“How Risk Management is

Leveraged for Sustainable

Power Plant Operation in
PT PJB”

Prepared for :
Malaysian Association of Risk &
Insurance Management
(MARIM)

PURWONO JATI AGUNG

Chief of Risk Management &
Compliance

Putrajaya, KL, 21 August 2019

AGENDA

1 Profile of PJB
2 Concept of Risk Management at PJB
Implementation of Risk Management
3
at PJB
Case Study – Risk Management for Coal Fired Power
4 Plant (CFPP) Management

5 Conclusions
1 Profile of PJB
Electricity System – PT PLN (Persero)
Business Process

Power
Plant

TRANSFORMATOR USER of TRANSFORMATOR USER of TRANSFORMATOR USER of

Medium Voltage / High Voltage High Voltage / Medium Voltage Medium Voltage / Low Voltage
High Voltage Medium Voltage Low voltage

Power Plant Transmission Line Industrial Household

Consumers Consumers
PLN, PJB, Indonesia
Power, IPP PLN
Structure of PLN Group

Government of the Republic

of Indonesia
100 %
PT PLN (Persero), a state owned- PT PLN (Persero) has 10 subsidiaries,
enterprise. PLN has a fully support
one of which is PT PJB (PT
from the Government of the Republic
of Indonesia. Pembangkitan Jawa Bali)

Gas & Geothermal

Role of PJB in the National Electricity
System
7 Power Plant, Owned & Operated by PJB – 7.060 MW
Muara Karang CCPP 908 MW
Muara Tawar CCPP 1.778 MW
Cirata Hydro Power Plant 1.008 MW
Brantas Hydro Power Plant 281 MW
Gresik CCPP 2.219 MW
Paiton #1,2 CFPP 800 MW
Suppa Diesel Power Plant 62,4 MW

14 Power Plant, Owned by PLN, O&M by PJB – 6.114 MW

Java Island Outside of Java Island
Indramayu CFPP 3 x 330 MW Arun Gas Engine PP 18 x 10,5 MW
Paiton #9 CFPP 660 MW Tenayan CFPP 2 x 110 MW
Rembang CFPP 2 x 315 MW Pulang Pisau CFPP 2 x 60 MW
Pacitan CFPP 2 x 315 MW Kaltim Teluk CFPP 2 x 110 MW
Tanjung Awar-Awar CFPP 2 x 350 MW Banjarsari CFPP 2 x 110 MW
Muara Karang Blok 2 CCPP 710 MW Asahan Hydro PP 2 x 90 MW
Muara Tawar Blok 5 CCPP 242 MW Other Power Plant 180 MW
(small power plant)

TOTAL, more than 4 IPP’s Power Plant – 5.980 MW

19.000 MW
BDSN – Asahan Hydro Power Plant 2 x 90 MW
BPI – Banjarsari CFPP 2 x 110 MW
S2P – Cilacap CFPP 2.260 MW
KPJB – Tanjung Jati B 3,4 CFPP 2 x 660 MW
Jawa 7 CFPP 2 x 1000 MW
Structure of PJB Group

100%
Subsidiary
Member of subsidiary
99,99% 0,01 %
Associated Company

98,0% 98,91% 99,9% 73,0% 51 %

PLN SC
Investment
O&M EPC Investment BPI
(Suku Cadang)

IPP S2P COAL FIRED POWER PLANT

Cilacap 2x300 MW
Ekspansi 1x660 MW
Human Ekspansi 1x1000 MW
Resources
Engineering IPP
Consultant PLTU Jawa 7 IPP BPI – COAL FIRED POWER PLANT
Provider Banjarsari CFPP 2x110 MW
Human Resources
10 IPP BDSN – HYDRO POWER PLANT
Competency IPP O&M Asahan-1 Hydro PP : 2x90 MW
Certification % Mamuju PLTU Jawa 7
Provider Power Plant
IPP SGPJB : COAL FIRED PP
Jawa 7 CFPP : 2x1000 MW
49,0% 36,6% 29,1% 49,0%
IPP RDM – COAL FIRED
IPP IPP IPP O&M PP ; Mamuju CFPP
2x25 MW
Vision & Missions PJB

VISION
To be the most trusted integrated–
power plant company with world class
standards

MISSIONS
Giving solutions and added value in an integrated
power plant business to guide the national
sovereignty in electricity.

