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REGULATION OF THE MINISTER OF FINANCE
No. 260/PMK.011/2010

CONCERNING
TECHNICAL DIRECTIVES FOR INFRASTRUCTURE GUARANTY IN PUBLIC-PRIVATE PARTNERSHIP PROJECTSHIP

BY THE GRACE OF ALMIGHTY GOD,
THE MINISTER OF FINANCE,

Considering:

a. that in the framework of implementing the provision of Article 15 paragraph (5), Article 16 paragraph (3) and Article 18 paragraph (4) of Presidential Regulation No. 78/2010 concerning Infrastructure Guaranty in Public- Private Partnership Projects, it is necessary to formulate a Regulation of the Minister of Finance concerning Technical Directives for Infrastructure Guaranty in Public-Private Partnership projects;

b. that following the enforcement of Presidential Regulation No. 78/2010 as intended in paragraph a, the provision on the granting of the government support as governed in Regulation of the Minister of Finance No. 38/PMK.01/2006, which constitutes the implementation of Presidential Regulation No. 67/2005 concerning Cooperation between the Government and Business Entities in the Provision of Infrastructure as already amended by Presidential Regulation No. 13/2010, needs to be adjusted so that it can be executed through Infrastructure Guaranty Business Entity;

c. that based on consideration as intended in paragraph a and paragraph b, it is necessary to stipulate a Regulation of the Minister of Finance concerning Technical Directive for Infrastructure Guaranty in Public-Private Partnership Project.

In view of:

1. Law No. 17/2003 concerning State Finance (Statute Book No. 47/2003, Supplement to Statute Book No. 4286);

2. Law No. 1/2004 concerning State Treasury (Statute Book No. 5/2004, Supplement to Statute Book No. 4355);

3. Government Regulation No. 35/2009 concerning Participating Interest of the Republic of Indonesia in the Establishment of Perusahaan Perseroan (Persero) in the field of infrastructure guaranty (Statute Book No. 79/2009);

4. Presidential Regulation No. 67/2005 concerning Public - Private Partnership in the Provision of Infrastructure (Statute Book No. 152/2005) as mended by Presidential Regulation No. 13/2010 concerning the Amendment to Presidential Regulation No. 67/2005 concerning Cooperation between the Government and Business Entities in the Provision of Infrastructure;

5. Presidential Regulation No. 78/2010 concerning Infrastructure Guaranty in Public - Private Partnership Projects through Infrastructure Guaranty Business Entity;

6. Presidential Decree No. 56/P/2010;

DECIDES:

To stipulate:

THE REGULATION OF THE MINISTER OF FINANCE CONCERNING TECHNICAL DIRECTIVES FOR INFRASTRUCTURE GUARANTY IN PUBUC-PRIVATE PARTNERSHIP PROJECTS.

CHAPTER I
GENERAL PROVISION

Article 1

In this Ministerial Regulation:

1. Infrastructure Guaranty is the provision of guarantee for the financial obligation of party in charge of cooperation project.

2. Financial Obligation of Party in Charge of Cooperation Project hereinafter called Financial Obligation of PJPK is an obligation to pay financial compensation to business entity with respects to infrastructure risks becoming responsibility of the party in charge of cooperation project in accordance with risk allocation as agreed in cooperation agreement.

3. Infrastructure Risk is incidents that may occur in cooperation project during the validity period of cooperation agreement, which are potential to influence negatively the business entity, covering equity and load from the third party.

4. Government Guaranty is infrastructure guaranty provided by the Minister of Finance for business entity after receiving guaranty recommendation from Infrastructure Guaranty Business Entity.

5. Guaranty by Infrastructure Guaranty Business Entity hereinafter called BUPI Guaranty is infrastructure guaranty provided by infrastructure guaranty business entity.

6. Joint Guaranty is infrastructure guaranty executed jointly by the government and Infrastructure Guaranty Business Entity for the same infrastructure risk against the cooperation project as intended in Article 24 of Presidential Regulation No. 78/2010 concerning Infrastructure Guaranty in Public Private Partnership Projects executed through Infrastructure Guaranty Business Entity.

7. Government Guaranty Agreement is a written agreement containing rights and obligations of the government as guarantor and guarantee beneficiaries in the framework of infrastructure guaranty.

