Indonesia Investments wishes all Muslims a happy & generous Ramadan
25 May 2018 (closed)
USD/IDR (14,166) -39.00 -0.27%
EUR/IDR (16,582) -47.80 -0.29%
Jakarta Composite Index (5,975.74) +29.20 +0.49%
Last week it was announced that the Japan Bank for International Cooperation (JBIC) agreed to a USD $3.4 billion loan for the construction of the controversial Batang power plant in Central Java. This power plant project is controversial as it met fierce resistance from the local community (triggering concerns about human rights violations related to the land acquisition process) as well as criticism from environmental groups, saying this power plant - set to become Indonesia's largest coal-fired power plant - runs counter to Indonesia's earlier commitment to reduce carbon emissions.
Despite the controversial nature of the USD $4 billion Batang power plant, Indonesian President Joko Widodo is a big supporter of the construction of the 2 GW coal-fired power plant as it will contribute significantly to the country's energy needs. The plant, scheduled to be operational by 2019 (but further delays would not be unimaginable), will be constructed and operated by Bhimasena Power Indonesia, a joint venture created by Indonesian coal miner Adaro Energy and Japan’s Itochu Corporation and Electric Power Development Co. Ltd. (J-Power).
The USD $3.4 billion loan that was agreed by JBIC will be covered by several Japanese banks including Sumitomo Mitsui, Mizuho and Bank of Tokyo-Mitsubishi. However, JBIC will account for most of it, slightly over USD $2 billion.
Originally, construction of the Batang power plant was scheduled to commence in 2012. However, fierce resistance from local landowners - who refused to sell their land - managed to delay the project. Even when President Widodo witnessed the groundbreaking ceremony in August 2015, not all land in the targeted area had been purchased. Widodo's presence at the ceremony also triggered doubts whether he is indeed the 'people's man' because the forced selling of local farmers' paddy fields is not well received by human rights activists. Others, however, approve of Widodo's support for the project as wider economic and social benefits caused by infrastructure and energy capacity development should prevail over the preference of a limited number of local residents who try to maintain their ancestral land. Moreover, another failure to acquire land for a grand infrastructure project would seriously undermine investors' confidence in Indonesia's investment climate. Land acquisition trouble has been one of the key problems for infrastructure development projects.
As the developers, central government and dozens of local landowners - spread across five villages - could not reach an agreement over the selling price of the land, the case eventually went to court (the government making use of the 2012 Land Acquisition Act). In February 2016 Indonesia's Supreme Court ruled in favor of the project, paving the way for the Indonesian government to acquire the remaining land and developers to go-ahead with construction.
Environmental groups also fiercely oppose the coal-fired Batang plant as coal is one of the most polluting energy sources due to its high proportion of carbon, while the power plant - set to become the largest coal-fired plant in Indonesia - runs counter to the nation's earlier commitment to combat carbon emissions. Although Japan uses technology that reduces carbon emissions, critics claim that this reduction is insignificant. Moreover, environmental groups claim the Batang project overlaps with the Ujungnegoro-Roban marine conservation area, jeopardizing the richness of local fishing waters as well as fishermen's livelihoods.
Earlier, Greenpeace Indonesia said the Batang plant would release some 10.8 million tons of carbon into the atmosphere, exceeding the entire carbon emissions of Myanmar in 2009.
I hate coal, but I kinda agree with the government here to push for realization of the project at the expense of some local farmers (they should get good compensation though!) because households and businesses in central java need more power capacity (sadly few renewable energy sources). Probably Pak Jokowi also felt the pressure from foreign investors who carefully monitor land acquisition developments in Indonesia. This Batang case reminds me a bit of the old Suharto days....
The lowest cost electricity is provided by the use of coal. Indonesia is having difficulty selling coal. Indonesia can reduce carbon by reducing forest fires.
CO2 emission contributes to global warming; however an Ice age is going to occur in about 4 years and last about 30 years (as predicted by sun spot activity).