SDG INDONESIA ONE – FAARIS

PRANAWA, DIRECTOR, PT SARANA

MULTI INFRASTRUKTUR (PTSMI)
Tri Hita Karana Blended Finance Deep Dive Workshops

SDG Indonesia One Blended Finance

Platform

Faaris Pranawa
Director
PT Sarana Multi Infrastruktur (Persero)

Jakarta
19 April 2022
PT Sarana Multi Infrastruktur (Persero)
Who we are and what we do

Non-Bank Financial Institution for Infrastructure Financing,

100% owned by Government of Republic of Indonesia through Ministry of Finance
Business Pillars & Strategic Partnership PT SMI’s advantages
Long-term financing
Performance (December 2021) Audited
Innovative, unique and flexible financing
Non bank financial institution
products to close the gap and be complementary
of banking products
Innovative Financing Product
Flexible Financing Scheme
AAA/Stable Highest rating for
local company
• Senior Loan, • Public Sector Financing National Rating
• Subordinate/ • Sustainable Financing, Large Multiplier effect
Mezzanine,
• Equity,
• Sharia Financing Sectoral Focus
Transportation Road Irrigation
Telecom-
munication
BBB/Stable similar with
sovereign rating
International Rating
Project Development & Advisory as enabler
in infrastructure investment
8.3
Drinking Oil and Energy
Electricity W astewater
Water Gas Efficiency USD
• Business Process Advisory Mgmt Billion Total Asset
• Project Preparation Advisory
• Transaction Advisor/ Fund Raising Advisor/
2.7
Train Rolling Water RE & Energy
Syndication Arranger W aste Mgmt
Stock Resources Conservation USD
System Billion Total Equity
• Investment Advisory & Financial Advisory
(Sharia) Sports

51.9
Arts
Facilities
Facilities
Public
Informatics Total
Housing USD
Strategic partnership for domestic and Billion Project Value
international institution to accelerate infrastructure
development in Indonesia
• Ministries/Government Institutions, Local
Governments Health (Hospital) Correctional
Education
24.4 times
Multiplier effect
To paid up capital
Facilities
• Private / State-owned Enterprises (BUMN) Facilities
Regional
• FI/Bank/Private Equity, Multilateral/Bilateral, Urban Tourism
Sovereign Wealth Fund
Infrastructure
“unqualified FS Opinion for 13
• Capital market, institutional investor (pension fund, opinion” consecutive years
Social Infrastructure
insurance, social security fund, hajj fund, etc)

PT Sarana Multi Infrastruktur (Persero) | 2

Government of Indonesia Already Has a Framework for
Implementing the SDGs at the National Level

Regulatory Framework Progress of SDGs in National Level

Mainstreaming SDGs in Launching of Governor

Government Planning National Action Plan Regulation for
Document for SDGs implementation
Sumatera Barat, Riau,
Bengkulu, Lampung, Jawa
Barat, Jawa Tengah, DIY,
Jawa Timur, Kalimantan
Utara, Kalimantan Timur,
Sulawesi Selatan,
Gorontalo, Bali, NTB, NTT

Voluntary National Involvement in

Report G20
Presidential Regulation
No. 59 year 2017 regarding the Indonesia Leadership in
Implementation of Sustainable Global Forum for SDGs
Development Goals
ASEAN Leader Gathering
National Regional ASEAN Ministerial Forum Establishment of
Action Plan Action Plan
(RAN) (RAD) SDG Center in
Localizing SDGs
University

