PROJECTS

Expressway Program Analysis, Indonesia

The problem

The Government of Indonesia is implementing an ambitious target to develop around 4,000 kilometers of new expressway network, to be financed and delivered through PPP. While they achieved rapid progress, the government has accumulated considerable contingent liabilities and is now struggling to provide sufficient funding for the rest of the program. The government wanted to improve the approach to prioritizing and funding individual projects for sections of the network.

How we helped

Castalia’s expressway program analysis looked at all possible avenues to provide additional funding for the expressway program, including land value capture, capital recycling from the re-sale of expiring concessions, and transport-oriented development. We developed detailed projections of the funding required to complete the expressway program and compared it to the existing fiscal commitments and other possible sources of revenue. Our team confirmed that, with the inclusion of the additional funding sources, the small remaining funding gap could close using available fiscal resources. We designed a collection of additional revenues and allow year-to-year mismatches in funding and costs managed through borrowing.

Impact

Indonesia’s government was given the policy options to fully implement its expressway program via PPP. The government is now working to implement our proposals.