Land Acquisition and Resettlement Plan

Resettlement Plan Document Stage: Revised Project Number: 39928 July 2006

INO: South Sumatra - West Java Phase II Gas Pipeline Project

Prepared by PT. Perusahaan Gas Negara Tbk (PGN)

The resettlement plan is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature.

ABBREVIATIONS

ADB - Asian Development Bank AH - Affected Household AP - Affected Person BPN - Badan Pertanahan Nasional DKI - Daerah Khusus Ibukota CDP - Community Development Program EIA - Environmental Impact Assessment GOI - Government of the Republic of Indonesia KEPPRES - Keputusan Presiden KUD - Koperasi Unit Desa LARP - Land Acquisition and Resettlement Plan LKMD - Lembaga Ketahanan Masyarakat Desa NGO - Non Government Organization NJOP - Nilai Jual Objek Pajak PERPRES - Peraturan Presiden PGN - PT Perusahaan Gas Negara (Persero) Tbk PU - Pekerjaan Umum PKBL - Program Kemitraan dan Bina Lingkungan RoW - Right of Way SEIA - Summary Environmental Impact Assessment SES - Socio Economic Survey SSWJ - South Sumatra West Java SSWJ phase II South Sumatra West Java Gas Transmission Project phase II

WEIGHTS AND MEASURES

mmscfd - million standard cubic feet per day ha - Hectare km - Kilometer m - Meter m2 - square meter

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GLOSSARY

Adat land Land held by customary community

Affected Persons,or People (households) who, on account of the project, stand to lose households all or part of their physical and non-physical assets, including homes, communities, productive lands, resources such as forests, range lands, fishing areas, or important cultural sites, commercial properties, tenancy, income-earning opportunities, social and cultural networks and activities.

Walikota/Regent Head of Kabupaten / District / Regency. Compensation Payment in cash or kind for loss of assets, resources or income. Consultation A process of mutually listening, giving and accepting opinions and aspirations, based on equality between the land right holder and the party requesting the land in order to reach agreement on the form and amount of compensation. Entitlement Range of measures comprising compensation, income restoration, transfer assistance, income substitution, and relocation to which APs are due, depending on the nature of their losses, to restore their economic and social base. Governor Head of a Province. Income restoration Programmes and/or activities designed to re-establish income sources and livelihoods of people affected Kabupaten Regency / District Kecamatan Sub-district Land Acquisition A committee, which consists of local government officials, given the Committee tasks to make an inventory of land and other assets on land to be acquired, to investigate the legal status of the land, to inform and negotiate with the people affected and with the agency acquiring the land, to estimate compensation, and to document and witness the compensation payments. Regent/Walikota Head of a Regency / District / Kabupaten. Relocation The physical shifting of an AP from their present place of residence to another location. Replacement cost Cost of replacing lost assets and incomes, including cost of the transactions. Land Acquistion and A time-bound action plan with budget setting out resettlement Resettlement strategy, objectives, entitlement, actions, responsibilities, Plan(LARP) monitoring and evaluation. Vulnerable groups Distinct groups of people who might suffer disproportionately from resettlement effects.

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ABBREVIATIONS II WEIGHTS AND MEASURES II GLOSSARY III CONTENTS IV LIST OF TABLE V LIST OF FIGURE V LIST OF APPENDIXES V EXECUTIVE SUMMARY 1 I. PROJECT DESCRIPTION 5 II. SCOPE OF LAND ACQUISITION AND RESETTLEMENT 5 III. SOCIO-ECONOMIC INFORMATION OF AFFECTED PERSONS 8 IV. INFORMATION DISSEMINATION, CONSULTATION, PARTICIPATORY APPROACHES AND DISCLOSURE REQUIREMENTS 10 V. GRIEVANCE REDRESS MECHANISMS 11 VI. POLICY AND LEGAL FRAMEWORK 11 VII. ELIGIBILITY AND ENTITLEMENTS 15 VIII. RELOCATION OF HOUSING AND SETTLEMENT 18 IX. INCOME RESTORATION AND REHABILITATION STRATEGY 18 X. BUDGET AND FINANCING 18 XI. IMPLEMENTATION SCHEDULES 19 XII. INSTITUTIONAL FRAMEWORK FOR LAND ACQUISITION AND RESETTLEMENT 20 XIII. MONITORING AND EVALUATION 22

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LIST OF TABLE

Table 1. Summary of LARP entitlement budget 3 Table 2. Summary of Land Acquisition Schedule 4 Table 3. Affected Land Owners, Title and Structures 6 Table 4. Population and Population Density of the Project Area 7 Table 5. Summary of Risk and Impact of Land Acquisition 7 Table 6. Amount of Land to be Acquired (Ha) 8 Table 7. Population and Population Density of the Project Area by Regency 9 Table 8. Main Occupation by Gender 9 Table 9. Entitlement Matrix 17 Table 10. Summary of LARP entitlement budget 19 Table 11. Land Acquisition Implementation Schedule 20

LIST OF FIGURE

Figure 1. Map of South Sumatra – West Java Gas Transmission Project 6 Figure 2. Organization of Environmental, Land Acquisition and Community Development 22

LIST OF APPENDIXES

Appendix 1 Company profile PJT II 26 Appendix 2 Percentage of Land Title acquired from APs 27 Appendix 3 Socio-economic data 28 Appendix 4 Minutes of a Land Acquisition Socialization Meeting 29 Appendix 5 Grievance Redress Mechanism 32 Appendix 6 Composition of Land Acquisition Committees 33 Appendix 7 GOI / ADB / PGN Gap Analysis 37 Appendix 8 Confirmation of AP Acceptance of Cash Compensation 40 Appendix 9 Land Acquisition Process and The Role of Institutions Involved 42 Appendix 10 Land Acquisition Compensation Payment Progress Report 43 Appendix 11 LARP External Monitoring Inception Report 44

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EXECUTIVE SUMMARY

1. The proposed South Sumatra – West Java Gas Transmission Project (the Project) will transport natural gas from the Grissik gas production field in South Sumatra Province to Rawa Maju in West Java Province to meet the rising energy demand in West Java. The capacity of the Project pipeline is 460 million standard cubic feet per day (mmcsfd).

2. The Project is 661 km of onshore and offshore pipe construction. Field survey established the selected onshore pipeline alignment as the most appropriate because it minimizes the number of houses, persons and forest ecosystems affected. Total area of land acquired is 1,137.76 ha in South Sumatra and Lampung provinces dominated by agriculture land such as rice fields, traditional plantations, drylands and arable homesteads. The project will have no impact on any shops, commercial or industrial establishments, and no social facility structures will be affected by the Project. In South Sumatra and Lampung provinces there is no resettlement requirement for the APs. In West Java there is no land acquisition or resettlement; the 34 km of land required will be leased by PGN from Perum Jasa Tirta II (PJT II). The land to be used in West Java is not in productive use as it is within the Right of Way (RoW) for a drainage canal.

3. The proposed gas transmission pipeline RoW will require the acquisition of land and other fixed assets along the proposed alignment. Following Asian Development Bank’s (ADB) guidelines, this Project is a category ‘A’ Land Acquisition and Resettlement Plan (LARP), because 4,298 persons are affected and some of these Affected Persons (APs) have lost more than 10% of their income generating assets by this project, so a full LARP has been prepared.

4. PGN’s LARP is prepared adhering to the laws and regulations of Indonesia, and all requirements of the ADB policy on involuntary resettlement as detailed in the ADB Handbook on Resettlement and the ADB Handbook on Poverty and Social Analysis (2001) as guidelines. PGN’s Policy Framework on Land Acquisition and Resettlement (Policy Framework) is committed to enhance the quality of life of the APs, and to prevent or mitigate any possible adverse social impacts.

5. A socio-economic survey indicated that 64% of the population in affected villages is in the productive age (15 – 55 years). The majority of households contain 5 - 8 members. The average level of education is elementary and junior high school level. Skills are limited mostly to carpentry, mechanical, transportation, and handicrafts. The socio-economic survey indicated that for adults, farming is the main occupation (88.3% male and 78% female). Secondary occupations for males include daily wage laborers (4%), civil servants (4%), and traders (2.7%); while for females, small retailing of food crop products (11.4%) is the secondary occupation.

6. The survey found no communities of indigenous people in the Project area. None of the communities along the RoW is isolated with a closed-economic system.

7. The impact of the Project on APs can be expressed in terms of change of land ownership, reduction of income due to loss of agricultural land, loss of crops, and loss of structures including houses. In South Sumatra and Lampung provinces the Project will acquire 951.42 ha of privately owned land from a total 4,315 land owners, and 186.34 ha from a total of 17 corporate land owners. These corporations are involved in commercial plantations.

-1- 8. A total of 28 structures in South Sumatra province and 12 in Lampung province with an average area of 50.5 m 2 will be affected by the Project. The structures affected are semi- permanent wooden houses, huts and farm field shelters. To date, all APs have chosen to accept the offer of cash compensation for loss of structures, as detailed in the Entitlement Matrix, rather than accept the alternative offer of resettlement.

