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Kværner involved in controversial Sumatra dam project: A practise of threats and corruption

In the middle of Sumatra in Indonesia, on the border between the provinces Riau and West Sumatra, the construction of the disputed dam Koto Panjang was finished in 1997. The dam has flooded 124 km2 of forest and fertile land. A brutal process of threats and corruption has forced 23,000 people to resettle. Many of them have not received any compensation. The project has ruined areas which were important to the Sumatra tiger, threatened by extinction, and to elephants. Kværner was still working in the area to fulfil the contract of turbine deliveries when NorWatch visited the area in November 1998. In periods, the power plant has only been partly in production, and there have been enormous flooding problems in the area. Local groups have taken legal action to get compensation.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
In the middle of Sumatra in Indonesia, on the border between the provinces Riau and West Sumatra, the construction of the disputed dam Koto Panjang was finished in 1997. The dam has flooded 124 km2 of forest and fertile land. A brutal process of threats and corruption has forced 23,000 people to resettle. Many of them have not received any compensation. The project has ruined areas which were important to the Sumatra tiger, threatened by extinction, and to elephants. Kværner was still working in the area to fulfil the contract of turbine deliveries when NorWatch visited the area in November 1998. In periods, the power plant has only been partly in production, and there have been enormous flooding problems in the area. Local groups have taken legal action to get compensation.


By Kim T. Loraas
Norwatch

23,000 people from 10 villages, 8 in the Riau province and 2 in West Sumatra, have been forced to resettle because of the Koto Panjang project. The people in question are mainly Minangkabau and Kapar Malay people who make their living from traditional farming and make money on the production of rubber and the root vegetable gambir. Many of them have not received the compensation they were promised, and the process of resettling and compensation has been a practise of threats and corruption. Some of the local people in one of the villages in West Sumatra, Tanjung Balit, have taken legal action to get the compensation they are entitled to. Representatives of regional and local authorities, the company PLN (Indonesia's state-owned electricity company), and other governmental bodies sit in the committee which is responsible for the compensation. Several lawsuits are under way.

In 1993, Kværner won the contract to deliver 3 turbines worth 15 million US dollars (110 million Norwegian kroner). Sven Edstrøm, director of Kværner Asia Paper and Pulp, writes in a fax to NorWatch that PLN has a reputation as a serious and professional company:

- I therefore presume that PLN met the demands made by laws and regulations when the decision to build Koto Panjang was made, he writes.

But when NorWatch asked him about the situation of forced resettlement and compensation, Nicholas Crosby, Kværner's representative for hydroelectric power projects in Indonesia, answers in a fax to NorWatch:

- We are unfamiliar with the background, but we have been told that there are still a few disputes.

The new life
When NorWatch visited people who had been forced to resettle from the villages Tanjung Balit and Tanjung Pauh in the province West Sumatra, they had big problems with farming near the new villages because the land in the area is barren, and many people do not own land.

- People have to go back to the old villages to grow food. They are not allowed to be there because the area is included in the project, but they have to in order to plant and harvest. Most of them go there to make a living, says Adhel Yusirman from the organisation YPBHI, which gives legal assistance to the victims of Koto Panjang.

- To get there, they must pay 1000 rp (about 1 Norwegian krone) for the car-ride, and 5000 rp (about 5 Norwegian kroner) for the boat (this equals one day's salary for the day workers in the area. Editor's note). The result of these expenses is that most of them stay there all the week, and return only for the week-end, he continues.

- The water supply of the new village does not work, so we have to travel far to find water or buy expensive water. I have received compensation for only 10% of the 900 m2 of paddy-field which was taken away from me, says an elderly village inhabitant in Tanjung Balit to NorWatch.

When travelling around the village Tanjung Pauh, NorWatch meets an old woman. She has been given a piece of land after the forced resettlement. The land has a number, but she still does not know where it is, nor if it exists.

- Without land, it is hard to get food for the family, she says.

Deprived of their means of livelihood
- Those who can afford to pay the authorities are admitted to choose land first, and they therefore get more and better land than the rest, Adhel explains to NorWatch, and the lawyer continues:

- About 20% of the people in this village buy land from others who have been forced to resettle. 80% are poor and have to sell land to get their daily food, because the new pieces of land are insufficient to feed them. While some people have paid the authorities to get more land, others are left with little or nothing, and are forced to become land-less workers to support their families.

