Financing Scheme for Related Waste Management
PT Sarana Multi Infrastruktur (Persero)
International Seminar on Electronic Industrial Waste
Management and Waste as Industrial Resources to Support
Reducing Releases of PBDEs/UPOPs
Sanur-Bali, 8-9 January 2018
Profile of PT SMI
Status
Duties
Vision
Mission
PT Sarana Multi Infrastruktur (Persero) (“PT SMI”) was established in
2009 as a State-Owned Enterprise under the Minister of Finance
Regulation No. 100/PMK.010/2009 on Infrastructure Financing
Companies
PT SMI carries the duty of supporting the Government’s infrastructure
development agenda for Indonesia through partnerships with private
and/or multilateral financial institutions in Public-Private Partnership
(PPP) projects. As such, PT SMI can serve as a catalyst in accelerating
infrastructure development in Indonesia.
100% owned by the Government of Indonesia
To serve as catalyst in accelerating national infrastructure development
1. To become a strategic partner that delivers value added
contributions to Indonesia’s infrastructure development
2. To develop flexible financing products
3. To offer service excellence backed with good corporate governance
Ownership
PT SMI as a Catalyst in Accelerating Infrastructure Development
Capital Injection
from GOI
Capital Market
(Bonds, Notes,
Securitization)
Loans and
Grants
BPJS, Sharia
Insurance
Sharia Capital
Market
Hajj & Syirkah
Funds
Sovereign Wealth
Fund
Sectoral FocusSources of FundsC
on
ve
nti
on
al
Sh
ari
aFINANCING &
INVESTMENT
Infrastructure
Financing
Municipal Financing
(PIP/RIDF)
• Senior loan (Working
Capital, Investment
Loan)
• Junior Loan
• Mezzanine
• Equity investment
• Arranger & Underwriter
• Standby Lender PPP
Public Sector
Advisory
Training & Capacity
Building
Investment
Advisory
Investment
Advisory
&
Financial
Advisory
(Sharia)
Project
Development
Facility (PDF)
PDF & Donor Fund
Management
TA & Donor Funds
Management
PPP Project
Renewable Energy Project
(Geothermal Exploration)
Municipal Projects
Sharia Financing
Technical
Assistance
CONSULTATION
SERVICES
PROJECT
DEVELOPMENT
Donor Fund
Management
PT SMI Business Pillars
Electricity
& Energy
Efficiency
Road and
Bridge
Transportation Telecommunication
Irrigation
Oil and
Gas
Waste Water &
Waste Management
Train Rolling
Stock
Water
SupplyRenewable
Energy
Regional
Infrastructure
Correctional
InfrastructureHospital
MarketTourism
Infrastructure
Social Infrastructure
Education
Infrastructure
PILLAR #1 PILLAR #2 PILLAR #3
• IMBT/ Lease with Option
to Own
• Murabahah/Installment
Sale with Deferred
Payment
• MMQ/Diminishing
Partnership
• Musyarakah/Joint
Partnership
• Ijarah Indent*
• MMOB*
Our Business Model
IMBT = Ijarah Muntahia Bittamlik l MMQ = Musyarakah Mutanaqisah l MMOB = Mudharabah Muqayyadah on Balance Sheet l *under development process
Regional
Government
Infrastructure
Development
Fund
Raising
Fund Raising
Optimization
(leveraging) from capital
market, conventional &
sharia banking, bilateral
and multilateral
organization
To Support Sustainable
Development Goals (SDGs)
and Climate Change programs
Setting up a special division,
Green Climate Fund (GCF)
accreditation, ESMF guidelines,
renewable energy promotion
Optimization of Strategic
Partnership and Technical
Assistance from
bilateral/multilateral
organizations
Financing facility for
regional government to
accelerate
infrastructure
development
Various & Flexible
Financing Products
To close the gap; e.g. senior
loan, mezzanine,
shareholder’s loan and equity
investment
Enabler to accelerate
infrastructure development
Providing advisory services,
project development, capacity
building