Running a qualified, competitive, and

environmentally friendly power plant business.

Developing the Human Capital’s competency and

productivity for a sustainable growth
The Core Role of PJB, Now & in the Future
 Risk Taxonomy, Stated in
PJB’s Long Term Planning

1.Strategic Risk: Risks related to the corporate's

business strategy and plans going forward. Included
in this is the risk of entering new businesses,
expanding production, mergers and acquisitions,
PJB’s Long Term application of new technologies and inability to
Planning 2017 – 2021 anticipate competition.

2. Financial Risk: Risk related to the financial condition of the Company.

In general, risk finance is categorized into: market risk (Example:
interest rates, exchange rates, commodity prices) and the risk of project
financing.
3. Operational Risk: Risk related to failure of policies, processes,
systems, people and events other external. Examples of operational risk
are risks related to construction, process risk procurement, and project
management risks.
4. Compliance Risk: Risks related to compliance with regulations and /
or regulations applicable or non-compliance with internal and / or
external regulations / regulations.
Strategic Risk of PJB
1. The ineffectiveness of the process of
formulation and implementing the PJB
strategy
2. PJB is unable to compete in the Java Bali
system
3. PJB failed to obtain investment / funding
4. Organizations (structure, capacity,
capabilities and IT) PJB do not support
business development
5. Occurrence of workplace accidents and
PJB’s Long Term Planning catastrophic failure
2017 – 2021 6. Failure to achieve project plans
7. Failure to develop the PJB business line
8. Insecurity of primary energy supply for PJB
9. Regulation that limits PJB in developing its
business
Strategic Risk Mapping of PJB
Risk Event Impact Possibility Exposure Category Nature of Risk

The ineffectiveness of the process of 5 5 Extreme Strategic Strategic

formulation and implementing the PJB
strategy
PJB is unable to compete in the Java 5 5 Extreme Strategic Strategic
Bali system
PJB failed to obtain investment / 5 5 Extreme Financial Strategic
funding
Organizations (structure, capacity, 5 5 Extreme Operational Preventable
capabilities and IT) PJB do not support
business development
Occurrence of workplace accidents and 5 5 Extreme Operational Preventable
catastrophic failure
Failure to achieve project plans 5 5 Extreme Strategic Preventable

Failure to develop the PJB business 5 4 Extreme Strategic Strategic

line
Insecurity of primary energy supply for 5 4 Extreme Operational External
PJB
Regulation that limits PJB in 5 3 Extreme Strategic External
developing its business

due to exposure to many extreme risk strategies, the PJB has prepared strategic
mitigation and until now has been executed properly according to the plan set
Definition of Nature of Risk - PJB
Strategy Map PJB due to Mitigation of
Strategic Risk
2 Concept of Risk
Management at PJB
Strategic Balancing Trade-offs – PJB
How PJB Group is able to optimize its assets with best practices business
processes in accordance with the current business challenges of
1 electricity to achieve the best performance improvement, cost reduction
& risk mitigation .....
Optimized Asset Management Plan
Risk based on :
Mitigation 1. Benefit and least cost analysis for
works
2. Capital works optimal timing
Balancing 3. Optimal planned operational
Trade-offs expenditure level
4. Predictive modelling for critical
Performance
Improvement
Cost asset groups
Reduction
5. Financial constraints

New & existing assets owned by PJB Group can transform value through
2 embedding asset management to all lines of organization, using better
data & adopting new technologies & learning from parallel industries
Leadership in Risk Management – PJB
Platform
Performance Risk
Vision – Mission – KPI
Management Management

Strategy LEADER Belief

Structure Values

System / Process Character

Execution

High High
Performance Commitment
Performance
Leadership in Risk Management – PJB
Platform

One of area of
improvement is
managing specific
risks, specifically to
ensure the
performance of all
coal-fired power
plants according to
best practices
standards, NERC
(North American
Electricity
Reliability Council)
Leadership in Risk Management – PJB
Platform
Risk Identification in PJB by “Top Down” and “Bottom Up”
The "top-down" approach: uses the overall organizational perspective to identify
and assess risk exposures at all levels of the company that can influence the
achievement of strategic goals and improve company performance.
Risk in Top down
corporate
approach
level