8. Guaranty Agreement of Infrastructure Guaranty Business Entity hereinafter called Guaranty Agreement of BUPI is a written agreement containing rights and obligations of infrastructure guaranty business entity as guarantor and guaranty beneficiaries in the frame work of infrastructure guaranty.

9. Joint Guaranty Agreement is a written agreement containing rights and obligations of the government and infrastructure guaranty business entity jointly acting as guarantor of the same infrastructure risk and guarantee beneficiaries in the framework of infrastructure guaranty for the cooperation project as intended in Article 24 of Presidential Regulation No. 78/2010 concerning Infrastructure Guaranty in Public Private Partnership Projects executed through Infrastructure Guaranty Business Entity.

10. Party in Charge of Cooperation Project hereinafter called PJPK is Ministers/Heads of Institutions/Heads of Regions or BUMN/BUMD based on legislation in the provision of infrastructure organized or executed by BUMN/BUMD.

11. Business Entity is the business entity as intended in legislation regarding cooperation between the government and business entities in the provision of infrastructure.

12. Infrastructure Guaranty Business Entity hereinafter called BUPI is a business entity established by the government and assigned specifically to implement infrastructure guaranty as well as already granted capital based on Government Regulation No. 35/2009 concerning Participating Interest of the Republic of Indonesia in the establishment of Limited Liability Company (Persero) in the field of infrastructure guaranty.

13. Guaranty Recommendation is a written recommendation of PJPK to guarantor to undertake infrastructure guaranty.

14. Guarantee Beneficiaries is business entities becoming parties in cooperation agreement.

15. Cooperation Agreements is a written agreement containing rights and obligations of PJPK and business entities in the framework of executing cooperation project.

16. Cooperation Project is the provision of infrastructure in accordance with legislation regarding cooperation between the government and business entities in the provision of infrastructure.

17. Regress is a right of guarantor to collect PJPK for what has been paid to guarantee beneficiaries in the framework of fulfilling financial obligation of the party in charge of cooperation project in counting the time value of the paid money (time value of money).

18. Regress Settlement Agreement is a written agreement between guarantor and PJPK, which contains terms and conditions of the fulfillment of regress.

19. Perpres 78/2010 is Presidential Regulation No. 78/2010 concerning Infrastructure Guaranty in Cooperation Project between the Government and Business Entities, which is executed through Infrastructure Guaranty Business Entity.

CHAPTER II
MODEL, PROCEDURE AND MECHANISM OF INFRASTRUCTURE GUARANTY

Part One
Model and Procedures for Infrastructure Guaranty

Article 2

The model of infrastructure guaranty in cooperation project shall consist of:

• a. government guaranty executed based on government agreement; and
• b. BUPI guaranty executed based on guaranty agreement of BUPI.

Article 3

Infrastructure guaranty in the cooperation project as intended in Article 2 shall be executed by means of:

• a. guaranty by only BUPI (BUPI Guaranty, which can cover infrastructure risk wholly or partly in a cooperation project; or
• b. BUPI guarantee along with government guarantee for different infrastructure risks in a cooperation project (BUPI Guaranty by Government Guaranty), based on the sharing of infrastructure risk between BUPI and the Minister of Finance.

Article 4

(1) In the framework of mitigating the financial risk of the state in accordance with the mechanism of state finance risk controlling and management (ring fencing), the implementation of infrastructure guaranty shall be executed as optimal as possible by means of BUPI guaranty as intended in Article 3 paragraph a from the method as intended in Article 3 paragraph b.

(2) BUPI guaranty as intended in Article 4 paragraph (1) shall be utilized optimally through:

• a. cooperation between BUPI and multilateral financial institutions and other parties having goal and objective of the same kind as intended in Article 18 paragraph (1) b of Perpres 78/2010,
• b. concerted efforts to fulfill the asset of BUPI through additional participating interest in accordance with the mechanism of the state budget of revenue and expenditure.

