A STUDY ON THE APPLICATION OF AVAILABILITY PAYMENT SCHEME FOR URBAN INFRASTRUCTURE IN INDONESIA

Abstract

The Government of Indonesia encourages the implementation of central and regional infrastructure through Public Private Patnership (PPP) which is regulated by Presidential Regulation no. 30/2015. One of the financing schemes in PPPs is the availability payment (AP), namely periodic payments by the Regional Head to the Implementing Business Entity for the availability of infrastructure services in accordance with the quality and/or criteria as determined by the PPP Agreement (Minister of Finance Regulation No. 260/PMK.08/2016). The AP scheme can be an alternative for PPP projects that are not feasible in terms of user payments because they do not depend on demand. AP is considered still difficult to implement in Indonesian PPPs because it is constrained by various things that need to be evaluated. Through a descriptive narrative approach based on literature review and case surveys, this research analyzes the keys to success, constraints, and recommendations for implementing AP in urban infrastructure in Indonesia. Case studies were conducted on several regional PPP projects in 8 districts/cities in Indonesia that use the AP and user payment schemes, where projects will be compared and evaluated based on the keys to the success of the AP to map constraints and their mitigation. The identification results obtained 13 AP success criteria which are grouped into regulation, institution, and business process aspects. The failure of AP compared to user payments in regional PPP projects is caused by the absence of regional PPP implementation and technical guidelines, the absence of approval from the DPRD and weak coordination with the regional government, the immature experience and preparation of the regional government, and the unpreparedness of regional PPP institutions. The recommendations proposed are the implementation of socialization of PPPs in the regions by the central government, increased coordination between the Regional Government and the DPRD, mature and complete preparation of regional PPP projects, and the implementation of regional PPP capacity building in improving the experience of regional governments.