No End to Indonesia’s Massive Environmental Disaster
The Indonesian community of Sidoardjo in East Java has become a macabre international tourism destination, a wasted tableau of stinking mud peopled by dozens of sculptures in human form representing villagers who fled 13 years ago when a natural gas well blew out and kicked off what has become Indonesia’s worst-ever environmental disaster, one expected to continue unabated for the next 25 to 30 years.
The massive mudflow was allegedly triggered by negligent drilling by a subsidiary of the politically powerful Bakrie Group of companies, which has been accused of seeking to evade responsibility, first claiming the disaster was due to an earthquake 250 km away and two days earlier. So far, they have paid only Rp5 billion (US$356,300) of the Rp1.7 trillion (US$121 million) owed to the government that was supposed to be paid by last July. The group is now seeking to restart operations in the area over the furious objections of the displaced residents.
The story began on May 29, 2006, when hot mud mixed with gas boiled out of the Banjar Panji 1 well, which was being drilled by Bakrie subsidiary Lapindo Brantas Inc. The mudflow continued to expand for several months until it drowned residential, agricultural and industrial areas in three sub-districts. The scale of the disaster is breathtaking, with 40,000 to 60,000 people displaced from 12 villages and forced to take refuge after their homes and land were buried. Some 30,000 to 60,000 cubic meters of mud bubble to the surface per day, down from 180,000 cu m in 2011 according to disaster management authorities –but still the daily equivalent of 12 to 24 Olympic-sized swimming pools. The land is so badly contaminated that it is probably unusable for centuries.
Damages at last count have topped US$2.7 billion. Some 4,000 hectares of fish and shrimp ponds have been destroyed. Mud has escaped into surrounding rice fields, destroying rice farmers’ incomes. In addition, the impact of offloading the water extracted from the mudflow into the waters in East Java is a further cause of economic and environmental devastation, according to a scholarly paper on the disaster by authors Nunung Rahayu, Nadia Nareswari and Suprandi Putri Nurina of Gadjah Mada University.
Lapindo Brantas was controlled by Bakrie, the Coordinating Minister for Public Welfare at the time of the disaster and head of Bakrie Group. The family, through its investments, held a controlling stake in PT. Energi Mega Persada, Lapindo Brantas’s parent company. According to Globe Asia magazine, Bakrie was one of Indonesia’s wealthiest men in 2018, with an empire worth US$2.05 billion. Bakrie-controlled companies have interests spanning Indonesia’s economy in mining, oil and gas, palm oil, property, telecommunications and finance. He is no longer active in Golkar Party, which he used to lead, although he remains an important player in Indonesia’s game.
Although Bakrie officials have sought to blame the 6.2 magnitude earthquake, which occurred in Yogyakarta two days earlier, the mudflow has been a personal disaster for Bakrie's finances and reputation despite an "Oscar” awarded by the Environment Ministry to his companies in 2009 for complying with environmental and safety standards.
International geologists from the United States, Britain and Australia, writing in the journal Nature Geosciences, concluded that an analysis of underground gas levels measured at the time of the outburst points the finger to gas exploration — not an earthquake — as the trigger, a research team from the United States, Britain and Australia wrote in the journal Nature Geosciences.
An investigation found that steel encasing linings had not been used, which would have prevented the disaster. Others charged that a safety cap that should have been deployed in the event of such an accident was nowhere to be seen.
In 2016, the Indonesian government under President Joko Widodo agreed to use state funds to help a holding group belonging to Aburizal Bakrie pay Rp781 billion (US$55.6 million at current exchange rates) to mudflow victims at the end of 2015. The deal was sealed under a presidential regulation stipulating that Lapindo would pay compensation to the government within four years with an interest rate of 4.8 percent per year – free of tax. The debt matured on July 10 and has now become Rp 1.7 trillion due to added interest and penalties.
The Bakrie response has been underwhelming.
"There has been no additional payment to date," said Director of State Assets at the Ministry of Finance Meirijal Nur. “The government has made various efforts to collect debt through the Minister of Finance and the Lapindo Mud Control Center in the past four years, but there has been no progress until now."
Vice President Ma'ruf Amin last week said the finance ministry is still handling the settlement of the debts. "We are waiting for an explanation from the Minister of Finance," Amin said.
The Managing Director of Bakrie and Brothers, Anindya N. Bakrie, said his company had formed a team to discuss the settlement of the bailout funds with the government, but can’t estimate the time period for the negotiations will end. "We want a good solution. We respect what is directed by the government," Anindya said last week.
In 2018, the company claimed to be owed US$128.24 million by the government for cost recovery, which they proposed as payment. The proposal was rejected by the government.
Although the disaster cut severely into operations, forcing the company to halt its activities in the mudflow area and pay compensation of Rp3.8 trillion, the Bakrie Group's upstream oil and gas business is now showing sign of revival. In 2018, the company successfully secured oil and gas block management rights and contract extensions from the Ministry of Energy and Mineral Resources (ESDM).
In 2016, the government allowed Lapindo to reopen operations in the Brantas Block in the hope that they could meet their debts. Although the block contract will expire next year, in August 2018 Lapindo received a new contract valid for the next 20 years starting on April 23, 2020. The Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources said the contract was extended because no other contractors dared to work on the Brantas Block out of concern that the disaster could recur.
In October 2018, another Bakrie company, PT Minarak Brantas Gas obtained the management rights of the Banyumas Block in Central Java covering 3,612 square kilometers, with potential oil reserves of 45 million barrels.
Long-term Impact of Lapindo Mudflow
The Indonesian Forum for the Environment (WALHI) in a report titled "Ecocide, Breaking Corporate Impunity" said that because of heavy metals exposure and toxic pollution from smoke released by the mudflow, residents of the affected area are vulnerable to least 10 types of diseases including diarrhea, skin infections, typhus and respiratory infections.
Harwati, a local resident affected by the disaster, said the discourse regarding responsibility focused only on compensation to the victims without attention to their socioeconomic rights, including health issues.
"There are many cases which show that the government pays little attention to the rights of victims,” he said. “In health problems, for example, there are many symptoms of serious illnesses such as cancer and heart disease, while there is no health insurance. Lapindo victims are forced to pay extra for hospital treatment.”
The East Java WALHI Director Rere Christanto said the increase health problems are the result of environmental degradation. Research from 2008 to 2016 found the soil and water in the area contained Polycyclic Aromatic Hydrocarbon, which triggers cancer, up to 2000 times above the normal threshold. Another report by the Settlement Feasibility Team formed by the East Java Governor found the level of air pollution by hydrocarbons reached a level of 8,000 -- 220 times the threshold.
The WALHI study also found high levels of heavy metals in the body of the biota in the Porong River used as a dump for the mudflow. Heavy metal contamination was confirmed in community wells in nearby villages, fouling the water and rendering it undrinkable.
Another victim, Ikhwan, said the citizens have rejected the extension allowing Lapindo to reopen the Brantas. There is no mechanism to guarantee people's assets and the environment sustainability.