Article 5

(1) The infrastructure guaranty by the method as intended in Article 3 paragraph b may only be executed in the following condition:

• a. assets of BUPI are not sufficient to fulfill the guaranty in accordance with guaranty recommendation but the agreement based on evaluation of BUPI as intended in Article 7 of Perpres 78/2010 needs to be executed with a view of accomplishing the goal of infrastructure guaranty;
• b. the cooperation as intended in Article 4 paragraph (2) a is not available or in case of cooperation being available, the facilities available inside it are not sufficient, adequate or suitable to support the implementation of infrastructure guaranty by the method as intended in Article 3 paragraph a; or
• c. efforts to fulfill the sufficiency of assets of BUPI as intended in Article 4 paragraph 2 b have not been applicable while the provision of business entities. in the recommended cooperation project in guaranty mechanism cannot be delayed anymore.

(2) Pursuant o the one executor mechanism as governed in Part Three of this Chapter, and in view of the condition as intended in paragraph (1), BUPI can recommend infrastructure guaranty by the method as intended in Article 3 paragraph b to the Minister of Finance in this case the Fiscal Risk Management Unit.

Part Two
One Executor Mechanism in Infrastructure Guaranty

Article 6

(1) In the framework of executing the principles of state finance risk controlling and management, the whole processes of infrastructure guaranty shall be executed through one executor mechanism by BUPI (Single Window Policy).

(2) The series of the infrastructure guaranty processes as intended in paragraph (1) shall cover:

• (a) granting of guarantee consisting of:
• i physical receipt of guarantee recommendation;
• ii evaluation of guaranty recommendation;
• iii submission of guaranty recommendation to the Minister of Finance in accordance with Article 7 paragraph (6) a of Perpres 78/2010;
• iv recommendation of infrastructure guaranty by the method as intended in Article 3 paragraph b in case of the condition as governed in Article 5 paragraph (1);
• v submission of results of evaluation in accordance with Article 7 paragraph (6) b of Perpres 78/2010;
• vi submission of recommendation about the sharing of risk according to Article 7 paragraph (6) c of Perpres 78/2010;
• vii preparation, deliberation and signing of regress agreement;
• viii preparation and submission of readiness statement;
• ix preparation, deliberation and signing of BUPI Guaranty Agreement;
• x preparation, deliberation and signing of government guaranty agreement.
• xi preparation, deliberation and signing of collective guaranty agreement.
• (b) claim and payment, consisting of:
• (i) monitoring on the:
• 1. Every possibility of infrastructure risk guaranteed by both BUPI guaranty as intended in Article 3 paragraph a and BUPI Guaranty with the government guaranty as intended in Article 3 paragraph b;
• 2. Every mitigation effort taken by PJPK to reduce impact in case of the guaranteed infrastructure risk occurring;
• 3. Submission of claim by business entities for the financial obligation of PJPK arising from the guaranteed infrastructure risk;
• (ii) submission of claim based on BUPI guaranty agreement or government guaranty agreement;
• (iii) examination of claim based on BUPI guaranty agreement or government guaranty agreement as intended in Article 12 of Perpres 78/2010;
• (iv) realization of payment based on BUPI Guaranty Agreement;
• (v) submission of payment notification to the Minister of Finance based on the government guaranty agreement whose payment is in accordance with the provision of Article 20;
• (vi) the implementation of regress as intended in Article 15 of Perpres 78/2010 in accordance with the provision of Article 26 up to Article 31.

Part Three
Task and Authority of BUPI in the framework of One Executor Mechanism

Article 7

(1) In executing the one executor mechanism as intended in Article 6 paragraph (1) and the granting of guaranty as intended in Article 6 paragraph (2) a, BUPI shall have the following tasks and authority:

• a. receiving physically guaranty recommendation as intended in Article 6 paragraph (2) (a) (i);
• b. evaluating the guaranty recommendation as intended in Article 6 paragraph (2) (a) (ii);
• c. submitting the guaranty recommendation to the Minister of Finance as intended in Article 6 paragraph (2) (a) (iii);
• d. recommending the infrastructure guaranty as intended in Article 6 paragraph (2) (a) (iv);
• e. submitting result of evaluation of the guaranty recommendation as intended in Article 6 paragraph (2) (a) (v);
• f. submitting recommendation about the sharing of risk as intended in Article 6 paragraph (2) (a) (vi);
• g. Preparing, deliberating and signing BUPI regress agreement and signing government regress agreement in case of the Minister of Finance authorizing BUPI to sign the government regress agreement as intended in Article 6 paragraph (2) a (vii), in accordance with the provision as intended in Article 21;
• h. preparing and submitting the readiness statement as intended in Article 6 paragraph (2) (a) (viii) to PJPK, to be enclosed into procurement document of business entity according to Article 9 of Perpres 78/2010;
• i. preparing, discussing and signing BUPI Guaranty Agreement as intended in Article 6 paragraph (2) (a) (ix) for and on behalf of their name;
• j. preparing, discussing nd signing the government guaranty agreement as intended in Article 6 paragraph (2) (a) (x) for and on behalf of the Minister of Finance in this case of the Minister of Finance authorizing BUPI to sign the government guaranty agreement as intended in Article 8 paragraph (2);
• k. preparing, discussing and signing the joint guaranty agreement as intended in Article 6 paragraph (2) (a) (xi).

