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Land Acquisition and Resettlement Policy Framework

Proposed Geothermal Clean Energy Investment Project

February 2011

Pertamina Geothermal Energy

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RP1006 REV

265718 RGE GEV 16 A

C:\Documents and Settings\boy20138\Local Settings\Temporary Internet Files\OLK3A\PGE Land Acquisition and Resettlement Policy

23 February 2011


Proposed Geothermal Clean Energy Investment Project

February 2011

Pertamina Geothermal Energy

Mott MacDonald, Victory House, Trafalgar Place, Brighton BN1 4FY, United Kingdom

T +44(0) 1273 365 000 F +44(0) 1273 365 100, W www.mottmac.com

Menara Cakrawala 15th Floor, Jalan MH. Thamrin No. 09 Jakarta 10340, Indonesia


Mott MacDonald, Victory House, Trafalgar Place, Brighton BN1 4FY, United Kingdom

T +44(0) 1273 365 000 F +44(0) 1273 365 100, W www.mottmac.com

Revision Date Originator Checker Approver Description

A 25 February 2011 T. Streather H. White

D. Boyland I. Scott First Issue

Issue and revision record

This document is issued for the party which commissioned it

and for specific purposes connected with the above-captioned

project only. It should not be relied upon by any other party or

used for any other purpose.

We accept no responsibility for the consequences of this

document being relied upon by any other party, or being used

for any other purpose, or containing any error or omission which

is due to an error or omission in data supplied to us by other

parties

This document contains confidential information and proprietary

intellectual property. It should not be shown to other parties

without consent from us and from the party which

commissioned it.

265718/RGE/GEV/16/A 23 February 2011 C:\Documents and Settings\boy20138\Local Settings\Temporary Internet Files\OLK3A\PGE Land Acquisition and Resettlement Policy Framework.doc

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Chapter Title Page

1. Introduction 1

1.1 Background________________________________________________________________________ 1

1.2 World Bank Operational Policy 4.12 (Involuntary Resettlement)________________________________ 1

1.3 Report Structure ____________________________________________________________________ 2

1.4 Resettlement Policy Framework – WB OP 4.12 ____________________________________________ 2

2. Institutional and Legal Policy Framework 5

2.1 PGE’s Land Acquisition Approach and the Legal Requirements _______________________________ 5

2.2 PGE’s Land Acquisition Principles ______________________________________________________ 5

2.3 PGE’s Institutional Management of Land Acquisition ________________________________________ 6

2.4 Negotiated Settlement Land Acquisition Procedure _________________________________________ 7

2.4.1 Site Selection ______________________________________________________________________ 7

2.4.2 Initial Socialization (consultation) _______________________________________________________ 7

2.4.3 Topographical Survey ________________________________________________________________ 7

2.4.4 Market Analysis_____________________________________________________________________ 7

2.4.5 Consultation with Affected Households___________________________________________________ 7

2.4.6 Submission of Land Acquisition Plan ____________________________________________________ 7

2.4.7 Negotiations _______________________________________________________________________ 8

2.4.8 Inventory of Individual Household Assets _________________________________________________ 8

2.4.9 Individual Agreements _______________________________________________________________ 9

2.4.10 Owners Submit Documentation ________________________________________________________ 9

2.4.11 Payment by PGE ___________________________________________________________________ 9

2.4.12 PGE Transfers Revised Letters to Owners ________________________________________________ 9

2.5 Resettlement Planning when Expropriation is Required ______________________________________ 9

2.5.1 Overview__________________________________________________________________________ 9

2.5.2 Planning for Expropriation and/or Resettlement ___________________________________________ 10

2.5.3 Resettlement Planning Instruments ____________________________________________________ 10

2.5.4 Managing Gender Considerations _____________________________________________________ 11

2.5.5 Establishment of the District Land Acquisition Committee (DLAC) _____________________________ 11

2.5.6 Disclosure, Consultation (Socialisation) and Deliberation (‘Musyawarah’) _______________________ 12

2.5.7 Organising Independent Assessment ___________________________________________________ 12

2.5.8 Socio-economic and Asset Census of Project Affected Persons (PAPs) ________________________ 12

2.5.9 Eligibility and Entitlements ___________________________________________________________ 13

2.5.10 Eligibility Criteria ___________________________________________________________________ 13

2.5.11 Compensation_____________________________________________________________________ 14

2.5.12 Determining Entitlements to Compensation ______________________________________________ 14

2.5.13 Replacement Land or Shelter _________________________________________________________ 16

2.5.14 Income and Livelihood Restoration_____________________________________________________ 17

2.5.15 Vulnerable / Severely Affected People’s Assistance________________________________________ 17

2.5.16 Grievance Mechanism ______________________________________________________________ 17

2.5.17 Land Possession___________________________________________________________________ 18

2.5.18 Resettlement Budget and Financing____________________________________________________ 18

2.5.19 Implementation Process _____________________________________________________________ 18

2.6 Monitoring and Reporting ____________________________________________________________ 20

Content


ii


2.6.1 Project Documentation ______________________________________________________________ 20

2.6.2 Monitoring and Evaluation of ARAPs and RAPs___________________________________________ 20

3. Land Acquisition and Crop Compensation to Date (1st January 2011) 22

3.1 Ulubelu 3 & 4 _____________________________________________________________________ 22

3.1.1 Land Acquisition ___________________________________________________________________ 22

3.1.2 Crop Compensation ________________________________________________________________ 24

3.2 Lahendong 5 & 6___________________________________________________________________ 24

3.2.1 Land Acquisition ___________________________________________________________________ 24

3.2.2 Crop Compensation ________________________________________________________________ 25

3.3 Land Acquisition Planned ____________________________________________________________ 26

3.3.1 Ulubelu 3 & 4 _____________________________________________________________________ 26

3.3.2 Lahendong 5 & 6___________________________________________________________________ 26

3.4 PGE Valuation and Compensation Experience____________________________________________ 27

4. Summary 29

Appendices 31

Appendix A. Requirements of Resettlement Plans ___________________________________________________ 32

A.1. Abbreviated Resettlement Plan (ARAP) _________________________________________________ 32

A.2. Resettlement Action Plan (RAP)_______________________________________________________ 32

Tables

Table 2.1: Entitlement Matrix __________________________________________________________________ 14

Table 2.2: Resettlement Plan Preparation and Implementation________________________________________ 19

Table 3.1: Ulubelu Land Acquisition Undertaken for Main Project Components ___________________________ 23

Table 3.2: Agreed Tariffs for Crop Compensation– Ulubelu Cluster C __________________________________ 24

Table 3.3: Lahendong Units 5 & 6 Land Acquisition Summary ________________________________________ 25

Table 3.4: Crop Compensation Summary – Lahendong Units 5&6 _____________________________________ 25

Table 3.5: Damaged Crops Compensation – Cluster 27 _____________________________________________ 26

Table 3.6: Land Price Comparison at Ulubelu Units 3 & 4 and Lahendong Units 5 & 6 (2006 to 2009) _________ 27

Table 3.7: Tree Price Comparison at Ulubelu and Tompaso (Lahendong Units 5 & 6) ______________________ 27


1


1.1 Background

Pertamina Geothermal Energy (PGE), a subsidiary of PT Pertamina (Persero), was established in 2006 as

mandated by the Government of Indonesia (GoI) to develop 15 Geothermal Business Working Areas in

Indonesia.

Geothermal power is a clean and efficient alternative for diversifying Indonesia’s electricity generation mix.

Indonesia has the world’s largest geothermal potential that could fuel about 27,000 MW of generation

capacity. However, the resource makes up only 3.2 percent of the present generation capacity.

The GoI has requested a loan from the World Bank (WB) to support the development of up to 370 MW of

capacity. The designated implementing agency is PGE who has requested the WB to assist with finance

investment in two sites at an advanced stage of preparation: Ulubelu Units 3&4 in Lampung Province,

Sumatra, and Lahendong Units 5&6 in North Sulawesi

The development objective of the proposed WB investment is to increase the utilisation of clean

geothermal based electricity in order to reduce pollution and improve the environment. This will be

achieved through: a) development of geothermal power generation capacity in fields under the control of

PGE, and b) strengthening the institutional capabilities of the company through technical assistance and

capacity building so that PGE can contribute to sector development on a sustained basis.

The bulk of project investment will be devoted to establishing up to 150 MW of power generation capacity

(Ulubelu Units 3&4 and Lahendong Units 5&6) which will include the confirmation of resources, production

drilling, development of the steam gathering systems, and the construction of the power plants. Upon

completion, PGE will be in a position to sell geothermal power into the national electricity grid in order to

meet growing electricity demand in an environmentally friendly manner.

Pertamina has been working in Ulubelu since the mid 1990s undertaking preliminary exploration surveys.

Since the establishment of PGE in 2006 as a subsidiary of Pertamina, PGE progressed with developing a

number of clusters, drilling wells and preparing the roads and other infrastructure needed to start

production. Lahendong Units 5&6 is actually located on the Tompaso field which is located near PGE’s

existing Lahendong field in operation since 2000. Work in the Tompaso field (registered as Lahendong

Units 5&6) started in 2007, resulting in two production clusters and one reinjection cluster.

1.2 World Bank Operational Policy 4.12 (Involuntary Resettlement)

Land for all facilities will be, or has been acquired by PGE. Since PGE is legally registered as a private

company, it acquires land through direct negotiations, based on the principle of willing buyer-willing seller.

However, PGE can request expropriation if negotiations fail and if no viable alternative siting exists.

