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

As described in the previous reports (click here for Part 1), the Tanjung Jati B Coal-Fired Power Plant (“TJB”) has developed to become a major power plant that is indispensable for the Indonesian economy. Through its engagement in this project for nearly 20 years, Sumitomo Corporation has built up a strong relationship with the Indonesian government. At the same time, the company has been conducting many activities to build stronger ties with the local residents. (Posted on April 3, 2012)

“Never pursue easy gains”―Taking the high road of business and building strong relationships

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Imbuing local staff with Sumitomo Corporation’s corporate DNA

Through its fully-owned local subsidiary, PT. Central Java Power (“CJP”), Sumitomo Corporation completed construction of TJB’s Unit 3 and Unit 4 in October 2011 and January 2012, respectively. The completed units are operated by PT. Perusahaan Listrik Negara (“PLN”), a state-owned electricity company. Construction of the two units was completed three months earlier than scheduled, which won accolades from the Indonesian government.

However, rather than feeling relieved and relaxed at this accomplishment, Yasushi Yoshida, then Director of the Jepara Site Office, CJP(currently Assistant General Manager of Power Plant EPC Dept. No.1, Sumitomo Corporation) reinforced his commitment to the TJB project. “The completion of construction work is not the end of the project,” he said. “Rather, this marks the project’s start in its true sense. For the next 20 years, we will prove the performance excellence of TJB and the outstanding quality of Japanese technology. We will aim at an annual operating rate of 90 percent or more. This is a requirement that we must achieve.” As TJB is literally a long-term project, the project members will need to continue their journey down the tough road ahead.

To smooth out any bumps in the road that may be encountered, a strong tie with PLN is important. In fact, the strong partnership with PLN was one of the major contributors to the success of the latest expansion project. It would be fair to say that CJP and PLN share a common fate under the financial lease scheme for the TJB project, as the two companies must share revenues generated from the project. A PLN executive explained to the ministry of Indonesia about Sumitomo Corporation and CJP, “Many investors bolted from Indonesia when the Asian financial crisis struck. But they (Sumitomo Corporation) didn’t. It did not surprise me because I knew who they were.” That remark eloquently expresses the trust that exists between PLN and the Sumitomo Corporation Group.

CJP President Director Koji Endo explained, “This business scheme for TJB was built upon the history that Sumitomo Corporation established over decades. We cannot ruin that. Of course, our Indonesian staff will also inherit that heritage, or in essence, our corporate DNA.”

Localization is the next goal for CJP. Currently, the company is managed by seven Japanese executives, including the President. In the future, the management team should consist entirely of Indonesian staff. Towards this goal, CJP needs to develop employees who will be qualified as directors and in other senior positions.

At the same time, CJP will focus on promoting technological transfer to PLN. For instance, the company is offering its know-how regarding the optimal purchase of coal through a detailed analysis of the chemical impact of coal quality on boilers. Such technological transfer is sure to become a significant asset to PLN as well as to Indonesia itself.


An operating room in TJB, monitoring Units 3 and 4


A full view of TJB with Units 1 to 4 in operation (model)

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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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