The Signing Of Cooperation Agreement For The “West Package” Of The Palapa Ring Project

29 FEBRUARY 2016

Jakarta, 29 February 2016 – The Minister of Communication and Informatics of Republic Indonesia has signed the cooperation agreement for The Palapa Ring Broadband Project: West Package with PT Palapa Ring Barat (Consortium of Moratel-Triasmitra) with project value of Rp1,24 trillion which will cover Riau, Riau Islands and Natuna Island with 2,000-kilometers of fiber optic cable.  Palapa Ring is one of National Strategic Infrastructure Projects as stated in Presidential Decree No. 3 In 2013,  which also categorized as National Priority Project.

The signing of Cooperation Agreement was held in the Mezzanine Hall, Ministry of Finance of the Republic of Indonesia. In this occassion, the guarantee agreement and recourse agreement were also signed between the Minister of Communications and Information Technology and Indonesia Infrastructure Guarantee Fund (IIGF), a SOE under Ministry of Finance providing guarantees for Public Private Partnership (PPP) infrastructure projects. The entire agreements signing ceremony was witnessed by the Minister of Finance of Indonesia.

Palapa Ring is one of Government’s Infrastructure Priority Projects in telecommunication infrastructure sector. The Palapa Ring West Package projects is a fiber optic communication network as the backbone for national telecommunication system connecting municipalities and regions across the nation with quality broadband access. “Accelerated growth and provision of equitable development of telecommunication infrastructure would improve the availability of quality internet access for people in Indonesia,” said Minister of Communications and Informatics, Rudiantara.

Minister of Finance, Bambang Brodjonegoro, stated that Government is taken a concrete step to realize the acceleration of Indonesia’s infrastructure development. “in The National Medium Term Development Plan (RPJMN) 2015-2019, conveyed target spending on infrastructure development untill 2019 reached Rp4,796 trillion while state budget and local government budget contributed Rp 2,817 trillion. The rest would be covered by the private sectors through PPP scheme,” he said.

President Director of IIGF, Sinthya Roesly, explained that based on Presidential Decree No. 38 of 2015,  there were 19 (nineteen) infrastructure sectors that can be cooperated and obtained government-backed guarantee, among others the Palapa Ring project. IIGF as the sole Infrastructure Guarantee Business Entity (BUPI) under the MoF has given guarantee for this project as she said “in order to fully support the project, IIGF guarantees the risk events allocated to CA in the PPP agreement such as termination payment.