Therefore, the World Bank Operational Policy (OP) 4.12 (Involuntary Resettlement) would be triggered, for

which PGE has prepared this Land Acquisition and Resettlement Policy Framework, which describes in

detail PGE’s land acquisition procedures as well as steps that will be taken under expropriation. OP 4.12

includes safeguards to address and mitigate against impoverishment risks associated with any land

acquisition or involuntary resettlement under development projects.

1. Introduction


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The primary objective of this Land Acquisition and Resettlement Policy Framework and Note is to provide

details of the land acquisition procedures employed by PGE on both project sites to date, as well as an

indication as to the expected land acquisition required for the remainder of the Project. This demonstrates

that PGE practices follow the principle of willing buyer-willing seller. A secondary objective is to provide

detailed procedures that will be applied if PGE requests the expropriation of any land, as well as

requirements for reporting to the World Bank to ensure and demonstrate compliance with OP 4.12.

Although this policy framework is intended to provide a framework for land acquisition and resettlement

impacts associated with these specific projects, it is also intended to provide an overarching framework for

land acquisition relevant to any future project that PGE pursues.

Resettlement in this document refers to the direct economic and social impacts that are caused by the

involuntary taking of land which results in relocation or loss of shelter, loss of assets or access to assets, or

loss of income sources or means of livelihood whether or not the affected persons must move to another

location. The Bank policy also refers to the involuntary restriction of access to legally designated parks and

protected areas resulting in adverse impact on the livelihoods of the displaced persons.

1.3 Report Structure

PGE has prepared this Land Acquisition and Resettlement Policy Framework (LARPF) as a means to

demonstrate compliance with both national laws and regulations and international best practice as

exemplified by WB OP 4.12. The document consists of two main sections:

1. Firstly, an outline of PGE’s Land Acquisition and Resettlement Policy Framework which includes

acquisition principles and corporate and field-level institutional and management arrangements by PGE

Land Acquisition Teams. A detailed description of PGE’s actual approach to land acquisition through

negotiated settlement is provided. In addition, by law PGE may request the Government to expropriate

land through eminent domain1 (under the Presidential Regulation, Perpres 65/2006) as a last resort.

The LARPF also includes procedures in order to ensure compliance with WB OP 4.12.

2. Secondly, a description of land acquisition and asset compensation undertaken to date as well as the

land acquisition anticipated to complete Ulubelu Units 3&4 and Lahendong Units 5&6 sites.

Additionally, a comparison of the variation in prices paid for land and trees/crops across time and

between locations is provided.

The document is based upon known information at the time of writing and is intended to be a live document

that can be updated and modified to reflect changes in law and/or acquisition status.

1.4 Resettlement Policy Framework – WB OP 4.12

This Land Acquisition and Resettlement Policy Framework corresponds with the requirements of a

Resettlement Policy Framework, the components of which are described in WB OP 4.12 Annex A

(paragraphs 23 – 25) and are shown below:

_________________________

1 Eminent domain is the right of the state to acquire land, using its sovereign power, for public purposes. National law establishes

which public agencies have the prerogative to exercise eminent domain.


3


(a) a brief description of the project and components for which land acquisition and resettlement are

required, and an explanation of why a resettlement plan as described in paras. 2-21 or an abbreviated plan

as described in para. 22 cannot be prepared by project appraisal;

A project description is provided as part of the projects specific information in Section 2 of the ESIA

Volume 2. No resettlement has occurred to date and none is envisaged at this stage. Should expropriation

or resettlement be required at a later stage, an outline of the requirements of an ARAP and a RAP is

provided in Appendix A and a framework for resettlement is provided in this document.

(b) principles and objectives governing resettlement preparation and implementation;

PGE’s principles for land acquisition are outlined in Section 2.2.

(c) a description of the process for preparing and approving resettlement plans;

Section 2.5 provides details on the necessary pre-requisites and procedures for resettlement planning

should it be required.

(d) estimated population displacement and likely categories of displaced persons, to the extent feasible;

Section 3.3 gives information regarding the land acquisition needed for the remainder of the Ulubelu 3&4

and Lahendong 5&6 projects. Details on the number of affected persons are yet to be established; no

persons are expected to be displaced.

(e) eligibility criteria for defining various categories of displaced persons;

Eligibility for entitlements is discussed in Section 2.5.10.

(f) a legal framework reviewing the fit between borrower laws and regulations and Bank policy requirements

and measures proposed to bridge any gaps between them;

The legal framework is reviewed in Section 2.1.

(g) methods of valuing affected assets;

Section 2.5.7 describes the establishment of an independent assessment to value affected assets if there

is expropriation.

(h) organizational procedures for delivery of entitlements, including, for projects involving private sector

intermediaries, the responsibilities of the financial intermediary, the government, and the private developer;

Organisational procedures, roles and responsibilities are detailed in Section 2.3.

(i) a description of the implementation process, linking resettlement implementation to civil works;

The implementation process is presented in Section 2.5.19.

(j) a description of grievance redress mechanisms;


4


This is described in Section 2.5.16 and draws on the grievance mechanism presented in the Public

Consultation and Disclosure Plan for the ESIA for the project (Appendix B, Volume III), which will be

disclosed when completed.

(k) a description of the arrangements for funding resettlement, including the preparation and review of cost

estimates, the flow of funds, and contingency arrangements;

Issues of funding are addressed by Section 2.3 and Section 2.5.18 discusses cost estimation in the event

of expropriation or involuntary resettlement. Examples of prices paid for land and assets for the two sub-

projects (Ulubelu 3 &4 and Lahendong 5&6) are shown in Sections 3.1 and 3.2.

(l) a description of mechanisms for consultations with, and participation of, displaced persons in planning,

implementation, and monitoring; and

Consultation with project affected persons (PAPs) is a key element of this Land Acquisition Framework and

is an inherent part of PGE’s existing practices. This document discusses consultation in Section 2.4.2,

which describes PGE’s current procedures of negotiated settlement, and in Section 2.5.6 which describes

the processes required for consultation when expropriation of land becomes necessary.

(m) arrangements for monitoring by the implementing agency and, if required, by independent monitors.

Monitoring, reporting and evaluation requirements are discussed in Section 2.6.


5


2.1 PGE’s Land Acquisition Approach and the Legal Requirements

As a subsidiary of the state owned oil company PT Pertamina (Persero), PGE is legally registered as a

private company in accordance with the Law and Human Rights Ministerial Decree Number W7-00089

HT.01.01-TH. 2007, Amendment Number: AHU-74736.AH.01.02.Tahun 2008.

PGE acquires land through direct negotiations, based on the principle of ‘willing buyer-willing seller’. By

law, PGE also has the option to acquire land under the rubric of public interest, utilising the principle of

eminent domain according to the provisions of the presidential decree Perpres 65/2006. The use of

Perpres 65/2006 has a controversial history in Indonesia resulting in project affected persons (PAPs)

refusing to relocate and riots. It is not a popular regulation amongst public officials or infrastructure

developers, who tend to avoid its use where possible.

Perpres 65/2006 is expected to be replaced by a national law on Land Acquisition in the Public Interest

which is currently being drafted and championed by the President2. This law, whilst still specifying

procedures for use of eminent domain, is expected to be more participatory than Perpres 65/2006 and

more aligned with best practice for land expropriation, as exemplified in WB OP 4.12.

PGE commits to employing expropriation and the use of the principle of eminent domain only as a last

resort in the unlikely event of failure to negotiate a settlement and to identify a viable alternative site. If

PGE decides to exercise this right, the approach used will be fully compliant with provisions of the

prevailing law on Land Acquisition in the Public Interest and adjusted to ensure compliance with World

Bank OP 4.12. This approach is described in more detail below.

2.2 PGE’s Land Acquisition Principles

As stated in their internal policy document on ‘Land Acquisition for Geothermal Exploration and

Exploitation’ (No. B-001/PGE500/2008-S0), which this documents complements, PGE adopts the following

principles which are consistent with international best practice when undertaking land acquisition:

a. PGE will ensure that compensation is paid based on replacement value which takes into account

prevalent market prices as determined through consultation with affected persons (owners) and

agreement with village heads along with transaction costs to enable all affected land owners to

replace their affected assets.

b. PGE will acquire land that is free of any encumbrances and to the extent possible does not affect

any households other than the land owners. Where this is not possible, land users, whether titled or

not, will be compensated, especially leaseholders and shareholders.

c. Land acquisition for development shall involve public participation commencing from the planning

stage of development through to execution and the post-acquisition of land stage – all negotiations

with the land owners and users will be carried out collectively in an accessible location, and in the

presence of village heads and community leaders, in an open and consultative manner without any

coercion and with sufficient time for consideration of offers.

d. Owners are free to refuse to sell their land or to refuse PGE’s offers. If negotiations fail, an

alternative site is selected and the process begins again.

_________________________

2 Source: Drafting Committee for the Land Acquisition Law

2. Institutional and Legal Policy Framework


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e. When negotiations are completed, inventories of affected land and other fixed assets are prepared in

consultation with affected land owners and a copy of the same is to be given to each land owner.

f. The negotiated amount will be paid within one month after all necessary documents required for the

land acquisition process have been completed by the land owners.

g. All market analysis, negotiation and other consultation proceedings will be documented and the

agreement for sale and purchase of land will be signed by the negotiating parties in the presence of

PPAT (Pejabat Pembuat Akta Tanah) and the village head or community leaders.

h. In the unlikely case where expropriation is pursued, it will be done in such a way to ensure that the

PAPs’ pre-project standard of living is improved and at a minimum restored.

i. Perpres 65/2006 or the anticipated new law on Land Acquisition in the Public Interest (‘eminent

domain’) will not be used for any land acquisition except in cases where direct negotiations with the

land owners on a ‘willing buyer-willing seller’ basis fails AND, alternative sites cannot be identified

for technical reasons without resulting in significant project component cost increases.

