PDAM Pontianak is a local government-owned autonomous water utility company that required technical assistance to enhance its creditworthiness to access private finance for projects that were aimed to reduce unaccounted for water (UFW), rehabilitate a water treatment plant, upgrade its water distribution network, and expand its network to cover 80 percent of the population. The objective of this assignment was to enhance Pontianak’s financial market access through the design of a financing plan and the issuance of a local currency credit rating to augment its access to the market-based funding pool of institutional savings and investment. This project was divided into two phases. Phase 1 involved identifying Pontianak’s financing requirements during the next 5-7 years while keeping in mind the evolving structure of the industry and the market, the corporate and legal framework, and the evolution of PDAM Pontianak over time. Phase 2 supported Pontianak during the credit rating process, which involved assisting Pontianak in preparing for the credit rating, in compliance with the rating agency’s information requirements, and in supporting Pontianak senior management during their dialogue with the rating agency.
In Phase 1, Osana assisted in the design of the capital structure, financing plan, and financial projections through presenting a strategy for accessing capital from a range of funding sources (including private capital and financing from bilateral and multi-lateral sources), and conducting a review of financial instruments to explore the capacity of institutional investors, the possibility of bond issuance, and constraints on Pontianak’s ability to issue the recommended financial instruments. Osana also provided legal and regulatory technical assistance through reviewing legal frameworks to assess Pontianak’s medium-term financing requirements and financial instruments. In Phase 2, Osana provided Pontianak with capacity support to engage with the rating agencies during the credit rating process, including preparation for the credit rating and supporting senior management during their dialogue with the rating agency.
