Public-Private and People Partnership (P4) Model for Sustaining Access to Electricity in Remote Areas

Abstraksi

Energy is one of drivers for local economic development. Indonesia’s eletrification ratio in 2017 was 95.5%, thus, leave alone 3 million households without access to electricity and contributes to economic disparity between regions in Indonesia. Renewable energy allows decentralized electricity generation by using locally available resources. However, despite of Government's effort to provide small scale renewable energy power plants in remote villages, sustainability of those power plants remains critical issue. Low technical and management capacity of local communities to operate and maintain it have been identified as key problems in the government's rural electrification programme. Small market size and high initial cost have hindered private investment in these remote areas. Millennium Challenge Account-Indonesia (MCA-Indonesia) has piloted a private-public-people partnership (P4) business model for sustaining electricity access from renewable energy power plants in 17 villages in 5 Provinces. In this model, MCA-Indonesia provides 96% grant to construct the solar PV and biomass mini-grid power plants with minimum installed capacity of 500 kiloWatt, For sustaining operation and maintenance, village-owned enterprise (BUMDESA) and private sector jointly established a Special Purpose Vehicle (SPV) as village utility company in which BUMDESA owned majority of share and private sector minority. Business partnership between BUMDESA and private sector addresses problem of low capacity since private sector as partner will bring skills and transfer it to BUMDESA. Furthermore, involvement of private sector and BUMDESA are potential to scale-up the business at local level. This P4 model is replicable for government or donor projects on rural electrification.