JAKARTA (RambuEnergy.com) – The Indonesian government is currently trying to boost investment in the energy sector, including in electricity or power plants. The move has been welcome by industry players, including foreign investors who have invested in this country. However, there are also some challenges that could hamper the development of energy projects.
James H. (Jim) Schnieders, Country Manager for Black & Veatch in Indonesia, said that the government has made some improvement related with investment, however, more works need to be done, including red tapes. In order to get more insights from industry players, RambuEnergy.com’s journalist Roffie Kurniawan interviewed the Country Manager of Black & Veatch at his office in South Jakarta recently.
Jim arrived in Indonesia about 20 years ago to build a major gas-fired facility at Muara Karang. Jim has returned to focus on developing local talent and building on Black & Veatch’s long and proud history in Indonesia. He has developed and managed key power generation infrastructure projects in China, Indonesia, Malaysia, Thailand and Vietnam over the past 23 years. He has extensive experience working on large international power projects, with diverse international contractors and equipment suppliers. Jim holds a B. Sc. Structural Engineering degree from Kansas State University.
Following the excerpt of the interview:
Q: How is business going so far?
It is kind of exciting time for us. We made a considerable investment in the last four years, hiring a number of engineers to support our projects out here, whether it is a consulting work or an EPC [engineering, procurement, and commission] role. In term of human resources, you’ll find a lot of employees retiring from the company. So you won’t see a lot turnover of our employees. In Black & Veatch, we provide the same opportunities and apply the same standard, whether you are a project manager in Thailand or in Indonesia. Recently, we hired a number of new graduates and provide them management-type of roles and give them associate construction positions. So, they can have real experience.
Q: You were here 20 years ago. What was your role at that time?
I came here in 1993, as an engineer, involving in some mechanical works in a power plant project at Muara Karang project in North Jakarta as well as at a power plant project in Tambak Lorok combined cycle power plant in Semarang, Central Java. It was exciting for me to work at Tambak Lorok. And, now we are working in an expansion project of Tambak Lorok power plant project.
Black & Veatch was the designed engineering of the original three thermal units of the power plant. We participate as the EPC contractor for 1 and 2 thermal unit. We came back again to the same site. We have a small role in that project, also in Tanjung Jati Power Plant Unit 1, 2, 3, 4, 5 and 6. We have EPC role in the project.
Q: What major projects that BV has involved?
I would say Tanjung Jati power plant in Central Java, Tambak Lorok also in Central Java and Cirebon station in West Java. The new ones are a power plant in Banten and Pangkalan Susu in Kalimantan. At Cirebon, we provide owners engineers role, in Banten and Pangkalan Susu, we provide owners’ engineers and consultation roles. At Tanjung Jati, we are the EPC provider and in Tambak Lorok, we were doing engineering and procurements.
Q: What are the ongoing projects?
Black & Veatch is working on a 315 megawatt (MW) coal-fired steam power plant project. It is part of the topline EPC consortium provider and overall technical lead. The company is also providing equipment supply as well as construction management and commissioning. We are also providing the Balance of Plant EPC solution for a 2×1000 MW supercritical pulverized coal-fired power plant.
Q: Any other projects?
Black & Veatch is proud to have worked on the Indralaya No. 4 Combined Cycle Addition Project (128 MW) which involved an upgrade of an existing gas-fired, two-unit simple cycle plant.
This simple cycle plant was upgraded to combined cycle in order to utilize waste heat that generates additional megawatts for no additional fuel cost. Combined cycle plants produce both lower air emissions and are also highly efficient power facilities. They ‘combine’ both natural gas and steam turbine cycles to produce electricity.
Black & Veatch provided the power island EPC solution, excluding some civil works. Black & Veatch’s work involved the addition of heat recovery steam generators (HRSGs), a steam turbine generator and other balance of plant equipment for the conversion of two gas turbines to combined cycle operation.
Q: Do you import components or manufacturing some of them here?
We made the investment back in the late 1980s and early 1990s. We have regional and local sources materials for sometimes. We worked with PT Murinda and others. We have seen fabrication abilities in Indonesia go from basic piping steel up to mechanical works. We have tried to utilize local projects in some of our projects. In fact, in a project we are working on now, the owners allow us to get more onshore (local) source.
Part of the success story is in utilizing local manufacturing and local resources. Let us understand that Indonesia today is different with Indonesia in the early 1990s. Today, you have a younger and higher intelligence generation. It is not a more intelligence generation, it is about what ‘we can do generation’.
Q: So, Indonesia get benefits from these JVs?
