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Down to Earth No. 42 1999

Sumatra pulp plant protestors fight on

Construction of the US$1 billion PT Tanjung Enim Lestari (PT TEL) paper pulp plant in Muara Enim, South Sumatra, is nearly complete. Hundreds of contract workers will be laid off soon. Most of the equipment, from Scandinavian, Canadian and German companies backed by export credit agreements from their governments, has been installed. Production is expected to start in October. The plant's capacity is 450,000 tonnes of pulp per year. The entire output is destined for export.

Local villagers are still opposed to the PT TEL paper pulp plant and the plantation of fast-growing trees intended to feed it which is owned by PT Musi Hutan Persada (PT MHP). Both companies are part of the Barito Pacific group, controlled by timber tycoon Prayogo Pangestu - a close associate of the Suharto family. At least 900 families in six villages surrounding the site have lost some or all of their land for which they received little or no compensation. A few dozen are still refusing to give up their land. Ideally, they would like the whole development cancelled, but as the project is now so advanced their demands now focus on having their land back and/or getting fair compensation for their land and crops. Many villagers used to make a reasonable living from their own small-scale rubber plantations. Without land, they are destitute. The factory will employ 200 local workers at most.

Corruption allegations

The protesting farmers believe that the former district administrator, Hasan Zen, was involved in corruption over compensation payments which have yet to be settled. They want to discuss this with PT TEL Director Jansen Wiraatmaja, said to be close to ex-President Suharto's daughter Siti Hardijanti Rukamana, but he remains in Jakarta and will not meet them. Hasan Zen is thought to have misused Rp 2.6 billion (then approx US$ 1 million) as PT TEL handed over Rp 6.3 billion for compensation, but local farmers only received Rp 3.7 billion. Although land was valued at Rp 5 million per hectare, farmers were paid only Rp 2-3 million/ha at most. Hasan Zen, who wants to become the next Governor of Bengkulu, was cleared of corruption charges earlier this year by the Palembang courts on the grounds of insufficient evidence from local farmers and NGOs. Two of his subordinates are now serving a prison sentence for corruption.

There have been several large demonstrations of villagers against PT TEL to the local authorities over the past year. Representatives of the afflicted communities took their demands to the governor's office in the provincial capital, Palembang in April. When this had no effect hundreds of farmers from the villages of Gunungmegang and Rambangdangku held another demonstration at the factory site in May. They closed off the road with barbed wire and put up tents, intending to stay until the company responded to their demands for their land. They were forced to flee into surrounding woodland when armed police and military used high pressure hoses and batons to disperse the crowd.

Neither the company nor the Indonesian government has made clear what sort of technology the PT TEL plant will use. The 1997 official Environmental Impact Assessment (EIA) states that "The bleaching unit will use 50-100% chlorine dioxide in the initial phase. If necessary, the plant will be able to produce ECF pulp". The company told local NGO representatives at a meeting in October last year that it would use ECF technology rather than the even more polluting chlorine bleaching method, but has not confirmed this in writing. Seven giant waste pipes, 2m diameter, will discharge effluent from the plant into the River Lematang - a major tributary of the R. Musi - which is the source for all water for domestic and agricultural needs for tens of thousands of people living in some 30 villages along its banks. The EIA shows that 70,000 cubic metres of treated effluent will be discharged into the R. Lematang daily and it is estimated that 18 tonnes of sulphurous gases per day will be emitted.

Foreign investors refuse to accept responsibility

Foreign investors continue to turn a blind eye to the social and environmental damage of the pulp plant. The Bank of Scotland, a member of the financial syndicate funding PT TEL, has come under pressure from UK NGOs and the media. It heavily promotes an environmentally friendly image through its 'green' credit card scheme. Kevin Dunion, Director of Friends of the Earth Scotland, said: "the Bank should withdraw from the project and urgently reassess its environmental assessment procedures". The Bank of Scotland said it saw no reason for it to withdraw from the project in which it had invested 5.5 million.

This paper pulp plant is being used to justify the development of a new harbour on the east coast of Sumatra. South Sumatra governor Rosihan announced in July that the German company, Ferrostal AG, would be involved in the project at Tanjung Api-Api. The local branch of Megawati's PDI-P party voiced its support even before the election results were announced. However, Nurcholis, Director of WALHI South Sumatra warned that the new harbour and the industries it attracted would result in the destruction of mangrove swamps, pollution and the silting up of the mouth of the River Musi and urged the local government to take a long-term economic view and drop the scheme.

Note: In January 1999, Down to Earth produced an update of its 1997 campaign pack Pulping the People. A new campaign pack will be available later this year.

(Sources: TW 5/5/99, 6/7/99; WALHI Sumsel 15/7/99; Scotland on Sunday 23/5/99 and others)

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