Purpose The purpose of this paper is to investigate the outcomes of Indonesian power projects as representative projects of Asian emerging economies that were procured via public-private partnerships (PPPs) and traditional public sector procurement. Power generation infrastructure delivery in emerging economies frequently seeks private participation via PPPs as one of the key mechanisms to attract private finance. Undertaking a comparative benchmark study of the outcomes of Indonesian power projects provides an opportunity to explore the historic evidence as to whether PPPs deliver better outcomes than traditional public procurement in emerging economies. Design/methodology/approach This paper reports on a study of the performance of 56 Indonesian power projects procured via either PPPs or traditional procurement. First, it focusses on project time and cost outcomes of power plant facility during construction and commissioning and then extends this comparison to consider the operating availability of power plants during their first two years of operation. Findings The results indicate that PPP projects had superior time and operating availability to those procured traditionally whereas no significant differences were identified in the cost performance between PPPs and traditionally procured projects. These findings highlight the importance of adopting policies that are supported by broader sources of international financiers and high quality power plant developers. Research limitations/implications The quality performance analyses of projects (based on equivalent available factor indices) were limited to the power plants in the Java-Bali region where the majority of projects are large scale power plants. Practical implications This study provides an empirical basis for governments of emerging economies to select the most beneficial procurement strategy for power plant projects. It highlights the importance of selecting experienced providers and to adopt policies that attract high quality international project financiers and power plant developers. This includes the need to ensure the commercial viability of projects and to seriously consider the use of cleaner power technologies. Originality/value This study is the first to compare the outcomes of power projects in Asian emerging economies delivered via PPPs against those delivered by traditional public procurement that includes consideration of the quality of the delivered product.
Purpose – Many electricity projects in Asian emerging economies involve private finance using Public Private Partnerships (PPPs) yet problems remain in terms of project initiation, commercial structuring, and financial arrangements. The motivation to pursue previous PPP power projects has been unduly influenced by the ability to attract finance rather than an independent assessment of value for money (VfM) of the project. The purpose of this paper is to present the development of VfM framework for improving investment sustainability of PPP power projects in Asian emerging economies. Design/methodology/approach – The drivers for achieving VfM in projects involving both public and private participants have been determined by a critical review of international practices and the development of sustainable energy systems using grounded theory. These drivers have been used to cross-analyse six Asian PPP power projects. Findings – The evaluation of the case study projects identifies the key determining linkages between the project structure, financial and commercial arrangements, and technical solutions with the ultimate project outcomes. It has been established that project outcomes can be improved through the inclusion of VfM considerations, energy security, and environmental sustainability. On the basis of this investigation, a conceptual governmental decision framework for future investment in PPP power projects is proposed. Originality/value – Advocating a VfM framework for assessment of PPP power project proposals in Asian emerging economies is a new approach and offers enhanced benefits both to the public and private sector.
Provision of electrical infrastructure in emerging economies, like Indonesia, is very challenging post the 2008 Global Financial Crisis (GFC). Constrained lending via international finance markets has led to a reduction in the number of investors and shorter lending periods for public private partnerships (PPPs) projects. While domestic Indonesian investors and banks have begun to be involved in such projects, the scale of budgetary requirements for the delivery of power plant projects generally exceeds the financial capacity of both the public sector and local financial markets. This paper presents the findings of a Delphi style survey and proposes implementation strategies that may overcome current investment constraints and still attain Value for Money (VfM) from the delivery of Indonesian PPP power projects post the 2008 GFC. Initially, qualitative data was acquired from two industry seminars to establish the context of Indonesian PPP power projects. This was followed by two rounds of the Delphi technique to develop consensus among a panel of industry experts about realizing VfM from Indonesian PPPs. The results show that (i) export credit agencies from regional Asian countries have increased their roles to support PPP power projects (ii) structural deficiencies of local power industry manufacturing has created barriers for greater roles of local finances in the projects (iii) enhanced contractual risk allocation between the public and private sector can potentially improve project outcomes; these involve greater transparency and accountability of project guarantee processes. This study adapted key implementation features for attaining VfM into short, medium, and long term development strategies that are suitable for Indonesia. It has been concluded that a sustainable energy system can be realized when there is alignment of interests between the government, project sponsors, fuel suppliers, and lenders.
Electricity consumption throughout Asia and the Pacific is projected to more than double from 2010 to 2035, reaching 16,169 terawatt-hours in 2035. While environmental factors are a pressing issue internationally, governments from developing countries in Asia also have a priority to deliver adequate power supplies to sustain their desired level of economic growth. The purpose of this article is to compare the implications of delivering power plant projects via either public private partnerships (PPPs) or traditional public procurement. A mixed method approach was used to evaluate four Indonesian power plant case studies. The article compares project performance based on project finance availability, construction and commissioning timelines, and operational reliability. It also investigates carbon emission factors from different power plant combustion technologies in relation to project financial structuring. The results show that (1) power plant projects that are procured through PPPs appear to be delivered in a more timely manner, and they have substantially better performance during the first years of operation than those of traditional public procurement; and (2) availability of project finance is influenced by a careful consideration of environmental and sustainability factors such as the selection of fuel type and the combustion technology.
In 1997, 10 economies of the Association of Southeast Asian Nations (ASEAN) established the ASEAN Power Grid (APG), a cross-border interconnection network that effectively uses regional energy resources. This study aims to quantify the effect of ASEAN power grid interconnection on electricity exports-imports between south-east Asia economies and its implications for renewable energy shares and carbon emission in power generation. Three scenarios are assessed in this model. The Base Scenario simulates APG parameters in 2030, considering four existing interconnections and those interconnection projects currently under construction. The second scenario, HAPUA Scenario, includes all the future interconnection projects outlined in the HAPUA report. The carbon tax scenario as the last scenario, aims to evaluate whether carbon pricing policies in Southeast Asia may incentivise cleaner energy and renewable energy development in the region. Under the HAPUA Scenario, Indonesia increases coal and/or gas-fired generation for electricity exports, contributing to a slight increase in CO2 emissions from power generation for the ASEAN region. It appears that carbon price affects the choice of electricity generation and incentivise cross-border electricity trade. Under the carbon tax scenario, emissions will decline to 719 MtCO2 or 22% lower than the base scenario and 24% than the HAPUA scenario.
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