UMBULAN WATER PROJECT

Pre-Bid Meeting
(Aanwijzing)

March 2012
TRANSACTION HIGHLIGHTS
Investment Opportunity
 The Investment Opportunity
• The East Java Provincial Government (EJPG) is conducting a competitive
tender process for the development and implementation of the Umbulan
Water Project.

• The Project involves the financing, design, construction, operation and

maintenance of a new potable bulk water supply system with a capacity
of 4,000 liters per second and a 103-kilometer underground transmission
pipeline to provide safe and high quality drinking water to the residents of
» Surabaya City,
» Pasuruan City,
» Pasuruan Regency,
» Sidoarjo Regency, and
» Gresik Regency
 Security Package and
Committed Government Support

Several agreements make up the security package and transaction

documents for the Project

•EJPG will grant 25-year concession to the investor for the

development and implementation of the Project

•PDAB will be offtaker and will sell water to the participating PDAMs

•Ministry of Finance (MoF) is considering to co-finance the capital

investment cost by providing grant or viability gap funding (VGF).

•Infrastructure Guarantee Fund (IIGF) is considering to provide

performance guarantee to backstop any material payment obligation
of EJPG under the transaction.
 Project Timetable
No. Activity Date
1 Issuance of Tender Documents to Bidders 27-29 February 2012
2 Open access to Data Room 7 March 2012
3 First Pre Bid Meeting (Aanwijzing) 7 March 2012
4 Receive Bidders’ written comments on Tender Documents 22 March 2012
5 Second Pre Bid Meeting (Aanwijzing) and Project Site Review 9 April 2012
6 Receive Bidders’ written comments on Draft Cooperation and Bulk Water 19 April 2012
Purchase Agreements
7 Bidder consultation meetings on Draft Cooperation and Bulk Water 21-25 May 2012
Purchase Agreement (I)
8 Bidder consultation meetings on Draft PPP Concession Agreement (II) and 18-22 June 2012
Draft Government Guarantee Agreement (I)
9 Bidder consultation meetings on Draft Government Guarantee Agreement 16-20 July 2012
(II) and Discussion on Government Support Decision
10 Issue Final Tender Documents, including Final Draft Cooperation and Bulk 31 July 2012
Water Purchase Agreements, and in-principle Ministry of Finance approval
for the Government Support
11 Bid Submission Date 30 August 2012
12 Opening of Administrative and Technical Proposals (Envelope I) 30 August 2012
13 Announcement of Administrative and Technical Evaluation Results 27 September 2012
(Envelope I)
14 Opening of Financial Proposals (Envelope II) 1 October 2012
15 Announcement of First Ranked Bidder 15 October 2012
16 Objection Period 16-24 October 2012
17 Response to Objection(s) 25 October – 7
November 2012
18 Issuance of Letter of Tender Award 9 November 2012
19 Signing of Cooperation and Bulk Water Purchase Agreements 9 January 2013
20 Financial Closing 9 July 2013
21 Project Commercial Operation Date 9 July 2015
PROJECT DESCRIPTION
Project Snapshot – Key Technical Aspects
• Intake
– Head Pond (3.000 l/s) and Tapak (1.000 l/s)

• Ground reservoir and pumping station

- Umbulan ground reservoir and pumping station (PS 1)
- Pumping station; PS 2 at Taman to supply offtake PDAM Surabaya in Wonocolo
and PS 3 at Gresik to supply offtake PDAM Gresik at Giri

• Transmission pipe and offtake (PDAM & PDAB)

– Transmission pipe route + 102.331 m, 16 offtakes PDAM and PDAB with total
water allocation 4000 l/s. Pipe diameter 1000 mm – 1800 mm
– Offtake reservoir PDAM and PDAB (elevated and ground reservoir based on
PDAM and PDAB proposal

• Distribution pipe to reservoir (offtake PDAM and PDAB)

– Pipe length + 30.477 meter with diameter 250 mm – 1000 mm
Technical Specifications
Pipeline and Reservoir Design
Pipeline Route
Pump Station
di wilayah
Gresik