*) Sustainable Development Solutions Network

**) Voluntary National Review PT Sarana Multi Infrastruktur (Persero) | 3
PT SMI Concrete Steps as Development Financial Institutions
to Support SDGs and Climate Finance Projects in Indonesia
Strategic Direction of
PT SMI’s Climate Finance
1. Making PT SMI’s climate
finance consistent with low
emission, climate-resilient
pathways
2. Taking steps to end finance
for carbon-intensive fossil
fuel based-energy
3. Mobilizing private sector
climate finance, promoting
climate PPP’s, as well as
project preparation
4. Scaling up international
climate borrowings and
enhancing the impact
(through SDG Indonesia One)
5. Defining, measuring, and
reporting PT SMI’s climate
finance
Concrete Action of
PT SMI’s Climate Finance
Sustainable Financing
1 Established Sustainable Finance Division
(2016) to finance RE-projects related
Green Climate Fund (GCF)
2 PT SMI as the first accredited entity
in South-East Asia
SDG Indonesia One (SIO)
Blended Finance Platform (October 2018)
3 to support Sustainable Development Goals
(SDGs), including support for green projects
Green Bond & Impact Report
4 Issued the 1st corporate green bond &
impact report in Indonesia
Environmental and Safety Management
Frameworks (ESMF)
5
The development and implementation of
Guidelines of Environmental and Safety
Management Frameworks (ESMF)
PT Sarana Multi Infrastruktur (Persero) | 37
Framework : Climate Change Issue Must Be Resolved By
Collaboration Between Government And Private

Climate action failure à

Global Warming

As an example of public bad How to mitigate public bad?

: non-excludable and non-
rival, and negatively affects Intervention of government
welfare and supported by private

Sustainable Finance to Challenges of Sustainable

support Finance : Private sector
sustainable/green participation, Project
projects readiness, Financial market
development, and Electricity
affordability.

Blended finance is the use of catalytic capital

from public or philanthropic sources to
increase private sector investment in
sustainable development.

Sources : https://www.convergence.finance/blended-finance

PT Sarana Multi Infrastruktur (Persero) | 38

 The Other Reason of Implementing Blended Finance is to Overcome Project
Preparation Challenges as a Bottleneck to Mobilize Private Capital

SDG Indonesia One

Challenges Blended Finance Platform Concept as of March 2022
Solution
SDG
Development
Offers consultation Facilities
Resources and public and project
sector’s limited ability on development
budgeting, planning, and service to improve
preparation project qualities
and readiness SDG
De-risking USD 3.23 Billion from
Facilities 35 Partners
Use various
sources of funds
Lack of project readiness from various
due to inadequate process stakeholders to
preparation (including the de-risk projects SDG
risks allocation framework) and increase Financing
bankability
Facilities

Synergy and
collaborate with
Other setbacks caused by:
relevant
• Tariff policy SDG
stakeholders and
• Unsustainable business Equity
strategic partners
model Fund
• High interest rate

PT Sarana Multi Infrastruktur (Persero) | 39

SDG Indonesia One Alignment with OECD Blended Finance Principles

OECD Blended Finance Principles SDG Indonesia One

• Linkage with National Priority sectors

Principle 1: Anchor Blended Finance use to a • Encourage integrating environmental, social and
Development Rationale governance (ESG) factors when selecting
blended finance projects

Principle 2: Design Blended Finance to Facilitate local capital market development, with a
Increase the Mobilization of Commercial focus on providing access to finance for example:
Finance credit enhancement product for renewable energy

Principle 3: Tailor Blended Finance to Local • Focus on crowding in domestic finance

Context • Promote local currency financing

• Understand the mandates, objectives and risk-

return profiles of each actor involved
Principle 4: Focus on Effective Partnering for • Make sufficient funding available for early stage
Blended Finance project preparation to accelerate the creation of a
pipeline of bankable projects

• Promote better reporting on development results,

improving data collection and quality assurance
Principle 5: Monitor Blended Finance for processes
Transparency and Results • Promote collaboration as integral to the
partnership

PT Sarana Multi Infrastruktur (Persero) | 40

Sustainable Development Goals (SDG) Indonesia One -
Blended Finance Platform: From the Concept to the Implementation

SDG Indonesia One from concept to implementation with various parties

Platform Concept SDG Indonesia One Partners (March 2022)
Grant (Project Preparation, Technical Assistance)
SDG Development Facilities
SDG Tools that can be mobilized by reducing the risk profile
Development and to support a range of activities, including project
Facilities preparation, environmental safeguard or broader
enabling environment (e.g. capacity building)

Reimbursable Grant, Investment Premium, Guarantee, etc

SDG Tools that can be mobilized for reducing the financial

De-risking risk by providing support in the form of credit
Facilities enhancement and any innovative products that could
increase the bankability of the projects.
SDG De-risking Facilities