PT SMI Has a Mandate to Become a Catalyst to Support Infrastructure Development
Portfolio Distribution Across Indonesia
● 72projects |
Financing and
Investment
● 8projects |
Project
Development
● 20projects |
Advisory
Services
● 2projects |
Equity
Electronic Waste(Our Understanding)
Electronic Waste
Electronic Waste (E-Waste)
Air Conditioner,
RefrigeratorComputers,
TelevisionsCommunication
Devices
Lighting
Eguipment
Definition:
E-Waste is all waste
caused by discarding
electonic devices,
especially consumer
electronics
E-Waste in Indonesia
Flame Retardant
Flame retardants are
chemicals that are added or
applied to materials in order
to slow or prevent the start
or growth of fire
Polybrominated diphenyl
ethers (PBDE’s) is one of
the compound used & is
toxic
PBDEs can lower birth
weight and length of
children, and impair
neurological development
E-Waste Contents
Hazardous
Material
1 Indonesian person disposal
3 Kg E-Waste per Year
Total E-Waste per Year
745 Kilo Ton
Source:
KLH & Global E-waste Monitor, 2014
E-Waste Management
Sorting
Re-Cycle
Re-Use
Waste to
Energy
Down-Cycle
Up-Cycle
Repair/
Refurbish
Incenerator
Pyrolysis
Batteries
Components
Casing
Packaging
Office
stationary
using computer
keyboard
Sale: i-
Phone 4
Creative Re-Use
Others product
Toxic component:
Hazardous material
Flame retardant
(PBDEs)
Refuse Derived
Fuel (RDF)
Disposal Scrap
►
►
►
►
►
Landfill
Others
►
►
Cement Plant
Power Plant
Indicative Financing Scheme
by PT SMI
Corporate Finance vs Project Finance
1. Corporate Finance
2. Project Finance
Lender relies on cashflows from all
corporate activity
Lender relies on cashflows from the
spesific project only
Bank Company
Loan
Repayment
Bank SPC
Loan
Repayment
Project-1
Project-2
Project-3
• Share Holder
• Non/ Partial
Guarantee
• Non/ Limited
Recourse
The ultimate goal of a sponsor in a project financing is to have a highly leveraged project
with little or no direct impact on the balance sheet or credit standing of the sponsor
Project finance is relying on the project’s cashflow as the principal repayment resource
Project
Finance
Corporate
Finance
Limited
asset life
Indefinite
asset life
Single
asset
Multiple
assets
Non-
recourse Recourse
Pledge of
collateral
Unsecured
debt
High
leverage
Moderate
Leverage
Stable cash
flows
Unpredictable
cash flows
Asset Life
Ownership
Recourse
Collateral
Leverage
Cash Flow
Category
Preliminary
Negotiations
Due Dilligence
Set Up
SPV*
Purchase & Sale
Agreement Signed
Closure Construction /
Development Start
Construction
Construction
CompleteSale
Establishing Partnership with Lenders
*A Special Purpose Vehicle (SPV) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to
fullfill narrow, specific or temporary objectives. SPE's are typically used by companies to isolate the firm from financial risk. A company will
transfer assets to the SPE for management or use the SPE to finance a large project thereby achieving a narrow set of goals without putting the
entire firm at risk.
Typical Project Financing Stages
High Leverage Tax Benefits Off-Balance Sheet Risk Allocation Transparency
Often 80%
compared with
40% for
corporate
finance
Interest shield on
taxes
If joint venture
with less than
50% ownership
Parties who can
control risk take
the risk
Increase the
transparency
21 4 53
Reasons fo Using Project Finance
Public Finance Private Finance Public Private Partnership
Sources of funds• General purpose or
special-purpose bonds• Tax revenues• Capital grants subsidies• International subsidized loans
Social benefits important justification
Benefits to region, quality of life, unemployment relief, etc.
