REPUBLIKA.CO.ID, JAKARTA -- The state owned infrastructure insurance company PT Penjaminan Infrastruktur Indonesia (PII) will provide Rp6.8 trillion in financial guarantee for five projects to be built under Government Private Cooperation (KPS) scheme in 2015.

Finance Minister Bambang Brodjonegoro at a meeting with the Commission XI on Thursday said Rp1.5 trillion of the fund came from state participation capital (PMN) as set aside in the 2015 state budget.

The financial guarantee from PT Penjaminan Infrastruktur Indonesia (PII) against financial risk of the KPD projects is needed to attract private investors in the KPS scheme.

The government hopes that the private sector would put up 30 percent of the total investment for infrastructure development of Rp5,500 trillion in 2015-2019.

"Currently the capacity of PII in providing financial guarantee is only Rp5.8 trillion, therefore, there is a gap to be covered with PMN," he said.

Bambang said the remaining capital after the disbursement of PMN would be used to provide guarantee against risks of other potential KPS projects.

The financial guarantee provided by PII is against risk of delay in project implementation on red tape in the process of licensing, and change in government regulation, absence of tariff adjustment and failure in integration of networks or facilities.

Implementation of KPS projects have often been not up to expectation. Based on data at the directorate of government-private cooperation at the National Development Planning Board (Bappenas)from 2013 to July 2015, there were five KPS projects delayed in implementation. The five projects were valued at US$11.3 billion.

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