Senior Loan, Subordinated Loan

SDG Tools that can be mobilized for mobilizing commercial SDG Financing Facilities
Financing capital in the form of direct loan, potential co-financing ,
Facilities and loan syndication opportunity to be able to scale up
private investment.
SDG Equity Fund
Equity, Equity-Linked Investment

SDG Tools that can be mobilized for mobilizing equity

Equity investment for greenfield projects or potential recycling
Fund asset for brownfield projects to be able to increase “The total of commitment from 35 Partners
private investment. has reached USD 3.27 billion”

PT Sarana Multi Infrastruktur (Persero) | 41

PT SMI’s SDG Indonesia One Product

SDG Indonesia One

Blended Finance Structure

and Transaction Leveraging Impact

Development De-risking Financing Equity

Grant for Technical Credit Financing Grant (non-

De-risking Equity Investment
Feasibility Study Assistance Enhancement Facilities repayable)

Senior Financing Junior Financing

Investment Financing Bridge Financing Subordinated Financing

Working Capital
Take Out Financing
Financing
Mezzanine

Promoter Financing

PT Sarana Multi Infrastruktur (Persero) | 42

Business Model of SDG Indonesia One

Government
(Ministry of Finance)

Donor PT SMI (SDG Indonesia One) Beneficiaries (Public/Private)

Program Design Program Discussion Project/Program Pipeline

Loan Loan
Loan Agreement

Grants Grant
Grant Agreement Implementation Stage
De-Risking (on Technical Assistance /
balance sheet) Capacity Building
Construction and
Development
De-risking Escrow Account

Disbursement Grant of De-

Triggering Event
risking (off Balance sheet) (De-Risking)

Evaluation &
Evaluation & Monitoring Reporting Reporting
Monitoring

The donor partners becomes the source of funds for the SIO platform, in which the commitment of these funds
will only be effective if there is an underlying program that can be collaborated. For this reason, PT SMI in
this case must discuss together to be able to design programs that can be collaborated with donors.

PT Sarana Multi Infrastruktur (Persero) | 10

Highlight Implementation of SDG Indonesia One

Type of
Intervention Output Outcome
Facilities

1. Blended Finance Project

Blended Finance 550 beds and total
SDG 57 Projects area of hospital
Implementation of concessional loan
Development ± 47.535 m2
from Bilateral/Multilateral • 50 Project Development
Facilities
Business dan Product Development 4 schools with 31
• 7 Project financing
Donor Matching for pipeline classes for 716
development 2. Ecosystem Enabler students

SDG Technical Assistance support for increasing 46 Activities 2.000 families get
readiness of project access to clean
De-risking • 42 capacity building,
sharing session, and water
Facilities Pipeline development in the form of business matching
grant for feasibility study • 4 activity with SDG Study of 13.48 MW for the
Center enewable energy power
3. Funds Mobilization plants with the potential
Leveraging Impact saving of ±1.5 M / year;

SDG • $3.270 billion

commitment Additional traditional
Financing Cooperation with • $939 million market area for 15.400
Facilities donor/philanthropist to scaling up Agreement m2 and 172 kiosk;
impact with co-granting scheme • $230 million
disbursement Waste
Cooperation with University to
4. SIO in Numbers management
monitor and calculating impact of the potential ±365.000
program
SDG ton / year

Equity Cooperation with other development • $1.20 billion Emissions reduction

potential ±5.867 tCO 2e
Fund financing association such as Project value
p/ year
IDFC,AVPN, ADFIAP and ADFIMI

PT Sarana Multi Infrastruktur (Persero) | 44

Implementation Model of Blended Finance
Structure in SDG Indonesia One

Type of Facilities Blended Finance Structure Description Program

Grants for meeting project preparation costs for Airport Solar Rooftop
Loan viable rooftop solar projects ready to scale, and Program (Supported by
Grant
Climate Works Foundation
Funding is targeted explicitly at mobilizing debt finance
Equity
Development
(Early-Stage Risk) • USAID-SINAR Program
Loan Grants originating from donor/philanthropy •European Climate
Technical
Assistance
which aim to build capacity to achieve Foundation (ECF) Clean
Equity financial, economic and social objectives. Energy Program

Senior Loan or
Equity Investment Grants originating from donors/philanthropy WB - Geothermal
which aim to reduce credit risk by replacing the Resource Risk
non-refundable portion of loan repayments by Mitigation (GREM)
Reimbursable Grant Program
project owners.