This process aims to be transparent, consultative, fair, and open.

2.3 PGE’s Institutional Management of Land Acquisition

At the corporate level, land acquisition for geothermal projects is headed by the Vice President of Support

Services at PGE3, who is responsible for guiding the Land Acquisition Teams (LAT) that are established for

each project. Each LAT is comprised of staff with the required skills representing the following

departments: Legal, Finance, Planning and Management; plus the Project Manager or General Manager

for each respective geothermal field. In practice, the Project Manager or General Manager will be assisted

by other staff such as Public Relations Officers with good communication skills, who are respected and

sought out by local residents and officials in relation to land acquisition and compensation.

In addition to the LAT, a Corporate Secretary helps coordinate between different PGE departments and

follows-up on the decisions taken in meetings. The roles and responsibilities of each member of the LAT

are clearly defined in the Pertamina’s internal order Prin-1062/PGE000/2007-S8, particularly regarding

decision-making and documentation.

The project LAT working in the field reports back to the corporate level at two points in the process, and

possibly a third as well:

a. First, after completing the topographical survey and market research, and reaching the decision that

local people are amenable to selling, the team reports on the process and proposes compensation

levels which are reviewed and endorsed by the corporate level. At this time, funds to make

payments should be ring fenced.

b. Second, if local owners insist on prices significantly higher than the range agreed by the corporate

team, the project team refers to the corporate level for guidance.

c. Finally, once negotiations are concluded and final agreements are signed by individual owners, the

corporate level arranges budget approval to release funds for payment.

In the highly unlikely event that eminent domain is sought and expropriation is followed, PGE personnel will

participate in the District Land Acquisition Committee (DLAC) in accordance with Perpres 65/2006 as

described below (see Section 2.5).

_________________________

3 Meanwhile, in the Vice President’s absence, the Corporate Secretary will take this responsibility


7


2.4 Negotiated Settlement Land Acquisition Procedure

The Project LAT goes through at least twelve distinct steps in the negotiated settlement land acquisition

process. They are described below.

2.4.1 Site Selection

Based on technical investigations, PGE selects a potential site and prepares preliminary designs that

indicate the likely location of platforms (clusters), roads, and other major characteristics. Meetings are held

with kecamatan (sub-district) and village officials to discuss preliminary designs and potential sites.

2.4.2 Initial Socialization (consultation)

Kecamatan and village officials conduct village level meetings to acquaint villagers with the nature of the

investment and the implications of construction for land acquisition, traffic, and other factors and discuss

potential benefits and impacts. These public information and dissemination meetings are generally held in

all villages in the kecamatan, beyond the immediate range of impact.

2.4.3 Topographical Survey

The project carries out a detailed topographical survey and mapping of the project area to pinpoint cluster

sites, roads, and other elements. An inventory of typical above-ground assets (crops, trees) is mapped on

cadastral maps to identify affected households.

2.4.4 Market Analysis

While the land survey and inventory are underway, PGE also obtains information on prevalent market

prices for the types of land, structures, trees and crops in the area. These prices are established though

consultation and agreement with village heads on both formal and informal (undocumented) market

transactions. Information on NJOP prices for land is collected from the village office. Information on

prevalent market prices is obtained by gathering information on both formal and informal (undocumented)

market transactions from discussions with local officials such as village heads.

2.4.5 Consultation with Affected Households

Staff approach members of affected households to discuss their willingness to sell the land required,

acquaint them with steps in the purchase process and, if the owners are amenable, prepare them for the

inventory and negotiations. Details of the grievance mechanism should also be made available to PAPs at

this point. Once the formal Grievance Mechanism is adopted, an outline of it will be distributed in each

discussion.

2.4.6 Submission of Land Acquisition Plan

Staff compile topographical, market and landholding data together with inventory estimates and submit a

report to the corporate office that proposes compensation levels and seeks endorsement.


8


2.4.7 Negotiations

Once the corporate office grants clearance of the Land Acquisition Plan, which should take approximately

one week, PGE staff start contacting land owners, individually and in groups to organize public meetings

prior to negotiations. It may take from one to three weeks to arrange public meetings, depending on how

difficult it is to contact all the land owners. The lag time between the first contact and the meeting provides

land owners with the opportunity to obtain information on prices and prepare themselves for negotiations.

All negotiations with the land owners are carried out collectively, and in the presence of village heads and

community leaders, in an open and consultative manner without coercion.

PGE starts negotiation sessions by providing information about the assets likely to be acquired for the

Project and then requests land owners for their asking prices for land per square metre. PGE then reviews

the offers and makes a counter offer, usually corresponding to the lowest requested price levels. Owners

are invited to discuss the offer among themselves and the next meeting is convened when owners are

ready for further discussion. Negotiation usually takes two to five rounds depending on the complexity of

the issues.

Once the land price is set, the unit price of other assets is also negotiated and these discussions are

generally easier to conclude. Once PGE and the owners agree on prices of both land and other assets and

negotiations are concluded, minutes of negotiations are prepared and signed by project staff, the village

head and other community leaders. The list of participants is signed by all present as confirmation of their

concurrence with the agreed prices.

In the event that the asking prices by land owners is significantly higher than the range provided by the

LAT, the matter is referred back to the Corporate LAT for further guidance and possible approval of

alternate rates. Ultimately, owners are free to decline the offer made by PGE and to decline to sell their

land for the Project.

When it is clear that land owners decide to not sell their land to PGE either due to disagreement over the

rates or for other personal reasons, PGE will make efforts to change the project design and find alternative

land parcels that meet project needs. Geothermal development normally requires several clusters of land

parcels of varying sizes often at some distance from each other, instead of one contiguous large plot.

Therefore, PGE has the flexibility to revise their project designs and change the location of the land that

needs to be acquired. PGE re-located proposed Platforms A and C in Ulubelu when negotiations failed for

the original sites; and the design of one platform in Lahendong was revised to exclude one parcel when the

owner could not provide the documentation needed to conclude a transaction.

If an alternative site cannot be identified due to technical reasons that would result in significant cost over-

runs, PGE may decide to pursue expropriation and exercise ‘eminent domain’ as a last resort. Additional

steps are required to ensure expropriation is done in accordance with Indonesian law and World Bank

OP 4.12, as specified in Section 2.5 below. It should be reiterated, however, that PGE has no intention of

resorting to expropriation.

2.4.8 Inventory of Individual Household Assets

Once agreement on land and asset unit prices is reached between the PAPs and PGE, PGE staff meet

with each owner to make a thorough inventory of household assets. This includes all standing crops, trees

and structures. Prices vary according to the age and productivity of the trees. Where possible, evidence

regarding age and productivity is provided. The inventory is signed by both parties with witnesses.


9


2.4.9 Individual Agreements

Based on the results of the topographical survey, the household inventory and prices established in the

common agreement, PGE drafts a separate purchase agreement with each household, clarifying the

responsibilities of each party for reaching a final settlement. Both parties sign the agreement.

2.4.10 Owners Submit Documentation

When the agreement is concluded, the owners are required to submit their land certificates as proof of

ownership to PGE to process revisions of land titles.

2.4.11 Payment by PGE

PGE is expected to pay compensation within a month of receiving the owners’ documents. It takes two or

three weeks for PGE to obtain budget approval from the corporate office and payments are usually prompt.

PGE makes payments in cash at its offices, witnessed by the head of the village. Each owner signs a

standard agreement that all payments are made and the owner has no further claims over the land and

assets sold to PGE. In addition, owners and PGE jointly sign documents to submit to the BPN to transfer

title for the land.

Villagers have the option of receiving payment in cash or direct deposit in a bank account. To ensure

women are not subjected to pressure or harassment to sign over their rights or relinquish their entitlement

no payment will be made for compensation to a female PAP to a bank account other than one that is

opened specifically for her as the sole account holder.

2.4.12 PGE Transfers Revised Letters to Owners

As the final step in the process, PGE processes the transfer of title at BPN and the Camat (sub-district)

issues a revised land letter indicating the change in land ownership. This is in effect a revised title, rather

than a new title that is issued after the transaction. The revised letter refers to the original plot and

indicates the part of the plot that has been transferred to PGE and the amount still held by the owner.

PAPs will be given one month to vacate the land or sufficient time to collect the last harvest, whichever is

the longest.

2.5 Resettlement Planning when Expropriation is Required

2.5.1 Overview

Following failure to negotiate a settlement or identify an alternative site during PGE’s Land Acquisition

Principles outlined in Section 2.2 above, PGE has the option to expropriate land using Perpres 65/2006 or

the new law on Land Acquisition in the Public Interest once it is enacted. When this occurs, PGE will notify

the Bank of its intent to expropriate land and will decide jointly on the appropriate resettlement instrument

to use. If PGE decides to request expropriation, in addition to the field steps taken under the negotiated

settlement, PGE will undertake resettlement planning and implementation in accordance with WB OP 4.12


10


and aligned with the prevailing laws relating to Land Acquisition in the Public Interest4. In addition, if PGE

determines in advance that a specific site is required, regardless of the outcome of negotiations, it will

notify the World Bank immediately and prepare a resettlement plan in accordance with OP 4.12, prior to

beginning negotiations.