Bottom up Risk in unit /

approach project level

Risk Control Matrix Profil Risiko

Documenting the list of risks that
can occur at the Unit / Work Unit /
project level, along with the
control activities carried out.
Documenting a list of risks that can
occur at the corporate level based on
risks that can affect the achievement
of strategic goals and improve PJB
performance and control

The "Bottom-up" approach: identifying and prioritizing risk events in Work Units /
Projects that can influence strategic objectives and improve company performance
5 Substantial Points of ISO 31000:2018
(Risk Management System) for PJB
ISO 31000:2018 in 3 minutes
The 3 essential elements of risk management
remain the same. However, there are 5
substantial messages from the ISO
31000:2018 we should not miss…!!

1) The purpose of risk

management is the CREATION &
PROTECTION of VALUE
2) Risk management starts from &
is a part of GOVERNANCE, and a
should be INTEGRATED into
process

3) The involvement (leadership & commitment) of top management in

risk management implementation is very CRUCIAL & VERY CRITICAL

4) Risk management also needs ACTIVE INVOLVEMENT OF EVERYONE

5) “Document & reporting” is a process of risk management, not the
EXPECTED OUTCOME
3 Implementation of Risk
Management at PJB
Strategy Map of Enterprise Risk
Management (ERM) – PJB
Increasing of ERM maturity ERM act as Decision Support
level System
Stakeholder Perspective

Integrated ERM (business, corporate and operational, in

head quarter level/division level/power plant level)

The Establishment of
Cost Effectiveness
Financial Perspective
Increasing the Risk Owner Increasing of Implement
effectiveness of risk Strengthening effeltiveness ation of
management based & Risk-Officer monitoring & Risk-Based
on business Empowerment evaluation of Audit
processes institutionally risk in gradually overall

Availability of Guidelines, The establishment

Policy & Standard of ERM of3rd party risk
& 3LoD management
Business Processes Perspective

Strengthening of Strengthening of
The establishment
Human Capital risk culture &
of Digital ERM
Readiness compliance culture
Learning & Growth Perspective
Corporate Risk Profile of PJB
Risk Management Implementation
Strategic Objective
PJB Company Direction KPI Projection
Missions Company Long
Direction RISK MANAGEMENT Term
PJB DOCUMENT Planning
Vision
Strategic Initiative /
Trustee Gap Strategic Program
Shareholders Analysis
General Plan Formulation
for Electricity
Supply of Long SWOT/TOWS Company Financial
Analysis Projection Projection
Term
PLN Vision
Planning
Internal & Values
External Core Comptenece
Factors

Work RISK ANNUAL PROGRAM

Program in RISK PROFILE OBJECTIVE / KPI
Budgeting MANAGEMENT
Planning DOCUMENT Annual Planning
(Mitigation)
Implementation SHAREHOLDERS
DIRECTION
of Activities
Implementasi Standard ISO 31000 - PJB
Risk Management - Guideline

Board of Directors Board of Commissioners

Directors Meetings/
Risk Committees
SRM

Risk & Process Management

(Risk Management &
Internal Audit

Compliance Division)

Power Plant Directorate Subsidiary

Unit (corporate) Company

Implementation Guidlines and BOD Implementation Commitment of ERM

since 2014, will be review this 2018 to adopt the new ISO standar 31000:2018
SRM = Strategic Review Meeting
Execution of Strategic Decisions Based on
ISO 31000:2018 – PJB Platform
Principles ISO 31000:2018
Value Creation
Risk Taxonomy in PJB
& Protection
Principles Long Term Planning :
Framework Process 1) Strategic Risk
Scope, Contect, 2) Financial Risk
Leadership &
Commitment
Criteria; Risk
Assessment, 3) Operational Risk
4) Compliance Risk
Risk Treatment

1 2
4
 Case Study – Risk Management
4 for Coal Fired Power Plant
(CFPP) Management
Role of PJB in the National Electricity
System
7 Power Plant, Owned & Operated by PJB – 7.060 MW
Muara Karang CCPP 908 MW
Muara Tawar CCPP 1.778 MW
Cirata Hydro Power Plant 1.008 MW
Brantas Hydro Power Plant 281 MW
Gresik CCPP 2.219 MW
Paiton #1,2 CFPP 800 MW
Suppa Diesel Power Plant 62,4 MW

