Risk criticality and allocation in privatised water supply projects in Indonesia

Abstract

Public-private-partnership (PPP) infrastructure projects typically involve a plethora of risks. Given that many risks which are traditionally borne by the government get transferred to the private sector, careful risk allocation is considered to be the key to successful PPP projects. This paper focuses on the current risk allocation practice within Indonesia's water supply projects. The paper captures, presents and discusses the perceptions of both regulators and operators in the context of project risk criticality and allocation. Both parties consider non-availability of raw water is of paramount concern. However, survey findings highlight low-to-moderate levels of intra-group and inter-group agreement regarding the allocation of specific project risk factors. Thus, asserting that the issue of optimal risk allocation remains elusive.