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Maximizing Global Partnerships to Accelerate Development in Indonesia

Maximizing Global Partnerships to Accelerate Development in Indonesia

Developing 35,000 megawatts (MW) of electricity by 2019 will not be as simple as flicking a switch. Indonesia is embarking on an ambitious, noble and complex engineering and construction effort that will lay the building blocks for the future of its economy and people. 

However, one of the critical challenges facing Indonesia is that it cannot achieve this vision alone. The scale of the challenge needs to be met with the right combination of domestic, regional and global solutions for engineering, equipment, construction and financing.

Building an advanced coal, gas or renewable energy power plant can be as complex and extensive as building a series of finely-tuned jumbo jets. To make matters even more challenging, the power plant project is often grappling with a series of complicating factors such as working outdoors in the weather or corroding sea-air, working in remote project locations with limited amenities for the large number of laborers, constructors and engineers required to build a power plant, and coordinating multiple companies with varying levels of experience and differing cultural backgrounds. Adding in limited budgets and tight schedules, one can see the level of expertise required to be successful.

Multinational, Multiparty Collaboration

Today, given global economics, major EPC (engineering, construction and procurement) projects are often some of the most successful examples of multinational and multiparty collaboration. The award-winning Tanjung Jati B Units 3 & 4 in Jepara, Java is such a positive recent example. Completed ahead of schedule in January 2012, together with Units 1 & 2, the facility continues to demonstrate exceptional, high-performance levels, accounting for approximately 12 percent of the electricity on the Java-Bali grid in Indonesia.

Owned by a Japanese developer, the plant is operated by PT PLN (Persero). On the boiler island construction alone, Black & Veatch’s local Indonesian and international teams worked with Chinese and Indonesian equipment manufacturers, as well as Indonesian construction companies. Over the entire project, there were multiple nationalities, cultures and companies involved – each lending their own unique and irreplaceable expertise. 

The project is a blueprint for how Indonesia can embrace cost-conscious contractual arrangements with appropriate levels of global and regional best practices. This blended approach can avoid shortcomings experienced on the previous fast-track program when the projects often over-relied on complete solutions from too narrow a range of contractual options. The blended approach also creates a framework for effective knowledge transfer to improve the capabilities of local companies and the industry in a sustainable and productive manner.

The value of broader and integrated experience on EPC project sites is often underestimated. At Tanjung Jati B Units 3 & 4, PT Satyamitra Surya Perkasa’s (SSP) experience and expertise played a critical role in the delivery of this incredibly complex project safely and on time. For almost 20 years, Black & Veatch has been working with PT SSP, sharing knowledge formally and informally. We have built a trusted and complementary relationship with PT SSP.

Raising Standards, Capabilities of Local Partners

As a global EPC provider, it is in our interests to coach and improve the quality, standards and capabilities of our local partners. Since working on our first project in East Java in the 1990s through to working on projects where we have entrusted entire mechanical and electrical engineering construction scopes, we have helped and encouraged our local partners to adopt international safety and quality assurance standards and certifications. We have instilled best practices in other areas, such as planning and cost estimating. We have accelerated this mutual training program further and today run structured classroom training sessions for both our professionals and local partner professionals on advanced concepts, such as constructability. 

This is an example of a true win-win situation that improves the EPC capabilities of the Indonesia business community. Similarly, we have taken long-term approaches with local equipment manufacturers. Again, as early as the 1990s, we sourced a major piece of equipment – a single blade bypass dampener – from an Indonesia manufacturer, PT Arkon Prima. This was the first time a major local component was sourced on a large power plant in Indonesia.

Our interests aligned with the local company over the long term, and what was important was that multiple orders were placed rather than just a one-off. This helped sustain and grow the local manufacturer’s business with a backlog of orders and credibility to supply equipment in Indonesia and overseas, and provided Black & Veatch with a competitive cost for a quality and proven product.

Partnership is about finding and maximizing common interests. For Black & Veatch, it’s about discovering each other’s strengths and working with a common purpose toward an agreed objective. What each partner gains from the relationship can be different, but what is clear is that neither can do it as well without the other.

Gaining knowledge for future generations and future industry must be a consideration for Indonesia as it scales up its efforts to build 35,000 MW of power generation capacity. Such ambitious infrastructure initiatives have the rare opportunity to transform the fortunes of a nation and galvanize the imagination of the people and its business communities. As a global company, we are ready to play an important and beneficial role toward fulfilling that potential.

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