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Kværner is involved in scandalous pulp project in Sumatra: 4,500 people's land has been stolen

The pulp giant PT Tanjung Enim Lestari (PT TEL) in Sumatra, Indonesia, causes fear among the local population, and is met by strong protests. The local population resist the low compensation they are offered, after corrupt governmental officials have had their share. Pollution from the plant will also cause serious environmental problems. Kværner delivers equipment to the plant worth approximately 350 million kroner (USD 46 million).
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
The pulp giant PT Tanjung Enim Lestari (PT TEL) in Sumatra, Indonesia, causes fear among the local population, and is met by strong protests. The local population resist the low compensation they are offered, after corrupt governmental officials have had their share. Pollution from the plant will also cause serious environmental problems. Kværner delivers equipment to the plant worth approximately 350 million kroner (USD 46 million).


By Kim T. Loraas and Morten Rønning
Norwatch
 
NorWatch mentioned Kværner's deliveries to the pulp industry in Sumatra when we reported on the pulp giants' role during the forest fires which devastated the country in the autumn 1997 (See NorWatch newsletter no 17/1997). In October 1998, the plantation company which is to supply PT TEL with timber, was convicted for illegal use of fire to clear land by a court in Palembang, according to the London-based organisation Down to Earth (DtE), which is working with environmental and human rights issues in Indonesia. DtE presented a report on PT TEL in January.

Indonesia's largest environmental organisation, WALHI, won the case against the company, after satellite pictures had been presented to prove that the company used fire illegally to clear forest and lay out plantations.

- I am not aware of any specific criticism against this plant, says Sven Edstrøm, President in Kværner Pulp & Paper in Jakarta, to NorWatch.

In 1997, Kværner signed the contract with PT TEL, and the plant is to be finished this autumn. The deliveries  include chemical and energy recovery plants, which are delivered by Kværner's Finnish subsidiary Tampella Power. NorWatch has visited the controversial project.

"Why can't these companies build at home, instead of coming here to ruin our lives?"
Local peasant whose land has been taken away from him

The inner circle
PT TEL is controlled by the Indonesian company Barito Pacific Group (51%), the Japanese company Sumatra Pulp (33%), and Citro Group (16%), which is controlled by former dictator Suharto's eldest daughter Tutut (Siti Hardiyanti Rukmana). During Suhartos reign, it was common practice that private companies formed joint ventures with companies owned by the president's close relatives. This way, projects got the necessary permissions which enabled them to attract foreign investors.

PT TEL is the first pulp plant in Indonesia which is primarily financed by foreign companies. Among others, Bank of Scotland has lent PT TEL œ5.5 million. Bank of Scotland is, by the way, one of the companies which the Norwegian Government Petroleum Fund has invested in. Sweden and Finland are among the countries which have given export guarantees for deliveries to the project. The total investment budget is 1.29 billion US$ (almost 10 billion kroner).

- The people behind the PT TEL project belong to the inner circle. They get concessions to establish industrial plantations (HTI) and many privileges from the authorities. For example, they get loans from the replanting fund, and they are permitted to fell timber in both secondary and primary forest, even though they have no right to do so. Primary forest shall not be converted into plantations. Barito Pacific is part of the circle around Suharto. That explains why they can corrupt the concession process. Barito can do as they like, they do not have to care about the law, says a local journalist who wants to be anonymous, to NorWatch.

"Now we have no land, almost no income, no future. We protest to the government and the prosecuting authority, but they do not answer."
Village resident in the construction area

The rainforest disappears
Some years ago, the Indonesian Ministry of Forest gave Barito Pacific Group's subsidiary, PT Musi Hutan Persada (MHP), a concession area of 447,000 hectares. According to the company's plans, about 300,000 hectares of this area will become industrial plantations (HTI) with fast-growing types of wood which can supply the pulp plant PT TEL with timber.

- These plants have an enormous capacity, and they base their supply of raw materials on the felling of rainforest. The problem is that the enormous appetite of the pulp plants introduces a new element in the struggle about the forest. It has become more cost efficient to clear forest, because all types of wood can be sold now. This is a new incentive which affects the decision-making, and it is an enormous potential for corruption. This is an all-consuming technology. A huge capacity is built in advance, without ensuring the supply of raw materials, says the Norwegian anthropologist Øyvind Sandbukt, who has been working with environmental issues in Indonesia for more than 15 years.

While PT TEL has not yet started production, many other pulp giants in Sumatra have big problems with their raw material supplies. The result is that illegal felling of trees in what is left of Sumatra's rainforest has become a profitable business.

Corruption and threats
Traditionally, people in the Muara Enim district in southern Sumatra have made their living from small scale rubber plantations, subsistence farming and fishing. About 4,500 people from six villages have lost their land because of PT TEL, and many more have been driven away by the plantations which are to deliver timber.

