Political Risk Factors on Perfomance of Public Private Partnership Renewable Energy Projects: The Case of Geothermal Renewable Enrgy Projects in Kenya

Kenneth Otieno Odhiambo^1, , Charles M. Rambo² and Stephen Lucas Okello³

¹Phd candidate, School of Open and Distance Learning, University Of Nairobi, Nairobi, Kenya

²Associate Professor, School of Open and Distance Learning, University Of Nairobi, Nairobi, Kenya

³Lecturer School of Open and Distance Learning, University Of Nairobi, Nairobi, Kenya

Cite this paper:
Kenneth Otieno Odhiambo, Charles M. Rambo and Stephen Lucas Okello. Political Risk Factors on Perfomance of Public Private Partnership Renewable Energy Projects: The Case of Geothermal Renewable Enrgy Projects in Kenya. International Journal of Econometrics and Financial Management. 2020; 8(1):21-29. doi: 10.12691/ijefm-8-1-4

Abstract

To solve the problem of limited fiscal funds and demand for energy, PPP has been touted as an effective approach. However political risks have been blamed for failure to attract private investments in equally measure as their developed partners. This article looked at political risks influencing the performance of PPP renewable energy projects in Kenya. The study adopted a pragmatic paradigm and employed a mixed methods approach, correlational and descriptive survey design. Quantitative data was collected by use of a self-administered questionnaire and an interview guide was used to collect qualitative data. A sample size of 263 respondents was drawn from a target population of 769 using the Yamane formula. For descriptive statistics the study used the mean and standard deviation. For inferential statistics the study used Pearson’s Product Moment Correlation (r) and Multiple Regression while the F-tests were used in hypothesis testing. The study established a significant influence of political risks r = 0.572, F (1,205) = 99.771, R2 = 0.327 at p<.05 H0 was rejected. The study concluded that there was a significant influence of political risks on the performance of PPP renewable energy projects in Kenya. Based on this finding the study recommends sustainable political stability.

Keywords:
political risks factors financing public private partnerships and geothermal renewable energy projects

