39160 - IIF USD Loan

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Summary of Investment Information

Project Number

39160

Company Name

PT INDONESIA INFRASTRUCTURE FINANCE

Date SPI Disclosed

Jul 5, 2017

Country

Indonesia

Region

East Asia and the Pacific

Projected Board Date

Jun 9, 2017

Environmental Category

FI-1 - Significant

Status

Completed

Last Updated Date

Dec 7, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 9, 2017
Signed : Jun 22, 2017
Invested : May 8, 2019

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed project (the “Project”) consists of a senior debt package to PT Indonesia Infrastructure Finance (the “Company”) in Indonesia. The Project will support the Company’s lending program for a pipeline of infrastructure projects in Indonesia.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

The development impact of IFC's investment in the Project is expected to be high. The Project is expected to help address the infrastructure development bottleneck which continues to hamper the country's economic growth. This situation has led to a significant increase in the cost of logistics and blocked development of the national and provincial economy. The Project is expected to create development impact by i) increasing the number of infrastructure projects achieving financial close; ii) increasing funding available for infrastructure projects and iii) increasing support to private and public companies through advisory services from IIF. The proposed Project would help: (i) reduce the infrastructure gap with long-term funding that is consistent with the underlying cash flow profile of the projects (ii) alleviate the constraints that infrastructure bottlenecks impose to competitiveness, growth and creation of jobs; (iii) support the delivery of services including water, sanitation, and electricity; (iv) provide inclusion and connectivity; and (iv) provide broader economic benefits generated through taxes levied on project companies and indirect impacts through higher company growth and more efficient operations. The project will allocate a portion of the proceeds to renewable energy and other green infrastructure projects, thereby boosting sustainable development in Indonesia.

By providing and mobilizing the necessary funding, through IIF, in a currency and maturity mix that matches the infrastructure funding requirements the Project is expected to help address some of the root-causes of the infrastructure development bottleneck. The project will address the Company's financing needs in terms of long-term financing because longer tenor is limited in the market yet necessary to deliver on the Company's growth aspirations. Furthermore, help mobilize long term funding and diversify IIF's sources of funding.

E&S Category Rationale / Risks and Mitigation

The Project will support IIF in the financing of infrastructure investments such as toll roads, ports, airports, power generation, or public utilities throughout Indonesia. These activities carry inherently high E&S risks. The Project has therefore been classified as FI-1 according to IFC's Sustainability Policy. The Company has been a client of IFC since IFC's initial equity investment in 2009 (PT Indonesia Infrastructure Finance Facility #26443) and subsequent investments in 2014 (Project #34837) and 2016 (Project #37299).

Environmental and social (E&S) risks associated with infrastructure development depend on the type and location of the project but may typically include, for example, land acquisition and resettlement, land conversion, atmospheric emissions, and occupational health and safety. In the financing of infrastructure projects in Indonesia, IIF has in place a robust E&S Management System ('ESMS') aligned with IFC Performance Standards on Environmental and Social Sustainability (2012) as well as the E&S requirements of other lenders/shareholders, including those of other Development Finance Institutions (DFIs). As defined in the ESMS, IIF is expected to screen the E&S risks of potential investments, conduct detailed E&S due diligence (ESDDs) to identify the applicable E&S risks of each sub-project, and define corrective actions as needed for projects to reach compliance with IIF's E&S Principles and applicable laws. IIF has been progressively gaining experience in the implementation of its ESMS and currently has a team of six full-time IIF E&S specialists, including a recently hired Vice President of Environmental and Social Affairs. IIF is further supported by external E&S consultancies in the conduct of ESDDs of potential new investments and in the supervision of portfolio projects. Going forward, in order to further strengthen implementation of its ESMS, IIF will enhance its due diligence and monitoring activities by commissioning independent auditing and monitoring of selected high E&S risk projects as described in the Environmental and Social Action Plan (ESAP). IIF will also receive capacity-building support from IFC and other DFIs who will assist IIF in reviewing quality of selected ESDD reports and background documentation. Additionally, as part of improvements to its documentation and sub-project disclosure practices, IIF will ensure that clients' environmental and social impact assessments and management plans are disclosed on the IIF's or the clients' website or other venues accessible to project affected persons for new projects going forward. IIF will develop and implement an external communication mechanism to receive, record and response as necessary to inquiries of external stakeholders.

Contacts

For Inquiries About the Project, Contact

PT Indonesia Infrastructure Finance
Andi Faizal

62-21-29915060

The Energy Building 30th, SCBD, Lot. 11A, Jl. Jend. Sudirman Kav.52-53 Jakarta 12190 Indonesia
www.iif.co.id

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
High E&S Risk Project Monitoring	06/01/2017
IIF Capacity Building	06/01/2017
Documentation and Disclosure	06/30/2017
External Communication Mechanism (relating to Social and Environmental Safeguard Issues)	06/30/2017

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