14 Power Plant, Owned by PLN, O&M by PJB – 6.114 MW

About 90% are CFPP
(Coal Fired Power Java Island Outside of Java Island
Plant) with the most Indramayu CFPP 3 x 330 MW Arun Gas Engine PP 18 x 10,5 MW
competitive Paiton #9 CFPP 660 MW Tenayan CFPP 2 x 110 MW
Rembang CFPP 2 x 315 MW Pulang Pisau CFPP 2 x 60 MW
production costs, so Pacitan CFPP 2 x 315 MW Kaltim Teluk CFPP 2 x 110 MW
PJB emphasizes Tanjung Awar-Awar CFPP 2 x 350 MW Banjarsari CFPP 2 x 110 MW
Muara Karang Blok 2 CCPP 710 MW Asahan Hydro PP 2 x 90 MW
more attention on Muara Tawar Blok 5 CCPP 242 MW Other Power Plant 180 MW
its management (small power plant)

4 IPP’s Power Plant – 2.980 MW

BDSN – Asahan Hydro Power Plant 2 x 90 MW
BPI – Banjarsari CFPP 2 x 110 MW
TOTAL S2P – Cilacap CFPP
KPJB – Tanjung Jati B 3,4 CFPP
1.260 MW
2 x 660 MW

16.455 MW
Location of Coal Fired Power Plant, Owned by PT
PLN (Persero), O&M by PT PJB (Java Island)
Location of Coal Fired Power Plant, Owned by PT
PLN (Persero), O&M by PT PJB (Java Island)

COD – FAC
Location of Coal Fired Power Plant, Owned by PT PLN
(Persero), O&M by PT PJB (Outside of Java Island)
O&M Services from outside Power Plant Owned by PT PJB CFPP FTP – 1 OUTSIDE JAVA =
1,013,3 MW in 13 locations
 Value PT PJB for PT PLN (Persero) : Performance improvement, significantly &
sustained (EAF, CF, NPHR)
Operational Performance
1) Performance is increasing but acceleration is not significant. To reach
the NERC / North American Electricity Reliability Council standard as a
benchmark for electricity generation (e.g Top 20% world class), the EAF
(Equivalent Availability Factor) target of 300 MW PLTU (87.65%) with
EFOR (Equivalent Forced Outage Rate) is around 2.98%.
2) At the latest within the next 5 years, PJB should be close the gap of EAF
(compare to NERC standard) up to 10%. Also for EFOR, at the latest 5
years in the future, PT PJB must reduce up to 10% of Forced Outage &
Forced Derating.
3) Dominant using LRC (Low Rank Coal) compared to Middle Rank Coal
(MRC), so CFPP is cheaper & more competitive than other types of power
plants.
4) So, CFPP performance (safety, availability, reliability and efficiency) is
still a major issue in risk management in the electricity system (Java
Bali & Outside Java Bali).
Cause of Risk – Cause of Problem of
CFPP
1. Hidden capacity is still large
2. Chronic problem / infant mortality, especially in the early
period of operation, has not been resolved completely so
that the reliability is not optimal which is characterized by
short MTBF (Mean Time Between Failure)
3. Low Maintainability

ASSUMPTION
1. Derating: CFPP is unable to operate > 98% x the capacity of the design
2. Force Down Time: CFPP experiences an unplanned down time of more
than 1% (FOR / Forced Outage Rate)
3. Plant Down Time: CFPP has down time / planned outage > 5.5%
4. Coal fired power plant based loader
5. Capacity Factor (CF), typically 15% below its EAF (Equivalent Availability
Factor)
6. Valid for power plants that have been in operation for more than 1 year
(after COD / Commercial Operation Date)
 Nature of Risk

Risk event Category

Exposure
Impact
Risk owner Possibility

Cause of Risk
Risk Card of CFPP
Control Measures
Risk, stated on
Risk Profile PJB –
2019

Impact Justification Possibility Justification

Problem of CFPP stated on Risk
Profile PJB – 2019

The unpreparedness of Coal Fired Power Plant (CFPP) due to the complete
and thorough acceleration of failure and aging acceleration so that the target
of strengthening the market positioning has the potential not to be achieved
which affects the image of PJB as the most trusted company
Risk Card of CFPP Risk, stated on
Risk Profile PJB – 2019
Risk Mitigation
Mitigation Planning