9. The mechanism of stakeholder’s participation in the implementation of LARP will be in the form of (i) information dissemination regarding the right to entitlements; (ii) public meeting with affected people; and (iii) formation of the Land Acquisition Committee (LAC). People interested in participating in the LARP can do so through institutional channels, namely village government, Lembaga Ketahanan Masyarakat Desa (LKMD), district & regency level governments, and PGN representatives.

10. As the Project alignment and land acquisition program has been carried out in consultation with the affected persons, the need for grievance redress procedures are minimal. However, in the event of any grievances during the course of project implementation PGN has prepared a grievance redress mechanism in accordance with Government of the Republic of Indonesia’s (GOI) regulations. PGN will ensure that no construction activities take place in the area before all APs have received compensation satisfactorily.

11. PGN accepts the overall responsibility for the enforcement of the Policy Framework. PGN’s general policy for land acquisition, compensation and resettlement regarding gas transmission and distribution project is based on Presidential Decree (KEPPRES) No. 55/1993 on Land Acquisition for Development Purposes in the Public Interest, and State Minister/Chief of The National Land Use Agency Act No.1 – 1994 on Guidance to perform KEPPRES 55/1993. In order to bridge the gap between the GOI’s current legislation and ADB policies, PGN’s LARP has been developed to ensure that involuntary resettlement of AP’s meets or may even exceed the requirements set out in ADB's Handbook on Resettlement.

12. PGN’s LARP policy determines that cash compensation for affected assets is based on replacement costs. The cash compensation for agricultural land is based on prevailing market price. The negotiated price is an amount agreed to by the APs as a group within a village. This price is set between the prevailing market price and the latest NJOP (Nilai Jual Objek Pajak, government land value). This policy also complies with ADB guidelines.

13. All APs losing land, buildings, plants and other objects related to the land are compensated in accordance to the type and amount of their losses (KEPPRES No. 55/1993, Art. 12 and State Minister/Chief of The National Land Use Agency Act No.1 – 1994, Art 20). Compensation is also given to persons using land without any title. The LAC has made an inventory of land and assets to be acquired, and identify all APs.

14. The entitlement rates vary according to region, land type, and land productivity. The total cost for the LARP of this project is Rp160,776,200,431 and will be met by PGN. Table 1 summarizes the LARP entitlement budget.

15. The time schedule for implementation of Land Acquisition and compensation activities is summarized in Table 2. The cut-off date for compensation eligibility is not later than the measurement and inventory survey.

16. In addition to PGN’s internal monitors, an external monitor reviews the existing baseline data and gathers additional socio-economic data, to identify any discrepancy between the policy

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requirements and actual practices, as well as any grievances at the village level, and provide recommendations for improving policy implementation. The external monitor also monitors the implementation of the compensation policy and public consultation.

17. The external monitoring methodology consists of (i) random reviews of documents on acquisition and compensation to ensure full compliance with the policy’s requirements, (ii) random site visits, (iii) special studies about the adequacy of compensation paid, (iv) periodic field visits and surveys to assess the public consultation concerning with project activities and grievances.

18. The external monitor’s reports include; (i) an inception report to the Project Coordinator and Project authorities, submitted within one month of the beginning of the assignment; (ii) six monthly monitoring reports to the Project Authorities and the lending institutions.

Table 1. Summary of LARP entitlement budget No. Description Amount (Rp)

A. Land Acquisition

1 Cash compensation for acquired land 62,775,935,810

2 Cash compensation for structure 1,213,727,516

3 Cash compensation for trees & crops 47,947,922,828

Total 111,937,586,154

B. Land Lease West Java 17,720,640,000

C. Services Charge (4%) 5,186,329,046

D. VAT (10%) 12,965,822,615

E. Contingency (10%) 12,965,822,615

TOTAL COST 160,776,200,431

-3- Table 2. Summary of Land Acquisition Schedule Schedule Agency No Activities Responsible Start Finish

1 Socialization PGN, LAC March 2004 August 2005

2 Measurement and Inventory PGN, LAC April 2004 October 2005

Announcement of Measurement 3 PGN, LAC August 2004 February 2006 result

Negotiation, Deliberation and 4 PGN, LAC September 2004 August 2006 Grievance

5 Payment PGN, LAC October 2004 August 2006

PGN, 6 Dissemination of LARP to APs August 2006 October 2006 Consultant

PGN, 7 Internal and External Monitoring March 2004 December 2007 Consultant

19. As at the date of this LARP, land acquisition for the Project is 89% complete. All compensation payments for land acquisition are expected to have been made by the end of August 2006. This report describes the procedures which have followed by PGN for disseminating information to and consulting with APs, establishing a fair and acceptable level of compensation, addressing grievances, if any, and other aspects of land acquisition and resettlement process for the Project. The report also sets out arrangements for the completion of the land acquisition and resettlement process and for the internal and external monitoring and evaluation of that process.

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I. PROJECT DESCRIPTION

20. The proposed South Sumatra – West Java Gas Transmission Project Phase II (the Project) is one of two gas pipelines that PT Perusahaan Gas Negara (Persero) Tbk (PGN) has planned to transport natural gas from South Sumatra to West Java. The Project will transport gas from the Grissik gas production field in South Sumatra Province to Rawa Maju in West Java Province (Figure 1) where rising energy demand has resulted in a growth in the market for natural gas. The capacity of the Project pipeline is 460 mmcsfd.

21. The Project consists of a 661 km pipeline and includes 500 km onshore and 161 km offshore. Based on field survey, the selected onshore pipeline alignment is the most appropriate of the alternative routes because it minimizes the number of structures, persons and the forest ecosystems affected. (see Figure 1)

22. The pipeline route will cross land in South Sumatra, Lampung, and West Java provinces, and offshore in DKI Jakarta province. Onshore, the pipeline will pass through five regencies in South Sumatra province, four regencies in Lampung, and one regency in West Java. Land acquisition will be necessary in South Sumatra and Lampung provinces, however in West Java province, land for the project will be leased from PJT II. (Appendix 1).

23. The LARP is prepared adhering to the laws and regulations of Indonesia. PGN’s Policy Framework on Land Acquisition and Resettlement commit the Project to the following three basic principles:

a) Enhance the quality of life for the APs

b) Prevent or minimize adverse social impacts, to the extent possible.

c) Mitigate possible adverse social impacts

24. PGN has requested financial assistance from ADB for implementing the Project.

25. The policy of ADB on Involuntary Resettlement is set out in the Involuntary Resettlement Policy (November 1995), PGN has also used the ADB Handbook on Resettlement: A Guide to Good Practice (1998) and ADB Handbook on Poverty and Social Analysis (2001). PGN’s land acquisition and resettlement policy has been developed to conform to all requirements within these ADB documents.

II. SCOPE OF LAND ACQUISITION AND RESETTLEMENT

26. The project’s impacts are mainly on agricultural land and some homesteads with very little impact on structures and buildings. The pipeline corridor alignment was chosen with care so it does not pass through population centers or community facilities.

-5- Figure 1. Map of South Sumatra – West Java Gas Transmission Project

27. The proposed gas transmission pipeline, with a 25 m RoW, requires the acquisition of land and other fixed assets along the proposed alignment. (see Figure 1) Following ADB guidelines, this Project is a category ‘A’ LARP because there are more than 200 APs and some of the APs have lost more than 10% of their income generating assets, a full LARP is required. All activities related to land acquisition and compensation for the proposed project are based on ADB’s and PGN’s policies on Land Acquisition. An estimated 4,791 private land titles, 26 corporate land titles and 40 structures will be affected by this Project. (see Table 3). From the total of 4,791 private land titles, 744 have legal title while the remaining 4,047 have no legal land title. (see Appendix 2). All the corporations affected are involved in commercial plantations including palm oil, rubber, and pineapples.

Table 3. Affected Land Owners, Title and Structures Province* Private Land Corporate Land TOTAL

Title Owner Title Owner Title Owner Structure South Sumatra 2,573 2,270 8 5 2,581 2,275 28 Lampung 2,218 2,028 18 12 2,236 2,040 12 Total 4,791 4,298 26 17 4,817 4,315 40 * All West Java land leased from PJT II

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28. All APs affected by the land acquisition inhabit 113 villages with a combined population of 393,426 and an average population density of 166 per km 2. The total of APs is 4,298. (see Table 4)

Table 4. Population and Population Density of the Project Area Province Population of Villages APs Population density Affected (per km 2)

South Sumatra 179,119 2,270 123

Lampung 214,307 2,028 202

TOTAL / 4,298 393,426 166 AVERAGE

29. The impact of the Project on APs can be expressed in terms of (i) change of land ownership, (ii) reduction of income due to loss of agricultural land and loss of crops, and (iii) loss of structures including houses. The following table shows the impact of land acquisition. (See Table 5)

Table 5. Summary of Risk and Impact of Land Acquisition Type of Losses Risk and Impact Land - Privately Owned Loss of plot or part of structures due to Loss of income from agriculture and commercial acquisition of additional land; activities, including fisheries; Loss of agriculture land/water bodies due May cause disruptions on existing landholdings to additional area for RoW and and resource use; temporary/permanent working area; Loss of income from perennial trees. Loss of perennial crops, such as fruit trees.