De-risking
(Financing and • European Union –
Credit Risk) AFD Investment
Loan Grants originating from donors/philanthropy
which aims to reduce the risk of capital Premium Scheme
expenditure by providing grant support to
• UK– Mentari Program
Investment subsidize the capital expenditures.
Equity Investment Grant
Premium
Scheme

Senior Loan or Concessional loan with/without government • ADB SIO Green

Financing Equity Investment (Commercial)
guarantees which could provide long term Finance Facility
(Long term and financing and competitive rate which can • AFD Financing facility
competitive rate) Concessional Loan catalyst commercial financing

PT Sarana Multi Infrastruktur (Persero) | 45

 Showcase Blended Finance (Development):
Collaboration Between PT SMI and ClimateWorks Foundation
Grant for Feasibility Study in Solar Rooftop -- PT Pertamina Power Indonesia

Project Description Solar Power Plant

Project Owner PT Pertamina Power Indonesia (‘’PT PPI’’)
Sector Eligibility Electricity
Project Location 29 locations of Fuel Terminal and New Gantry System (project details
attached)
Estimated USD5,753,352
Project Value
Financing Grant for Project Preparations and Private Loan
Modalities

Project Preparation Feasibility Study Preparation

Phase
Solar Panel on Refinery Unit
Land Status No need for new IV Cilacap PT PERTAMINA
land acquisition (PERSERO)

(using existing
buildings)

Project Information • All 29 locations where the Solar Power Plant will be installed are
buildings owned by PT Pertamina Patra Niaga with rooftop
installation type.
• The concept of the business model that will be implemented is that
the owner of the building/land will rent the Solar Power Plant
and the facilities provided by PT PPI in accordance with the lease
agreement.
• From the results of the temporary discussion of the 29 proposed
locations, there are 25 solar power plants that are planned to be Solar Panel on Logistics PT Pertamina International Shipping
developed with capacities below 500 kVA. In accordance with
Minister of Environment Regulation Number 5 of 2012 and
Minister of Environment Regulation Number 16 of 2012, the project
does not require an environmental permit. Meanwhile, the other 4
PLTS locations are indicated to have capacities above 500 kVA
which require environmental permits in the form of UKL/UPL.
PT Sarana Multi Infrastruktur (Persero) | 46
Showcase Blended Finance (Development and De-risking):
Collaboration Between PT SMI and Development Bank
Credit Enhancement Product to Support Clean Energy in Mobilizing Private Capital through Capital
Market Instrument

Facility Details Credit Enhancement Facility

Sector Electricity – Renewable Energy Final Rating

AAA
AAA
Issuer Private Company

Issuance IDR 750,000,000,000 (~USD 52.4 million)

AA+
Technical
Tenor 3 years, 5 years, 7 years Assistance
Support
Rating idAAA(sf) AA

AA- 6 Notches
As an investment portfolio, these bonds are Upgrade
relatively safe because the Bonds are supported
Credit
by the Credit Enhancement Facility (CEF) from A+ Enhancement
PT Sarana Multi Infrastruktur (Persero) with a Facility

maximum standby facility of IDR 750 billion.

These funds can be used to fulfill the Reserve Fund A
for Interest Payments and/or the Reserve Fund for
Repayment of Principal Bonds.
Initial Rating
A- Bond Issuer

PT Sarana Multi Infrastruktur (Persero) | 47

Thank kasih,
Terima You
PT Sarana Multi Infrastruktur (Persero)
Sahid Sudirman Center, Lantai 48
Jl. Jenderal Sudirman No. 86
Jakarta 10220, Indonesia
Telepon : (62-21) 8082 5288 (hunting)
Faksimile : (62-21) 8082 5258
Surel : corporatesecretary@ptsmi.co.id

ptsmi.co.id @ptsmi

infralib.ptsmi.co.id ptsmi_id
PT Sarana Multi Infrastruktur
(Persero)