All the time, local and central authorities have ignored local protests against loss of land, threats, felling of rainforest and destruction of resources on which the local population depends. Repeated requests to the authorities have not been replied to. In Benakat, the local population tried to defend their land with knives and sticks. Women from the village Desa Dalam stood naked in front of the bulldozers in order to prevent the destruction of their rubber trees.

Local authorities have co-operated closely with the police and the military forces to stay in control. For a long time, Hasan Zen, the former ruler of Muara Enim, has been accused of corruption when considering the PT TEL compensation cases. Like the office for local land cases and the district administrators for Gunung Megang and Rambang Dangku, he has had to report to the prosecuting authority.

"The demands made by the authorities concerning the environment are roughly on the same level as in Europe."
Sven Edstrøm, President of Kværner Pulp & Paper Asia

No compensation
According to DtE, the relationship between the representatives of the authorities in southern Sumatra is so friendly that Zen was interrogated in the evening because he was "too busy" during the day. In all the villages in the area which NorWatch visited, we were told stories of use of threats and force in the process of expropriating land.

- The appropriation committee said that if we did not accept the compensation which we were offered, we would be labelled as communists and referred to as members of the communist party, says one village resident in Desa Dalam to NorWatch.

- In Indonesia, this means that you can be taken to the police station and arrested without a legal process, Amin, who works with LBH Palembang, explains.

The organisation LBH Palembang consists of a group of lawyers who, among other things, give legal advice to the local people who are affected by PT TEL.

Other people in the village say that they signed the compensation papers because they were threatened that if they did not sign right away, they would not receive any compensation, and that their land would be expropriated anyway. In 1995, PT TEL paid local authorities 1.6 billion rupiah (corresponding to 4 million NOK at the 1995 exchange rate and 1.5 million NOK at the 1998 exchange rate) to make them take care of all the compensation claims. Rubber peasants only got 5,000 rupiah (corresponding to 5 kroner at the 1998 exchange rate) per rubber tree even though they were worth twice as much. In addition, more than half the trees were not compensated, according to DtE.

The fall of the Suharto regime has reduced people's fear to claim their rights, and recently people in the villages Muara Niru and Banuayu have accused the authorities of corruption during the compensation process. They accuse representatives of the authorities of taking a percentage of each payment. They demand full compensation and alternative land.

"The impact analyses which have been carried out are completely pro forma. They order the impact analyses from their own consultants. The analyses are tailor-made."
Øyvind Sandbukt, anthropologist with a long experience with environmental issues in Indonesia

Gather information themselves
The lawyers in LBH Palembang co-operate with the village residents who are forced to move or whose land has been taken as a result of the factory, to gather information on how much compensation they actually have received. Amin from LBH Palembang explains:

- The village residents collect this information although it should have been done by the prosecuting authority. This is an issue of six villages. So far, we have only collected data from three of them. We need this information to find out what the locals have received, and to compare the total amount with what PT TEL has given to the appropriation committee, because there seems to be a great disparity. This is corruption.

Forced into poverty
In the villages where people have lost all or most of their land, most of them have been forced to become day workers. In the village Tebat Agung, one village resident says:

- At first, I did not want to accept the compensation because I thought there should be a negotiation process. There was none, and I refused. When I told them, they answered that I must be a communist. I still refused. Then the leader of our sub-district came to convince me, and when I saw that most of the neighbours accepted, I did the same. Still, many people refuse to do so. They have been threatened with imprisonment.

- We used to make up to 200,000 rupiah a week, now we make approximately 5,000 rupiah a day, and that is not enough to support the family, one of the men tells NorWatch. He describes the common hopelessness and anger:

- Now we have no land, almost no income, no future. We protest to the government and the prosecuting authority, but they do not answer.

Demonstrations
Inside PT TEL's plant area, NorWatch talked to some of the locally recruited construction workers. They told us that when the plant is finished, they will be out of work. They fear the future because they will have no income, and in addition, the family has no land:

- The land belonged to my father. He got 10 million rupiah as compensation for two hectares of land. There were many trees and plants there, for example production trees, such as rubber. Much of the money went into the pockets of the appropriation committee members. My father did not know this. He was told that if he did not sign, the police would come after him, and he might be imprisoned, one of the employees says.

He continues about the demonstration in October, during which hundreds of people who worked for a subcontractor in the area demanded wage increases because they could not survive on the salary and had no land to cultivate. During the demonstration, parts of the installations were damaged by the demonstrators.

In February this year, thousands of peasants from the six villages which are directly affected by the project organised an eight hours long peaceful demonstration outside the factory gate. They claimed that the particularly low compensation they had received was a result of corruption and threats from local authorities, and demanded re-negotiation of the compensation, according to DtE.

In October 1998, the military trained near PT TEL. Many people have connected this with the increasing local opposition against the plant.

Air pollution
The villages around PT TEL will be exposed to large quantities of nitrogen oxides, sulphur dioxide and hydrogen sulphide. In addition to being directly harmful for people living near by, nitrogen and sulphur dioxide cause acid rain which can ruin crops, land and water.