(2) In the framework of executing the single executor mechanism as intended in Article 6 paragraph (1), and in connection with the settlement of claim and payment as intended in Article 6 paragraph (2) b, BUPI shall have the following tasks and authority:

• a. executing. the monitoring activity as intended in Article 6 paragraph (2) (b) (i);
• b. receiving physically the claim as intended in Article 6 paragraph (2) (b) (ii) submitted to BUPI by guarantee beneficiaries in case of the occurrence of the condition as intended in Article 11 of Perpres 78/2010 or Article 16 paragraph (1);
• c. examining the claim as intended in Article 6 paragraph (2) (b) (iii) or in Article 17 paragraph (2);
• d. submitting payment notification to the Minister of Finance with respects to the submitted claim based on the government guaranty agreement according to Article 18;
• e. realizing the payment as intended in Article 6 paragraph (2) (b) (iv), if the verification according to Article 13 of Perpres 78/2010, determines that the payment to guarantee beneficiaries can be realized.

Article 8

(1) The government guaranty agreement as intended in Article 6 paragraph (2) (a) (x) shall be signed by the Minister of Finance in this case the Director General of Debt Management.

(2) The Minister of Finance may authorize BUPI to sign the government guaranty agreement as intended in Article 6 paragraph (2) (a) (x).

CHAPTER III
CRITERIA FOR INFRASTRUCTURE GUARANTY

Part One
Cooperation Project

Article 9

The infrastructure guaranty shall be applied to the cooperation projects already fulfilling technical and financial feasibility.

Part Two
Infrastructure Risk

Article 10

(1) The infrastructure risk which may be granted infrastructure guaranty according to Article 3 shall be infrastructure risk:

• a. attributed to action or the absence of action of P3 PK or the government other than PJPK in cases wherein PJPK or non-PJPK government have authority to take the action according to law or legislation;
• b. attributed to policy of PJPK or non-PJPK government;
• c. attributed to unilateral decision of PJPK or non-PJPK government;
• d. attributed to inability of PJPK in executing an obligation determined to them by business entity based on cooperation agreement (breach of contract).

(2) The decision of BUPI on infrastructure risk as intended in paragraph (1), which will be granted infrastructure guaranty shall be based on analysis of BUPI with regards to the distribution of infrastructure risk according to the cooperation agreement based on the principle of risk allocation as intended in Article 1 paragraph 4 in conjunction with Article 4 of Perpres 78/2010.

Article 11

(1) BUPI shall issue reference regarding category of infrastructure risk based on the events as intended in Article 10 paragraph (1) and the availability of distribution of Infrastructure Risk according to the cooperation agreement based on the principle of risk allocation as intended in Article 10 paragraph (2).

(2) The reference to category of infrastructure risk issued by BUPI as intended in paragraph (1) shall constitute:

• a. reference to PJPK in the formulation of cooperation agreement;
• b. reference to PJPK in the submission of recommendation about guaranty for cooperation project; as well as
• c. reference to business entities to invest capital in cooperation project.

(3) The reference as intended in paragraph (1) for the first time shall be issued in no later than 3 months following the promulgation of this regulation and shall be reviewed periodically in no later than every 12 months.

(4) In the framework of the formulation and periodical review of the reference as intended in paragraph (2), BUPI shall seek input from the Fiscal Policy Board, Ministries/Institutions, Regional Governments, multilateral institutions and other parties having competence in the field of infrastructure risk.

