Initial study of the Palu-Parigi By-pass road policy in Central Sulawesi Province, Indonesia

Abstract

This research aims to do the assessing the feasibility of the Public-Private Partnership project in investing in the construction of the Palu-Parigi By-pass road through a PPP financing scheme, thereby providing opportunities for the private sector to participate in the provision of special road infrastructure. In this context, experimental criteria for determining Value for Money (VFM) are applied using the PPP model, to evaluate projects. The main objective also emphasizes the provision of greater VFM Goods through private financing, through conventional methods that are economical, efficient and effective. Furthermore, financial performance measurement reports apply several methods, including Payback Period (PP), Net Present Value (NPV), and Internal Rate of Return (IRR) which determine the feasibility and time required for returns on invested capital. The previous Economic Feasibility Study of the Palu-Parigi By-pass Road Construction project also showed an EIRR value of 20.1% in 2014, illustrating the economic development of this work. In connection with the limitations currently faced by the Regional Budget Agency of Central Sulawesi Province, the next PPP scheme is recommended for road construction by prioritizing infrastructure completion after the 28 September 2018 earthquake and the COVID-19 pandemic. The DBFMT (Design–Build–Finance–Maintenance–Transfer) model was also applied to the project, with GCA responsible for design, construction, financing, periodic maintenance and transfer at the end of the collaboration agreement.