Tag: financial times

  • Jakarta puts own interests first in tale of two disasters

    On May 27 last year, 6,650 people died and 450,000 homes were damaged or destroyed when an earthquake struck near the Indonesian city of Yogyakarta.

    Two days later, mud started gushing from the ground 280km to the east after a mishap near the town of Sidoharjo at an exploratory drilling well. More than 11,000 homes and two dozen businesses have since been buried under 20m-deep mud flows that are still spewing at a rate of 130,000 cubic m a day. Rail, road and gas links to a large section of east Java have been severely disrupted, sending reconstruction costs and estimated economic losses soaring to billions of dollars, more than that of the earthquake.

    A year on, the Indonesian government’s contrasting responses to these two separate disasters demonstrate the significance of decisive political leadership and the continuing power of well- connected businesspeople.

    Only 1 per cent of people who lost their homes in Yogyakarta lack temporary shelter or a permanent new home. More than 90 per cent of markets, schools and health centres have been rebuilt and more than 80 per cent of damaged irrigation networks are functioning properly.

    “In the 10 years that I’ve been doing this, this (recovery) has gone the most smoothly,” says Peter Manfield, of the United Nations’ co-ordination office.

    Bill Marsden, recovery co-ordinator for the International Federation of the Red Cross in Yogyakarta, says the reconstruction process could be finished next year, a year earlier than expected.

    “The crucial thing was the speed with which the government mobilised the money and the system that was used,” he says. “It wrong-footed everyone. No one thought it would be possible to disburse so much money so quickly. It has shown what can be done with the right political will.”

    The local government in Bantul, the worst-affected district, received its 2007 reconstruction funds in April; regular central government budget allocations are unlikely to be disbursed for another month.

    President Susilo Bambang Yudhoyono had good reason to act so efficiently. “Yogyakarta is the heartland of the nation,” says a diplomat. “The president could not afford to neglect millions of people on his doorstep.”

    The situation in Sidoharjo could not be more different. Lapindo Brantas, the company doing the drilling that police say triggered the mudflow, is owned by the family of Aburizal Bakrie. Mr Bakrie is the senior welfare minister and a prominent member of Golkar, which as the largest party in parliament provides key support to Mr Yudhoyono. This has cast a dark shadow across the whole relief operation.

    “If Bakrie hadn’t been involved, the situation would not have been like it is now,” says Anton Soedjarwo, director of Dian Desa, a relief organisation. “The response would have been more pragmatic.” Mr Bakrie has denied that Lapindo employees’ negligence caused the disaster but he has agreed to buy all the victims’ destroyed property and pay some of the clean-up cost.

    Lapindo has been ordered to pay for much of the clean-up but no one in the government is willing to say that the company was responsible for causing the mudflow. Political analysts and government officials say the dilemma facing Mr Yudhoyono is that he does not want to alienate a crucial supporter but he cannot afford to let Mr Bakrie off the hook.

    “The result is that he has been indecisive and the people on the ground are suffering the consequences,” says an official involved in disaster management. “When elite interests are involved, they always seem to take priority over tackling the core of the problem.”

    Virtually all affected residents have received money for rent and monthly allowances from Lapindo. But only a few dozen have begun to receive compensation promised by Lapindo.

    Khairul Huda, a university lecturer who has helped co-ordinate the response in one village, says the frustration over the slow disbursement of money has grown to a point where demonstrations have become regular.

    “The problem is the political will of the government and Lapindo. It’s just not there,” he says. “We don’t know whether there’s an elite conspiracy or not. We just know we’re not getting our money.”

    Despite the scale of the destruction, Mr Yudhoyono has yet officially to declare the mudflow a disaster. Central government aid has been limited and non-governmental organisations have established only token presences. There has also been little progress in the prosecution of those responsible for the drilling mishap. It took the police nine months to complete their investigation but the case has yet to go to trial. Conspicuously, only individual employees and contractors, not the company, are being probed as suspects.

     John Aglionby 

    © Financial Times

  • Lapindo Blamed for Mudflow in East Java

    A two-year-old mud volcano in East Java that has submerged six villages, displaced 12,000 families and inundated hundreds of hectares of land, was caused by drilling negligence rather than natural causes, according to new research by British and US academics.

    The research, seen by the Financial Times, provide the most conclusive findings to date that Lapindo Brantas, the oil and gas company drilling an exploratory well 150m from the eruption site, triggered the mudflow on May 29 2006. The mud is still flowing at more than 100,000 cubic metres a day – enough to fill 53 Olympic swimming pools.

    Lapindo, which has seen the report, acknowledges it made significant mistakes less than a day before the eruption, but says these had no bearing on the subsequent mudflow. It says the incident was a natural disaster caused by tectonic activity unsealing a geological fault close to the drill site.

    The political fallout for President Susilo Bambang Yudhoyono at legislative and presidential elections could be significant if prosecutors proceed to court and Lapindo is found liable.

    The government agreed to share the multi-billion dollar clean-up costs with Lapindo, which is owned by the family of Aburizal Bakrie, the chief welfare minister.

    Geologists Richard Davies of Britain’s Durham University and Michael Manga of the University of California at Berkeley in the US said they were “98 percent certain” that Lapindo was responsible. “In geology you can rarely be 100 per cent certain about anything,” Dr Davies said. “There are so many unlikely coincidences – Lapindo was either the unluckiest drilling company anywhere in the world ever, or they caused the disaster.”

    The academics concluded that the disaster began with the drilling crew’s failure to detect for 90 minutes a “massive” influx of water and gas, known as a kick, into the 2,834m-deep drilling hole the day before the eruption. They say that by the time the hole had been closed to contain the kick, the pressure in the hole had risen so much that it exceeded the maximum allowable pressure and the sides fractured.

    Lapindo acknowledges that its personnel failed to detect the kick promptly, but says that the pressure in the bore never exceeded the maximum allowable.

    The company points to a 5.9-magnitude earthquake 250km to the south-west on May 27 as evidence of tectonic activity occurring at the time, suggesting that it opened the Watukosek fault, on which the drill site was located.

    “We’re trying to look for answers for what happened,” said Bambang Istadi, Lapindo’s former exploration manager and now the Bakrie Group’s senior vice-president for technical services.

    Dr Manga said there was no evidence of an escalation of tectonic activity over the previous year, that bigger earthquakes nearer the eruption site had not caused mud eruptions and that the fault would have been more likely to close than open, based on the way the Earth’s plates moved to cause the Yogyakarta earthquake.

    Separately, an unpublished analysis carried out for the Indonesian police and seen by the FT points to potentially crucial errors in Lapindo’s pressure calculations.

    Harry Eddyarso, who has 25 years of worldwide drilling experience, was commissioned by the Indonesian police to analyse the data submitted by the companies involved in the drilling.

    “I’m 100 per cent certain Lapindo is to blame,” he said. “They made one mistake after another.” The police have publicly accused Lapindo of responsibility for the mud slide but prosecutors have declined to proceed to court, citing reports from scientists who have attributed the mud flow to natural causes.

    Last year the Bakrie Group bought the 32 percent stake in Lapindo owned by Medco Energi, Indonesia’s largest private energy company, in exchange for Medco withdrawing arbitration proceedings against Lapindo.

    The government said last week it was focusing on cleaning up the mess and helping the victims.

    John Anglionby 

    © Financial Times