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Govt struggling to settle land acquisition for Batang power plant

The government is still in the process of completing the land acquisition for the construction of a large power plant in Batang, Central Java, despite a promise by President Joko “Jokowi” Widodo to speed up the development of the facility

Raras Cahyafitri (The Jakarta Post)
Jakarta
Fri, June 5, 2015

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Govt struggling to settle land acquisition for Batang power plant

T

he government is still in the process of completing the land acquisition for the construction of a large power plant in Batang, Central Java, despite a promise by President Joko '€œJokowi'€ Widodo to speed up the development of the facility.

During his visit to Japan in March, the President said the construction of the 2x1,000 megawatt (MW) coal-fired power plant would start in April.

But as of June, his administration is still struggling with the land acquisition issue, making the power plant'€™s development uncertain.

Coordinating Economic Minister Sofyan Djalil said around 12.5 hectares (ha) out of 225 ha of land needed for the facility were uncleared.

'€œWe have a new schedule to make the project progress according to the plan. By July 28, we will have location permits for the uncleared land,'€ Sofyan said after a meeting discussing electricity on Thursday.

The location permits, to be issued by the Central Java governor, will legally force people to give up their land for the construction of public facilities, in this case, the power plant.

The construction of the Batang power plant has been delayed following opposition from local residents who have refused to give up their land for the project. Initially, the commercial operation was expected to start in 2016. However, in July last year, the developer declared force majeure, citing unsettled land acquisition issues.

The government has also assigned state-owned firm PLN to the land acquisition problem. PLN president director Sofyan Basir said the company had set aside an amount of money to be deposited with the court for land acquisition purposes.

Under the Land Acquisition Law, any land acquisition disputes are to be settled at court. Meanwhile, the developer must deposit money, the amount of which is calculated based on the land'€™s value as compensation for residents opposing the acquisition.

Batang power plant, the development of which is estimated to cost US$4 billion, is seen as crucial, particularly to avoiding an electricity crisis on Java, which has a high population and is home to many industries in the country.

'€˜The construction of the Batang plant is expected in October, which is also the deadline for the project'€™s financial closure,'€ said PLN director Nasri Sebayang, who attended the Thursday meeting.

Under an amended power purchase agreement between PLN and PT Bhimasena Power Indonesia, the developer of Batang plant, the deadline of financial closure has been extended by one year to October
this year.

The financial closure, which marks a phase in which all conditions have been met for the availability of funds, requires that all plots of land needed to have been cleared.

Bhimasena, a consortium comprising Jakarta-listed PT Adaro Energy, J-Power Electric Power Development Co. Ltd. and Itochu Corp., won the tender for the power plant project in 2011.

Besides Batang power plant, the government is also working to accelerate the development of the Asahan 3 hydro power plant, which is also backed by Japanese investors, in North Sumatra.

Asahan 3'€™s plant development has been delayed since 2012 partly because the required permits for the use of forest areas have not been issued.

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