Risk Mitigation
Mitigation Planning

Risk Mitigation
Mitigation Planning
Key Indicator of Risk Management in CFPP
(Coal Fired Power Plant) Management
ULTIMATE
GOAL 1. Overcoming the Electricity Supply Crisis, Increased Electrification Ratio
2. Lowering Electricity Production Costs through Primary Energy
Diversification

Acceptable Quality, Well Managed

Delivery, Cost Transition
O&M Management

“high” :
“well “ •Reliability, Availability,
Design, Construction,
•Efficiency, HSE
Engineering Well Prepared IP / PJB as
O&M Management •“Low” : a ASSET
PLN as a •Human Resources
•Life Cycle Cost MANAGER
PROJECT •O&M Management
MANAGEMENT
•Organization
•Fuel Management
•Life Cycle Cost
Management
•Set Up Baseline and Target
PLN as a
PLN as a IP / PJB as •Installment Asset
Asset a ASSET •Profit Owner
Owner MANAGER
A successful risk management implementation
must be able to shift from Overtime Hero to
Preventive Hero
A successful risk management implementation must be able to shift from

• EAF
• EFOR
• BPP

The goal of a preventive maintenance approach

is to minimize system and component degradation and thus sustain or
extend the useful life of the asset
(Ramesh Gulati, Maintenance and Reliability Best Practice)
Strategic Initiatives as Risk Mitigation – PJB

PJB emphasizes
close attention
to 2 probability
distribution of
full forced
outage duration
STRATEGIC SPARE
(HILP & HLPI), to
ensure
electricity
supply to
customers is
maintained

Power Plant Cycling Costs

April 2012 N. Kumar, P. Besuner, S. Lefton, D. Agan, and D. Hilleman
Intertek APTECH Sunnyvale, California NREL Technical Monitor: Debra Lew
Strategic Initiatives as Risk Mitigation – PJB

Shorten Planned Downtime Duration with O&M Focused

From the planning side, management PJB is focused on getting the
best level that is directly related to planned downtime as the
reference of “Reach Peak O&M Performance in Power Generation, by
AT Kearney
Description of Cause of Risk due to
CFPP Risk
A D

ASSET LIFE CYCLE &

B E
UNDERSTANDING FAILURE
C F

Gambar 1. Enam jenis pola kegagalan dimana sumbu-x menunjukkan umur

operasi sedangkan sumbu-y menunjukkan kemungkinan kegagalan

A key understanding of the main maintenance strategies that are supported by operations
and engineering related to the general PF curve that occurs in power plants
As much as possible to find out the initial failure As much as possible to know and predict all
early and no matter how small to be handled further hidden failures to be prevented further
Description of Cause of Risk due to
CFPP Risk
Review of Fail Safe Protection & Emergencies Supply
Risk Control System 2018
Strategic Initiatives as Risk Mitigation – PJB
Strategic Initiatives as Risk Mitigation – PJB

1. One of the risk mitigations undertaken by PT PJB is to do the best

planning (RJPP & RKAP) based on equipment history (synergy of
asset management with OEE / Overall Equipment Effectiveness &
PLO / Pareto Loss Output) (action program based on history)
2. One of the risk mitigations undertaken by PT PJB is to do the best
planning (RJPP & RKAP) based on equipment history (synergy of
asset management with OEE / Overall Equipment Effectiveness &
PLO / Pareto Loss Output) (action program based on history)
WORK PROGRAM
ANNUAL & LONG TERM
PLANNING

A B
HISTORY PREDICTION
(OEE & POWER PLANT (Optimization of CBM Technology
ASSET MANAGEMENT) & ASSESMENT by Expert)

44
Strategic Initiatives as Risk Mitigation – PJB
Continuous Improvement
OEE of Cost Production
1. Reliability Improvement
Management & eliminate • NPHR (Net plant Heat
hidden capacity Rate) 2015 - 2019
2. System & equipment
Assessment Pareto Heat • NPHR (Net Plant Heat
3. Risk Assessment Analysis Rate rate) Projection 2020 -
4. Engineering analysis Analysis 2023
5. Outage management –
optimalisasi durasi OH • Monthly Heat rate
6. Inventory Optimization • Lifecycle Asset Mngmt
7. Stakeholder requirement Heat
8. History of Operational Pareto Pareto Heat
Rate PRIMARY ENERGY
Performance Loss Mainte- Rate
Gap OPTIMIZATION
9. Review of O&M Contract Output nance Gap
Break-
based on Performance Cost Analysis • SLA of Coal Management
down
• Redundant Coal Handling
Facility
Recommendation Quick Win
Quick Win • Coal Laboratory
• Coal Quality
Risk Management
Document

