PT PII’s Story Explains Madiun Project Without Burden on the Local Budget (APBD)

Jakarta, CNBC Indonesia - Acting President Director of PT Penjaminan Infrastruktur Indonesia (Persero) (PT PII), Andre Permana, shared the success story of guaranteeing an infrastructure project under the Government–Business Entity Cooperation scheme (KPBU), namely the Street Lighting Equipment Project (APJ) in Madiun Regency, East Java, in 2022-2023.

He said the KPBU scheme initiated by Madiun Regency to improve street lighting has been widely replicated by other regional governments across Indonesia.

‘If I may share, at the local government level there is a phenomenon that is quite interesting and is now quite widely adopted by many regions for street lighting infrastructure,’ Andre said during Fiscal Focus on CNBC Indonesia TV, quoted Thursday (5 March 2026).

Previously, street lighting improvement or construction was usually funded through the Regional Revenue and Expenditure Budget (APBD). Under this conventional scheme, expansion or installation of street lighting could not be maximised. According to Andre, the number of lighting points could only be increased to hundreds.

However, when local governments use the KPBU scheme, they can directly obtain 7,500 lighting points and these can be managed for 10 years in accordance with the contract managed by the private sector.

In this KPBU scheme, local governments also use an Availability Payment (AP) scheme. This means that the return on private investment is paid by the government periodically based on service availability that meets the standards, rather than from direct users.

With the AP scheme under KPBU, payments for service availability are made directly, so service standards improve.

‘That means even if there is a disruption or the lights go out, it is replaced promptly, and so on. They can experience cost efficiency in electricity,’ he said.

Local governments, according to Andre, can save up to 50% on electricity costs.

‘That also improves quality spending because they are using better technology,’ he added.

In addition, the street lighting tax as a funding source for paying the services has reportedly risen. In Madiun, according to Andre, it has now increased by around 30-40%.

As a result, local original revenue (PAD) has increased and local government burdens have decreased. Economically, the KPBU scheme for street lighting also stimulates a more active regional economy.

‘In other words, before there was effective street lighting, which was good, activity might be quiet at sunset because the night was dark. When this is available, the economic transaction life and so on can be longer, SMEs can grow, and the economy also improves,’ he explained.