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Jakarta Post

Supreme Court ruling paves way for Batang megaproject

Fedina S. Sundaryani
Jakarta   ●   Wed, March 2, 2016

A Supreme Court verdict has brought an end to a lengthy land-acquisition dispute, which has hampered the development of a mega power plant in Batang, Central Java.

The Supreme Court voted to reject a cassation request from Batang locals who sought to overturn a previous Semarang State Administrative Court (PTUN) decision to uphold a Central Java gubernatorial decree allowing a 125,146-square-meter site to be used for 2x1,000 megawatt (MW) coal-fired power plants.

'€œThe cassation cannot be accepted,'€ the verdict read on the Supreme Court'€™s official website on Tuesday.

The construction of the power plant, touted as the largest in Southeast Asia, is part of President Joko '€œJokowi'€ Widodo'€™s administration'€™s ambitious five-year plan to add 35,000 MW to the electricity grid by building multiple power plants.

Last August, Jokowi officiated the groundbreaking ceremony to mark the start of the Batang power plant development on 226 ha of land, considered crucial for avoiding an electricity crisis Java.

However, residents, supported by environmental activists, continually refused to release their land even though a year earlier the government had given PLN the authority to step in and enforce Law No. 2/2012 on land acquisition, which lets the government seize people'€™s land in the name of public interest.

Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa said that the Supreme Court'€™s verdict was a positive sign for investors as it was reassurance that the construction would soon be underway.

'€œThe cassation is the final step so this will convey a positive signal,'€ he said, adding that if construction started in the middle of this year, they could possibly complete the first unit by the end of 2020.

However, Fabby recommended that the government reevaluate their compensation method as many locals refused to give up their land for financial compensation because they needed the land for agriculture purposes. He warned that lengthy legal processes similar to the Batang power plant case could be repeated when the government attempted to acquire other locations for its 35,000 MW plan.

'€œCurrently, there are no similarly large cases. However, the 35,000 MW project continues and similar cases may appear,'€ he said.

The power plant is the first project to be developed under a public-private partnership scheme with Bhimasena Power Indonesia (BPI), a consortium consisting of Jakarta-listed PT Adaro Energy, J-Power Electric Power Development Co. Ltd. and Itochu Corp., which won the tender for the Batang project in 2011.

The project is estimated to cost US$4 billion and the electricity will be sold to PLN under a 25-year contract. The first stage of commercial operations was initially scheduled for 2016. However, the target became unfeasible partly because BPI, in mid-2014, declared force majeure on the project as it was unable to acquire the remaining plots of land it needed.

BPI eventually asked for an extension on the deadline for the financial closure '€” which marks when all conditions for financial agreements have been fulfilled '€” until March this year from the original October 2015 deadline.

Meanwhile, Jarman, the Energy and Mineral Resources Ministry'€™s director general for electricity, said that the Supreme Court'€™s decision allowed for the land acquisition to be quickly concluded.

'€œAs soon as the land [acquisition] is completed, financial closure can be reached,'€ he said.

Timeline of Batang land dispute

* Sept. 19, 2011: Batang regent issues a bylaw that contradicts other regulations. The bylaw allowed the power plant to be built on land in Karanggeneng subdistrict in Kandeman, Batang, and at sea in Ujungnegoro-Roban waters. The Ujungnegoro-Roban coastal area was declared a local marine-tourism site under Government Regulation No. 26/2008. According to Central Java Bylaw No 6/2010 on spatial planning, part of the project'€™s site at sea also infringes upon a protected area.

* Oct 13, 2011: State-owned PT Penjaminan Infrastructure Indonesia (Indonesia Infrastructure Guarantee, IIG) guarantees the first public-private partnership project '€“ the $3.2 billion coal-fired power plant in Batang, Central Java, with an installed capacity of 2,000 MW.

* Mar 13, 2012: The Central Java Environment Agency (BLH) suggests the project be moved to Tanjung Celong in Kedawung subdistrict, Subah district, Batang.

* Sept. 3, 2012: Thousands of residents of Ujungngegoro beach in Batang, Central Java, protest against the construction of a coal-fired power plant (PLTU) in the area, insisting that it would harm the environment and threaten their livelihoods.

* April 25, 2014: In an update on the power plant'€™s development at his office, Coordinating Economic Minister Hatta Rajasa says 29 ha of land are still in question from the 226 ha needed for the megaproject.

* Aug. 6, 2014: Coordinating Economic Minister Chairul Tanjung says the government may move forward with the Batang power plant project, but that doing so would take extra time to acquire the necessary land.

* Mar 24, 2015: President Jokowi stakes his reputation on delivering the Batang plant via a public-private partnership after telling businesspeople in Tokyo that construction could start the following month.

* Mar 31, 2015: Batang residents and Greenpeace Indonesia activists protest a statement made by President Jokowi in which he claimed that obstacles hampering the construction of the Batang coal-fired power plant (PLTU) had been overcome.

* Aug. 28, 2015: Jokowi officiates the ground-breaking ceremony for the 2x1,000 megawatt (MW) project in Batang, Central Java. According to Agrarian and Spatial Planning Minister Ferry Mursyidan Baldan, only around 11.1 ha of land had yet to be settled on after three more families agreed to give up their land for compensation.

* Dec 22, 2015: During a meeting with executives of state-owned electricity firm PLN and numerous independent power producers (IPPs) at the State Palace, Jokowi pushes investors to commit to speeding up the power plant development.

* Feb 16, 2016: Environmental activists stage a rally in Mega Kuningan, Jakarta, to oppose the construction of a coal-fired power plant in Batang, an agricultural area in Central Java.

Source: The Jakarta Post

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