“Exemption from taxes”
Equity • Invest corporate equity and
retained earnings• Offering equity shares• Stock Issuance (e.g. in capital
markets)• Must entice investors with
sufficiently high rate of return• May be strategically wrong
(e.g., source of money, ownership)
Debt • Borrow money• Bonds
“Because higher costs and risks, require higher returns”
Benefits for PPP projects• Lower total funding cost• Increases investors’ financialcapacity, so creating morecompetition for projects
• Enables public sector to assessand monitor project-specificdata
• Third-party due diligence
Benefits for investors•Spreading risk•Greater leverage, which may beoff-balance sheet
•Hence higher return oninvestment
“Enables partnerships with different financial strengths to
work together”
Public Private Partnership (PPP) is One of the Model of Project Finane
Playing a Role as a catalyst with unique and complementary products,
not only for financing but also for investments
• Investment/Term
Financing
• Take-Out Financing
• Promoter Financing
• Working Capital
• Bridging Financing
• Sharia Financing
20-30%
Equity
Equity
Subordinated Loan
Mezzanine
ConvertiblesQu
as
i-E
qu
ity
Long-Term
(> 5 Years)
Short-Term
(1-5 Years)
By Structure By Project Financing Tenor
Financing & Investment
Products
• Investment/Term
Financing
• Take-Out Financing
• Promoter Financing
• Subordinated Loan
• Mezzanine
• Equity Investment
• Sharia /financing
Financing Products
• Working Capital
• Bridging Finance
• Cash Deficiency Support
(CDS)
• Sharia Financing
Pro
jec
t F
ina
nc
ing
Str
uc
ture
70-80%
Debt
The Uniqueness of Financing and Investment Products of PT SMI
Generic Models of Financing by PT SMI
Fund Management
RE Fund /
Donor
Special/
Esc. Account
Loan
revolvingLoan/
Grant
Assign for
fund manager
PT SMI
Fund
management
Fund
disbursement
Co-financing Model
RE Fund /
Donor PT SMI
RE
Projects
Loan
repay-
ment
Loan
Co-financing
Loan
repay-
ment
Intermediary
RE Fund /
Donor
PT SMI
Loan /
TA
Loan
repay-
ment
Fund
RE
Projects
RE
Projects
“Beside financing & equity investment activities, PTSMI serves many strategy alliances in advisory, capacity building
programmes as well as project preparation facilities”
Sponsor
Biomass Power PlantOff taker :
PT Perusahaan
Listrik Negara (PLN)
• Limited equity
• Limited flexibility of financing
• Proven Off taker*
• Certain/Regulated Pricing (<10
MW)
• Simple procurement
Operator
• Included in sponsor
• Convensional
management
Government• Licensing
• Land
Acquisition
Project Preparation
ConsultantContractorMachine Supplier
Raw Material
Supply
• Sustainability issues of feed
stock
• Logistic
• Simple technology
• Low maintenance
• Lower middle
• Unproven project management
capabilities
• Lack of ability to handle cost
overruns case
• Small and medium class
• Less comprehensive feasibility
study (probability of cost
overruns and design changes)
Low
Low to Medium
Medium
Medium to High
High
Bank
Not many banks or other
financial institutions are
interested in providing
financing to biomass
projects power
Case Study-1: Project Structure for IPP Project (Renewable Energy)
Case Study-2: Project Structure for PPP Project (Waste to Energy)
GCA
SPV-1
MBT Plant
Lender
Off Take
Equity
RDF *
Off take
agreement
Loan
PPP
Agreement
Project
Sponsor
SPV-2
Power Plant
Lender
PLNRDF
Purchasing
Agreement
RDF
PPA
Loan
Equity
SPV-1Project
Sponsor
SPV-1 SPV-2
RDF: Refused Derived Fuel
1.500 Ton Munisipal Solid Waste/day produce 525 Ton RDF/day
Off take: Power Plant/ Cement Plant
RDF will produce electricity 19 MW
* End of product
Intermediary
InstitutionProject
Financing
Grant
• Senior Loan
• Mezzanine/ Subordinated
• Equity
• Technical Assistance
• Project Appraisal
• Project Assessment
RE = Renewable Energy EE = Energy Efficiency
Source of Fund
Hydro Power
Biomass
Solar Power
Wind Power
Energy Efficiency
Geothermal
Climate
Change
(RE and EE) (RE and EE)
(Wind Energy)
Others
(CTF & GEF)
(Green Prosperity)
Role of PT SMI in Renewable Energy and Climate Change Program
PT SARANA MULTI INFRASTRUKTUR (PERSERO)
Gedung Sahid Sudirman Centre, Lantai 47-48
Jl. Jend. Sudirman No. 86, Jakarta 10220, Indonesia
Ph: (62-21) 8082 5288 (hunting), Fax: (62-21) 8082 5288
Email: [email protected]
@ptsmi ptsmi_id
PT Sarana Multi Infrastruktur (Persero)#BaktiUntukNegeri
Thank You