Structure – Residential Loss of housing by owners of private Reduce number of available structures and living structures due to acquisition of land; quarters for affected households. Loss of residential structures by tenants due to RoW and working area acquisition.

Livelihood Loss of business/income by owners due Reduce income from agriculture; to land acquisition. Reduce household income.

30. Total area of land to be acquired is 664.40 ha in South Sumatra province and 473.58 ha in Lampung province and 25.32 ha leased in West Java. The major portion of land acquired is individually owned. In general, individual ownership of land affected by the project is the same land type, dominated by agriculture land such as rice fields, traditional plantations, drylands and arable homesteads. (see Table 6)

-7- Table 6. Amount of Land to be Acquired (Ha) Province * Private land Corporate land TOTAL (Ha)

South Sumatra 581.19 83.21 664.4

Lampung 370.23 103.13 473.36

Total 951.42 186.34 1,137.76

* 25.32 ha leased from PJT II in West Java

31. PGN will acquire land for the Project in South Sumatra and Lampung, however land used for the RoW for the Project pipeline in West Java is leased by PGN from PJT II, the state-owned water utility company. The 34 km Project RoW section in West Java is not in productive use as it is within the Right of Way (RoW) for a drainage canal.

32. An estimated 28 structures in South Sumatra and 12 in Lampung with an average area of 50.5 m 2 will be affected by the project. The structures affected are semi-permanent wooden houses, huts and farm field shelters. The survey indicates that no community structures and common property resources will be affected directly by the project. The pipeline will only pass some public facilities such as irrigation canal and village roads. In West Java there are no affected structures.

III. SOCIO-ECONOMIC INFORMATION OF AFFECTED PERSONS

33. Seriously affected persons as those APs who are forced to resettle as a result of LARP. In the Project, no seriously affected persons have been identified. All APs have accepted compensation and there has been no requirement for involuntary resettlement.

34. All APs by the land acquisition inhabit 113 villages along the pipeline route. The percentage of land acquired from APs varies from 0.05% to 90.75%. According to Environmental Impact Assessment (EIA) the villages affected have combined population of 393,426 with population density range from 48 to 401 per km 2. (see Table 7)

35. The extent of losses and the compensation measures necessary to reinstate the livelihood of APs is based on inventory and social surveys. A socio-economic survey of 1,797 affected households in the Project area was conducted in 1997 in order to specify the likely social impact of the project and to define, identify and enumerate the people to be affected by the project.

36. The majority of households contain 5 - 8 members, about 64% are in the productive age bracket (15 – 55 years). Farming is the main occupation for men and women. The secondary occupations of males are daily wage laborers, civil servants and traders. For females the secondary occupation is mostly retail traders of food crop products (see Table 8). Additional socio-economic data is available in Appendix 3.

37. The average level of education is elementary and junior high school level. Skills are limited, mostly to carpentry, mechanics, drivers, and handicrafts. APs in Lampung Province have more technical skills compared with those in South Sumatra.

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Table 7. Population and Population Density of the Project Area by Regency Population Population of No Regency Province density Villages Affected (Person/km 2.)

1 Musi Banyuasin 43,607 48

2 Banyuasin 29,216 150

3 Prabumulih South Sumatra 22,797 401

4 Muara Enim 42,871 51

5 Ogan Komering Ulu 40,628 103

6 Way Kanan 21,453 49

7 Tulang Bawang 42,284 97 Lampung 8 Lampung Tengah 44,995 175

9 Lampung Timur 105,575 287

Total 393,426 Source : Project AMDAL 1999 and 2005

Table 8. Main Occupation by Gender South Sumatra Lampung TOTAL

Main Occupation male female male female male female

Land Owner Farmer 984 353 571 88 1,555 441

Tenant Farmer 7 4 9 1 16 5

Farm Laborer 5 1 10 3 15 4

Wholesaler 10 2 1 2 11 4

Retailer 32 40 6 25 38 65

Labor 42 19 30 4 72 23

Civil Service 49 19 22 8 71 27

Fishermen 19 0 0 0 19 0

TOTAL 1,148 438 649 131 1,797 569 Source : Project Socio-economic Survey, 1997

-9- 38. The project area will not pass through any communities of indigenous people. None of the communities along the RoW is an isolated community with a closed-economic system. These communities are Javanese, Sundanese, and Balinese transmigrants communities, and people from Lampung, Melayu-Ogan, and Komering.

IV. INFORMATION DISSEMINATION, CONSULTATION, PARTICIPATORY APPROACHES AND DISCLOSURE REQUIREMENTS

39. PGN has carried out extensive public consultation and disclosure with the Project’s stakeholders since the early stage of the AMDAL process in 1999. The Project’s stakeholders are; (i) the APs; (ii) local governments down to village level; (iii) village councils; (iv) local NGOs; and (v) informal local leaders. These stakeholders have been given information, consulted and participated in the land acquisition and resettlement process. To ensure the decisions taken are acceptable to the community, stakeholder participation has been included in the preparation, implementation, and rehabilitation phases of LARP. The mechanisms for participation in the preparation include public meetings at provincial and regency level, information dissemination and consultation with APs and local institutions. The mechanisms included in the implementation and rehabilitation phases of LARP are: (i) information dissemination regarding rights to entitlements, (ii) public meetings with affected people, (iii) formation of LAC, which consists of local government and will be chaired by the vice governor or regent in each regency. People interested in participating in the LARP can do so through institutional channels, which are: (i) village governments; (ii) LKMD; (iii) district and regency level governments; and (iv) PGN representatives.

40. The mechanism used by PGN for public consultation meetings is firstly, to contact local government and district or village authorities who organize and invite APs and related NGOs to participate in the meeting, then, following the meeting, stakeholder’s comments are conveyed directly to PGN’s representatives on the site. The APs can also submit their comments and opinions to the local government and through the institutional channels to PGN for consideration. In the case of Adat Land, PGN negotiates with the representatives of the affected Adat communities. Agreed compensation is held in a court escrow account for use by the affected Adat community.

41. Public consultations are carried out through various means. Initially through dissemination of project information through local community announcements including announcements on local radio, after which community members have 30 days to comment, give opinions and make submissions to the local BAPEDALDA or PGN; then, surveys of public attitudes towards the Project; and finally, public meetings held in regencies and sub-districts along the entire Project area. These meetings provide information on the Project and its impacts on community members.

42. In these public consultations, PGN described the Project and its possible impacts on the communities, solicited views on the impact mitigation, and sought cooperation of the communities and all related parties. These discussions generally supported the Project but some concern was expressed regarding the land acquisition.

43. A survey of attitudes of communities towards the project revealed the following; (i) of those interviewed along the Grissik – Pagardewa section, 78% expressed support for the project, 5% stated otherwise and 17% abstained; (ii) in West Java, attitudes towards the project show 47% expressed support, 39% stated otherwise and the balance abstained; and (iii) in Labuhan Maringgai, 40% expressed support, 45% stated otherwise and the balance abstained.

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The survey in Labuhan Maringgai was carried out before 1999 prior to any public consultations held to explain the benefits of the project. PGN will carry out further public consultations before October 2006 to gauge current attitudes for the Pagardewa-Labuhan Maringgai segment, and take proper measures to address local communities’ concern about the project. PGN will continue public consultations including the disclosure of relevant information for the duration of the Project.

44. Further meetings were held by PGN at sub-district level with participants from local communities to present and inform the local communities of the land acquisition activities, including; (i) the GOI legislative requirements; (ii) PGN’s land acquisition policy; (iii) negotiation process; (iv) schedule of land measurement; (v) grievance mechanism; and (vi) the rights of APs. PGN’s Land Acquisition Team also presented the alternatives of land for land or cash compensation for land acquired by the Project. These meetings were publicized with local public announcements posted in the villages at least one week prior to the meeting. (Appendix 4)

V. GRIEVANCE REDRESS MECHANISMS

45. The current Indonesian grievance procedure, based on KEPPRES No. 55/1993 Art. 19-21 and Regulation of the State Minister of Agrarian Affairs and National Land Agency No. 1 of 1994, Art. 18 & 22, is designed to mitigate disputes regarding compensation levels for land. It is not designed for or capable of adequately dealing with grievances covering other aspects of the LARP process, such as; (i) grievances regarding compliance with the procedures established under the Project; or (ii) non-compliance by government departments with the LARP.

46. As the Project alignment and land acquisition program affords the opportunity for individual participation by the APs and other stakeholders, the need for grievance redress procedures are minimal. However, in the event of any grievances, the following mechanisms apply. All grievances must be registered within a month from the announcement of the result of the measurement and inventory of the land, structures and assets; (i) grievances will be addressed by the Land Acquisition Committee; (ii) if the committee cannot resolve the problem specifically regarding financial compensation; then the dispute will be resolved by the district court (Pengadilan Negeri). During the dispute settlement, the compensation will be held in an escrow account by the district court. Grievance redress mechanism and procedure will be publicized at meetings with stakeholders so that APs are aware of their rights and procedures for grievance redress. (Appendix 5).