CHAPTER IV
MECHANISM OFGOVERNMENT GUARANTY

Part One
Submission of Guaranty Recommendation

Article 12

(1) In case of the guaranty recommendation being submitted to the Minister of Finance as intended in Article 6 paragraph (2) (a) (iii), BUPI shall submit to the Minister of Finance in this case the Fiscal Risk Management Unit recommendations which can be considered by the Minister of Finance in taking policy a long with the documents according to Article 7 paragraph (6) of Perpres 78/2010.

(2) The fiscal risk management unit shall submit recommendation to the Minister of Finance after examining the recommendations along with the documents submitted by BUPI as intended in paragraph (1).

(3) Based on the recommendation as intended in paragraph (2), the Minister of Finance may decide to approve or reject the guaranty recommendation.

Part Two
Allocation of Government Guaranty Funds

Article 13

(1) In case of the submitted guaranty recommendation as intended in Article 12 paragraph (1) being approved, the contingency funds needed for implementing the government guaranty may be allocated.

(2) The allocation of the funds as intended in paragraph (1) shall be realized through mechanism of the state budget of revenue and expenditure (APBN).

Article 14

(1) The calculation of the contingency funds as intended in Article 13 paragraph (1) shall be executed by the Fiscal Policy Board in this case the Fiscal Risk Management Unit.

(2) Result of the calculation as intended in paragraph (1) shall constitute a basis for recommendation about the provision of government guaranty funds.

(3) The provision of budget for the implementation of government guaranty shall be recorded as expenditure in the financing item of infrastructure guaranty in the Public Private Partnership project.

Article 15

(1) The Minister of Finance as budget user shall appoint the Director General of Debt Management as proxy of budget user (KPA).

(2) The Director General of Debt Management KPA shall submit a request for providing budget of the government guaranty funds in the said year to the Director General of Budgetary Affairs by observing result of calculation of contingent liability executed by the Fiscal Policy Board as intended in Article 14 paragraph (2).

(3) The Director General of Debt Management as KPA shall appoint:

• a. the official authorized to take action causing the release of expenditure budget/personnel in responsible for activity/commitment maker/maker of payment request (SPP); and
• b. official authorized to sign payment order (SPM)/ verify SPR.

(4) Based on the request from KPA as intended in paragraph (2), the Director General of Budgetary Affairs shall provide government guaranty funds through the issuance of letter of stipulation of action plan of budget (SPRKA).

(5) Based on the issued SP-RKA as intended in paragraph (4), the Director General of Debt Management as KPA shall formulate Completing List of Budget Realization (DIPA), and submit the said DIPA to the Director General of Treasury Affairs as Proxy of State General Treasurer for ratifying.

Part Three
Submission and Settlement of Claim for Government Guaranty

Article 16

(1) Guarantee beneficiaries may submit claim based on the government guaranty agreement after fulfilling the condition as intended in Article 11 of Perpres 78/2010.

(2) The claim as intended in paragraph (1) shall be submitted by guarantee beneficiaries to BUPI in accordance with the task and authority as intended in Article 7 paragraph (2).

Article 17

(1) By virtue of the authority as intended in Article 7 paragraph (2), BUPI shall examine the claim submitted by guarantee beneficiaries.

(2) The examination of the claim as intended in paragraph (1) shall be executed by BUPI to ascertain:

• a. conformance of claim to coverage of guaranty already approved based on guaranty agreement; and
• b. the absence of dispute between PJPK and guarantee beneficiaries with regards to claim submitted by guarantee beneficiaries to PJPK.

(3) Result of tle examination of claim submitted by guarantee beneficiaries shall be written down by BUPI into account of claim examination signed by guarantee beneficiaries and BUPI.

Article 18

BUPI shall submit account of claim examination and payment notification to the Minister of Finance in case of the result of examination showing that the conditions as intended in Article 17 paragraph (2) a and b have been fulfilled.

Article 19

(1) In case of result of examination of claim showing a dispute between PJPK and guarantee beneficiaries with respect to claim of guarantee beneficiaries to PJPK for the financial obligation of PJPK, BUPI shall ask parties to settle first the dispute in accordance with the agreed mechanism in cooperation agreement.

(2) The decision on the settlement of dispute as intended in paragraph (1) shall become a basis for BUPI to submit or not submit payment notification to the Minister of Finance.

