An Exploration of The Key Issues and Challenges in Implementing Public-Private Partnerships: A Case Study of The Central Java Power Plant Project, Indonesia

Over the last two decades, Indonesia began to implement Public-Private Partnerships (PPPs) to provide an alternative mechanism for providing public infrastructure. The need to accelerate development, fulfil national demands and address mounting fiscal constraints are the reasons behind choosing PPP approach. One of the infrastructure projects using PPP mechanisms in Indonesia is Central Java Power Plant (CJPP) project, which is claimed to be the largest power plant in Southeast Asia. The project bidding was won by three consortia including ITOCHU Corporation, Adaro Power and J-Power, while the Government of Indonesia provided a guarantee for this project through the Ministry of Finance (MoF) and the Indonesia Infrastructure Guarantee Fund (IIGF). The project is built under Build, Operate, Own, and Transfer (BOOT) PPP model. In continuing academic research about PPP in general and CJPP in particular, this study was conducted with the aim of exploring critical issues and challenges in implementing PPPs in CJPP project. Three issues were chosen for particular examination, including governance, environment and social issues. This study was conducted by adopting a qualitative approach under a constructivist epistemology to gain meaning and knowledge from certain phenomena or specific circumstances, in this case, by using CJPP as a single case study. Document reviews, semi-structured interviews, and unstructured observation were carried out from July to September 2018 to gain information and perspectives from multilevel stakeholders who are in charge, involved in and were impacted by the implementation of PPP mechanism in CJPP. Stakeholder Analysis and Sustainable Livelihood Approach were taken as the framework for data analysis. This study found that top-down approach applied to implementing PPP in CJPP project left some governance issues and dynamics about power relations and regulations; conflicting stakeholders’ interests; communication and knowledge gaps; and dualism perspectives for viewing the scheme. The Governments of Central Java and Batang Regency underwent difficulties in structuring and implementing Environmental and Social Impact Assessment (ESIA), or in Bahasa Indonesia known as AMDAL. Meanwhile, coal, the major resource that will be utilised in this project, faces issues surrounding its emissions, stock, and sustainability. Several issues regarding five forms of capital for sustainable livelihood – human capital, social capital, economic capital, natural capital and physical capital – also arose during the project period. These issues included differing perspectives and sentiments among the surrounding societies and economic inequalities, as well as cultural and migration issues. It is hoped that this research can inform our understanding of PPP implementation, both in policy and in practice. Based on this study, PPP practice at the national level should standardise documents and processes as well as having project assistance. At the regional level, the local government must be more empowered regarding their roles, responsibilities and resource management. Moreover, the impact of PPP on environment and society should be more precisely predicted and managed