for Road Action Program for Road Safety and Government
Operational Acceptance (Laik Fungsi to review the existing Ministerial
Jalan) Regulation no. 11/2010 on Procedure
and Requirement for Road
Operational Acceptance since up to
the end of 2014 national roads have
not fully complied with the
requirements

PLAN - VOLUME 2: IMPLEMENTATION
FRAMEWORK

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1

Network Development Master

Any errors of fact or interpretation are solely those of the authors.

Jakarta, 14 December 2016

AMDAL Environmental Impact Assessment

APBN State Budget

ATP Ability to Pay

Bappenas National Planning Agency

BINTEK DGH Division that sets technical standards and techniques

BLU Public Service Unit

BPJT Toll Regulatory Agency

BPN National Land Agency

BUMN State-Owned Enterprises, Badan Usaha Milik Negara

Capex Capital Expenditures

COD Commercial Operation Date

CMEA Coordinating Ministry of Economic Affairs

DED Detailed Engineering Design

DGH Directorate General of Highways

FBC Final Business Case

GCA Government Contracting Agency

GDP Gross Domestic Product

GoI Government of Indonesia

IIGF Indonesia Infrastructure Guarantee Fund

IndII Indonesia Infrastructure Initiative

KPPIP Committee for Infrastructure Prioritisation

LLF Limited Liability Fund

LMAN National Asset Management Agency

MoF Ministry of Finance

MoT Ministry of Transportation

MPPU Major Projects Preparation Unit

NDMP Network Development Master Plan

NRFPG National Roads Forward Planning Group

OBC Outline Business Case

O&M Operations and Maintenance

PBMC Performance-Based Maintenance Contract

PMI Independent Quality Controller Consultant

PMO Project Management Office

PPP Public Private Partnership

PUPR Ministry of Public Works and Public Housing, Kementerian

RAMS Road Asset Management System

RENSTRA National Plan

ROW Right of Way

RUJPJJN National Roads Master Plan

SPM Minimum Toll Road Service Standards

VGF Viability Gap Funding

WTP Willingness to Pay

The successful delivery of the NDMP to implement a strategic backbone of expressway

Included in this Volume is information on a suggested financing plan to deliver the

The actions have the following three phases of implementation:

Action and Context Timing

CHAPTER 3: FINANCING THE NETWORK DEVELOPMENT MASTER PLAN

3.3 Private Sector Role in the Financing of Expressways

A3. Care should be taken to not overuse AP concessions and in so doing

A4. Create the legal framework for bidders to submit surplus-generating

A6. A national expressway toll strategy should be prepared. Medium Term

CHAPTER 4: INSTITUTIONAL AND ORGANISATIONAL REQUIREMENTS

4.2 Overview of Roles and Responsibilities

A8. Best practice approach to managing a projects progress is to submit all

A8.1 There should be a clear, personal responsibility to manage a project and

4.3 Planning of Connectivity and Capacity

A12. The Directorate General of Highways (DGH) should be recognised as

4.4 Project Preparation

A16. An ownership function responsible for land bank assets should be