The environmental impact analysis for the PT TEL construction says that 18,000 kilos of sulphide gases will be emitted each year. These gases can damage people's respiratory passages. Breathing problems are already common in the area. According to DtE, this is partly a result of last year's forest fires.

Threatens vital river system
Many fishermen along the Lematang river have not been informed by the authorities or the company on possible discharges and pollution from the plant. PT TEL intends to bleach the pulp with chlorine, and environmentalists are very concerned.

The environmental impact analysis says that "the first phase of the bleaching process will use 50-100% chlorine dioxide, even though the factory will be able to produce ECF mass (Elemental chlorine free) if the demand is high."

The ECF technology implies smaller chlorine discharges than the emissions from the plant during the first phase. However, it is much more polluting than the TCF technology (Total chlorine free), and it will still lead to discharges of chlorine into the river system. But to begin with, the factory will use the mentioned 50-100% chlorine dioxide in the bleaching process. This may have fatal consequences for the environment and people locally.

There are 32 villages along the Lematang river, which will be used as water source for the plant. The effluents from the plant will also be discharged into the river. The river is the freshwater source of the village residents, and it is used as drinking water by 90% of the population during the drought, and by 60% for the rest of the year. Many places, people wash in the river, and fishing and shrimp breeding are important sources of food and income for many people.

The factory will send 70 million litres of waste into the river every day. Even if the effluents had been through a cleaning process, they would have contained large amounts of waste products and traces of harmful chemicals such as chloroform, phenols, sulphides, and organic chlorine compounds, according to DtE. Many of these chemicals represent a health hazard, and as they are not quickly broken down, and they are accumulated in the food chain.

The environmental impact analysis which has been carried out for PT TEL says that the waste from the factory will be pumped into the Lematang river, but it gives little information on how the waste will be treated.

- The impact analyses which have been carried out are completely pro forma. They order the impact analyses from their own consultants. The analyses are tailor-made, says anthropologist Øyvind Sandbukt.

"At first, I did not want to accept the compensation because I thought there should be a negotiation process. There was none, and I refused. When I told them, they answered that I must be a communist."
Man from the village Tebat Agung

Environmental impact analysis?
In their report on PT TEL from January this year, Down to Earth list several problems with the environmental impact analysis.
•It was carried out for PT TEL in early 1997, eighteen months after the company started taking land from the local population. This is a violation of Indonesian law, but it has not had any consequences so far.
•It only includes the plant itself, and does not take the impacts of the tree plantations into account. According to DtE, it is not known whether an impact analysis of the plantations was carried out.
•It does not mention local opposition, and it ignores all the requests from the local population to the authorities.
•The local population were not part of the process, as neither the company nor the authorities had informed on possible impacts of the plant.
•Fundamental social and environmental studies of the local communities are almost absent.
•Based on very limited data, the environmental impact analysis assesses the establishment of the plant as negative or neutral on almost all the environmental criteria that are used.

- The demands made by the authorities concerning the environment are roughly on the same level as in Europe, Sven Edstrøm, President of Kværner Pulp & Paper Asia, claimed when NorWatch met him in Jakarta.

According to DtE, the environmental impact analysis was not independent. The Indonesian company PT Beakindo Pacific, which carried out the environmental impact analysis, is a subsidiary of the Canadian company Beak Pacific. PT Beakindo Pacific is closely related to the Indonesian authorities and to the organisations which dominate the main sectors of the Indonesian economy. The company has current licenses with the Ministry of mining, energy, forest, industry and environment, and it describes itself as an active member of "Indonesian Pulp and Paper Association", "Indonesian Mining Association", "Indonesian Petroleum Association", and "Association of Indonesian Consultants", according to DtE.

Soon to be completed
- The buildings and installations of PT TEL are 95% complete, according to the contractors. The construction area is now well protected as a result of the frequent protests from local people who want work, and from students who demand that the entire construction must be stopped. Although demands are often made that projects associated with the Suharto family must be cancelled or reassessed, we have not heard whether PT TEL will be included. We believe that the project will be continued without participation from the Suharto family, because of the considerable number of foreign investors. But, I may be wrong, because it is hard to predict the political situation in Indonesia at the moment, said a local activist to DtE in November 1998.

Kværner in Sumatra
PT Tel will be completed in the autumn of 1999. Kværner Pulping Power Division, which has its head office in Finland, has been responsible for the deliveries of chemical and energy recovery plants to the factory from Tampella Power, which Kværner bought in 1996. The contract is worth between 340 and 375 million kroner. In addition, Kværner has had deliveries to the pulp plants PT Riau Andalan, PT Indah Kiat, and PT Lonthar Papyrus in Sumatra. The contracts are worth approximately 1.5 billion kroner.

Norwatch Newsletter 6/99

- Annonse -