International companies, like ourselves Black & Veatch, Schneider, Siemens, and others, are doing more fabrications here. That provides opportunities for the younger generations. When younger generations work in that industry, and they can do it more successfully. We invested more in Indonesia and expertise in Indonesia. We have employees from Indonesia working in our project in Beijing, and working in our office in Bangkok and Philippines.
Q: How do you see power industry in Indonesia at present?
I think we have some very interesting developments. I think they (the government) need to be aggressive. I think the 35 GW program is very good. There has been a lot of discussions. I do agree that the government should shoot high, and they have done that. We see a lot of big projects are being developed, such as a number of the supercritical power project in large scale.
There are also power developments supported by coal and gas and renewables. Black and Veatch involved in those projects and that we hare exciting about this. If you look at US domestic market, we are driven by large-scale renewables and solar-type projects. We are finishing in the development of 75 MW renewable project for large utility, which was previously driven by coal. We see Indonesia is moving in the same direction.
I think, most global utility companies will tell you that today the world is 35 percent driven by gas generations. Where are we going from here? We have seen gas thermal efficiency by 30-40 percent in the past and now combustion turbine technology which pushes efficiency by 60-64 percent. It is fantastic.
What does Indonesia need to do? Be aggressive in the thoughts. ‘Shoot’ high, create opportunities and develop faster.
You see renewables development in Indonesia take a long time to develop. It takes seven years to develop a geothermal power plant. It is too long. I think the Joko Widodo government is taking steps to give the right access to the people in the remote areas. I see the desire to get and drive renewable projects. You do see a lot of changes in rules and others.
How can we work together to shorten the time to develop renewables? You have a lot of licensing. How the government and the companies work together to cut through the red tapes, do the right way, transparent way and moves things quicker. President Joko Widodo said the government will increase the electrification rate. That means we have to get the renewable projects as fast as possible. Start thinking about that and how do we do that. The microgrid is one solution for small-scale generations. We are really happy to be included in the PLN recent qualification for gas power generation.
Q: What BV can contribute to the development of microgrid system in Indonesia?
We build first microgrid system in our headquarter office. We actually build that along with small-scale renewables, we have been looking at putting out microgrid applications along the way. We are excited about opportunities in Indonesia. The reality is microgrid has been around. What we need to do is to deploy them better.
Q: What are your biggest obstacles to investment in Indonesia?
I think, the biggest obstacle obviously is the economy. We need to see the success in the economy, and we have seen qualified resources. I think, we need to continue the cooperation between the private sector and the government. It is difficult for me to say, but I have seen red tapes that we have to go through. We need to see those to change.
Q: Any changes the government has done?
Recently, we find the government is eager to help. We started to see changes, we have seen it to the effect what he has expected. What I see is that he (Joko Widodo) has that passion to make changes. We want to see Bapak Joko Widodo be successful. I think he needs to be there. I am encouraged by the openness to change and the continued commitment. What needs to be faster perhaps in the licensing procedures, but I think the government is moving in the right directions.
Q: How foreign investors view investment opportunities in Indonesia?
We continue to make the investment. Indonesia has been a good market for us. Like I said, we are not building Black & Veatch, just to take advantage of opportunities, but we grow the company for long-term business. We did that because we believe this market will continue to grow. I am anxious to see electrification rate improves by the government’s efforts to provide electricity in remote areas. I am excited about the renewables and microgrids development.
Q: Are there any projects that cover Renewable Energy?
Black & Veatch has supported Indonesia’s renewable energy development through feasibility studies and technical advisory services. In 2017, it performed site feasibility, assessed solar resource and energy production estimates for a site in Sumatra. We conducted a production estimate study to derive the best suitable technology for the site by analyzing a typical polycrystalline and a typical thin film technology.
Black & Veatch also performed technical advisory services for a solar photovoltaic (PV) in Gorontalo which included project conceptualization, engineering solutions and procurement assistance.
Q: Are you interest or planning to invest in renewable projects?
Absolutely. We are looking at that as well. You see the opportunities in renewables are not coming quickly as we expected. Primarly, Black & Veatch is interested in PV solar applications, hydro and geothermal energy. We have historical interest in geothermal. The government is trying to catch up some baseline power generations. It looks like that the Government takes that natural step.
Q: Where is your global growth sources?
We see renewables growing in the US and now in Southeast Asia. Power generations in Southeast Asia and Africa, frontier markets are growing—Malaysia, Indonesia, Thailand and the Philippines are our main focus market in Southeast Asia, also a big market in Bangladesh and Srilanka. In Vietnam, we have hydro and coal-fired power plants.South America is also growing. Obviously, Vietnam is also taking off. We have been for 50 years, we are comfortable here. *)
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