Opsi Terminasi Sebagai Instrumen Dukungan Pemerintah untuk Proyek Infrastruktur Berisiko Permintaan Tinggi

Abstract

This paper proposes an option for the concessionaires to prematurely terminate the contracts as an alternative to existing government supports for public-corporate partnered infrastructure projects implemented under the Build-Operate-Transfer (BOT) scheme. This instrument is well adapted to BOT projects under high risks which are neither controllable nor predictable with certainty by contracting parties, such as demand uncertainties in retail infrastructure. It shares some element of support by way of reducing demand risks and, given the high degree of asset specificity, providing concessionaires with limited flexibilities on their stay-or-exit decisions when the projects turn out be financially infeasible. Another advantage of adopting this instrument is that the government contingent liability is straightforwardly measured, thus allowing for the establishment of a better budget at risk. Tested on a hypothetical BOT toll road project and using Monte Carlo simulation, the option to terminate is proven to be useful for making the project under evaluation more attractive although the extent to which it improves the viability largely depends on the project riskiness: the higher uncertainty increases the value of this option. This paper also acknowledges its limitations on the valuation of this option and prompts some open research questions that may lead to future studies in the domain.

Keywords

• Option to terminate
• Demand risk
• Retail infrastructure
• Build-Operate-Transfer