2.5.2 Planning for Expropriation and/or Resettlement

This section outlines the preparatory stages required prior to expropriation or resettlement taking place.

These include: information about how to decide on an appropriate resettlement instrument; the process for

preparing resettlement plans; the eligibility criteria for compensation; an entitlement matrix to ensure fair

compensation for all PAPs; the institutional and legal framework; methods for the evaluation of assets; a

description of the implementation process; a grievance redress mechanism; the arrangements for funding

of resettlement; consultation mechanisms; and arrangements for monitoring of the resettlement process.

2.5.3 Resettlement Planning Instruments

Selecting an appropriate resettlement tool is important. There are two main resettlement planning

instruments for project impacts, namely an abbreviated resettlement action plan (ARAP) which is

acceptable if fewer than 200 PAPs are affected, or if more than 200 people are affected but land acquisition

is minor (10 percent or less of all productive assets of the affected households is taken) and no physical

relocation is involved. A full resettlement action plan (RAP) is required when land acquisition affects more

than 200 people, takes more than 10 percent of household productive assets, and involves physical

relocation. For both types of resettlement plan, preliminary notification that the land is needed for public

purposes will be required.

Full details on the requirements of both an ARAP and a RAP are shown in Appendix A. There are no

fundamental differences in terms of achieving objectives of equality and compensating social cost; however

there are some procedural differences between an ARAP and RAP. The RAP is more detailed and takes

longer to complete. A RAP needs to include a review of the legal and institutional framework (such as is

provided within this document) whereas an ARAP does not. An ARAP can be based on an asset census

with each PAP household while a RAP requires both an asset census and a community socio-economic

survey to provide a monitoring benchmark for understanding how PAPs’ socio-economic conditions have

changed.

The socio-economic survey generally covers one in every four households where PAPs live. It will draw

accurate information and help identify likely impacts of displacement based on a quantitative as well as

qualitative assessment. It also helps with the stakeholder analysis by identifying different categories and

groups, sectors and population involved and analysing the particular ways they are going to be affected. It

provides a useful baseline for evaluating income restoration and ensuring that PAPs are returned to at least

pre-project standards of living.

The RAP also needs to address provisional resettlement arrangements, if relevant, (which may include

transport arrangement and temporary accommodation if needed), livelihood restoration and community

access to service provision as well as land and housing provision.

_________________________

4 If the project is still in effect when the law is changed, PGE will revise this document to update legal provisions and assure

compliance with OP 4.12 and submit it to the Bank for approval


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The Project Land Acquisition Team at PGE will be responsible for coordinating the production of the

appropriate resettlement planning instrument and for ensuring its implementation. The following

procedures and considerations are expected to be part of the resettlement planning and implementation

monitoring processes.

2.5.4 Managing Gender Considerations

Women have important economic roles in project areas, particularly in farming, and the quantity and quality

of water significantly affects their well-being. PGE’s sub-projects will pay particular attention to ensure

women’s needs and perspectives are addressed in entitlement packages and to ensure the impact on them

as well as vulnerable groups is monitored and evaluated. Women will be major participants in the

consultation processes to determine and negotiate for compensation entitlements and implement the

resettlement plans. Where the PAP census identifies women headed households, these will be clearly

listed as beneficiaries of compensation and rehabilitation activities. To address gender issues, the

following actions have been identified:

� Collect gender disaggregated data;

� Include female surveyors in the household survey team;

� Have women only focus group discussions; and,

� Have monitoring indicators and evaluation questions related to how women’s and other vulnerable

groups needs have been addressed in resettlement implementation.

Vulnerable groups that have been identified include the elderly, the disabled or those with long term health

problems, and those who are untitled.

2.5.5 Establishment of the District Land Acquisition Committee (DLAC)

The District Land Acquisition Committee (DLAC) will be established as stipulated by Presidential Decree

Kepres 65/2006, to manage all aspects of the expropriation process in an open, transparent and

participatory manner. The DLAC will comprise of the:

� Bupati (Head of District Administration) who will chair the DLAC;

� District administration land agency representatives (secretary);

� Project affected village head;

� PAP representatives: a minimum of two representatives - one male and one female; and a suggested

one for every fifty PAPs; and

� PGE Land Acquisition Team Leaders.

The DLAC will be responsible for overseeing all of the expropriation activities specified in detail below

including:

� Public consultation and disclosure (socialisation) with PAPs;

� Household socio-economic and asset census surveys;

� Research on the legal status of the plots of land;

� Facilitation of deliberation (musyawarah) between PGE and the PAP with regard to the type of impacts,

form of compensation, appraisal of compensation, and appointment of the appraising agency;

� Preparation and issue of official monitoring reports with regard to the payment of compensation for land,

buildings, plants, and other objects thereon and release of title to land; and

� Administration and documentation of all files on the expropriation process and provision of legalized

copies of the original documents to the district/city land office.


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2.5.6 Disclosure, Consultation (Socialisation) and Deliberation (‘Musyawarah’)

The DLAC shall disclose information about the Project and land acquisition process via a public information

booklet to the PAPs and the village leader explaining the development proposal, the results of the

topographical survey, the failure of the negotiations discussed in Section 2.4.7, the reasons for pursuing

expropriation, the expropriation process moving forward, and the legal rights of the PAP under this

framework. This information will be disclosed in the appropriate local language and in non-technical terms,

taking into account literacy levels. The date of distribution of the public information booklet to PAPs shall

be the cut-off date for eligibility for entitlements under the expropriation process (see Section 2.5.10). The

booklet will contain contact information—names, addresses, phone numbers—for those who wish to raise

queries or grievances (see Section 2.5.16 below). PGE will retain documentation of the receipt of the

information by each PAP.

The DLAC together with PGE will meet with PAPs in order to disclose information about the process and to

deliberate the compensation and income restoration entitlements. This may be conducted several times as

required. In addition to the PAPs, deliberation must also involve the Appraising Agency (as discussed in

Section 2.5.7 below) to ensure exchange of accurate information from the initial stage on the appraisal of

compensation and to prevent speculation on unit prices. Efforts will be made to minimise speculation by

having a transparent and inclusive decision on land rates, by using as much concrete, recent data as

possible, and by not allowing for the implementation schedule to be delayed, therefore reducing the amount

of time available for speculation to occur. The DLAC will ensure female representation to discuss issues

with female PAPs.

2.5.7 Organising Independent Assessment

The DLAC can establish a local assessment group or acquire the services of an appraising agency that has

obtained the required license from the National Land Agency of the Republic of Indonesia to act as an

Independent Assessor. The appointment of independent assessor should be agreed in principle by the

PAPs. The appraising agency shall clearly define in writing and inform affected persons of the proposed

valuation methods prior to beginning the appraisal. Whether a local assessment group is established or an

appraising agency is used, the valuation process is to be guided by the principle that the livelihood of the

people affected by the land acquisition shall be better off or at least equal to their condition before the land

acquisition. Valuation methods need to reflect use of replacement cost as the main basis for appraisal of

physical and economic displacement.

2.5.8 Socio-economic and Asset Census of Project Affected Persons (PAPs)

For a full resettlement action plan, a socio-economic baseline measurement of the PAPs pre-project

standard of living is required. A sample of twenty-five percent of local households must be surveyed to

determine baseline household composition and socio-economic status in terms of health, education,

livelihood, income, expenditure and vulnerability to impoverishment risks.

In addition an asset census for those who will be directly affected and suffer losses must be undertaken

with one hundred percent of PAPs for both abbreviated and full resettlement action plans. Gender-

disaggregated socioeconomic and asset census information for PAPs and local households will be included

in a database for reference and livelihood/income restoration monitoring purposes, particularly for

vulnerable or severely affected PAPs (see Section 2.5.15 below).

Census information will cover, but is not limited to covering:


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� Aggregate number of individuals and households;

� Age, gender, occupation of every individual;

� Ownership of personal property including structures, land, crops on land, other assets such as livestock,

wells, trees, fishing equipment;

� Use of public and common property including land, structures and facilities, and infrastructures; and

� Income sources including farm and natural environment-based income, off-farm labour or employment,

informal sector activities, remuneration from other family members.

During the census, detailed measurements of assets, including land plots, standing crops, in some cases

trees, structures, houses, and equipment will be taken to help value them. Sketches and photographs will

be used to record land use and assist in asset valuation.

2.5.9 Eligibility and Entitlements

Based on the results of the asset census, the entitlement package for each PAP will be prepared. The

entitlement matrix below (Table 2.1) addresses loss of agriculture, non-agricultural, commercial, residential

land, crops, trees, and commercial, residential or other structures and community infrastructure.

Temporary losses are also reflected in the entitlement matrix.

2.5.10 Eligibility Criteria

For the purposes of this framework, a PAP will include:

� any person or household adversely affected by acquisition of assets or change in use of land due to

PGE’s operations;

� any vulnerable and affected person including women, destitute, artisans, tribal communities, squatters,

and those with usufruct rights, poverty groups depending for livelihood upon the land to be acquired by

the project; and

� any other person who may prove and establish his/her right as an affected person to the satisfaction of

the PGE’s Director General of Projects.

Compensation eligibility will be limited by a cut-off date to be set for each subproject as the day of the

distribution of the PAP information booklet. PAPs who settle in the affected areas after the cut-off date will

not be eligible for compensation. They will be given sufficient advance notice to vacate premises and

dismantle affected structures prior to project implementation. Dismantled structures materials will not be

confiscated and ineligible PAPs will not pay any fine or suffer any sanction if completed in the requested

time period.