Input for Long Term &

Annual Planning Recommendation
Strategic Initiatives as Risk Mitigation – PJB

The formulation of
work program is
based on predictions PREDICTION

CBM Health
Condition Based
Maintenance Assesment

6 STEPS TO SET UP CBM :

1. Identify the equipment to be monitored
2. Choose the right PdM (Predictive Maintenance) Technology
3. Measurement/monitoring Recommendations
4. Develop a competent PdM team
5. Update & calibration of Tool/Technology
6. Maturity Level – 8 Frame Work PdM

INPUT for Long

Term & Annual
Planning
Strategic Initiatives as Risk Mitigation – PJB

The formulation of
work program is
based on predictions
Health Assesment

BY INTERNAL EXPERT PLN RESEARCH & EXISTING

DEVELOPMENT, MANUFACTURER (MHPS,
MANUFACTURER: PJB (TECHNOLOGY &
UNIVERSITY EXPERT or ALSTOM GE,
1)Equipment ENGINEERING TEAM) SIEMENS)
Assessment DOMESTIC EXPERTS
2)On call services 2 3 4
3)Training
4)Warranty spare 5
parts availability

1 1.Assessment
2.Partnership

LONG TERM & ANNUAL

PLANNING PROGRAM
47 47
Strategic Initiatives as Risk Mitigation – PJB

Success Story, achievement of KPI (Key Performance Indicator)

1. CF (Capacity Factor) : average increased 8% per

year
2. EAF (Equivalent Availability Factor) : average
increase 5% per year

3. EFOR (Equivalent Forced Outage Rate) :

average decrease 50% per year
4. NPHR (Net Plant Heat Rate) : average decrease
0.07% per year
5 Conclusion
5.1. Related to Risk Management
Implementation

1. The involvement of leadership & commitment at the BoD

(Board of Director) & BoC (Board of Commissioner) level is
very crucial & very critical in the implementation of all PJB
business processes in accordance with the objectives of risk
management, namely creation & protection of value (principle
of ISO 31000: 2018)
2. The challenge are risk culture & change management, for all
organization level in PJB.
a) Risk management start from & a part of governance, and
should be integrated into process
b) Risk management also needs active involvement of
everyone
c) “Documenting & reporting” is a process of risk
management, not the expected outcome
5.1. Related to Risk Management for Coal
Fired Power (CFPP)
1. Coal Fired Power Plant (CFPP) ex China manufacturing has a different
engine characteristics compared to the previous power plant owned by
PT PJB, so it must be formulated a different asset management from the
one implemented by PT PJB so far, wherein the formulation is stated in
risk mitigation as a strategy of managing CFPP through comprehensive
and sustainable of power plant asset management.
2. Risk mitigation related to CFPP is focused on the stages of handling
reliability & efficiency in 4 phases (baseline run to failure, first level
improvement, optimization & strategic focus) :
a) management of enablers that are focused on safety improvement and
the adequacy of the capacity & capability of human capital;
b) Improvements of planning that are focused on getting the best level
that has a direct relationship with planned downtime;
c) Integration of reliability management, operation management and
supply chain management focused on getting the best level from
operating time and losses due to failure ;
d) Cascading strategic formulation - strategic initiatives.
5.1. Related to Risk Management for Coal
Fired Power Plant (CFPP)

3. PT PJB has a very good history of success in implementing of

power plant asset management, and by utilizing existing lesson
learned / key success factors, namely top down, institutional,
organizational & human capital readiness, partnership and
consistency, PT PJB believes that the implementation of power
plant asset management is also will succeed in the risk
mitigation of CFPP management.
4. Execution of power plant asset management as the one of risk
mitigation requires continuous commitment, focus, consistency
& learning from all stakeholders, where the speed of short-
term execution must be prioritized and the long-term
sharpness of planning must be in place to ensure the
sustainability / sustainability of PT PJB.
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