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Private Power In Indonesia

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  • Louis Wells

Abstract

The Asian currency crisis led to the collapse of agreements that Indonesia had negotiated for private electric power only a few years earlier. The ensuing struggle with investors created bad publicity and cost the country several hundred million dollars. As Indonesia in 2007 was designing a new law that would pass the constitutional test and encourage private investors in electric power, it was not clear that officials had fully understood the lessons of the earlier disputes. The original problems lay less in the legal framework than in lack of information about deals elsewhere, in the personal interests of highly placed individuals, and in the institutional structure and procedures for negotiations. The resulting power purchase agreements produced high electricity prices, imbalanced allocation of risks and rewards, and unwillingness to use the most effective defences when disputes arose. Learning from the past should help officials avoid similar mistakes in the future.

Suggested Citation

  • Louis Wells, 2007. "Private Power In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 43(3), pages 341-364.
  • Handle: RePEc:taf:bindes:v:43:y:2007:i:3:p:341-364
    DOI: 10.1080/00074910701727605
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    References listed on IDEAS

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    1. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications, The World Bank, number 15024, August.
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    Cited by:

    1. Peter McCawley, 2010. "Infrastructure policy in Asian developing countries," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 24(1), pages 9-25, May.

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