Those entitled to receive compensation shall be:

� Holders of titles to land whether with certificates or without certificates;

� Customary law community members whose communal land is used for development;

� Nadzir for wakaf land;

� State land users;

� Owners of buildings, plants, or other objects related thereto;

� PAPs dependent on use of affected land for their livelihoods as well as business owners or employees;

and

� Other land users who may not be living on the land but may have been using its resources and now will

suffer from restrictions on that land use.


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2.5.11 Compensation

The compensation, as in the procedures for negotiated settlement (see Section 2.4), may be in the form of:

� Replacement land (for instance where there is complete loss of a landholding, an equivalent area of

land with similar characteristics will be provided as an option to cash compensation); and/or

� Replacement shelter or structure (for instance where the main residence is lost, housing with similar

amenity will be provided as an option to cash compensation); and/or

� Money (allowances in addition to compensation for permanent losses can include cash assistance for

land preparation, transition allowances, transport allowance for shifting to a new location, and

allowances to cover repair cost of the remaining structure); and/or

� Income and livelihood restoration measures (see Section 2.5.14 below).

If land is not directly replaced, cash compensation is to be based on replacement value taking into account

current market values or productive potential, and inclusive of all administrative fees and taxes and other

transaction costs, including moving costs.

2.5.12 Determining Entitlements to Compensation

Based on the results of the asset census, the entitlement package for each PAP will be prepared. The

entitlement matrix below addresses loss of agriculture, non-agricultural, commercial, residential land, crops,

trees, and commercial, residential or other structures and community infrastructure. Temporary losses are

also reflected in the entitlement matrix. Entitlement packages are classified in terms of category of loss

rather than category of person affected as each category of person may suffer more than one loss. Table

2.1 below presents the Entitlement Matrix.

Table 2.1: Entitlement Matrix

Type of Loss

Application Category of PAP Compensation Entitlements

Owner: a person with legal title/registration of land ownership (including customary and traditional rights recognised under the laws of Indonesia)

Full replacement cost (Market Value) and relocation allowance.

Tenant Cash compensation for above ground assets and relocation allowance. Owner/Tenant agreements apply.

1. Permanent agricultural land loss

PAPs losing agricultural land

Encroachers (unofficial users of agricultural land)

Cash compensation for above ground assets and relocation allowance.


Full replacement cost (Market Value) and relocation allowance.

Tenant Relocation allowance.

2. Permanent residential land loss

PAPs losing their residential land

Squatters (unofficial users of residential land)

Relocation allowance.


Full replacement cost (Market Value), relocation allowance (see item 12) and compensation for temporary income loss.

3. Permanent commercial land loss

PAPs losing their commercial land

Tenant Relocation allowance (see item 12), compensation for temporary income loss.


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Type of Loss


Squatters (unofficial users of commercial land)

Relocation allowance (see item 12), compensation for temporary income loss.


Cash compensation for rent or plot rehabilitation equivalent to 1/10th of land market value.

4. Temporary land loss

Land used temporarily during construction of transmission lines

Tenant/Unofficial user Cash compensation lump sum equivalent to 1/10th of land market value shared between land users as per proportions.

Owner: a person with legal title/registration of ownership

Cash compensation for residential building at replacement value based on market price free of depreciation/transaction costs and salvaged materials plus relocation allowance (see item 12).

Partial impacts will entail the compensation of the affected portion of the building plus repairs to return to at least pre-project standard.

5. Residential building loss

Loss of residential buildings

Tenants/squatters in residential buildings who are identified in census

Relocation and severe impact allowance as below.

Owner of commercial or non-residential buildings/assets with registration or who is identified in census

Cash compensation for non-residential building and other fixed assets at replacement value based on market price free of depreciation/transaction costs and salvaged materials plus relocation allowance (see item 12).

Partial impacts will entail the compensation of the affected portion of the building plus repairs.

6. Commercial and non- residential buildings/ asset loss

Loss of commercial and non-residential buildings

Tenants/squatters in commercial or non-residential buildings/assets who are identified in census

Relocation and severe impact allowance as below.

7. Crop Losses

Standing crops affected

Owner of crop Advance notice to harvest last crop

Cash compensation to equal amount of market value of crop lost plus cost of replacement of seed based on Agriculture Department estimate.

8. Tree Losses

Trees affected Owner of tree Advance notice to harvest tree products. Salvage material free of cost.

Cash compensation to equal amount of market value of tree lost plus cost of replacement of seed based on Agriculture Department estimate taking into account type, age and productive value.

9. Income losses

Business or employment loss

All PAPs regardless of legal status For a permanent impact, cash compensation of one year net business income or salary.

For a temporary impact, cash compensation of net income or salary for the number of months of business or employment stoppage for a period of up to 1 year.

Assessment to be based on paper evidence or oral testimony and Village Head confirmation. At least government decreed minimum salary will be provided.

10. Community structures or public infrastructure losses

Including losses affecting public service and religious infrastructure

The public via leadership of the relevant authority

Reconstruction of lost structure in consultation with community. They will be fully replaced or rehabilitated so as to satisfy their pre-project functions taking into account any recognised new needs that could increase use or service levels.


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Type of Loss


11. Allowance for severe impacts

Rehabilitation assistance for PAPs with more than 10 percent of land holding affected or to be relocated

All severely affected PAPs including informal settlers and relocated tenants

For severe land impacts, an additional allowance equal to the market value of the land for one year.

For those being relocated, a rehabilitation allowance of equal to six months of average annual salary.

12. Allowance for relocation

Transport/ transition costs

All relocated PAPs including relocated renters

Provision of funds to cover transport costs and livelihood expenses for 1 month of average annual salary.

13. Allowance for especially vulnerable people

Rehabilitation assistance for PAPs considered especially vulnerable

‘Especially vulnerable’ include households headed by a single parent, woman or widow; include a pregnant woman or woman with a newly born child; have more than six dependent children; and have a family member who has a disability, long term illness (including mental illness), or who has mobility challenges.

Allowance equivalent to 6 months of average annual salary and employment priority for a household family member in project-related jobs.

14. Unforeseen impacts

Will be documented and mitigated or compensated based on the principles in this RPF.

2.5.13 Replacement Land or Shelter

Where land or shelter is replaced it should be of similar productive or amenity value. In particular, the

following screening criteria will be used for identifying relocation sites:

� the new site should not be within an environmentally sensitive area;

� the resettlement area should be within reach of infrastructure services such as water supply, electricity,

roads, hospitals, schools, etc;

� as far as possible, PAPs should be resettled within or close to their original settlement areas;

� there should be a sustainable source of water within 1 km of the site;

� the site should be large enough to accommodate PAPs and the public and social services provided

should be sufficient enough to cope with the revised population density;

� the site owners, users and PAPs should be consulted and invited to participate in the meetings and

activities related to resettlement;

� the project should secure legal title to the land for the PAPs who are resettled;

� the site boundaries and the land allocated for public service should be clearly marked, measured and

recorded;

� there should not be any natural or man made features on the site (e.g. swamps, water pipes, gullies,

bedrock, flood plains, graveyards, rock falls, steep cliffs, electricity pylons, etc) to obstruct construction

or cause danger to people, animals or building structures;

� the site must conform to the local development plan for the area or district; and

� utilisation of the site should not result in physical displacement of host site people, or the loss, denial or

restriction of their access to economic resources.

There shall be no deduction for depreciation or salvageable materials from partial or complete structural

losses.


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2.5.14 Income and Livelihood Restoration

In some cases, income and livelihood restoration opportunities such as training and permanent

employment (minimum of three years), land preparation and access to credit may be provided in addition to

cash and land. Where PAPs need to be relocated from their homes and subsistence lifestyles were

practiced, income and livelihood restoration will be considered. It should be noted that no relocation is

anticipated at this point, thanks to the relative flexibility of PGE in terms of site locations.

2.5.15 Vulnerable / Severely Affected People’s Assistance

If the socio-economic census reveals that vulnerable, marginalised or disadvantaged people or households

– including those below the poverty line, ethnic minorities/indigenous peoples or female or disabled headed

households - are amongst the PAPs, then these individuals and groups will be consulted to determine their

development needs and priorities which will be accounted for through the compensation measures

provided to them. The same is the case for ‘severely affected’ PAPs - defined as those losing more than

10% of their productive agricultural land and unable to obtain access to alternative land.

2.5.16 Grievance Mechanism

PAPs will be informed of their land rights and the provisions in this RPF. The aim of building awareness

with the written and oral information will be to achieve clarity and avoid misinterpretation, complaints and

grievances. Care will be taken to prevent grievances rather than going through a redress process by

careful implementation, by ensuring full participation and consultation with the PAPs, and by establishing

extensive communication and coordination between the affected communities, PGE’s LAT, the DLAC and

local governments in general.

Even with precautions and care, a disagreement or dissatisfaction may emerge. To address such a

situation, for instance a PAP that is unsatisfied with the outcome of their eligibility decision or compensation

package, a grievance redress mechanism will be put in place. The main objectives of mediating conflicts

and having a grievance redress mechanism are to:

� reach mutually agreed solutions satisfactory to both the Project and the PAP;

� cut down on lengthy litigation processes ; and

� prevent delay in project implementation.

