PROJECTS

Satellite Public Private Partnership Project, Indonesia

The problem

Public sector agencies such as police and the military in Indonesia’s outlying islands lacked access to broadband communications, hindering operations. The Indonesian Ministry for Telecommunication needed to procure a private sector partner to develop, launch, and manage a satellite to serve this demand, but the project needed a guarantee to be bankable. The Indonesian Infrastructure Guarantee Fund (IIGF) did not know the best way to structure the guarantee.

How we helped

Castalia helped the IIGF structure the guarantee by analyzing the financial and fiscal risks of the project and estimating the likelihood of the guarantee being called. Based on our analysis, we recommended how the risks that would be guaranteed should be defined, as well as which risks should not be guaranteed. We also recommended that the special circumstances of this project justified the guarantee being in place for the entire life of the contract and not just the debt repayment period.

Impact

The IIGF board approved the guarantee and the project is proceeding. The satellite is slated for launch in 2022 and is expected to service 149,400 public sector premises. This will enable police, military units and health and education establishments in the outlying islands perform their responsibilities in a more efficient and timely manner.