Pump Station
di wilayah
Taman

Pump Station
Umbulan
Schematic Pipeline
TENDER PROCESS AND BID
SUBMISSION

EVALUATION METHODOLOGY
 Two-Envelope Structure
• First envelope contains technical information, annual
reports/financial data for Bidder and legal/administrative
requirements
– Evaluated for completeness and conformance to commercial, legal and
technical requirements on a pass/fail basis, NOT points.
– Indicates Bidder’s acceptance of the final project contracts (including the
Cooperation Agreement/Bulk Water Purchase Agreement and technical scope)
• Second envelope contains the proposed VGF and is opened only for
bidders whose first envelope is rated “passed”

Select bidder with lowest proposed VGF as Winning Bidder , after

checking supporting financial data
 Umbulan Bid Consortium Structure

Lead Member O&M Partner (1) Committed New

Shareholders (3) Members/Other
 Biggest equity holder, with at Has the required O&M experience
least Rp33 trillion Net Worth for water supply systems Committed
 Original members of
 Ownership stake of at least consortium Shareholders
 Ownership stake of at least 5%
34%  Ownership stake of at least
 Required only if no O&M 
 Controls Project Company 5% each Allowed only after
Contractor 2nd year post COD

≥ 34% ≥ 5% ≥ [5%]

…………………………………………

UMBULAN PROJECT COMPANY

•The Lead Member and Committed Shareholders of the original consortium cannot be changed during the Bidding Process until 2 nd
year after COD.
•After the second year, new members may join the bidding consortium provided Lead Member and Committed Shareholders retain
ownership of at least 51% of the equity interest in the consortium vehicle or Project Company.
•(1) EPC Contractor required, but does not need to own an equity stake .
•O&M Partner with at least 5% equity stake required otherwise, Bidder can nominate O&M Contractor with no stake required.
 Evaluation of Envelope 1: Technical Proposal

 EPC and O&M Experience Criteria

 EPC Contractor Experience in a number of similar projects
 O&M Experience – can be for owner-operated model or through contractor
 Forms provided
 Acceptance of Technical Specifications
 To be included in the Project Contracts which have to be signed/initialed by each
Bidder
1. Design criteria for bulk water supply system
2. Offtake criteria
3. Detail references (codes and standards)
4. Quality control and measurement
5. Technical target

 Technical Aspects of Plan for Project

 Bidder to propose plan, within parameters stipulated in RFP
 Evaluation of Envelope 2: VGF bid and Financing

 Each Bidder to propose required VGF funding for [2 years] – VGF to be

infused at the end of each year by Government.

 Bidder offering lowest NPV of VGF will be declared Winning Bidder, but only
after confirmation of:
 Availability of financing from both Lenders and Sponsors
 Validation of other financial data
PROJECT AGREEMENTS
STRUCTURE
Project Structure
Project Structure Three level Structure

1. Cooperation Agreement (between EJPG and Project Company)

– EJPG grant 25-year concession for the development and implementation of the Project
– Investor responsible for the financing, design, construction, operation and maintenance of new water
intake, treatment, storage, pumping, transmission and metering facilities capable of supplying 4,000
liters/second of potable bulk water to EJPG
– Facilities will be transferred to EJPG at the end of the cooperation period.

2. Bulk Water Purchase Agreement (between PDAB and Project Company)

– PDAB, on behalf of EJPG , will perform key contractual obligations of the Provincial Government under
the Cooperation Agreement acting as the single offtaker, aggregator of PDAMs’ water requirements
– PDAB will then act as a bulk water administrator and reseller that will aggregate and meet the water
demand requirements of the PDAMs

3. Water Sale Purchase Agreements (between PDAB and each PDAM)

– The terms of the sale and purchase of drinking water between PDAB and each of the five PDAMs will be
provided for in individual Agreements

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Project Structure

• Government Support (provided by MOF and IIGF- still under discussion)

– MoF will give the grant subsidy under the terms of the Government Support Letter
– IIGF will issue a performance guarantee pursuant to the Guarantee and Recourse Agreement to
backstop the offtake and payment obligations of EJPG /PDAB.

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