Abstract
Infrastructure Projects are large investment by the public and/or private sector that required enormous financial resource commitment to build physical asset and facilities needed for economic development so that the company need project financing to support with. Project finance is based on debt repayment from project companies’ revenue and not on the sponsors or the developer’s balance sheet, so the project companies should assure the cash flow is sufficient for debt repayment and dividend payment. Beside that investors still have to analyze the value created in that project with highest positive Economic Value Added. Net Operating Profit After Tax (NOPAT) need to cover cost of invested capital to create value so that the ratio of NOPAT to total Project Cost (Return on Invested Capital) is should be more than the weighted average cost of capital (WACC). The capital structure doesn’t have an optimum weight and cost as long as the Return on Invested Capital (ROIC) higher than WACC.
Highlights
Result The result will examine every point that mentioned from method, so the result will give the view about Net Operating Profit After Tax (NOPAT) and Economic Value Added (EVA), Return on Invested Capital (ROIC), Solvency Ratio and Sensitivity Analysis to assure about the magnitude of capital structure predispose the EVA result
As we could see in that table that Kaltim-5, jawa-3 and Manokwari-2 on average generate ROIC higher than weighted average cost of capital (WACC) that means all of those projects get positive EVA as a surplus for the company for creating a bigger profit to cover cost for capital holder
Enormous amount of capital needed in Project in Indonesia could fulfilled by the corporate finance and need specific financing scheme to finance the project, which does not rely on the balance sheet of the company but only in the cash flow produce from the project
Summary
Electricity Supply Acceleration Program In 2016 Government of Indonesia commit to fulfill the electricity demand equitably and prevail in Indonesia, Government of Indonesia (“GOI”) produce the Presidential Regulation (“Perpres”) of The Republic of Indonesia Number 4/2016 regarding The Electricity Infrastructure Acceleration that the infrastructure of electricity should develop generation that reach 35.000 MW and 46.000 km for the Transmission and prioritize the use of renewable energy to support the to reduce global warming. This Commitment represent in Electricity Supply Business Plan 2017-2025, 2018-2026, and 2019-2027. Based on Perpres 75 of 2014 the KPPIP has 6 (six) priority mandate encompass of (1) Determining and controlling the policy and strategy of priority infrastructure supply acceleration, (2) Managing and monitoring the implementation of the priority infrastructure supply acceleration, (3) Facilitating the improvement of state apparatus associated with the priority infrastructure supply acceleration, (4) Determining quality standard of feasibility evaluation, (5) Facilitating the preparation of priority infrastructure, (6) Debottlenecking the priority infrastructure problem
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