- The 2,000-megawatt Batang coal-fired power plant has been billed as the largest project of its kind in Southeast Asia, and is part of a larger plan to add 35,000 megawatts of power to Indonesia’s grid.
- Batang villagers who oppose the plant allege they have faced human rights abuses.
- As preliminary construction begins, local fishers claim their catch has been reduced.
- As a model project for public-private partnerships in Indonesia, the Batang plant enjoys robust government support.
Batang district, on the northeastern coast of the central Indonesian island of Java, will soon be home to what has been billed as Southeast Asia’s largest ever coal-fired power plant.
The developer announced last month that construction is underway on the 2,000-megawatt (MW) plant, which is now expected to be “fully operational” in 2020.
The announcement followed multiple delays due to four years of community protest and opposition to the project’s development.
Batang is best known for its abundant fishing, thanks to the coral reefs and lush mangroves that support an array of marine life including crabs, prawns and tortoise. Every day, a patient parade of lantern-lit boats can be seen silently fishing, speckled across the ocean surface from horizon to horizon.
Local tourism, a monthly market festival, social cohesion and the character of the province is dependent on this fishing industry. Those who are not fishers are generally farmers, including approximately 50 landowners who refused to hand over their fields to developers without a fight.
Troubled waters
Even before the official launch of the project, locals report they are already feeling its impacts.
As exploration begins in the corals for the development of a jetty, fishermen have already reported a decrease in their hauls of fish. Batang fishermen usually get 500,000 rupiah a day (around US$37), or even 10-12 million rupiah in a good season, explained Didit Wicaksono, a coordinator at Greenpeace Indonesia.
In the area where developers are exploring, fishing at the same time of day will now result in a haul of just three kilos (6.6 pounds) of fish, worth around 50,000 rupiah, Wicaksono said. “This is just about enough for gas to go fishing in the first place.”
Tenant farmers are already out of work too, as landowners have sold the plots they depended on to project developer Bhimasena Power Indonesia (BPI).
BPI is a private joint venture between two Japanese firms — utility and power plant operator J-Power and the Itochu Corporation — and Adaro Power, a subsidiary of Adaro Energy, one of Indonesia’s largest coal companies. The $4 billion project is being funded by the government-owned Japan Bank for International Cooperation (JBIC) along with several other Asian banks.
Up against these powerful entities, the farmers and fisherman of Batang – some of whom are illiterate — asked for assistance from environmental NGOs Greenpeace Indonesia and Friends of the Earth Japan.
Local security, the police and the army intimidate citizens who object to the development, Wicaksono told Mongabay. “People opposing are also arrested and jailed. One community leader was jailed for eight months. It makes people very scared. Even when they try to inform the police, if it is from someone opposing, the police do not care,” said Wicaksono.
Last month, community leaders decided to deliver a petition against the Batang plant to one of its key financiers, JBIC, which provided the project’s developers with a $2.1 billion loan.
In their letter of objection, community members allege they have faced “lack of respect for human rights, lawlessness, promotion of actions of illegality and corruption.”
JBIC’s Guidelines for Confirmation of Environmental and Social Considerations require the bank to screen and review any human rights violations and stop “unacceptable impacts” to environmental and social degradation.
In response to protests against them, JBIC sent staff to meet the community of Batang on three separate occasions during the last four years. Each time, JBIC’s investigations ruled that there was not enough evidence. “They just fill out their forms,” said Wicaksono.
The bank held off on making a decision about the loan until 2016. CEO Hiroshi Watanabe told reporters in April: “We understand we need to watch the local project construction contractor to ensure they do not harm the environment.” JBIC eventually agreed to provide the loan in June 2016.
In May 2016, Greenpeace Indonesia posted a video of a fence that had appeared in Batang. Patrolled and protected by private security, the two-meter-high iron wall separates farmers from about 12-15 hectares of their land, livelihood, heritage and way of life. According to farmers appearing in the video, the land in question had not been sold to the developers.
The construction fence was just one salvo in a long-running dispute. In 2014, BPI sent a force majeure notice to Indonesia’s state-owned electricity company, PLN, as a result of the ongoing land disputes. Determined to push through with the coal power plant, the Indonesian government began the application of Indonesia’s 2012 Land Procurement Law.
This law allows state entities to acquire land in the interests of the “nation, state and society” for the “benefit of the greatest prosperity of the people.” Land acquisition must be “democratic and fair,” the law says, to “ensure the construction of public utilities” as well as providing “adequate and fair compensation” to landowners.
“They used this regulation to say that the land is owned by BPI now. They do not say what happened in the field,” said Wicaksono. “There was lots of violence there.”
Mimin Hartono, a senior investigator who handled the Batang case at Indonesia’s National Human Rights Commission (an independent government agency that opposes the Batang coal power project), told Mongabay the new land-procurement law was wrongly applied, because the Batang coal plant “is a private project.”
