This document discusses the scope of work for Ernst & Young (E&Y) on the financial aspects of Phase 2b of the Jatiluhur-Jakarta Pipeline and Water Treatment Project. E&Y is tasked with reviewing commercial issues, identifying risks, assessing costs, evaluating funding options, and developing a business model. E&Y has held discussions with stakeholders to understand technical, commercial, and legal aspects. Preliminary capital expenditure is estimated at USD663 million including transmission systems and a water treatment plant, while annual operating costs are estimated at USD21.2 million excluding depreciation. Next steps include finalizing costs, discussing tariffs with concession holders, and socializing the business model.

1. Jatiluhur-Jakarta Pipeline & WTP
Phase 2b – Financial Aspects
Jakarta, 17 January 2012
Australian Aid—managed by
SMEC on behalf of AusAID

2. Ernst & Young Scope of Work
• Review of the commercial issues in the existing
Jakarta concession agreements;
• Identify and map the project risks and propose
mitigation alternatives;
• Assess the project base case costs;
• Assess the financial market’s interest and capacity to
fund the development of the Project, and
• Develop business model in accordance with the
requirements of Permen PU No. 12/PRT/M/2010.
• Deliverables:
1. Inception report;
2. Draft feasibility study which includes draft business
model with PPP modality;
3. Final feasibility study; and
4. Monthly reports and final completion report.
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3. E&Y Work Progress
• Discussions with various stakeholders to understand
the technical, commercial and legal aspects of the
Project:
1. Regular metings with BPPSPAM;
2. Discussions with technical and legal advisors (Mott
McDonald and Makarim)
3. Meeting with PJT II;
4. Meeting with regulatory body of Gov. of DKI
Jakarta;
5. Meeting with regulatory body of PAM Jaya;
6. Meeting with UKP4; and
7. Discussions with Aetra and Palyja
• Understand the commercial issues
• Understand the Technical and Legal aspects
• Prepare the associated risks mapping and matrix
• Develop the project business model
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4. Indicative capex and opex of the Project
• Based on technical design and estimated capex
and opex by Mott McDonald
1. Route: pipeline and water treatment via West
Tarum Canal
2. Capex: USD663m or Rp5.8tn which includes:
- Transmission system from Jatiluhur to Buaran of
USD229m;
- Transmission system from Buaran to Aetra and
Palyja of USD100m;
- Raw water intake and WTP of USD122m; and
- Project oncosts (e.g. engineering, project design,
management contractor fees) of USD212m
3. Opex: USD21.2m per annum (exclusive of
depreciation)
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5. Next steps
• Obtain detailed capex by MottMcDonald and
revise the draft business model accordingly;
• Discussions with Jakarta concession holders
and PAM Jaya to understand their views on
water tariffs and water distribution capacity
vs. demand
• Discussions with IIGF to understand financial
guarantee scheme
• Discussions with Ministry of Public Works to
agree on key assumptions and final business
model
• Socialization of business model to potential
private investors, if required
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