Article 20

(1) Based on the payment notification from BUPI, officials making SPP shall submit SPP to official issuing SPM by enclosing at least:

• a. payment notification from BUPI;
• b. account of claim examination as intended in Article 17 paragraph (3).

(2) Based on SPP as intended in paragraph (1), officials issuing SPM shall issue SPM and submit it to the Director General of Treasury Affairs in this case of State Treasury Service Office (KPPN) Jakarta II by attaching:

• a. Statement of Expense Responsibility (SPTB);
• b. account of claim examination as intended in paragraph (1) b, completed by signature of KPA; and
• c. receipt.

(3) Based on SPM issued by official issuing SPM as intended in paragraph (2), the Directorate General of Treasury Affairs in this case State Treasury Service Office (KPPN) Jakarta II shall issue order to disburse funds to account of guarantee beneficiaries.

CHAPTER V
REGRES MECHANISM

Part One
Regress Agreement

Article 21

(1) Pursuant to the provision as intended in Article 5 paragraph (2) (ii) of Perpres 78/2010, the commitment of PJPK in the framework of fulfilling the regress shall be written down into regress agreement.

(2) The regress agreement as intended in paragraph (1) shall be distinguished between BUPI Regress agreement and Government Regress Agreement.

(3) BUPI Regress Agreement as intended in paragraph (2) shall govern at least::

• a. requirements and provisions regarding the settlement of regress, containing at leas timetable of the settlement and payment term;
• b. procedures for the settlement of dispute which may occur between BUPI and PJPK in connection with the implementation of regress agreement through mechanism of alternative for the settlement of dispute and/or arbitration institution.

Part Two
Mechanism of Regress in Government Guaranty

Article 22

(1) If the government has received payment notification and settled liabilities to guarantee beneficiaries based on the government guaranty agreement, the Director General of Treasury Affairs shall promptly submit letter of notification about the implementation of regress to PJPK based on the government regress agreement.

(2) The letter of notification about the implementation of regress as intended in paragraph (1) shall contain at least:

• a. information about the principal amount of regress, namely the total value of payment of financial liabilities of PJPK executed by the Directorate General of Treasury Affairs to guarantee beneficiaries based on the government guaranty agreement;
• b. application of requirements and provisions on the settlement of regress, containing at least the settlement period and term of payment;
• c. information about the time value of money;
• d. period of confirmation for notification about the implementation of regress.

Article 23

(1) In case of PJPK not confirming in accordance with the period stipulated in Article 22 paragraph (2) d, the Directorate General of Treasury Affairs shall submit promptly letter of notification about negotiation to PJPK to discuss the requirements and provisions regarding the settlement of regress which may be acceptable to both parties.

(2) Result of the negotiation as intended in paragraph (1), shall be written down by both parties in regress settlement agreement.

(3) PJPK shall realize the payment of regress to the Directorate General of Treasury Affairs in accordance with the requirements and provisions mentioned in regress settlement agreement.

Article 24

Regress conversion with the financial obligation owned by the Minister of Finance over PPJK may be governed in the regress settlement agreement as intended in Article 23 paragraph (2) in so far as according to legislation in force.

Article 25

The mechanism as governed in Article 22 up to Article 24 may only apply to BUMN/BUMD and Heads of Regions as PJPK and shall not apply to Ministers/Heads of Institutions as PJPK.

Part Three
Regress Mechanism in BUPI Guaranty

Article 26

(1) In case of BUPI already settling its obligation to guarantee beneficiaries based on BUPI Guarantee Agreement, BUPI shall submit promptly a letter of notification about the implementation of Regress to PJPK based on the regress agreement as intended in Article 21 paragraph (1).

(2) The letter of notification about the implementation of regress as intended in paragraph (1 shall contain at least:

• a. information about the principal amount of regress, namely the total value of payment of financial liabilities of PJPK executed by BUPI to guarantee beneficiaries in accordance with BUPI Guaranty Agreement;
• b. application of terms and conditions of the settlement of regress containing at least the settlement period and payment term;
• c. information about the time value of money;
• d. period of confirmation for letter of notification about the implementation of regress.

