Indonesia: Strategic Advisory – Bandung Street Lighting

This PPP Pilot aims at providing better quality infrastructure and achieving energy saving efficiency in the Street Lighting project for the City of Bandung as the Government Contracting Agency (GCA). The Project is planned to follow a Rehabilitate-Build-Operate-Transfer of Street Lights including financing, design, construction, operation and maintenance, and transfer of SL infrastructure, and soon shall be launching its procurement the latest by mid-September 2018.

XS-Axis Consulting as Lead Adviser led the preparation stage on development of the Pre-FS. The services included full review and analysis of needs, and structuring of PPP scope next to review of financial model, and the legal, institutional arrangements, technical scope, output specifications and payment mechanisms, and risk analysis. Presentations to Local Government and mayor of Bandung as decision-makers and Procurement Committee. The final Pre-FS considers the implementation of PPP financial structuring options following an availability-based payment scheme, by applying best practices and lessons learned from other Street Lighting practices for instance in India, and the UK. The study provides a means to navigate around the complexities of differential ownership of the road network (across the city, provincial and the national government). It also demonstrates the considerable benefits of adopting new technologies and management practices, which should work to improve overall illumination of the city, and also the efficiency by which the sector is managed.

Scope of work and the assignment includes the following tasks:

1. Review of Outline Business Case prior to development of Final Business Case based on existing data and the Value for Money analysis to be embodied in the Pre-FS.
2. Lead Support to legal advisers to be compliant with national, cross-sector PPP and regional regulations to make the PPP project compliant with relevant national and regional legal provisions.
3. Design and development of best practice PPP options based on existing practices in India, and other places.
4. Support in conducting successfully Market Sounding Event.
5. Advise on economic and financial analysis of the PPP option considering relevant revenues, cost parameters, financing assumptions and performance standards.
6. Technical assistance to GCA to get the needed approvals and to advance the regulatory provisions required to promote the defined PPP option.
7. Finalization of Pre-FS for Local Parliament approval and launch of the PPP as a tender in 2018.