47. As of the date of this document, land acquisition for the Project is 89% complete. There are no outstanding grievances regarding compensation for land acquisition. There has been one instance where Adat land ownership was disputed and resulted in the matter being referred to the district court. This single grievance was settled.

VI. POLICY AND LEGAL FRAMEWORK

48. The key legislation concerning land acquisition and resettlement in Indonesia for gas transmission pipelines is KEPPRES No. 55/1993, which (i) specifies grievance procedures for landowners; (ii) defines "public interest" for development purposes; (iii) separates private projects which should use regular land purchase arrangements. This legislation places increased emphasis on community consultation and reaching agreement with people affected regarding the form and the amount of compensation; and presents options for compensation including cash, substitute land, and resettlement.

-11- 49. The Regulation of the State Minister of Agrarian Affairs and National Land Agency No. 1 of 1994 on Operational Directives of the Decree 55/93 is the enabling regulation for implementing the Decree. This specifies that each Provincial Governor establish a LAC which should include representatives of the Level II Land Office, Tax Office, Public Works Agency, Agriculture Agency, the heads of the sub-district and villages where land acquisition will take place, and two additional members. This committee is chaired by the Bupati or Walikota in each kabupaten (regency/district) and kota (municipality). (Appendix 6)

50. Where the development covers more than one Kabupaten/kota territory, the Governor will establish a Provincial LAC. When necessary, Governors will issue project-specific decrees with guidelines on specific procedures and entitlements for compensation and rehabilitation for people affected, as a basis for planning, implementing and monitoring resettlement according to KEPPRES No. 55/93.

51. The Committees have the authority to; (i) make an inventory of land and other assets on land to be acquired; (ii) investigate the legal status of the land; (iii) inform and negotiate with the people affected and with the agency acquiring the land; (iv) estimate compensation; and (v) document and witness the compensation payments.

52. An associated regulation is Government Regulation (PP) No. 27 of 1999 on Environmental Impact Assessment. This requires a management and monitoring plan for environmental impacts. It also requires mitigation of social impacts, public disclosure and community consultation.

53. The policy of the Asian Development Bank on Involuntary Resettlement is set out in the Involuntary Resettlement Policy (November 1995). PGN has also used the ADB Handbook on Resettlement: A Guide to Good Practice (1998) and ADB Handbook on Poverty and Social Analysis (2001) as guidelines. This resettlement policy has the following objectives and principles:

a. Involuntary resettlement should be avoided where feasible.

b. Where population displacement is unavoidable, it should be minimized by exploring all viable options.

c. People unavoidably displaced should be compensated and assisted, so that their economic and social future would be generally as favorable as it would have been in the absence of the project.

d. People affected should be informed fully and consulted on resettlement and compensation options.

e. Existing social and cultural institutions of re-settlers and their hosts should be supported and used to the greatest extent possible, and re-settlers should be integrated economically and socially into host communities.

f. The absence of a formal legal title to land by some affected groups should not be a bar to compensation; particular attention should be paid to households headed by women and other vulnerable groups, such as indigenous peoples and ethnic minorities, and appropriate assistance provided to help them improve their status.

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g. As far as possible, involuntary resettlement should be conceived and executed as a part of the project.

h. Land and houses acquired for the Project shall not be occupied or demolished prior to the full delivery of compensation to the affected persons and prior to completing their resettlement in new houses.

i. The full costs of resettlement and compensation should be included in the presentation of project costs and benefits.

54. Presidential Regulation (PERPRES) No. 36/2005 replaces Presidential Decree (KEPPRES) No. 55/1993, for only 21 different categories of public works, and does not include gas transmission pipelines. All other land acquisition for public interest development in Indonesia, including SSWJ phase II, is regulated by (i) KEPPRES No. 55/1993 on Land Acquisition and (ii) State Minister/Chief of The National Land Use Agency Act No.1 – 1994 on Guidance to perform KEPPRES 55/1993.

55. The GOI fully subscribes to ADB’s Policy on Involuntary Resettlement, the central principle of which is that people should not be disadvantaged in the process of development; however, the government’s legislations on the issue of involuntary resettlement do not fully support ADB’s Policy.

56. PGN’s general policy for land acquisition, compensation and resettlement regarding gas transmission and distribution projects is based on KEPPRES No. 55/1993. However, in order to bridge the gap between the GOI’s current legislation and ADB policies and guidelines, PGN’s LARP has been developed to ensure that involuntary resettlement meets or may even exceed the requirements set out in ADB's Handbook on Resettlement. (see Appendix 7)

57. The scope of PGN’s framework covers compensation for loss of assets and restores or enhances the livelihoods of all categories (direct, indirect, title holders and non-title holders) of APs, in providing the following:

a. All APs will be sufficiently compensated and rehabilitated so as to allow them to re-establish their pre-project standard of living, with the prospect of improvement.

b. All APs will be adequately informed on eligibility, compensation rates and standards, and project timing.

c. Land acquisition will not take place prior to satisfactory compensation and resettlement of the affected people.

58. To create a better relationship between the Project and the stakeholders, PGN endeavors to promote a mutual understanding of the process adopted for land acquisition and other affected assets through; (i) public consultations; (ii) advise to local government; (iii) public awareness programs; (iv) community level assistance; (v) the establishment of grievance procedures; and (vi) field monitoring, to help address any problem experienced by communities whose assets are affected by the Project. The detailed policy and implementation for LARP are as follows:

a. Resettlement of people will be minimized as much as possible by appropriate alternative pipeline corridor alignment. Actions have been taken to minimize the

-13- amount of residential land, houses and structures affected by aligning the pipeline corridor, ensuring it does not pass densely populated area and social facilities. The project will have no impact on any shops, commercial or industrial establishments. b. Compensation cut-off-date for non-title holders will be the date of completion of the census of the APs conducted on a section of the corridor. c. Assistance for non-title holders, such as tenants and squatters for relocating and replacement cost for any structure that they have erected. d. Assistance for APs who require relocation, as a result of the Project, in order to improve, or at least restore to pre-project levels, their income and standard of living. Particular attention will be given to vulnerable groups if any are identified. e. Compensation of APs for loss of assets. If necessary, adequate social and physical facilities (such as community services and civil amenities) will be provided, to maintain or improve APs incomes and living conditions at pre-project levels. f. Encourage participation of APs and host communities in the implementation of the LARP. g. Compensation and rehabilitation measures to APs and affected communities are:

i. replacement land in an acceptable location for the APs, or cash compensation based on the latest NJOP (Nilai Jual Objek Pajak, government land value) and current market value. Based on public consultations, all APs have chosen to receive cash compensation for their lost land. Loss of standing crops and productive trees will also be compensated at replacement cost. All land acquisition will be made after the harvest of crops.

ii. cash compensation for structures including houses and fixed assets.

iii. cash compensation at market price or re-building of the affected community and public structures.

iv. cash compensation for affected businesses which have negative impacts on livelihoods and incomes.

v. cash compensation for temporary asset acquisition by the Project. PGN will pay the APs for any damage caused to the properties/assets and full compensation for the loss of income during the period of temporary acquisition.

vi. transport allowance for all displaced APs.

vii. rent allowance and assistance in finding alternate rental accommodation for tenant APs.

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viii. rehabilitation and income restoration programs such as vocational training, credit facilities, job opportunities and other assistance for self- employed.

ix. rehabilitation assistance for income restoration for tenants on agricultural land affected by the Project.

h. Plans for acquisition of land and other assets and provision of rehabilitation measures will be carried out in accordance with APs together with local government.

i. Arrangements will be made adequately for (i) effective and timely supervision, (ii) internal and external monitoring and (iii) evaluation of the implementation of the LARP.

j. Institutional arrangements to ensure effective and timely planning, consultation and implementation of compensation, resettlement and rehabilitation measures.

k. Ensure the civil works do not start on any pipeline segment before compensation and assistance to the APs have been provided. The project will provide adequate notification, counseling and assistance to the APs so they are able to move or give up assets without undue hardship.

l. Target APs/AHs within vulnerable groups, if any, for special support to minimize adverse impacts. The project defines vulnerable groups as including but not limited to (i) landless households, (ii) households below the poverty line and absolute poverty line, (iii) women-headed households, (iv) orphan and destitute persons, and (v) persons with disabilities.

VII. ELIGIBILITY AND ENTITLEMENTS

59. All APs losing land, buildings, plants and other objects related to the land will be compensated in accordance to the type and amount of their losses (KEPPRES No. 55/1993, Art. 12). Compensation is also given to persons using land without any title (Regulation No. 1/1994, Art 20).