When grievances do occur, appeals are likely to focus on the following key issues: the intent to

expropriate, disputed ownership, compensation valuation. In the first instance, efforts should be made to

resolve the issue informally. Disputed ownership may be able to be resolved by consideration of additional

documentation including copies of land titles, mortgage deeds, revenue receipts or other legal tender

showing ownership of tenancy. In the case of renters of farmed or rented land, documentary evidence of

the understanding between the landowner and the renter may be available and in case of customary land

use, verification and evidence of use for land for instance through testimonies and receipts may be

possible. For proof of residence, voters list or other official records may be available.

For grievances related to the proposed compensation value, the LAT should review each case, review

these RPF guidelines especially the eligibility and entitlement matrix, and decide whether to reconfirm the

original offer or propose a revised offer. It may be necessary to establish new guidelines related to the

revised offer.


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At the outset of the expropriation process, the DLAC and PGE must prepare and disclose a grievance

mechanism to PAPs. This provides contact details of local (project level) DLAC representatives to whom

they can submit grievances regarding the expropriation process or other project associated complaints or

information requests. The contact person for Ulubelu is Mr, Anshoruddin (Address : Pekon Karang Rejo,

Ulubelu District Tanggamus, Lampung Province – Indonesia, Tel : +62 21 39833316, Email:

[email protected] or [email protected]) and the contact person for Lahendong is Mr

Remmy Basalama (Address : Jl. Raya Tomohon No. 420 Tomohon, North Sulawesi – Indonesia, Tel +62

431 351378, Email: [email protected] or [email protected]).

The DLAC will consider the grievance and issue a response within seven days. If the PAP is not happy

with the compensation outcome they must submit their grievance to the District Court no later than 14 days

after the decision. The District Court’s decision is final. PGE will log and follow up grievances, reporting

every six months to the Bank.

Further details on the Grievance Mechanism are provided in the Public Consultation and Disclosure Plan

included in the Environmental and Social Impact Assessments prepared for each site.

2.5.17 Land Possession

Payment of compensation of assets other than structures (land, crops, and trees) will need to be made at

least 15 days, and preferably 30, prior to actual possession of the space being utilised by the PAPs. In the

case of a grievance, the assessed/allocated amount of compensation will be pledged in the names of the

concerned PAPs, pending a decision. Civil works cannot commence until all compensations have been

paid and entitlements provided, with documentation of receipt by the PAPs.

2.5.18 Resettlement Budget and Financing

Each ARAP/RAP will provide a budget that includes:

� Unit compensation rates for losses and the number of units affected;

� Unit costs for relocation activities (transporting PAPs and assets, transfer fees, taxes, costs for

identifying new housing or land, temporary shelter, etc.) and number of units;

� Resettlement site preparation costs; and

� Income restoration and improvement costs including temporary income support, purchasing alternative

income generating assets, training, extension services, start up capital, etc.

PGE will pay PAPs in a timely fashion as per their procedures for paying those involved in negotiated

settlement (see Section 2.4.11 for details).

The WB requires that the full costs of involuntary resettlement activities are included in the total project

cost. Resettlement activities need not be economically viable on their own but they should be cost

effective. PAPs will not bear the resettlement costs.

2.5.19 Implementation Process

Involuntary resettlement is a sensitive process that takes time. RAPs take more time than ARAPs and both

can take several months to follow the required processes and ensure involvement of appropriate

organisations. Table 2.2 below provides the general process that each subproject should follow to address

resettlement impacts.


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Table 2.2: Resettlement Plan Preparation and Implementation

Step Action Responsibility

A) ARAP/RAP PREPARATION

A1 Decide whether involuntary resettlement is an issue and, if so, what type of RAP is required LAT

A2 Establish the relevant DLAC PGE and Local authorities

A3 Identify independent assessor PGE and DLAC

A4 Establish system for channelling, logging and resolving grievances LAT

A5

Prepare surveys forms for household asset census and detailed measurement survey, train local survey teams, and establish coordination with relevant local government LAT

A6 Collect cadastral and land maps of area where there is involuntary resettlement LAT

A7 Verify land records in affected areas, update cadastral maps and carry out surveys LAT / Local government

A8 Conduct public consultations LAT / DLAC

A9 Negotiations with PAPs LAT / DLAC

A10 Integrate data from surveys, consultations and negotiations into the RAP LAT

A11 Submission of RAP to World Bank for approval LAT / World Bank

A12 Upon approval, issue formal notification about the particular land Local government

A13 Ring fence funds for RAP implementation, including contingency PGE

A14 Distribute RAP and its non-technical summary to stakeholders in an appropriate language, location and manner. LAT / DLAC

A15 Post on WB Infoshop World Bank

B) ARAP/RAP IMPLEMENTATION

B1 Inform PAPs where and when compensation will be paid along with project schedule and dates for vacating their premises LAT

B2 Disburse land and crop compensation and submit payment receipts to appropriate PGE finance department LAT / Local government

B3

Disburse other compensation, assistance and rehabilitation allowance and submit payment to appropriate PGE finance department DLAC / LAT

B4 Prepare new relocation sites as required LAT

B5 Finalise land transfer by demolishing and relocating affected structures and assets (if relevant) LAT / DLAC / Contractor

B6 Monitor and Document RAP implementation DLAC / LAT / Independent Assessor

B7 Issue notice to proceed with civil works DLAC / WB / PGE

B8 Internal monitoring with quarterly reports on RAP implementation DLAC

B9 External evaluation of RAP TBD

Key: LAT – Land Acquisition Team

DLAC - District Land Acquisition Committee

TBD – To be determined


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2.6 Monitoring and Reporting

2.6.1 Project Documentation

To facilitate monitoring of compliance with this policy framework, PGE will prepare, maintain and make the

following documentation available to the World Bank as evidence of the negotiated settlement land

acquisition process:

� Initial site description and land acquisition plan;

� Schedule of survey, socialization activities and inventory;

� Record of receipt by PAPs of information and cut-off date manual

� Land acquisition report - submitted for corporate agreement;

� Minutes of negotiation;

� Summary compensation data - land and other assets;

� Payment date; and

� Date of transfer of revised certificates to owners.

In cases where resettlement planning is required because expropriation is pursued as a last resort, a

resettlement plan (RAP or ARAP) and reporting will be required. The following additional documentation is

relevant:

� Description of the discussions and negotiations that have taken place prior to initiating the expropriation

process and the circumstances that led to the decision to expropriate;

� Entitlement matrix;

� Any anticipated outcomes that are expected to be different than the outcomes from the standard

negotiated settlement land acquisition process;

� Identification of all PAPs (gender and age disaggregated);

� Identification of vulnerable and severely affected PAPs, and provisions to address their status.

� Record of receipt by PAPs of information and cut-off date manual

� Changes in administrative procedures, assignment of responsibility to individuals, or compensation

rates or measures that will result from expropriation;

� Official monitoring reports with regard to the payment of compensation for land, buildings, plants, and

other objects thereon and release of title to land; and

� Reports on all of the activities specified in Section 2.5 above, for example reports on socio-economic

and asset census, additional consultation, etc.

2.6.2 Monitoring and Evaluation of ARAPs and RAPs

Regular, for instance monthly, reports should track items such as:

� Information campaign and consultation with PAPs;

� Status of land acquisition and payments on land compensation;

� Compensation for affected structures and other assets;

� Relocation of PAPs;

� Payments for loss of income;

� Selection and distribution of replacement land areas;

� Income restoration activities; and

� Number and type of grievances received, how they are being addressed and when they have closed

out).


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PGE will need to produce a Final Land Acquisition and Resettlement Evaluation Report within four months

of the last resettlement activities being implemented, which can be used by World Bank supervision to

review and report on resettlement completion (called a RAP audit). It should provide a summary of

activities and amounts related to:

� Eligibility

� Valuation of property;

� Grievances;

� Losses and compensation;

� Income restoration;

� Consultation and participation of PAPs, especially women, the poor and the most vulnerable groups;

� Level of satisfaction of PAPs in the post resettlement period.


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3.1 Ulubelu 3 & 4

3.1.1 Land Acquisition

Ulubelu Geothermal is situated in an open basin that appears to be fully utilised for agriculture and

horticulture. The bottom of the basin is paddy land and the surrounding hills are planted with coffee, cocoa

and other tree crops, sometimes mixed with small vegetable and fodder plots, depending on the land

contours. Except for the paddy land, the terrain is rugged, with relatively steep hills and valleys. Although

the hillsides appear to be scrub forests, on closer look they are densely covered by tree crops. Villages are

located on natural terraces above the paddy land. Residences are concentrated in villages, although the

new roads have prompted linear development of housing and retail outlets beyond the traditional villages.

Several small shops (warung) have appeared recently around new construction sites. Land ownership is

fragmented and it is common for one family to own several pieces of land in different locations. Pertamina

initially established an operations centre at the edge of the paddy land, off the main road into the area.

Subsequent works have been located in the hills, however, deliberately avoiding the paddy land.

The Ulubelu project consists of eight platforms (clusters or groups of wells numbered A to H) on which a

number of either production or reinjection wells are drilled, pumping stations, connection roads, connection

pipes and two power plant sites (each of two units). PLN has purchased the land for Ulubelu Units 1&2

and construction is underway; PGE recently concluded acquisition of the land for implementation of Ulubelu

Units 3&4. The various clusters will be interconnected by steam pipelines to the respective power units.

Each cluster comprises two to six wells. Five of the clusters (B, C, D, G and H) will be used for steam

production and two (A and F) for steam reinjection. Cluster E wells are reportedly not good enough for

production and may be used as spare reinjection capacity.