Article 27

(1) In case of PJPK not confirming in accordance the stipulated period in Article 26 paragraph (2) d, BUPI shall submit promptly letter of notification about negotiation to PJPK to discuss terms and conditions of the settlement of regress acceptable to both parties.

(2) Result of the deliberation as intended in paragraph (1), shall be written down by two parties in Regress Settlement Agreement.

(3) PJPK shall be obliged to realize the payment of Regress to BUPI in accordance with the terms and conditions mentioned in regress settlement agreement.

Article 28

(1) In case of PJPK not responding the notification about negotiation as intended in Article 27 paragraph (1), in case of negotiation between BUPI and PJPK failing to reach an agreement on terms and conditions of the settlement of regress, BUPI shall settle the issue in accordance with the dispute settlement mechanism regulated in regress agreement.

(2) PJPK shall realize the payment of regress to BUPI in accordance with decision of the dispute settlement institution as intended in paragraph (1).

(3) In case of ministers/heads of institutions as PJPK failing to meet regress based on decision of the dispute settlement institution as intended in paragraph (1), BUPI may submit bill based on the decision to the Minister of Finance.

Article 29

(1) In case of ministers/heads of institutions as PJPK failing to meet the regress settlement agreement as intended in Article 27 paragraph (2), BUPI shall settle the regress by dispute settlement mechanism in regress settlement agreement.

(2) In the event that the decision resulting from the settlement of dispute as intended in paragraph (1) orders PJPK to pay BUPI, BUPI may submit bill based on the decision to the Minister of Finance.

Article 30

(1) BUPI may recommend the Minister of Finance to take over the right the Minister owns to PJPK based on the regress settlement agreement as intended in Article 27 paragraph (2) or decision of the dispute settlement institution as intended in Article 28 paragraph (2).

(2) Recommendation of BUPI to the Minister of Finance to take over the right owned by BUPI to PJPK as intended in paragraph (1) may not be executed in case of the right owned by BUPI based on the regress settlement agreement as intended in Article 27 paragraph (2) or the decision of the dispute settlement institution as intended in Article 28 paragraph (2) being directed to Ministers/Heads of Institutions as PJPK.

Article 31

(1) If the recommendation of BUPI to the Minister of Finance to take over right owned by BUPI to PJPK as intended in Article 30 paragraph (1) is approved, the Minister of Finance shall replace the position of BUPI and have the whole right originally owned by BUPI based on the regress settlement agreement as intended in Article 27 paragraph (2) or decision of the dispute settlement institution as intended in Article 28 paragraph (2).

(2) The right owned by the Minister of Finance to PJPK following the transfer of the right as intended in paragraph (1) may be converted into the financial obligation that the minister owns to PJPK in accordance with legislation in force.

CHAPTER VI
COMPENSATION FOR GUARANTY

Article 32

In determining the value of compensation for infrastructure guaranty to be imposed, BUPI may consider:

• a. the value of financial compensation for the would-be guaranteed infrastructure risk;
• b. the cost spent for guaranteeing;
• c. rational profit margin.

Article 33

BUPI may impose compensation for infrastructure guaranty on parties having the highest interest and/or parties badly needing infrastructure guaranty.

CHAPTER VII
MECHANISM OF COUNTER-GUARANTEE PROVISION

Part One
Cooperation Recommendation

Article 34

(1) In case of BUPI cooperating with multilateral financial institutions or other parties as intended in Article 4 paragraph (2) a, needing government guarantee (counter guarantee), BUPI shall submit recommendation about the cooperation to the Minister of Finance in this case the Fiscal Risk Management Unit.

(2) The recommendation about cooperation as intended in paragraph (1) shall contain at least:

• a. terms and conditions of cooperation agreement between BUPI and multilateral financial institutions;
• b. terms and conditions of counter guarantee.

(3) Based on the, cooperation recommendation as intended in paragraph (2), the Fiscal Risk Management Unit shall:

• a. evaluate the cooperation recommendation as intended in paragraph (2).
• b. submit result of evaluation along with recommendation to the Minister of Finance.

(4) Based on the recommendation as intended in paragraph (3) b, the Minister of Finance shall approve or reject the cooperation recommendation as intended in paragraph (1).