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Ménard, C. (2012, January 23rd). Is public-private partnership obsolete? Assessing the obstacles and shortcomings of PPP. Presentation for Université de Paris, Paris, France
[2]	Evenhuis, E., Vickerman, R. (2010). Transport pricing and Public-Private Partnerships in theory: Issues and suggestions. Research in Transportation Economics, 30(1), 6-14.Retrieved from http://www.sciencedirect.com/science/article/pii/S0739885910001010
[3]	Spackman, M. (2002). Public-private partnerships: lessons from the British approach. Economic Systems, 26(3), 283-301.
[4]	Sachs, T., Tiong, R., and Wang, S. Q. (2007). Analysis of political risks and opportunities in public private partnerships (PPP) in China and selected Asian countries: Survey results. Chinese Management Studies, 1(2), 126 - 148.
[5]	Sachs, T., and Tiong, R. (2009). Quantifying Qualitative Information on Risks: Development of the QQIR Method. Journal of Construction Engineering and Management, 135,56-71.
[6]	Power Africa, (2017), Annual Report 2017, www.usaid.gov/powerafrica
[7]	Kilaka & Omwega (2015) Factors affecting the performance of public-private-partnerships in infrastructure financing in Kenya: A case of Kenya urban roads authority. International Journal of Social Sciences Management and Entrepreneurship 2(1): 157-170, March 2015
[8]	Chan A., Lam P., Chan D. Cheung E. and Ke Y. (2010), Critical Success Factors for PPPs in Infrastructure Developments: Chinese Perspective, Journal of Construction and Engineering Management, 136 (5), 484-494.
[9]	Baldwin, L., 2006, “Political Risk in Sub-Saharan Africa.” Infrastructure Journal Online 41: 35-38
[10]	Jensen, N. (2008), Political Risk, Democratic Institutions, and Foreign Direct Investment. Journal of Politics, 70(4), 13.
[11]	MIGA. (2010), World Investment and Political Risk 2009 104. Retrieved from http://www.miga.org/news/index_sv.cfm?aid=2486.
[12]	Haftel, Y. Z. (2006), Regional Integration, Signaling, and Foreign Direct Investment: The Case of ASEAN. Paper presented at the International Studies Association.
[13]	Jensen, N. (2003), Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment. International Organization, 57, 587-617.
[14]	Slaughter, M. J. (Ed.). (2003), Host-Country Determinants of US Foreign Direct Investment. Heidelberg: Springer.
[15]	Ramamurti, R., & Doh, J. P. (2004), Rethinking foreign infrastructure investment in developing countries. Journal of World Business, 39(2), 151-167.
[16]	Harms and de Meulen (2011), The demographics of expropriation risk .J Popul Econ (2012) 25:809-832.
[17]	Jeffrey B. Marshall Randall W. Stone (2011), Expropriation risk and strategic entry decisions in foreign direct investment A draft t5heta was prepared for presentation at the Politics of Foreign Direct Investment Conference (University of Rochester) September 19, 2011.
[18]	Busse and Hefeker (2005), Political Risk, Institutions and Foreign Direct Investment HWWA discussion paper 315, April 2005
[19]	Getz, K. A., & Volkema, R. J. (2001), Culture, perceived corruption and economics. Business & Society, 40(1), 7-30. http://dx.doi.org/10.1177/000765030104000103
[20]	Habib, M., & Zurawicki, L. (2002), Corruption and foreign direct investment. Journal of International Business Studies, 33(2), 291-307. http://dx.doi.org/10.1057/palgrave.jibs.8491017
[21]	Rambo, CM, (2013), Renewable energy project financing risks in developing countries: Options for Kenya towards the realization of vision 2030. International Journal of Business and Finance Management Research, 1,1-10.
[22]	De Jongh , Ghoorah and Makina (2014), South African renewable energy investment barriers: An investor perspective Journal of Energy in Southern Africa Vol 25 No 2 May 2014
[23]	Krupa, J. & Burch, S. (2011), A new energy future for South Africa: The political ecology of South African renewable energy. Energy Policy, 39, 6254-6261.
[24]	European Union (2009), Country Energy Report, Côte d'Ivoire. Brussels. Fielmua N. (2011). The role of the community ownership and management strategy towards sustainable access to water in Ghana. J. Sustain. Dev. 4(3): 174-184.
[25]	Asyan A. & Ersoy Z. (2007). What types of perceived governance indicators matter the most for private investment in Middle East and North Africa. Econ. Bull. 5(8): 1-16.
[26]	AfDB, (2010), Committee of Ten Policy Brief: Financing of Sustainable Energy Solutions. Committee of Ten Policy Brief. 3.
[27]	Environics (2010). Prospects of the renewable energy sector in Egypt focus on photovoltaics and wind energy, Cairo: Egyptian-German Private Sector Development Programme.
[28]	Ramcharran H. (1999), Fo reign direct investment and country risk: Further empirical evidence. Global Econ. Rev. 28(3): 49-59.
[29]	UN-Energy/Africa (2011). Energy for sustainable development: Policy Options for Africa. Publication to CSD15.
[30]	Freeman, R. E. (1984). Strategic management: a strategic stakeholders’ management, Boston: Pitman.
[31]	PMI. (2013). A Guide to the Project Management Body of Knowledge: PMBOK Guide (5th ed.). Newtown Square, PA: Project Management Institute, Inc.
[32]	Newcombe, R. (2003). From client to project stakeholders: a stakeholder mapping approach. Construction Management and Economics, 21: 841-848.
[33]	Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L. & De Colle, S. (2010). Stakeholder theory. The state of the art. Cambridge: Cambridge University.
[34]	Amaeshi, K. M., and Crane, A. (2006), Stakeholder engagement: A mechanism for sustainable aviation. Corporate Social Responsibility and Environmental Management, 13, 245-260.
[35]	Ayuso, S., Rodrıguez, M. A., and Ricart, J. E. (2006), Responsible competitiveness at the “micro” level of the firm: Using stakeholder dialogue as a source for new ideas: a `dynamic capability underlying sustainable innovation. Corporate Governance, 6 (4), 475-490.
[36]	Bosse, D.A., Phillips, R.A., & Harrison, J.S. (2008), Stakeholders, reciprocity & firm performance. Strategic Management Journal, 30(4), 447-456.
[37]	Breusch, Trevor, Michael B. Ward, Hoa Thi Minh Nguyen, and Tom Kompas. (2011), “On the Fixed-Effects Vector Decomposition.” Political Analysis 19 (2): 123-34.
[38]	Burns, N., & Grove, S. (2008). The practice of nursing research: Appraisal synthesis and generation of evidence (6th ed.). St Louis, NY: Saunders Elsevier.
[39]	Greene, William. (2011) “Fixed Effects Vector Decomposition: A Magical Solution to the Problem of Time-Invariant Variables in Fixed Effects Models?” Political Analysis 19 (2): 135-46.
[40]	Harris, F. (ed.) 2010. A Historical Overview of Stakeholder Management, In: CHINYIO, E. A. O., P. ed/eds. Construction Stakeholder Management. Chichester: Backwell Publishing Ltd. pp. 41-55
[41]	Kolk, A. & Pinkse, J. (2007), Towards strategic stakeholder management? Integrating perspectives on sustainability challenges such as corporate responses to climate change. Corporate Governance: The International Journal of Effective Board Performance, 7,370-378.
[42]	Martinot, E. & Macdoom, O. (2000), Promoting energy efficiency and renewable energy: GEF climate change projects and impacts. Washington, DC: Global Environment Facility.
[43]	Painuly, J.P. (2001), “Barriers to Renewable Energy Penetration: A Framework for Analysis”. Renewable Energy Vol. 24, pp. 73-89.
[44]	Yi and Feiock (2014), Renewable Energy Politics: Policy Typologies, Policy Tools, and State Deployment of Renewables. Policy Studies Journal, Volume 42, Issue 3.August 2014 Pages 391-415