60. PGN together with the LAC has made an inventory, of land and assets to be acquired; and identified all persons affected by permanent impacts, or temporary impacts during construction. This survey, or any other forms of inventory of loss of assets in accordance with Art. 12 of Regulation No. 1/1994, is used to minimize fraudulent claims made by people who move into the area affected by the project, or plant or construct assets on the land to be acquired, in the hope of being compensated. Ownership and possession of property are not always vested in the same person, for example when land is share-cropped. In such cases the compensation for possession/use right has to be shared according to the agreement related to such possession/use.

61. The cut-off date for compensation eligibility is not later than the measurement and inventory survey in each Regency (Table 11). Persons constructing structures or settling in project-affected areas after the cut-off-date will not be eligible to compensation or subsidies.

-15- 62. As stipulated in Art. 12 of the KEPPRES No. 55/1993, compensation will be given for land, buildings, plants and other objects related to the land, while Art. 13 specifies the form of compensation. ADB’s policy includes not only the payment of cash for the lost land, houses and the like, but also for the loss of income or livelihood.

63. According to the KEPPRES No. 55/1993, Art. 15, the compensation value for assets to be released for public interest is:

a. the NJOP for the land concerned; b. the market value of a structures assessed by the district agency in charge of public works; c. the market value of plants assessed by the district agency in charge of agriculture.

64. The compensation is determined by negotiation and agreement based on replacement cost, in particular when the NJOP is below the market price. The assessment of the losses (see Table 9) has been prepared. The process of negotiation and agreement determines the rate for each item in each location under current democratic conditions and sufficient safeguard so that fair, market price-based compensation is achieved.

65. Various types of losses have been identified under different categories of loss and entitlements through evaluation of the socio-economic profile of the study area as well as objectives and principles of resettlement of ADB funded projects. (see Table 9)

66. The project construction activities require unskilled laborers and skilled staff. PGN will make provision with the contractors for preferential employment of qualified APs in the recruitment of local labor.

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Table 9. Entitlement Matrix Type of Entitled Person Compensation Policy Implementation Issues Loss Provide equivalent nearby Cash compensation at A list of available land in each replacement cost affected community is If only partial land is required Loss of Farmers who affected but the remaining Assistance to farmers to agriculture cultivate the become economically develop new crops and land land unviable, the APs will be improve production entitled to get cash Replacement cost will be compensation for entire determined by local land at full replacement government. cost. If remaining land is enough The value of the new site has to absorb APs, to be equivalent but not less replacement land will be than the value of the current provided within the property of APs. If the Legal occupant community. assessed value of the new Loss of of the land with If remaining area is not site is larger than the residential certification enough an alternative assessed value of their land from relevant house plot or equivalent will current property, the authority. be offered. difference should not be Cash compensation at collected from the APs. replacement cost. APs will have to conform to all existing regulations. a Cash compensation at a During the survey, the Legal owner of market price. amount and type of structures the structure. b Transport allowance needed will be evaluated. Loss of for relocated APs. b Cash compensation structure Receive assistance for Tenants and will be based on market price relocating and replacement illegal and negotiation between PGN cost for any structure that occupants. and APs. they have erected. Prices of agriculture products in local market will be checked for comparison. Loss of Farmers who Compensation in kind for APs will be given written standing cultivate the crops based on productivity notice several months in crops land. of the land in the past. advance of actual land acquisition. Crops grown after the issue of the notice will not be compensate. Person who Cash compensation based Loss of utilize the land on type, age and diameter trees where trees are of trees. located.

-17- VIII. RELOCATION OF HOUSING AND SETTLEMENT

67. The selected onshore pipeline alignment minimizes the number of structures affected, and this ensures that no settlements require relocation. Where structures are impacted by the acquisition, the APs are offered the choice of replacement land and structures and / or cash compensation. To date, all APs have chosen to accept the offer of cash compensation for loss of structures, as detailed in the Entitlement Matrix (Table 9), rather than accept the alternative offer of resettlement. A sample of an acceptance letter is shown in Appendix 8.

IX. INCOME RESTORATION AND REHABILITATION STRATEGY

68. The key objective of the land acquisition and resettlement plan is to ensure that the economic and social future of the affected households is at least as favorable as it would have been in the absence of the project.

69. Based on data collected from the field, no significant loss of assets, income or livelihood, or displacement of people is anticipated. Because the survey found no vulnerable groups, and APs will only be marginally affected, so the emphasis is on the provision of adequate compensation.

70. As a responsible corporate citizen, PGN has a Community Development Program (CDP) and PKBL (Program Kemitraan dan Bina Lingkungan). CDP is based on the need assessment of people in the affected villages. The need assessment is a survey conducted of the affected villages to ensure that CDP activities are efficient, on-target and enduring. The ultimate goal of CDP activities is to contribute to the growth of village economy. The PKBL is comprised of (i) Partnership Programs with small scale business enterprises and include small scale credit schemes, and (ii) Community Empowerment Programs which include public infrastructure development, health assistance program, education program, and vocational trainings. Funding for the programs is allocated from PGN’s profit. In 2006 total fund allocated for CDP and PKBL is Rp12.9 billion, or 1.5% of the 2005 profit. PKBL is permanent program of PGN.

X. BUDGET AND FINANCING

71. The policy in LARP regarding the cash compensation for affected assets will be based on replacement costs, as mentioned earlier. The assessment of the cash compensation for agricultural land is based on prevailing market price of land at local/farm level (information collected through consultation with affected people and village officials). For the structures, the replacement value is based on related institutional regulation set by Ministry of Public Works (PU). The budgeted cost for LARP of this project is approximately Rp160.7 billion and detailed in Table 10.

72. The compensation rates used vary for different regions, land types, and land productivity.

a. Valuation of Land Cost. Total area of land acquired for this project is 11,377,666.00 m 2 with total budgeted amount of cash compensations of Rp 80,5 billion. The average unit rate of land acquired is Rp 5,330/m 2.

b. Valuation of Replacement Cost of Structures. Cash compensation for structures affected by the project is based on price estimate from PU. Total compensation for structures is estimated at Rp1.2 billion with a total of 40 affected structures.

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c. Valuation of Replacement Cost of Trees and standing crops. Besides receiving cash compensation for land, the APs also received cash compensation for the standing crops on the project affected lands. Total estimate cash compensation for standing crops will amounted to Rp47.9 billion.

73. In South Sumatra and Lampung Provinces there is no requirement for any resettlement. No social facility structures are affected by the Project.

74. According to KEPPRES 55/1993 the payment of compensation shall be witnessed by LAC. The payment is to be monitored by a provincial level monitoring team. No construction in that area will start until the compensation has been received satisfactorily by concerned APs. PGN will provide all funding for LARP entirely from its own cash reserve.

Table 10. Summary of LARP entitlement budget No. Description Amount (Rp)

A. Land Acquisition

1 Cash compensation for acquired land 62,775,935,810

2 Cash compensation for structure 1,213,727,516

3 Cash compensation for trees & crops 47,947,922,828

Total 111,937,586,154

B. Land Lease West Java 17,720,640,000

C. Services Charge (4%) 5,186,329,046

D. VAT (10%) 12,965,822,615

E. Contingency (10%) 12,965,822,615

TOTAL COST 160,776,200,431

XI. IMPLEMENTATION SCHEDULES

75. PGN will implement a control and monitoring process to ensure that the APs receive the compensation satisfactorily prior to any construction activities take place before pipeline activity starts in that area. Internal and external monitoring will be conducted by consultant for the Project from March 2004 to December 2007. PGN will disseminate this LARP to APs in an appropriate format and language from August 2006 to October 2006. The time schedule for implementation of land acquisition and compensation activities are presented in the table below:

-19- Table 11. Land Acquisition Implementation Schedule Announcement Measurement Negotiation Activity Socialization of Measurement Payment start & Inventory start Target result Completion Schedule Agency PGN, LAC PGN, LAC PGN, LAC PGN, LAC PGN, LAC Responsible

South Sumatra province

Regency

September February February 1. MUBA August 2005 January 2006 August 2006 2005 2006 2006

November Desember 2. Banyuasin August 2005 August 2005 October 2005 August 2006 2005 2005

September October February 3. Muaraenim July 2004 July 2004 August 2006 2004 2004 2005

September September November 4. Prabumulih October 2004 June 2005 August 2006 2004 2004 2004

November February 5. OKU Induk August 2004 August 2004 October 2004 Completed 2004 2005

September September November January 6. OKU Timur October 2004 Completed 2004 2004 2004 2005

Lampung province

Regency

November 7. Waykanan July 2004 July 2004 July 2004 August 2004 Completed 2004

8. TUBA April 2004 June 2004 June 2004 August 2004 April 2005 Completed

October 9. LamTeng April 2004 April 2004 June 2004 July 2004 Completed 2004

November 10.LamTim April 2004 June 2004 June 2004 August 2004 Completed 2004

XII. INSTITUTIONAL FRAMEWORK FOR LAND ACQUISITION AND RESETTLEMENT

76. A strong and effective organizational framework is required for the coordination of the fundamental functions related to land acquisition and resettlement. The organizational framework required for implementing the LARP and ensuring the payment of cash compensation and rehabilitation allowances for the loss of land, structures, and plants. (see Appendix 9)

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77. The overall responsibility for the enforcement of the Policy Framework and the planning and implementation of the LARP will be performed by PGN. PGN is responsible for ensuring all APs receive compensation as defined in this policy. A special Land Acquisition Team was formed under PGN Project Coordinator to implement the LARP. This team along with LAC and local government carry out all land acquisition with the involvement of APs. An external consultant is employed to assess and evaluate the overall effectiveness of the land acquisition process and to ensure compliance to the regulations. (see Figure 2)

78. Involvement of NGOs in any resettlement framework is more important if vulnerable groups are affected; however, in this Project no vulnerable groups are affected by the land acquisition activities for the project.