- Many have used the compensation money to buy food until now. But many have spent all the money, and in addition they have not received the land they are entitled to. Or they have been given land which was not planted as promised, and which is not very fertile. The result is that they become poorer and have problems supporting themselves. Many have to work on the land around the old village to get food, or they establish gardens in forest-covered areas, or work as day workers to survive, says Adhel.

"Even though the authorities' control of how laws and regulations are followed has its weaknesses, one should not underestimate the possibilities of being listened to which the Indonesian population does have."
Sven Edstrøm, director in Kværner Pulp and Paper Asia

Corruption
Many people from these villages are forced to work as day-workers in plantations, or to chop wood or collect stones to sell them. This kind of work pays between 4 and 8 NOK a day.

An elderly man whom NorWatch met in Tanjung Pauh, tells about the problems with compensation:

- It is assumed that the former village leader, Haji Syukur, received a compensation of 200.000 kroner, because all his property in Tanjung Pauh was registered to be compensated. The same procedure was applied to all the other families who had close relations with the former village leader. None of them were denied compensation for their belongings and properties. The entire compensation process was manipulated and corrupted, and the community was aware of it, but could not do anything. And we, 168 families, only got promises from the compensation committee, which was supposed to pay compensation for all plants and all the land. The project area was to be planted and completed before the relocation to the new village. But this has still not been realised.

No dialogue
One of the persons who has taken the case to court, is Pak Samsuri from Tanjung Balit.

- The first time the regional office came here, was in 1990. The regional director informed us in the mosque that they would start a PLN project. They promised that this project would bring about a happy life for us. After the first meeting, we were asked to count our plants and belongings (...) The authorities measured the houses and set a price. There was no room for discussion about this between the authorities and local people, he tells NorWatch.

The World Bank had refused to support the Koto Panjang project, while the OECF (Japanese Overseas Economic Cooperation Fund) agreed to finance it. As early as 1991, a campaign was launched, led by Professor Kazuo Sumi at the Yokohama University in Japan, to pressure the OECF to withdraw the loan of 290 million US dollars which they had pledged.

Protests and demands
Along with five representatives from affected villages, members of the "Kotopanjang Solidarity Action Committee" went to Jakarta to protest to the Parliament and the Japanese Embassy. Two village inhabitants also went to Tokyo to meet with representatives of the Japanese Ministry of Foreign Affairs. They protested against:

- the fact that people were pressured to sign documents saying that they were willing to move by threatening them that they would never receive any compensation if they refused,

- that there was no available environmental impact assessment, which is demanded by Indonesian law,

- that there was no possibility for the civil society to monitor the seizure of land and the compensation process,

- that there was no available plan for relocation of wild animals.

They demanded that the Japanese financing must be withheld until the project plan had been examined and discussed with the affected local population. OECF accepted to withhold the financing until the following demands were met:

- that all affected families expressed that they were willing to move,

- that those who had to move agreed on adequate compensation rates,

- that the movement of animals was arranged for.

Bribes and threats
After this, Indonesian authorities took several steps to ensure the payment from OECF. They gave the leaders of eight villages motorbikes as an incentive to co-operate. Two of the village leaders refused to accept the "gift" and claimed that "We will no be tied to the authorities' policy through this so-called gift, and if we accepted it, our own people would regard it as a bribe." (Colin Pemul in the article Koto Panjang: Compensation Corruption).

The authorities brought documents which they wanted the village inhabitants to sign, saying that they were willing to move. Not everybody signed, and many cannot remember that they have signed this. They thought it was something else they signed.

- The authorities did not explain the documents properly to them, says the lawyer Adhel Yusirman, and continues:

- After a meeting with the village people, the authorities produced a letter of consent for signing. The documents which were brought to the village inhabitants had two parts. One part was an agreement where one by signing accepted the project and the resettlement, the other part concerned compensation rates of various belongings. In this process, the authorities frightened people by saying that if they did not sign and agree, they would not get any compensation at all. Many signed the documents on belongings and compensation rates, and the authorities then used these signatures to get money from OECF, without these people's knowledge.

Forced to leave
In addition to misinformation, threats and manipulation from the authorities, many of the people who did not sign have been threatened with the military, and some have been arrested and presented with false accusations. Muas from Koto Tuo in Riau was accused of having planned to kill the village leader because he did not want to sign, according to Colin Pemul in "Move or be damned" in the periodical Inside Indonesia, December 1993.

OECF had the guarantees from Indonesian authorities that the conditions they had presented in 1991 were met. In addition, they were given local signatures, which many of the village people did not know that they had written, and OECF then financed the project with 290 million US dollars.