Projects wholly financed by the private sector have to acquire land directly from the landowner, Hartono explained.
Hartono said the government argued the use of the Land Procurement Law is justified because the coal power plant development is in the “public interest,” as it will provide electricity.
“This is a trick,” said Wicaksono. While around 15 percent of people in Indonesia do not have access to electricity, according to Greenpeace, central and populous Java is almost fully electrified.
“This electricity is not for those people without electricity access, it is for industry,” said Wicaksono. The government is “using [the electrification rate] to make people agree to the coal power plant.”
Proposals and setbacks
The current government has many reasons to push for developing new coal plants. The previous regime pledged and failed to bring 20,000 megawatts of new energy generation online, prompting the current government to implement its ambitious mission to build 35,000 megawatts by 2019. Of this, 50 to 60 percent is expected to be generated from coal.
Experts predict that if the 35,000 megawatt plan goes ahead, early deaths from coal pollution in Indonesia will skyrocket. A Harvard University-led research study analyzed health impacts of all existing and planned coal plants in Indonesia, and predicts the country will see more than 24,400 premature deaths per year by 2030 if all plans go through.
The Batang plant is also part of the Indonesian government’s 2025 development plan, named the “Master Plan for the Acceleration and Expansion of Indonesian Economic Development.” According to PwC Indonesia, the government is aiming to reach an electrification rate of 99.7 percent by 2025, requiring 80,000 megawatts of new power plants to be built by 2025. Around 64,000 megawatts has already been allocated, predominantly to private companies.
The Batang coal power plant has consequently received unwavering support and regulation from the government. “Batang is very important for President Joko Widodo; for the government to prove it is very supportive of foreign investment,” said Wicaksono.
Hartono added that the government is insisting on Batang because it is the first public-private investment mechanism financed completely by the private sector. “If this project failed, then the government is afraid it will affect the investment climate.”
To protect the fragile investment climate, the local government twice remapped a marine conservation area protecting the coral native to Batang, Wicaksono explained. “Usually it takes five years to change this regulation, they changed it twice in two years for Batang coal.”
Financing for the Batang plant was also raised via the Indonesia Infrastructure Guarantee Fund, a vehicle created specifically to mobilize private funds for government infrastructure while providing government regulations and guarantees to hedge against uncertainty and political risk.
Future Plans
Mining companies in Indonesia, which exports more coal, by volume, than any other country, face an uncertain future. Concern about emissions and pollution threatens to reduce long-term demand for the fuel. With global demand in question, domestic plans to up coal consumption amount to “a lifeline for the coal mining sector” in Indonesia,” industry analyst Oxford Energy says.
The key stakeholder in Batang, Adaro Energy, is one of the biggest coal mining and plant development companies in Indonesia. Its future rides on the success of Batang, and on the 35,000 megawatt power plan being predominantly coal. “They want to make an Indonesian market,” said Wicaksono, “so coal mining still gets them money.”
Adaro Energy’s CEO, Garibaldi “Boy” Thohir told Reuters in a June 2016 interview that Batang will generate $80 million a month. “This is a public-private partnership that definitely has to go ahead as [president Joko Widodo] wants to show to the world that the Indonesian government can solve an issue,” Thohir reportedly said.
Despite potentially earning $80 million a month, the compensation BPI has put aside for the community of Batang is “not effective enough to restore livelihoods,” said FoE Japan researcher Hozue Hatae.
According to Wicaksono, BPI has given some farmers compensation of 1 million rupiah for three months, but continuing to work as a farmer “would get 15 times more. It is not enough.”
The community has been divided by the offers of compensation mixed with force.
Those still strongly opposing have never received anything from BPI. “They firmly believe the monetary compensation and assistance programs are not the solution for the loss of their livelihood. And it is true,” said Hatae.
Others have chosen to accept cash and other compensation from the company. In a December 2016 press statement, BPI said 700 Batang farmers were granted compensation of 32 hectares of replacement agricultural land, artificial fish houses, and libraries and skills programs.
People from communities that already host coal plants have traveled to Batang to warn the farmers and fishers not to accept these handouts. “In our experience it doesn’t work,” said Wicaksono. “Once the plant is built, the support disappears.”
Proponents of coal argue that developing countries need cheap fuel to advance, saying the “economic trade-off” of problems like pollution is more than justified by the overall gains to a country’s living standard. Environmentalists argue that Indonesia– an equatorial country with high solar radiation and vast geothermal resources– has no need to make such sacrifices for development.
Geothermal has “the biggest potential in the world in Indonesia: 28 gigawatts of geothermal, but we use less than 4 percent of this,” said Wicaksono.
Hartono added, “there is lots of renewable energy in Indonesia, solar, hydro, lots of renewables, not just coal.”