79. PGN has the ultimate and overall responsibility for the planning and implementation of all activities relating to the land acquisition, compensation and resettlement under the Project. The local authorities with PGN will have the responsibility for all LARP activities at the local level, including surveys, consultation negotiation with the APs and will act through the LAC as stipulated by KEPPRES No. 55/1993, Art. 6&7, in each district. This committees usually comprises:

1. Head of Kabupaten/Municipality (Bupati/Walikota) as a chairman 2. Head of Kabupaten/Municipality Agrarian Office as vice chairman 3. Head of Land and Building Tax Office 4. Head of the local government agency responsible in the field of building (Agency of Public Works) 5. Head of the local government agency responsible in the field of agriculture (Plantation and Food Crops Agency) 6. Head of the District (Camat) where the project will be implemented, 7. Head of the Village (Lurah) where the project will be implemented. 8. Secretary of Head of Kabupaten/Municipality (Bupati/Walikota) as First Secretary 9. Head of Section at Agrarian Office of Kabupaten/Municipality as Second Secretary

-21- Figure 2. Organization of Environmental, Land Acquisition and Community Development

PGN Directors

Project Coordinator

Project Manager Senior Advisor III Head of Land Acquisition Community Dev. Team

Local Land Area Government Affected Acquisition Coordinator & District Persons Committee LA Team Court (Province) Field Coordinator LA Team (Regency) Field Officer

& Database Operator Land Acquisition LA Team Process (Village)

External Monitor

Source: PGN Comdev Division 2006

XIII. MONITORING AND EVALUATION

80. Broad objectives of monitoring and supervision are to provide project management with an effective tool for assessing LARP implementation at various stages and to identify problem areas and recommend mitigation measures for efficient implementation.

81. Monitoring and supervision of the LARP implementation involves (i) internal monitoring: To monitor and evaluate the project performance through the management and budgetary system of the project, and (ii) external monitoring: To monitor and evaluate the project’s impacts for both natural and social environment. The LARP implementation for the monitoring and evaluation is to be done by third parties. The third party consultants monitor and evaluate the LARP implementation, while contracted environmental consultants will monitor and evaluate the project as a whole.

82. The monitoring targets and functions will include (i) monitoring the implementation of the compensation policy and public consultation; (ii) Identifying any discrepancy between the policy requirements and actual practices, as well as any grievances at the village level; and (iii) providing recommendations for improving policy implementation.

83. Monitoring methodology will consist of the following:

a. Random review of documents on acquisition and compensation, to ensure full compliance with the policy’s requirements.

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b. Random site visits to ensure that compensation has been duly paid prior to the start up of construction works, its compliance to the principle of replacement cost and grievances.

c. Special studies about the adequacy of compensation paid for APs loss of assets compared to current market prices.

d. Periodic field visits and surveys to assess the public consultation concerning with project activities.

e. Periodic field visits to assess grievance procedures and the solution of land disputes, if any.

84. Data collection for monitoring is done through (i) direct interviews with the APs, (ii) specific focus group interviews to identify specific problem issues related to the project impacts, and (iii) secondary data collection and project records including project staff’s report. Samples for providing quantitative verification should cover target groups for each category (landowners, affected house owners, tenants).

85. PGN uses the following indicators for regular monitoring and evaluation of LARP :

a. Methodology; related to consistency in implementation with KEPPRES 55 as standard ensuring, (i) land acquisition activities have been implemented according to regulation, (ii) compensation payments have been disbursed according to regulation, (iii) progress of land acquisition and compensation according to the entitlement matrix, and (iv) public consultations have taken place as scheduled including meetings, groups, community activities

b. Administration; related to data management (documentation, storing, tracking and maintenance of data and reporting) on land from village level up to regency/province and Jakarta (PGN Head Office)

c. Organization; related to commitment and performance (coordination, consolidation, facilitation) of related institutions in the land acquisition acitivities, both internal and external as stated in KEPPRES 55/1993.

86. PGN progress activities report (Appendix 10) will provide information in term of internal/ routine monitoring and will report on the following indicators:

a. Status of payment of compensation on a timely basis and to the agreed amount;

b. Status of payment of compensation to all eligible affected people, and only to eligible persons;

c. planning and implementation of income and livelihood restoration measures that has been agreed in the entitlement matrix and as per budget;

d. Assessment of progress on income restoration and maintaining / improving on pre-project standards of living.

-23- e. Inspection of the complaints registered and actions taken for resolution if conflicts.

87. The monitoring reports by third party consultants will be sent as (i) an Inception Report submitted to the project authorities within one month of beginning of the assignment; and (ii) six monthly reports to the project authorities and the lending institutions. (Appendix 11)

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APPENDIX 1 PERUM JASA TIRTA II PROFILE

Status State-owned Company - PERUM (Perusahaan Umum)

Business/Industry • Water utility • Hydro-electric • Flood Control • Fishery

Business Descriptions : • Providing water for various purposes : drinking water, electricity, irrigation, industrial and other use • Generation and transmission of hydro electric • Tourism and land development • Providing support for agriculture sustenance by providing irrigation water and flood control

Legal Foundations • PN Jatiluhur (1967-1970) : PP (Peraturan Pemerintah/Government Regulation) No. 6 Year 1967 • Perum Otorita Jatiluhur (1970–1999) : PP. No. 20 Year 1970, PP. No. 35 Year 1980, PP. No. 42 Year 1990 • Perum Jasa Tirta II (1999 – present) : PP. No. 94 Year 1999

Share Holder Republic of Indonesia 100.00 %

PJT II Headquarters Jln. Lurah Kawi Jatiluhur -Purwakarta 41152, Jawa Barat Purwakarta - 41152

Phone 0264-201972 Email [email protected] Fax 0264-201971

PGN use of Land Leased from PJT II • Land leased by PGN for the RoW is adjacent to a drainage canal in West Java • Land leased will be used for both pipeline RoW and off-take station in Muara Bekasi • The pipeline RoW will not be fenced. To ensure security and integrity of the pipeline, PGN will use SCADA system for remote monitoring and routine foot patrols. • The trench will be backfilled with the excavated soil. The topsoil will not be compacted mechanically. After the pipeline is completed, markers will be placed along the pipeline at 1 km intervals. The corridor will be covered with grass and shallow-root vegetation to minimize soil erosion.

Note: on the PTJ II leased land, there are no persons who will be affected by the Project RoW.

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APPENDIX 2 PERCENTAGE OF LAND TITLE ACQUIRED FROM APs

Land with Legal Title Land with no Legal Title Total Project Area 0,05%-10% 10,05%-50% 50,05%-100% Total Land Title M2 Land Title M2 Land Title M2 Land Title M2 Land Title M2 Land Title M2 South Sumatra Province

1 MUBA Regency 37 26,431 90 258,330 1 3,855 128 288,616 272 836,413 400 1,125,029

2 Banyuasin Regency 3 3,453 5 16,889 - - 8 20,342 122 359,281 130 379,623

3 Muaraenim Regency 54 37,508 49 30,075 1 41,108 104 108,691 803 1,892,709 907 2,001,400

4 Prabumulih City 7 3,011 1 9,705 - - 8 12,716 229 481,167 237 493,883

5 OKU Induk Regency 20 43,755 54 86,512 - - 74 130,267 176 608,098 250 738,365

6 OKU Timur Regency 6 16,096 30 57,413 - - 36 73,509 613 1,000,157 649 1,073,666

Total 127 130,254 229 458,924 2 44,963 358 634,141 2,215 5,177,825 2,573 5,811,966

Average 21 21,709 38 76,487 1 7,494

Lampung Province

1 Waykanan Regency 21 117,083 74 192,482 4 15,702 99 325,267 125 449,216 224 774,482

2 Tulang Bawang Regency 30 14,793 56 102,666 2 2,550 88 120,009 256 520,510 344 640,519

3 Lampung Tengah Regency 19 17,303 48 94,508 3 5,729 70 117,540 326 554,122 396 671,662

4 Lampung Timur Regency 39 37,051 79 156,012 11 28,144 129 221,207 1,125 1,394,386 1,254 1,615,593

Total 109 186,230 257 545,668 20 52,125 386 784,023 1,832 2,918,234 2,218 3,702,256

