The Viability Gap Funding (VGF) Scheme in Construction Assignment LRT Jabodebek Phase 2 Project Economic and Financial Analysis

The development of transportation infrastructure is very necessary for the process of developing connectivity between regions and an effort for regional equity in Indonesia. This necessity doesn’t align with Indonesia’s financial capacity to finance the infrastructure. This gap creates financing innovations between the Government of Indonesia and business entities, such as the Viability Gap Fund. This research used secondary data from PT. Adhi Karya (Persero) Tbk. A further financial calculation has implemented discounted cash flow method to analyse the financial feasibility of LRT Jabodebek Phase 2. Financial feasibility without the Government of Indonesia support is economically feasible but not financially feasible. Therefore, project financing support from the Government of Indonesia is required. The result of the analysis consisted of NPV of 2,255.9 billion rupiahs and IRR of 10.15% which is higher than the project’s WACC of 9.26%. Therefore, the project is financially feasible, although the IRR of the project might be less attractive for some private investors. In order to make this project more attractive to private investors, it is recommended to increase non-farebox revenue, and create concessions to build TOD (Transit Oriented Development).