Share
Print
DownloadUpgrading Public Street Lighting through PPPs
The modernization of Public Street Lighting infrastructure has become a key agenda for many local governments across Indonesia. This initiative involves large-scale efforts, including the installation of new lighting points as well as the upgrading of existing ones. Given the substantial investment required for such widespread development, the Public-Private Partnership (PPP) model presents a viable and efficient financing alternative.
The implementation of PPP schemes for street lighting has already been initiated in various regions, with eight projects currently recorded under this framework. Among these, two projects—located in Madiun Regency and Dharmasraya Regency—have successfully reached the operational phase. These projects serve as success stories, highlighting the potential and effectiveness of PPPs in accelerating the development of public street lighting infrastructure in Indonesia.
Source: PPP Book 2024
According to the Indonesian Ministry of Transportation Regulation No. 47 of 2023 on Street Lighting Devices, the government is obligated to upgrade lighting infrastructure when newer technologies offer advantages in terms of energy efficiency, lifespan, durability, and/or cost components. This regulatory mandate aligns with the support of the state electricity company, PT PLN, in promoting transparent energy consumption monitoring. Specifically, PT PLN Director’s Decree No. 335.K/010/DIR/2003 mandates the installation of Electricity Metering and Limiting Devices (Alat Pencatat Pembatas, or APP) for public street lighting systems. This shift replaces the older subscription-based electricity billing model with a more accurate, usage-based system.
To enable the installation of APPs, local governments must first conduct a thorough and well-organized asset inventory—especially important when planning large-scale additions of new street lighting points. Together, these two requirements—the regulatory push for technological upgrades and the need for asset transparency—serve to elevate the urgency for local governments to modernize their Public Street Lighting infrastructure.
Beyond regulatory compliance, this modernization effort is expected to benefit not only the public through improved lighting and safety but also the government by reducing overall energy consumption.
In addition to these policy and regulatory drivers, several other key advantages support the viability of implementing Public-Private Partnerships (PPPs) for street lightings development. These include:
- Allocation of Specific Goods and Services Tax (PBJT) on Electricity for Street Lighting Development
Under Government Regulation No. 4 of 2023 on the Collection of Specific Goods and Services Tax (Pajak Barang dan Jasa Tertentu, or PBJT) on Electricity, electricity consumers are required to pay a tax to local governments, with a maximum rate of 10% of the electricity sale price. This regulation also mandates that at least 10% of the revenue from PBJT on electricity must be allocated to the provision of public street lighting. Furthermore, Government Regulation No. 35 of 2023 clarifies that such provision includes payments for Availability Payment (AP) under PPP schemes. This creates a clear mandate for local governments to allocate part of their tax revenues for street lighting development through PPP arrangements.
- Electricity Cost Savings through Energy Efficiency
PPP-based street lighting projects often involve large-scale upgrades, including the installation of new lighting points and the replacement of outdated lighting technology. Typically, this means replacing High-Pressure Sodium (HPS) lamps with Light-Emitting Diode (LED) lamps. LED technology offers improved lighting quality while consuming significantly less energy compared to HPS. A study by Fauziah and Mubarok (2024) found notable differences in energy consumption between LED and HPS lamps with similar lighting specifications, supporting the shift toward more energy-efficient technology in public lighting systems.
Comparison of Electricity Consumption between HPS and LED
Source: Fauziah and Mubarok (2024)
Faster Project Delivery Compared to Conventional Procurement
From the perspective of procurement speed, the development of Public Street Lighting through a Public-Private Partnership (PPP) scheme has the potential to achieve project targets more rapidly than traditional procurement methods using regional or national government budgets (APBD/APBN). This advantage stems from the obligation placed on private partners to fully deliver the agreed project scope and ensure the infrastructure becomes fully operational following the construction phase.
This obligation is governed by a PPP Cooperation Agreement and a Service Level Agreement (SLA), both of which outline the standards and service quality that must be met. These contractual mechanisms ensure that the private sector remains committed to both timely delivery and long-term performance, making the PPP approach a more reliable and results-driven alternative for street lighting infrastructure development.
Comparison Analysis of Annual Street Lighting Procurement
Sumber: Hasil Analisis, 2025
To better understand the advantages of financing street lighting infrastructure through Public-Private Partnerships (PPP) compared to traditional budget schemes (APBN/APBD), a simplified simulation analysis was conducted. The simulation is based on assumptions related to lamp durability and annual replacement requirements under each financing model. The findings indicate that development using conventional government budgeting would take significantly longer to meet project targets compared to the PPP approach.
Specifically, under APBN/APBD procurement, it would take approximately 24 years to reach the same development targets that could be achieved in just the first year through a PPP scheme. This delay is largely attributed to limited annual budget allocations and the recurring need to replace lighting units that have exceeded their service life—factors that reduce the number of new installations possible each year.
- Small-Scale PPP Implementation
Small-scale PPPs offer promising potential for infrastructure projects with limited complexity, such as public street lighting. Supported by streamlined policies and regulatory frameworks tailored for smaller-scale PPPs, Street Lighting projects can benefit from faster preparation and transaction processes.
Notably, PPP projects for street lighting do not always originate from government initiatives. Private sector entities can also initiate projects under the unsolicited street lighting model. Of the eight street lighting PPP projects listed in Indonesia’s 2024 PPP Book, seven were unsolicited proposals initiated by private firms. Experience has shown that street lighting development projects tend to demonstrate strong financial viability and require shorter construction periods compared to other infrastructure sectors. These favorable characteristics have made street lighting projects an attractive opportunity for private companies seeking to participate in PPP schemes.
References:
Peraturan Pemerintah (PP) No 4 Tahun 2023 tentang Pemungutan Pajak Barang dan Jasa Tertentu atas Tenaga Listrik
Peraturan Pemerintah (PP) No 35 Tahun 2023 tentang Ketentuan Umum Pajak Daerah dan Retribusi Daerah
Peraturan Menteri Perhubungan Nomor 47 Tahun 2023 tentang Alat Penerangan Jalan
Fauziah, D., & Mubarok, H. I. (2024). Comparison of 250 Watt Sodium SON Lamp and 168 Watt LED for Lighting on Gading Tutuka Highway. Industrial Sciencetech Jurnal, 1(1), 24–32.
PPP Book 2024
office
Lina Building, 2nd Floor Unit 211JL. Rasuna Said Kav. B7
South Jakarta 12910 - Indonesia
Workshop
At Braga Tech OfficeJl. Cilaki No.23, Bandung Wetan
Bandung City 40114 - Indonesia