GOVERNMENT POLICY SETS THE NATIONAL INDUSTRY DIRECTION

Governments are increasingly focused on ensuring an uninterrupted power supply by implementing market-friendly reforms to encourage IPPs to play a more important role in meeting rising power demands. For example, Indonesia's three-stage Fast-Track Programme (FTP) is building new transmission links between Indonesia's isolated grids and adding 35 GW of new capacity of power by 2019 - with 44 percent ($36 billion) of investment being offered to private sectors.40 Government reforms include clarifying regulations for PPPs; improving land acquisition and environmental permit processes; implementing a system of auctions and feed-in tariffs (FiT); and concessions of offtake agreements at indexed tariffs. This way, key risks, such as those linked to raw material prices, operator performance, and tariff re-negotiation, are largely mitigated or transferred to the government.