REPORT 02 Solutions through Innovation ―Power Plant Lease Project in Indonesia

Despite the adverse business climate that forced a five year suspension of the program, Sumitomo Corporation completed construction of Units 1 and 2 of the Tanjung Jati B Coal-Fired Power Plant (“TJB”) and subsequently finished the expansion work of Units 3 and 4 (See Parts 1 and 2). TJB has now become a leading power generation plant in Indonesia. Behind the current success of TJB are many stories of its employees who overcame difficulties by staying strong in their beliefs. (Posted on March 27, 2012)

Just keep moving ahead―Clearing a pile of components and regulatory barriers

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Enough steel components to assemble 300,000 cars, left unattended for five years

“In May 2003, five years after the suspension of construction, we finally re-started the TJB project. Can you guess what awaited us at the site? Hundreds of thousands tons of work-in-progress components and parts,” recalled Masayuki Hyodo, President Director of PT. Sumitomo Indonesia.

The project members at that time tried their hardest and succeeded in resuming construction of Units 1 and 2 of the TJB with their unwavering belief in the absolute necessity of this power plant for Indonesia.

In parallel with negotiations with the Indonesian government on the resumption of the project, Sumitomo Corporation took stock of all unused steel and other work-in-progress components one by one and appropriately developed and implemented respective storage plans, a task that required an enormous amount of time and labor. The purpose of this was to fully prepare the site for resumption of construction work, which could have come at any time. The unused iron parts and components amounted to 270,000 tons; enough to manufacture 300,000 passenger cars (assuming 900 kg steel is used for one car).

Despite such efforts, some items were unusable after such a long period of time.

“Suppose you are making a car and all the parts were stored in pieces for five years. You assemble the car using these parts. Do you think the car will start? Iron parts may be severely rusted and electric components may look like they were retired to a museum. This analogy can also be applied to a large scale power generation plant construction project,” explained Mr. Hyodo.

In this way, the resumption of the TJB project began with the process of dealing with many unexpected problems, including the need to have many parts and components re-manufactured. However, despite this setback, all project members retained their positive attitude, taking this unexpected event in stride and recognizing it as a valuable opportunity to grow as individuals. Indeed, that experience became a significant asset for young employees in the team as well as to Sumitomo Corporation itself.

Close collaboration with PT. Perusahaan Listrik Negara (“PLN”), a state-owned electricity company and the lessee under the TJB finance lease, is another notable feature of the post-resumption phase. Together, the partners of the TJB project were able to overcome challenges such as negotiations on an overwhelming volume of legal contracts and obtaining regulatory licenses and permits. As all the parties involved, including the Sumitomo Corporation Group, the Indonesian government, and PLN, had never used this business model before, they needed to search for the right direction in which to proceed with the project, which sometimes led to disagreements.

As a result of these joint efforts, the Sumitomo Corporation Group completed construction of TJB Unit 1 in October 2006 and Unit 2 the following month. By that time, twelve years had passed since the initial launch of the project. “The completion of the power plant was the product of our relentless efforts,” said Mr. Hyodo. “All of the employees involved in the project, including myself, thought deeply about what customers wanted from us, and we devoted ourselves to bringing those services into reality. We never gave up. We never thought about anything but moving forward. But we couldn’t achieve this alone. Support from lenders, partner companies and other external parties, as well as the understanding of the Indonesian government, allowed us to complete the project.”

Upon completion of TJB Units 1 and 2, one of the foreign company’s leaders in charge of the project remarked, “I admire Japanese people. Once they make up their mind to do something, they will do it no matter what happens. I can see why they were able to successfully reconstruct their country after WWII. I myself feel fortunate to have been a part of the project.”

Recognizing the success of Units 1 and 2, the Indonesian government asked Sumitomo Corporation whether the company was interested in expanding TJB’s capacity by building Units 3 and 4.


The boilers of Units 1 and 2, to the left of the chimney,
were manufactured by U.S.-based The Babcock & Wilcox Company


Cooled steam is emitted from the 240 meter-tall chimneys. To minimize the environmental impact of emissions from the chimneys, emission monitoring systems and sulfur reduction equipment (that remove 95% of SOx) have been installed to the chimneys

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REPORT 01 Expanding into New Markets―Mining Equipment Business: From Canada to the World

REPORT 02 Solutions through Innovation ―Power Plant Lease Project in Indonesia

  • Demonstrating the excellence of Japanese corporations―Relentless efforts to reduce power shortages in Indonesia
  • Perseverance wins the day―Building an unorthodox business model with a strong belief
  • Just keep moving ahead―Clearing a pile of components and regulatory barriers
  • “Never pursue easy gains”―Taking the high road of business and building strong relationships

REPORT 03 Introducing Japanese Agricultural Business Model Across the Globe ―Agribusiness to Spread Agricultural Cooperative Style Service from Romania

REPORT 04 Supporting Lifestyles ―Retail Business Incorporating Trends in Consumption Behavior

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