Risk Allocation Preferences in Indonesian Electricity Public–Private Partnership Projects: A Conjoint Analysis

Abstract

This article investigates the risk allocation preferences of Indonesian government agents within a public–private partnership scheme in electricity infrastructure projects. A full-factorial conjoint analysis is employed by introducing three groups of risk factors, namely, “Policy,” “Legal,” and “Project residual” risks, to form eight distinctive scenarios. A total of 37 respondents from a government agency and other public agencies participated in the experiment, and two distinct clusters within a single party (public entity/government) emerged. The two clusters agree on the order of importance of risk preferences but disagree on nearly everything else. The clusters diverge in the magnitude of risk importance, risk preference scores, profiles, and the most preferred scenarios. This article also determines that the risk preference profiles of both clusters do not consistently follow the optimum risk-sharing principles. Moreover, this article elaborates on the scientific contributions and practical implications of the findings. Results provide essential insights into the risk allocation preferences of the public agents. The findings contribute to the development of mutual understanding between the public and private entities.