Pertamina originally acquired land for exploration wells. With the establishment of PGE in 2006, PGE has

subsequently acquired land for Clusters A to H, Ulubelu Units 3&4 power plant and the road network used

for transport and interconnection pipes. The first acquisitions, Clusters A and B, were completed when

PGE was a division of Pertamina; the remaining purchases were carried out by PGE as a separate entity,

the last of which was concluded in December, 2010. To date, PGE has acquired a total of 46.44 ha in

Ulubelu to support the overall Ulubelu development (approximately 34.7 ha is relevant to the Ulubelu Units

3&4 project component scope). Neither the roads nor the earthworks restrict the villagers’ access to

housing or agricultural plots. The PGE roads have significantly improved communication within the project

area and between the local villages and other parts of the kecamatan.

Table 3.1 summarises the land acquisition activities to date for Ulubelu Units 3&4 project components and

Units 1&2 (outside project component scope). It is important to note that certain well clusters serve both

power plants (although have dedicated wells to respective power plant), and have therefore been included

in the table.

3. Land Acquisition and Crop Compensation to Date (1st January 2011)


23


Table 3.1: Ulubelu Land Acquisition Undertaken for Main Project Components

Component Project Scope?

Area (m²) No. of Owners

Date Acquired

NJOP (Rp/m2)

Price Paid

(Rp/m2)(e)

Power Plant Units 1&2 (a) No NA NA NA NA NA

Water Pumping Station 1 Yes 260.00 1 May 13, 1997 NA 5,000

Well A1 (UBL-01) No

Well A2 (UBL-09) No

Well A3 (UBL-18) Yes

Wellpad Cluster A (Reinjection)

Well A4 (UBL-22) Yes

22,236.00 6 August 31,

2006 3,500

7,000 or 8,000

Well B1 (UBL-02) No

Well B2 (UBL-03) No

Well B3 (UBL-04) No

Well B4 (UBL-15) Yes

Wellpad Cluster B (Production)

Well B5 (UBL-16) No

52,144.00 (b)

37

August 31, 2006 and

September 2009

3,500

7,000 or 8,000 (2006)

and 12,500 or

20,000 (2009)

Well C1 (UBL-05) No

Well C2 (UBL-06) No

Well C3 (UBL-07) No Wellpad Cluster C

Well C4 (UBL-08) No

31,126.00 6 March 27,

2008 2,450 to 3,500

12,500 or 20,000

Well D1 (UBL-14) No

Well D2 (UBL-11) No

Well D3 (UBL-12) No Wellpad Cluster D

Well D4 (UBL-13) No

86,276.30 (b)

27

June 27, 2008 and

November 5, 2008

2,450 to 3,500

11,500 or 17,500

Well E1 (UBL-10) Yes Wellpad Cluster E (Production) Well E2 (UBL-20) Yes

47,046.55 (b)

16 November 5,

2008 2,450 to 3,500

11,500 or 17,500

Water Pumping Station 3 Yes 9,345.33

(c) 16

January 9, 2009

3,500 to 7,150

11,500 or 17,500

Production Pipeline Corridors Yes 5,253.63 15 January 9,

2009 3,500 to 7,150

12,500 or 20,000

Water Pumping Station 2 Yes 2,224.13 2 July, 2009 3,500 to 7,150

11,500 or 17,500

Well F1 (UBL-17) No

Well F2 (UBL-19) Yes Wellpad Cluster F (Reinjection)

Well F3 (UBL-21) Yes

31,115.68 (b)

9 September,

2009 3,500 to 7,150

12,500

Well G1 (UBL-23) Yes




Wellpad Cluster G (Production)


38,933.31 (b)

15 September,

2009 3,500 to 7,150

12,500 or 20,000

Well H1 (UBL-28) Yes



Wellpad Cluster H (Production)


56,442.38 (b) (d)

29 September 6,

2010 3,500 to 7,150

12,500 or 20,000

Power Plant Units 3&4 Yes 81,982.04 20 December 16, 2010

3,500 to 7,150

12,500 or 20,000

Source: PGE Land Acquisition Team


24


Notes: (a) The site was being prepared for construction during the visit of the ESIA team in June 2010, but the exact size of the

affected area and number of affected people is not known by PGE.

(b) Includes area of road access.

(c) Includes land acquired for the water supply pipeline corridor.

(d) Area acquired for Cluster H includes brine and condensate pipeline corridors to reinjection Clusters A and F.

(e) When two price amounts are presented, the first refers to the price for plantation (kebun) and the second for paddy land

(sawah).

3.1.2 Crop Compensation

Table 3.2 provides an example of crop compensation paid during the acquisition of Cluster C as part of the

overall Ulubelu development.

Table 3.2: Agreed Tariffs for Crop Compensation– Ulubelu Cluster C

Plant Rp/tree

Coffee 20,000

Pepper 25,000

Cocoa 15,000

Sugar palm 50,000

Vanilla 25,000

Cloves 100,000

Others 25,000

3.2 Lahendong 5 & 6

3.2.1 Land Acquisition

The Tompaso area (within which Lahendong Units 5&6 are being developed) is located on a gently sloping,

slightly undulating plane below a volcanic ridge. The area is intensively cultivated with a mixture of grazing,

fodder, vegetables, tall grains and tree crops. Plots appear to be larger than at Ulubelu, with open fields

demarcated by rows of trees, including coconut palms, interspersed with more dense horticulture. Cattle

are grazed in small herds. Communication is easy within the area, as it is well-served by village roads.

There are two existing production platforms (clusters) in Tompaso and one injection platform in place. The

clusters will be interconnected by steam pipelines to allow operational flexibility. Each cluster comprises

two to five wells. The land for two of them (Cluster 27 close to Sendangan and Cluster 26 close to

Kanonang) was purchased in October 2006. The land for the Cluster 32 close to Tompaso II was

purchased in 2009. Additionally, there is a smaller area of land that was acquired at Pinabetengan for the

purposes of water abstraction / pump-station.

The production clusters are located on village roads, and the injection site is very close to a road, so PGE

did not need to acquire land for roads. PGE upgraded village roads leading to the sites and linking the

clusters.

The clusters will be interconnected by pipelines to allow operational flexibility. Each cluster comprises two

to five wells. Table 3.3 summarises the land acquisition activities to date for Lahendong Units 5 & 6, a total

of 15.18 ha to date.


25


Table 3.3: Lahendong Units 5 & 6 Land Acquisition Summary

Location Area (m2)

No. of Owners

Date Acquired

NJOP (Rp/m2)

Market Rate (Rp/m2)

Price Paid (Rp/m2)

Water Pump Station I 8,171.00 3 22 Feb. 2007 n.a. 15-30,000 30-31,000

Kanonang (IV) - Cluster 26 37,953.00 7 26 Mar. 2007 1,200-5,000

15 to 25,000 30,000

Cluster 26 expansion 2,987.37 2 2 April 2008 n.a. 15-25,000 30,000

Sendangan – Cluster 27 47,515.00 9 22 Feb 2007 n.a. 15 to 25,000 30,000

Tompaso II – Cluster 32 55,128.00 2 9 May, 2009 3,500 15-30,000 30,000


3.2.2 Crop Compensation

Table 3.4 provides an example of crop compensation paid during the acquisition of land for the Lahendong

Units 5&6 project.

Table 3.4: Crop Compensation Summary – Lahendong Units 5&6

Price paid 2006 per tree (Clusters 26,27, WPS)(Rp.) Price paid 2009 (Cluster 32) (Rp.)

Tree type Young Sapling

Mature Tree pre-

fruit bearing

Mature Tree fully producing

Young Sapling

Mature Tree pre-

fruit bearing

Mature Tree fully producing

Bamboo 50,000 100,000 150,000

Wood Tree 100,000

Saw timber trees 40,000 100,000

Cloves 25,000 35,000

Palm 20,000 40,000 80,000

Coffee 10,000 15,000 25,000

Lansat 5,000 10,000 25,000

Mahogany 25,000 100,000

Papaya 10,000 25,000

Guava 10,000 25,000

Coconut 10,000 30,000 100,000

Cinnamon 20,000 35,000

Fence Bamboo n/a n/a 75,000

Same as 2006


26


Following damages to crops as a result of a vertical well test in 2008, further negotiations took place on

compensation to be paid for the lost crops. Compensation amounts paid are summarised in Table 3.5.

Table 3.5: Damaged Crops Compensation – Cluster 27

No. Owner Total (Rp)

1 Jubels Salendu 2.280.000

2 Joutje Kalangi 5.092.000

3 Hartje Saroinsong 1.175.000

4 Nyong Pantow 1.603.000

5 Lexi Dajoh 750.000

6 Sani Langi 10.125.000

7 Sani Langi (Fertiliser + Chemicals) 1.595.000

8 Felix Tewuh 750.000

9 Welly Kawengian 1.000.000

10 Maxi Monimbar 600.000

11 Jon Kolompoy 750.000

12 Nona Langi 1.000.000

3.3 Land Acquisition Planned

3.3.1 Ulubelu 3 & 4

As of December 2010, PGE has completed all land acquisition currently planned for Ulubelu, but

requirements may change depending on the results of ongoing drilling and well testing. The only remaining

land acquisition planned is for the short transmission line that will connect Units 3&4 to the switchyard at

Units 1&2. For this, land will be acquired for the footprint of the towers (estimated total of 1,200 m2). For

the right of way between the towers, owners will be compensated a portion of land value, as well as any

above ground assets that need to be removed to meet safety requirements.

