Evidence on Optimal Risk Allocation Models for Indonesian Geothermal Projects Under PPP Contracts

This study explores risk allocation in public-private partnerships for geothermal energy projects in Indonesia. We develop an evidence-based framework founded on principal-agency theorising that suggests an optimal allocation of risk between the parties in these arrangements. A Delphi survey suggested the risk bearing levels for the Indonesian government range between 100% (for legal and regulatory exposures) to 0% in an operational and maintenance risks. Risks relating to resource and exploration, financings, as well as field development and construction issues are viewed as being optimally shared between the parties. The proposed risk allocations reflect both evidenced outcomes