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Boosting Mini-Hydro Power Plant (PLTM) Business Performance by Implementing Supply Chain Management and Business Partnership - Case Study: PLTM Business Unit in West Java
West Java topography condition is very potential for the development of hydro power plant technology especially mini-hydro power (PLTM) and micro-hydro power (PLTMH) which is a runoff river power plant. Unfortunately, until right now the business performance of PLTM and PLTMH is not optimal yet. It was allegedly related to the supply chain management and business partnership aspect.
The mountainous topograph in Southern part of West Java, with many small rivers flowing throughout the year and high rain fall volume have springs flowing to the rivers is very potential for the development of environment friendly hydroelectric technology, which is a runoff river power plant between 1-10 MWh called Mini Hydro Power Plant (Pembangkit Listrik Tenaga Mini Hidro). The equipment used is relatively simple and easy to find. The required land is not extensive, so there is no need to open the forest to build the large scale hydroelectric power supply with big water dam and huge power installation. Southern part of West Java has mountain topography spread all over the region. In general, mountain's texture is steep with relatively few inhabitants. The mountainous area has a large electrical energy in the form of water. The flow of water from the plateau to the lower one has potential energy that can be utilized as a source of electrical energy, especially in Sukabumi, Cianjur, Garut and Tasikmalaya that still have forests and stable water supply. With the publication of ESDM Regulation no. 19 of 2015 on Micro Hydro Power Plants regarding the electricity tariff (Feed In Tariff) of Hydro Power Plants under 10 MW/h of 12 cent USD / KWh and the use of mini hidro Potential of 500 MW, newly installed 86.1 MW, should increase the number of Mini Hydro Power Plants (PLTM) in West Java.
Actually, the potential of Mini Hydro Power Plants for supporting to the main grid of electricity (Jawa Bali Network) and remote areas that have not reached the electricity network or areas that do not have other sources of fuel, so that the potential for the development of the Mini Hydro Power Plants is not optimal. However, the request for a Water Power Business Permit under 10 MW in Indonesia has only reached 33 Commercial Operation Date (COD) Permits from 266 Permits during 2015 to date. Until now, the company's performance is only 65%-75% of 86.1 MW installed yet, due to the frequent down time. This problem is caused by lack of optimal partnership and also supply chain management in mini hydro power plants companies, especially in the technology to be used, expertise people and financial investor. The Previous study has not address on Supply Chain Management and Strategic Partnership during the operation phase of Mini Hydro Power Plant. The form of partners relationship proposed by Cravens (2013) that includes a vertical relationship consisting of relationships with suppliers and customers and the relationship horizontally consisting of lateral and internal partnerships. In the era of decentralization of the energy sector in Indonesia, the key to sustainability success is extensive coordination with private parties, local government offices, state electricity company, and communities. On the other hand, Clement, Clement, Joseph (2013) suggests that the performance of a company with partnership is better than a single-ownership company. In addition, Agus and Hassan (2012) demonstrate that the product quality performance and business performance dependence on practices of strategic suppliers partnerships. Another factor that is alleged to have an impact on the optimum business performance of micro hydro power plant companies is regard to the aspects of the supply chain. Turban, Rainer & Porter (2004) mentions supply chain includes 3 components ie upstream supply chain, internal supply chain management, and downstream supply chain. Lia, Ragu-Nathan, Ragu-Nathan, Rao (2006) found that higher levels of SCM practice lead to increased competitive advantage and improved organizational performance.
Based on this background, the aim of this study is to examine;
Question 1- Identify the components of the supply chain management
Question 2- specify how this process can be implemented to improve the performance of the micro hydro power plant in West Java.
Question 3- In this case, this study are expected to be used by the Government in their policies and private sectors to boosting the e-business infrastructure
Question 4- Provide benefits to the next Mini Hydro Power Plant Business to extend this process by the use of business partnership and build their business performance.