3.3.2 Lahendong 5 & 6

Final plans for Lahendong 5 & 6 are still evolving, reflecting the inherent nature of geothermal

development. Currently, PGE expects to construct possibly two more production well clusters, the power

house and perhaps an additional injection well cluster, as well as the transmission line from Units 5 & 6 to

the nearest PLN substation. The land requirement for the remaining project components could total up to a

maximum of 40 ha. Acquisition of the remaining land is estimated to be concluded by early 2012.


27


3.4 PGE Valuation and Compensation Experience

In the past, to establish a price for land, PGE has started with the local tax value (NJOP) which is adjusted

annually, and then assessed market prices. Market prices are ascertained through discussions with village

headmen and other local officials who are familiar with recent land transactions. Many transactions are

informal, thus there is no single source for up-to-date information. In practice, PGE has then set its offering

price between two and three times the NJOP. A comparison of recent examples is presented in Table 3.6.

Table 3.6: Land Price Comparison at Ulubelu Units 3 & 4 and Lahendong Units 5 & 6 (2006 to 2009)

Price Comparisons (Rp/m2) Location Year

NJOP Value Market Value PGE Value

2006 3,000 4,500 7-8,000

2008 6,000 4,500 11,500 to 20,000 Ulubelu 3 & 4

2009 3,500 up to

7,150 5000 – 6000 11,500 to 20,000

2006 7,000 to 8,000 15,000 to 20,000 30,000 Lahendong 5 & 6

2009 7,000 to 8,000 20,000 30,000


PGE has negotiated from a reasonable market assessment, thus it does not change its offer much during

negotiations. In Tompaso in 2006, PGE raised its offer from Rp 27,500 to Rp 30,000 per square metre, for

example, in light of the owners’ asking prices that varied from Rp 35,000 to Rp 50,000 per square metre.

In general, PGE has paid more for land in Tompaso (Lahendong Units 5&6) than in Ulubelu, which is a true

reflection of the value of the land. PGE always pays a considerably higher rate for land than has been

reasonably established as its prevailing market rate. As shown in Table 3.6 above, there are marked

variations in the NJOP and market land prices across time and locations, to which PGE’s land acquisition

strategy is responsive and adaptive.

PGE’s compensation rate for crops and trees has also varied considerably by location as well as according

to the maturity of the trees, as seen in Table 3.2: and Table 3.4. Each location has a strikingly different

mixture of major crops and trees, and the actual variety of assets of individual farmers can be much more

complex. Table 3.7 below shows the variation in prices paid for three trees common to both Tompaso and

Ulubelu. Coffee and Sugar Palm have been established as being of higher value in Tompaso than in

Ulubelu, although the rate paid in Tompaso has not changed over three years. In contrast, clove trees are

paid for at a higher rate in Ulubelu than they are in Tompaso. This data shows that PGE’s asset

compensation is sensitive to prevailing local market values and is able to be adapted to enable a fair price

to be paid in each case.

Table 3.7: Tree Price Comparison at Ulubelu and Tompaso (Lahendong Units 5 & 6)

Price Per Mature Tree (Rp/m2) Tree Type

Ulubelu 2008 Tompaso 2006 Tompaso 2009

Coffee 20,000 25,000 25,000

Sugar Palm 50,000 80,000 80,000

Clove 100,000 35,000 35,000



28


Finally, to give an idea of the importance of the above ground assets, one owner in Ulubelu was

compensated for 18 different trees and plants in 28 different price categories and the combined value of the

trees was half that of the land. Despite the complexity of the subject of above-ground assets, however,

negotiations for compensation are much simpler than negotiations over the price of land. Provinces and

Kabupaten have standardized prices for each crop. PGE has used these references as a starting point in

negotiating compensation rates with owners, as well as market inquiries and discussions with local officials.


29


PGE is legally registered as a private company in Indonesia and it acquires land through direct

negotiations, based on the principle of willing buyer-willing seller. PGE has the legal right to request

expropriations if negotiations fail and if no viable alternative site exists for the Ulubelu Units 3&4 and

Lahendong Units 5&6 proposed geothermal projects. Hence, the World Bank Operational Policy 4.12 on

Involuntary Resettlement is triggered and will apply if expropriation is used.

This document has established a policy framework for PGE to manage land acquisition and resettlement

impacts in accordance with OP 4.12. It described the negotiated settlement procedures, which is PGE’s

standard practice for addressing land acquisition and resettlement. The negotiated settlement approach

involves establishing a project specific PGE land acquisition team (LAT). With a preliminary design in

mind, the LAT carries out topography and market data gathering exercises. Meetings are held with local

representatives and project affected persons (PAPs) and an initial plan for addressing compensation is

produced. Negotiations begin and when there is agreement on unit prices, valuation of assets is

undertaken. When individual agreements are made, land documents are provided to PGE who pay the

negotiated settlement and a letter revising the land title is organised.

If a settlement cannot be negotiated and there is not an acceptable viable alternative, expropriation is a last

choice solution requiring resettlement planning, but PGE has not reached that stage in any of its land

acquisition exercises and does not expect to do so. Nonetheless, if this should happen, an appropriate

resettlement planning instrument, either an abbreviated resettlement plan (ARAP) or a full action plan

(RAP) will be produced. It will reflect procedures including the establishment of a district land acquisition

committee (DLAC) to orient and implement resettlement activities. Information about the Project and land

acquisition process, including the grievance process, will be provided in writing and orally to PAPs. An

independent appraisal will be undertaken to establish replacement costs to be proposed to PAPs for

negotiation. PGE will work with the DLAC and a local institution to carry out the socio-economic baseline

survey with 25 percent of local households (for a full resettlement plan) and the asset census inventory and

detailed measurement survey with 100 percent of PAPs. The entitlement matrix in Table 2.1 defines

resettlement compensation and will be used to develop assistance packages. Criteria for providing

replacement land and shelter is provided. Rehabilitation assistance to restore livelihoods and special

measures to support vulnerable, marginalised or disadvantaged PAPs are included in the entitlement

matrix and will be applied if relevant. A grievance procedure will be established and grievances will be

logged for monitoring resolution. Compensation and resettlement assistance will be provided prior to

construction commencing.

The status of land acquisition and resettlement to date indicates that much of the land needed for the

projects has already been acquired, all of which was acquired through negotiated settlements.

The overall Ulubelu project consists of eight clusters (groups of wells numbered A to H) and two power

plant sites (each of two units, although only Unit 3 & 4 are developed by PGE). Land for Clusters A to H,

the road network used for transport and interconnection pipes, pumping stations, and Unit 3&4 has already

been acquired in 12 acquisition efforts. PGE will purchase the land for the transmission line to connect

Units 3&4 to the switchyard at Units 1&2. PLN purchased land for Power Units 1&2 and has started

construction.

There are two production clusters and one reinjection cluster existing within the Tompaso area (within

which Lahendong Units 5&6 are being developed). Land acquisition for these three clusters has been

4. Summary


30


completed. PGE may construct two additional production clusters and one additional reinjection cluster.

Additional land will be acquired for these clusters (as required) as well as for Lahendong Power Units 5&6

and the transmission line between Units 5&6 and the nearby PLN substation. A rough estimate of the

maximum anticipated land acquisition is approximately 40 ha.

Review of past land acquisition indicates that PGE has paid more for land in Tompaso (Lahendong Units

5&6) than in Ulubelu, which reflects the relative market value of land in the two locations. PGE’s

compensation rate for crops and trees has also varied considerably by location. Additionally, in each

instance PGE seems to have paid a considerably higher rate for land in comparison to the prevailing

market rates of the time. PGE’s asset compensation practices seem to be sensitive to prevailing local

market values and adapt easily to assure that owners are awarded fair prices for the type of loss and

location. As a measure of its success, PGE has no outstanding challenges or appeals in either location.


31


Appendix A. Requirements of Resettlement Plans ___________________________________________________ 32

Appendices


32


A.1. Abbreviated Resettlement Plan (ARAP)

The ARAP covers the following minimum elements:

� Asset and livelihood census survey of 100% of PAPs and a valuation of their assets and respective

income sources;

� Description of compensation and resettlement assistance to be provided;

� Consultation with PAPs about acceptable alternatives;

� Institutional responsibility for implementation and procedures for grievance redress (as outlined in this

policy framework);

� Arrangements for monitoring and implementation; and

� A timetable and a budget.

A.2. Resettlement Action Plan (RAP)

The Scope and level of detail of the resettlement plan vary with the magnitude and complexity of

resettlement. The plan covers the elements below as relevant and when not relevant, it is noted in the

RAP.

� A description of the project, identification of how the Project has given rise to involuntary resettlement;

� Identification of potential project impacts;

� The objectives of the resettlement programme;

� A description of the socio-economic studies (both a baseline survey and an asset census survey);

� The legal framework (as outlined in this policy framework);

� The institutional framework and organisational responsibilities (as outlined in this policy framework);

� Eligibility and the entitlement matrix showing resettlement measures;

� Methodologies for valuation of losses and compensation for losses;

� A description of compensation packages/resettlement measures

� Site selection, site preparation and relocation where appropriate including housing, infrastructure and

social services, and integration support to be provided;

� Environmental protection and management;

� PAP participation, consultation and disclosure;

� Measures to mitigate the impact of resettlement on any host communities;

� Grievance mechanism procedures;

� Organisational responsibilities;

� Implementation schedule and budget; and,

� Monitoring and evaluation activities.

Appendix A. Requirements of Resettlement Plans