Average 27 46,557 64 136,417 5 13,031

Total South Sumatra & Lampung 236 316,484 486 1,004,592 22 97,088 744 1,418,164 4,047 8,096,059 4,791 9,514,222

Average South Sumatra & Lampung 24 34,133 51 106,452 3 10,263 ------

-27- APPENDIX 3 SOCIO-ECONOMIC DATA

TABLE A3.1: Gender Structure Province Male Female Total

South Sumatra 3,297 3,099 6,396

Lampung 1,631 1,461 3,092

Total 4,928 4,560 9,488

TABLE A3.2: Main and Supplementary Income Income (Rp000/month) Province N Main Source Supplementary Other Total South Sumatra 1,148 384.59 80.20 14.61 479.40

Lampung 649 159.76 21.21 0.77 181.75

Total 1,797 544.35 101.42 15.38 661.15

Weigthed Mean 303.39 58.90 9.61 371.90

TABLE A3.3: Number of Households According to Household Size 1 – 4members 5 – 8 members +8 members Total Province N % N % N % N % South Sumatra 407 35.51 653 56.83 88 7.66 1148 100

Lampung 302 46.53 332 51.16 15 2.31 649 100

Total 710 39.49 985 54.78 103 5.73 1797 100

Source for all data from : Project Socio-economic Survey, 1997

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APPENDIX 4 SAMPLE MINUTES OF LAND ACQUISITION SOCIALIZATION MEETING

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APPENDIX 5 GRIEVANCE REDRESS MECHANISM

Grievance Redress Mechanism & Performance Evaluation

ORGANIZATIONAL HIERARCY LEVEL GRIEVANCE REDRESS MECHANISM GRIEVANCE SOLUTION & EVALUATION

BOARD OF DIRECTORS Performance Evaluation of Land Performance Acquisition Team Evaluation

Performance Evaluation : PROJECT Grievance Solution Scenarios COORDINATOR Analysis Include: man PGN OFFICE HEAD money material machine method

PENGADILAN NEGERI (DISTRICT COURT)

Grievance Unsolved PROJECT MANAGER SENIOR ADVISOR III COMDEV AFFAIRS Grievance Grievance Solved Grievance Redress Analysis Action

PROJECT MANAGER

Master List HEAD OF LAND PROJECT MANAGER Grievances ACQUISITION TEAM

Grievance Unsolved

Grievance Solved Grievance PROVINCE REGENCY SUB-DISTRICT / VILLAGE SUB-DISTRICT / REGENCY PROVINCE Analysis Grievance Redress Action

Grievance AREA Documentation COORDINATOR (regency & province level)

Grievance Unsolved

Grievance Solved Grievance Analysis Grievance Redress Action

AREA Grievance COORDINATOR Documentation (Sub- district & regency level)

Grievance Unsolved

Grievance Solved Grievance Grievance Redress Action Analysis

Grievance FIELD Documentation (Sub- OFFICER district/village level)

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APPENDIX 6 COMPOSITION OF A LAND ACQUISITION COMMITTEE FOR SSWJ PHASE II

SOUTH SUMATRA PROVINCE

Banyuasin Regency

1. Chairman (and member) : Head of Banyuasin Regency 2. Vice Chairman (and member) : Head of Land Agency – Banyuasin Regency 3. Secretary I : Governance & Administrative Affairs Asssitant – Banyuasin Regency 4. Secretary II : Section Head of Land Rights in Banyuasin Regency Land Agency Members : 5. Head of Regional Revenue Agency – Banyuasin Regency 6. Head of Public Works Agency – Banyuasin Regency 7. Head of Plantation & Forestry Agency – Banyuasin Regency 8. Heads of Sub-districts in the affected sub-districts 9. Heads of Villages in the affected villages

Ogan Komering Ulu Regency

1. Chairman (and member) : Head of Ogan Komering Ulu Regency 2. Vice Chairman (and member) : Head of Land Agency – Ogan Komering Ulu Regency 3. Secretary I : Governance & Administrative Affairs Asssitant – Ogan Komering Ulu Regency 4. Secretary II : Section Head of Land Rights in Ogan Komering Ulu Regency Land Agency Members : 5. Head of Land and Structure Tax – Ogan Komering Ulu Regency 6. Head of Public Works Agency – Ogan Komering Ulu Regency 7. Head of Agriculture, Fishery, and Farming Agency – Ogan Komering Ulu Regency 8. Heads of Sub-districts in the affected sub-districts 9. Heads of Villages in the affected villages

Muara Enim Regency

1. Chairman : Head of Muara Enim Regency 2. Vice Chairman : Head of Land Agency – Muara Enim Regency 3. Secretary I : Division Head of Governance Affairs – Muara Enim Regency 4. Secretary II : Section Head of Land Rights in Muara Enim Regency Land Agency Members : 5. Head of Public Works Agency – Muara Enim Regency 6. Head of Land & StructureTax Agency – Muara Enim Regency 7. Head of Agricultural Agency – Muara Enim Regency 8. Heads of Sub-districts in the affected sub-districts 9. Heads of Villages in the affected villages

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Musi Banyuasin Regency

1. Chairman (and member) : Head of Musi Banyuasin Regency 2. Vice Chairman (and member) : Head of Land Agency – Musi Banyuasin Regency 3. Secretary I : Governance & Administrative Affairs Asssitant – Musi Banyuasin Regency 4. Secretary II : Section Head of Land Rights in Musi Banyuasin Regency Land Agency Members : 5. Head of Socialization & Tax Potential Monitoring Agency – Musi 6. Head of Public Works Agency – Musi Banyuasin Regency 7. Head of Water Works Agency – Musi Banyuasin Regency 8. Head of Agricultural & Farming Agency – Musi Banyuasin Regency 9. Head of Forestry Agency – Musi Banyuasin Regency 10. Head of Plantation Agency – Musi Banyuasin Regency 11. Heads of Sub-districts in the affected sub-districts 12. Heads of Villages in the affected villages

Prabumulih Regency

1. Chairman : Head of Prabumulih Regency 2. Vice Chairman (and member) : Governance Affairs Asssitant – Prabumulih Regency 3. Vice Chairman II (and member) : Head of Land Agency – Prabumulih Regency 4. Secretary I : Division Head of Governance Affairs – Prabumulih Regency 5. Secretary II : Section Head of Land Rights in Prabumulih Regency Land Agency Members : 6. Head of Public Works Agency – Prabumulih Regency 7. Head of Land & StructureTax Agency – Prabumulih Regency 8. Head of Agricultural Agency – Prabumulih Regency 9. Section Head of Land Measurement & Mapping in Prabumulih Regency Land Agency 10. Heads of Sub-districts in the affected sub-districts 11. Heads of Villages in the affected villages

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LAMPUNG PROVINCE

Way Kanan Regency

1. Chairman (and member) : Head of Way Kanan Regency 2. Vice Chairman (and member) : 1st Assistant of Regency Secretariat – Way Kanan Regency 3. Secretary (and member) : Division Head of Governance Affairs – Way Kanan Regency 4. Vice Secretary (and member) : Division Head of Legal & Organization Affairs - Way Kanan Regency Members : 5. Head of Public Works & Mining Agency – Way Kanan Regency 6. Head of Agricultural Agency – Way Kanan Regency 7. Head of Plantation & Forestry Agency – Way Kanan Regency 8. Head of Land and Structure Tax Agency – Kotabumi 9. Head of Land Affairs Agency – Way Kanan Regency 10. Heads of Sub-districts in the affected sub-districts 11. Heads of Villages in the affected villages

Tulang Bawang Regency

1. Chairman (and member) : Head of Tulang Bawang Regency 2. Vice Chairman (and member) : Head of Land Agency – Tulang Bawang Regency 3. Secretary : Division Head of Land Affairs – Tulang Bawang Regency 4. Vice Secretary : Sub-division Head of Land Acquisition and Rights in Tulang Bawang Regency Land Affair Section Members : 5. Governance Affairs Assistant – Tulang Bawang Regency 6. Head of Land and Structure Tax Agency – Tulang Bawang Regency 7. Head of Public Works Agency – Tulang Bawang Regency 8. Head of Agricultural Agency – Tulang Bawang Regency 9. Division Head of Legal Affairs – Tulang Bawang Regency 10. Heads of Sub-districts in the affected sub-districts 11. Heads of Villages in the affected villages 12. Section Head of Land Rights in Tulang Bawang Regency Land Agency

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Lampung Tengah Regency

1. Chairman (and member) : Head of Lampung Tengah Regency 2. Vice Chairman (and member) : Head of Land Agency – Lampung Tengah Regency 3. Secretary : Division Head of Governance Affairs – Lampung Tengah Regency 4. Vice Secretary : Section Head of Land Rights - Lampung Tengah Regency Members : 5. Head of Land and Structure Tax Agency – Metro 6. a. Head of Public Works Agency – Lampung Tengah Regency b. Head of Housing and Residential Agency – Lampung Tengah Regency c. Head of Water & Irrigation Agency – Lampung Tengah Regency 7. Head of Agricultural Agency - Lampung Tengah Regency 8. Heads of Sub-districts in the affected sub-districts 9. Heads of Villages in the affected villages

