IMPROVING GOVERNMENT STRATEGY IN SOLVING CHALLENGES OF WASTE-TO-ENERGY PROJECTS IN INDONESIA: AN ANALYSIS TOWARDS TIPPING FEE IMPLEMENTATION AS RETURN ON INVESTMENT IN PUBLIC-PRIVATE PARTNERSHIP PROJECT

Abstract

The stipulation of Presidential Regulation Number 35 of 2018 has established the accelerated development of Waste-to-Energy project in 12 (twelve) big cities in Indonesia. This project is targeted to decrease the volume of waste significantly as well as to use waste as resources in the production of electricity. In its procurement, the Local Government has the authority to develop Waste-to-Energy facilities using the Public-Private Partnership scheme, in which they will cooperate with private entities to cover the lack of Regional Budget at their disposal. In ensuring the revenue streams, the Local Government is obliged to pay a portion of its budget for waste-processing service fees, known as Tipping Fee, to the Project Company. However, this aspect has obstructed the development of Waste-to-Energy, as the Local Government refuses to provide Tipping Fee without a clear legal ground. This is caused by the absence of Tipping Fee regulation, which the Central Government has not stipulated. Therefore, the role of Central and Local Government is required to stipulate Tipping Fee regulation to provide legal certainty for private entities interested to participate in the development of Waste-to-Energy in Indonesia.