Risk Assessment of the Implementation of PPP Scheme in Natural Gas Network Project for Households (Case Study: Natural Gas Network for Households in Batam City)

Abstract

The government is actively promoting the use of natural gas over petroleum through the Natural Gas Network for Households (Jargas) program. Due to budget limitations, Jargas development has been gradual, achieving 881,752 Household Connections (SR) by 2022. To accelerate progress, the government is utilizing a Public-Private Partnership (PPP) model, as outlined in the National Medium-Term Development Plan (RPJMN) 2020-2024. This plan targets the construction of 2.5 million SR under the PPP scheme, with Batam City earmarked for 307,749 SR. As this is the first application of the PPP model in Jargas development and no prior risk assessment exists, it is crucial to identify potential risks. This research aims to identify critical risks associated with the PPP scheme. The methodology includes qualitative and quantitative analyses. Initially, qualitative analysis identifies and ranks risks, followed by quantitative analysis using the fuzzy synthetic method to precisely evaluate high-risk levels and identify critical risks. The analysis revealed 91 potential risks, categorized as 17 high-level, 43 medium-high-level, 26 medium-level, and 5 low-level risks. The fuzzy quantitative analysis of high-level risks identified 10 critical risks: delays and cost increases in land acquisition, delays in permit issuance, project lender default, failure to obtain environmental approval, construction delays, extreme weather, rising construction costs, inflation and interest rate fluctuations, flood-prone land, and scope creep. These findings provide essential insights for managing and mitigating risks in Jargas development projects.