Both in Riau and West Sumatra there were many people who did not want to move to the "new" villages because of the way the authorities had handled the compensation cases, and because the living conditions in the new places were dreadful.  Access to necessities such as water and land was not, and still is not, taken care of. In many of the villages people moved because they feared that they would be victims of military operations, and in some places they actually were driven away by troops. Two trucks with soldiers were sent into the village Pulau Gadan in Riau to drive people out, and their houses were destroyed in order to prevent them from returning, according to Pemul in Inside Indonesia.

Flood and chaos
The Koto Panjang project at the Kampar Kanan river will produce 114MW of electricity and control floods. Up to now, however, the flooding problems have become much worse downstream. Forest and land has been ruined.

In the village Pangkalan, the flooding problems have increased extremely after the dam was finished. While earlier flood cycles gave one big flood every 25th year, there has been flood every time it has rained heavily in 1998. On two occasions, the water levels of the river have risen about 5 metres over the normal level, and caused flood in the village. These floods lasted about 12 hours before the water level slowly normalized. On these occasions, the water stood 2 metres over the mosque floor, many houses were damaged, and the flood created large problems for the cultivation of rice and food production.

As a result of partly ruined harvests, the inhabitants of Pangkalan have to buy more food than they used to, and the insecure situation has caused traumas and stress for the inhabitants. When asked what is the reason for these floods, and how the problem can be solved, Edstrøm in Kværner answers:

- We do not know, but this is not our responsibility.

Operational problems
Regional authorities urge all affected inhabitants to co-operate to solve the problems with Koto Panjang, but the locals do not trust the authorities after years of lies, manipulation and lack of information and openness. Opening of formerly forest-covered areas as a consequence of the dam construction and the establishment of new villages has resulted in more flood when it rains, and drier soil outside the rainy season because the thin soil cannot absorb sufficient amounts of water.

There has also been problems with operations and production of electricity. Kværner does not know how much the power plant produced last autumn, but the turbines have been out of operation for long periods, according to local sources. When NorWatch visited Koto Panjang, there seemed to be a lot of organic material  left in the reservoir. This may cause big, unnecessary emissions of CO2 and represent a problem for the turbines.

- Organic material in the dam can generate hydrogen sulphide, which dissolves in the water, but creates gas bubbles in the turbines, which may interrupt the operation of the turbines. This is not an uncommon problem with hydroelectric power plants, and we have had some problems in Koto Panjang as well, says Edstrøm.

- Listening to the local population
Once again, Kværner is heavily involved in a controversial, scandalous project in Indonesia. Koto Panjang was forced through by the Suharto regime, it was refused financing by the World Bank, and it met sharp protests locally and internationally.

Most of the compensation has disappeared on its way through the corrupt bureaucracy. The documents about belongings which were signed by the village inhabitants were also manipulated by the committee, which erased parts of them, and changed the contents completely in some cases. Some people have copies that prove this, but they are afraid to confront the committee because they fear the military.

- In Indonesia, there is a general rule that you must have permission from the authorities to build an industrial plant (...) In the process of giving permission, agreements must be made with local landowners, the environmental criteria must be met etc. Even though the authorities' control of how laws and regulations are followed has its weaknesses, one should not underestimate the possibilities of being listened to which the Indonesian population does have, says Edstrøm.

Sequel
But the local population obviously has a different opinion. When representatives of the authorities, the company behind the project, and the uniformed police stick together, there have been few places to go. After the fall of the Suharto regime however, people are not so afraid of taking their cases to court, but lack of money often makes it difficult to hire lawyers and prepare cases.

10 families from the village Tanjung Balit have gone to court because they have not received the compensation they had been promised. The case is tried before the local court in Tanjung Pati. 71 families in the village Tanjung Pauh are planning an identical case, but they lack 500 000 rp (5000 kroner) for fees. There is also no money to pay the lawyers of YPBHI, who have prepared cases for the people affected by the Koto Panjang project on an idealistic basis so far.

Kværner Energy in Indonesia
Kværner Energy has delivered three Kaplan turbines to the Koto Panjang project. The contract was made in 1993, and was worth 15 million US dollars. PLN (The Indonesian state-owned electricity company) is the employer of the project. Kværner has also made deliveries to the Sengguruh and Mrica dam projects, both in Java. Kværner Energy in Indonesia is owned 100% by Kværner ASA.

Norwatch Newsletter 3/99