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Building Blocks of Effective Preparation

Essential elements for a structured and efficient preparation process.

Pre-FS Components

A Pre-FS consists of the following studies, components, and activities. Each has sub-sections and sub-activities. A complete Pre-FS has all provisions of the regulations relating to it in the form of these studies, components, and activities. All components included in the Pre-FS make the project (solicited) ready for evaluation by Bappenas.

Introduction

This section is an introduction to the entire Pre-FS in the preparation stage of the PPP project. The Pre-FS is expected to have many sections and subsections. The sections or chapters are classified as ‘reviews’ of the PPP project under consideration. Before the reviews begin, the GCA shall draft the introduction sections to introduce the background of the project and its features which set the context for the subsequent sections.

The introduction section includes the:

  • Project background including overview of infrastructure and PPP in the sector, the project concept & vision, conclusions and recommendations of the Pre-FS, need / intent / purpose of PPP in the project, and objective of the Pre-FS.
  • Project initiator including the GCA and the consultants/experts in project preparation.
  • Legal and regulatory basis/ framework including the legal basis to prepare the Pre-FS and the substantive changes to Ministerial Regulation Number 7 of 2023.
  • Methodology including the process to conduct Pre-FS studies, primary and secondary data sources and limitations, if any
  • Structure of the Pre-FS and
  • Key qualifications/disclaimer.

From this section, the evaluator/ reader shall become aware of the background to the PPP project, with the required references to the previously prepared Preliminary Study (PS) and know what to expect as content in the Pre-FS.

Strategic Suitability

The Strategic Suitability Study chapter in the Pre-FS for a solicited PPP should have confirmation of the conformity with and/or update to the strategic review conducted in the PS. The strategic study or review of the Pre-FS should provide information about the strategic context of the proposed PPP. The review should make observations about the following in relation to the strategic review conducted previously in the PS.

  • The existence or absence of new regulations from those that have been used as references in the preparation of the strategic study in the PS.
  • Validity of regulations used as references in the preparation of the strategic study in the PS.
  • Development of regulatory reviews in accordance with the progress of the PPP project and/or
  • Development of institutional reviews in accordance with the progress of the PPP project.

Economic Review

An economic review is a review conducted by the GCA to identify projects that provide the best Value for Money (VFM) through an economic study. The review is carried out through a Social Cost Benefit Analysis (SCBA) and quantitative Value for Money (VFM) analysis. The review/assessment comprises estimation of the full costs and benefits (financial as well as non-financial) of the PPP project to the society as a whole. This assessment helps the GCA determine whether the project is desirable or not from the viewpoint of the society as a whole.

Commercial Review

A commercial review is a review conducted by the GCA to prepare a project agreement structure under the PPP scheme. A complete commercial review contains two parts:

  • A technical preparation review; and
  • A commercial preparation review.

Financial Review

A financial review of a PPP project is a critical process that evaluates the financial feasibility of the project. It ensures that the GCA has a clear understanding of the project's financial structure, obligations, and expected returns. The purpose of a financial review is to:

  • Assess viability: Determine if the project is bankable and financially sustainable.
  • Support decision-making: Inform negotiations, risk allocation, and government support mechanisms.
  • Ensure transparency: Provide clarity on costs, revenues, and fiscal implications for all parties.

Management Review

In this chapter, the GCA shall have a goal to prepare a project monitoring and evaluation (M&E) mechanism for the PPP agreement. To fulfil the goal, the GCA shall conduct the management review. The management review document shall be a reference guide for PPP Nodes to monitor and evaluate the PPP project. The GCA’s management review shall also involve preparation of a draft of the management document for the PPP agreement. The inclusions of this draft are mentioned in the following sub-sections.

Environmental, Social, and Governance (ESG) Considerations.

An Environmental, Social, and Governance (ESG) assessment is holistic and offers a lens to ensure the project preparation process is responsible, sustainable, and inclusive.Institutionalisation of ESG practices carries strategic importance for Indonesia’s Ministry of Finance because it can help to enhance the quality and sustainability of infrastructure investments, can attract green and responsible financing, and minimises environmental and social risks while maximising long-term benefits.

Supporting Activities

This is an important part for converting the Pre-FS into a Ready To Offer proposal. The GCA shall undertake the following the supporting activities during the preparation stage. The activities include:

  • public consultation
  • market sounding
  • government support measures
  • procurement committee readiness and
  • other supporting activities conducted by the GCA.

Conclusion and Next Steps

The conclusions section of a feasibility study report for an infrastructure PPP project should provide a clear, concise summary of the study’s findings and a recommendation on whether the project should proceed. The conclusions should include the following:

Pre-FS Toolkit