Part Two
Recommendation about the Granting of Counter Guarantee

Article 35

(1) In case of BUPI promoting guaranty cooperation with multilateral financial institutions or other parties having the same goal and objective to a cooperation project, BUPI based on the cooperation recommendation approved by the Minister of Finance as intended in Article 34 paragraph (4) shall submit recommendation about the granting of counter guarantee to the Minister of Finance.

(2) The recommendation about the granting of counter guarantee shall be enclosed by at least:

• a. result of evaluation of guaranty recommendation by BUPI,
• b. agreement containing commitment of PJPK to fulfilling their liabilities to the Minister of Finance based on the granting of counter guarantee.

(3) The Fiscal Risk Management Unit shall verify and evaluate recommendation about the granting of counter guarantee as intended in paragraph (1).

(4) The Minister of Finance shall provide counter guarantee if:

• a. result of verification shows at least:
• i conformance of the granting of counter guarantee to terms and conditions of counter guarantee in cooperation recommendation already approved by the Minister of Finance as intended in Article 34 paragraph (4).
• ii the document as intended in paragraph (2) has been completed.
• b. result of evaluation shows that the exposure arising from the granting of counter guarantee does not influence negatively fiscal sustainability.

(5) The provision as governed in paragraph (2) b, shall only apply to BUMN/BUMD and heads of regions as PJPK and shall not apply to Ministers/Heads of Institutions as PJPK.

Part Three
Payment of Compensation for Claim Payment

Article 36

(1) Multilateral financial institutions or other parties having the same goal and objective may submit bill of compensation for claim payment based on the counter guarantee approved by the Minister of Finance as intended in Article 35 paragraph (4).

(2) The multilateral financial institutions or other parties having the same goal and objective as intended in paragraph (1) shall submit bill of compensation for claim payment to the Minister of Finance if they have paid claim to the guaranteed party with regards to the fulfillment of obligation of PJPK based on cooperation agreement on certain infrastructure risk.

CHAPTER VIII
TRANSITIONAL PROVISION

Article 37

(1) Infrastructure guaranty for the cooperation project as intended in Article 24 of Perpres 78/2010, may have the process converted by the Minister of Finance to BUPI.

(2) In case of the Minister of Finance transferring the granting of guarantee to BUPI as intended in paragraph (1), the transfer shall be executed in writing.

(3) BUPI may submit application in writing to the Minister of Finance to participate in executing joint guaranty for the cooperation project as intended in paragraph (1) in accordance with the provision of Article 25 of Perpres 78/2010.

(4) The joint guaranty as intended in paragraph (3), shall be applied to the same infrastructure risk in a cooperation project.

Article 38

(1) In case of the application from BUPI as intended in Article 37 paragraph (3) being approved by the Minister of Finance, th Minister of Finance along with BUPI shall make joint guaranty agreement with business entity.

(2) The Minister of Finance shall delegate the signing of the joint guaranty agreement as intended in paragraph (1) to the Director General of Debt Management.

Article 39

The allocation of funds of government obligation arising from the joint guaranty as intended in Article 37 paragraph 3, shall be executed by the mechanism as governed in Article 13 up to Article 15.

Article 40

(1) In case of the Minister of Finance settling the obligation arising from the joint guaranty as intended in Article 37 paragraph 3, the settlement thereof shall be in accordance with the provision as governed in Article 16 up to Article 20.

(2) Starting from the payment of the government obligation as intended in paragraph (1) by the Minister of Finance, the Minister of Finance shall have regress to PJPK based on the regress agreement as intended in Article 21 on regress settlement agreement as intended in Article 23 paragraph (2).

(3) The regress agreement as intended in paragraph (2) shall be signed by the Minister of Finance and PJPK.

(4) The Minister of Finance shall delegate the signing of regress agreement as intended in paragraph (3) to the Director General of Debt Management.

CHAPTER IX
CLOSING

Article 41

With the enforcement of this regulation, Regulation of the Minister of Finance No. 38/PMK.01/2006 concerning Technical Directives for Controlling and Managing Risk of Infrastructure Provision shall be revoked and declared null and void.

Article 42

The regulation shall come into force as from the date of promulgation.

For public cognizance, the regulation shall be published by placing it in State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
on December 31, 2010
THE MINISTER OF FINANCE,
signed,
AGUS D.W. MARTOWARDOJO