Lampung TimurRegency

1. Chairman (and member) : Head of Land Agency – Lampung Timur Regency 2. Vice Chairman I (and member) : Governance Affairs Assistant – Lampung Timur Regency 3. Vice Chairman II (and member) : Head of Land Affairs – Lampung Timur Regency 4. Secretary : Division Head of Governance Affairs – Lampung Timur Regency 5. Vice Secretary : Section Head of Land Rights in Lampung Timur Regency Land Agency Members : 6. Head of Public Works Agency – Lampung Timur Regency 7. Head of Agricultural Agency and Head of Plantation & Forestry Agency - Lampung Timur Regency 8. Head of Land and Structure Tax Agency – Lampung Timur Regency 9. Sub-section Head of Land Right Problems in Lampung Timur Regency Land Agency 10. Division Head of Legal and Organization Affairs – Lampung Timur Regency 11. Heads of Sub-districts in the affected sub-districts 12. Heads of Villages in the affected villages

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APPENDIX 7 GOI / ADB / PGN GAP MATRIX

ITEM GOI current legislation ADB policy and guidelines PGN LARP framework

Policy or GOI’s general policy for land The policy of the Asian PGN’s general policy for land acquisition, compensation and Framework acquisition, compensation and Development Bank on Involuntary resettlement regarding gas transmission and distribution resettlement regarding gas Resettlement is set out in the project follows KEPPRES No. 55/1993. Compensation for transmission and distribution Involuntary Resettlement Policy APs is based on the latest NJOP (Nilai Jual Objek Pajak, project follows KEPPRES No. (November 1995). Handbook on government land value) and current market value. PGN’s 55/1993. Compensation for APs Resettlement: A Guide to Good objective is to ensure that APs/AHs by the Project are is based on the latest NJOP Practice (1998) and ADB Handbook adequately and fairly compensated and resettled, where (Nilai Jual Objek Pajak, on Poverty and Social Analysis applicable, according to the main principles and objectives government land value) and (2001) as guidelines. of the policy. negotiation between LAC and AP Involuntary resettlement Not a requirement of Involuntary resettlement should Resettlement of people will be minimized as much as KEPPRES No. 55/1993. be avoided where feasible possible by appropriate alternative pipeline corridor alignment. Where population displacement is unavoidable, it should be Actions have been taken to minimize the amount of minimized by exploring all viable residential land, houses and structures affected by aligning options. the pipeline corridor, ensuring it does not pass densely populated area and social facilities. The project will have no impact on any shops, commercial or industrial establishments.

Compen- sation APs unavoidably displaced as People unavoidably displaced APs unavoidably displaced as a result of the Project will be a result of the Project will be should be compensated and assisted in efforts to improve, or at least restore to pre- compensated based on assisted, so that their economic project levels, their income and standard of living. Particular NJOP, but can be open to and social future would be attention will be given to those from vulnerable groups. negotiation generally as favorable as it would have been in the absence of the project.

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ITEM GOI current legislation ADB policy and guidelines PGN LARP framework Consultation of APs Not a requirement of People affected should be APs and host communities will be encouraged to participate KEPPRES No. 55/1993. informed fully and consulted on in the implementation of the LARP. resettlement and compensation To create a better relationship between the Project and the options. stakeholders, PGN will endeavor to promote mutual understanding of the process adopted for land acquisition and other affected assets through public consultations, advise to local government, public awareness program, community level assistance, and the establishment of grievance procedures and field monitoring to help address any problem experienced by communities whose assets are affected by the Project.

Treatment of existing Not a requirement of Existing social and cultural APs will be compensated for loss of assets. If necessary, social and KEPPRES No. 55/1993. institutions of re-settlers and their adequate social and physical facilities (such as community cultural hosts should be supported and services and civil amenities) will be provided, to maintain or institutions used to the greatest extent improve APs incomes and living conditions at pre-project possible, and re-settlers should levels. be integrated economically and socially into host communities.

Treatment Not a requirement of The absence of a formal legal title The LARP will target APs/AHs within vulnerable groups for of AP with KEPPRES No. 55/1993. to land by some affected groups special support to minimize adverse impacts. The project no formal should not be a bar to defines vulnerable groups as including but not limited to (i) legal title compensation; particular attention landless households, (ii) households below the poverty line should be paid to households and absolute poverty line, (iii) women-headed households, headed by women and other (iv) orphan and destitute persons, and (v) persons with vulnerable groups, such as disabilities. indigenous peoples and ethnic Non-title holders, such as tenants and squatters will receive minorities, and appropriate assistance for relocating and replacement cost for any assistance provided to help them structure that they have erected. improve their status. LARP as KEPPRES No. 55/1993 part of the indicates that involuntary As far as possible, involuntary PGN’s involuntary resettlement is conceived and executed project resettlement should be resettlement should be conceived as a part of the project conceived and executed as a and executed as a part of the part of the project project.

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ITEM GOI current legislation ADB policy and guidelines PGN LARP framework

Condition Not a requirement of Land and houses acquired for the Is coordinated during the project implementation to minimize precedence KEPPRES No. 55/1993. Project shall not be occupied or the impact from civil works. The project staff will provide for demolished prior to the full adequate notification, counseling and assistance to the APs construction delivery of compensation to the so they are able to move or give up assets without undue affected persons and prior to hardship. completing their resettlement in Ensures the civil works do not start on any pipeline segment new houses. before compensation and assistance to the APs have been provided.

LARP cost Not a requirement of The full costs of resettlement and PGN has prepared a full budget including all costs as part of KEPPRES No. 55/1993. compensation should be included associated with LARP project cost in the presentation of project Cash compensation for affected assets will be based on costs and benefits. replacement costs. The assessment of the cash compensation for agricultural land is based on prevailing market price of land at local/farm level (information collected through consultation with affected people and village officials). For the structures, the replacement value is based on PU related institutional regulation. The cost for LARP is part of the Project cost.

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APPENDIX 8 SAMPLE OF CONFIRMATION OF ACCEPTANCE OF CASH COMPENSATION

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TRANSLATION OF STATEMENT OF ACCEPTANCE TO RECEIVE STRUCTURE COMPENSATION FOR STRUCTURE AFFECTED BY PGN GAS PIPELINE PROJECT

The undersigned hereby :

Name : Boyadi Age/Date and Place of Birth : Lampung, 16-04-1972 Address : Dusun 02, RT 01 RW 02 Rantau Jaya Udik II Sukadana

Acting on behalf of and for the head/representative of the household which owns the structure affected by the construction of South Sumatra – West Java Gas Transmission Pipeline of PT Perusahaan Gas Negara (Persero) Tbk. In the location of Muara Jaya Village, Sukadana Sub-district, Lampung Timur Regency declare acceptance of said structure in form of cash compensation as has been agreed by negotiation between our side and PT Perusahaan Gas Negara (Persero) Tbk, which took place in 3 February 2005 witnessed by Lampung Timur Regency Land Acquisition Committee.

I hereby state that this statement is made of my own free will and under no duress by any side, to be used as necessary.

Muara Jaya, 3 February 2005

Undersigned

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APPENDIX 9 - LAND ACQUISITION PROCESS & THE ROLE OF INSTITUTIONS INVOLVED Institutions Involved Input Process Output Level Internal PGN External PGN 1 Director 1 Head of Province and Staffs 2 Project Coordinator PLP (Penetapan Lokasi 3 Project Manager PGN Submit Project Pembangunan / Construction 4 Senior Advisor III Comdev Affairs Coordination Meetings Permit Request from Area Decision) Province 5 Head of Land Acquisition Team Local Government with Local Government and IP (Ijin Pembangunan / Construction Permit)

1 Head of Land Acquisition Team 1 Head of Regency and Staffs 2 Area Coordinator 2 Land Acquisition Committee PLP (Penetapan Lokasi 3 Field Coordinator Pembangunan / Construction Coordination Meeting & Area Decision) Formation of Land Land Acquisition Regency and Acquisition Committee Committe IP (Ijin Pembangunan / Construction Permit)

1 Head of Land Acquisition Team 1 Land Acquisition Committee 2 Area Coordinator 3 Field Coordinator PGN Internal Land Acquisition Team Land Acquisition Land Acquisition Coordinating LARP Implementation Master Regency Committe implementation With Schedule Land Acquisition Committe

1 Head of Land Acquisition Team 1 Land Acquisition Committee 2 Area Coordinator 2 Head of Sub-district 3 Field Coordinator 3 KPM-IPB Socialization (1) Perception, 4 Field Officer (External Monitoring Consultant) Land Acquisition (1) WHAT and HOW understanding & support Implementation Master about the pipeline project for the project and land Schedule (2) Benefit of the project acquisition process from (3) Land Acquisition the APs Sub-district / Procedure (2) Mintues of Village Socialization

1 Area Coordinator 1 Land Acquisition Committee 2 Field Coordinator 2 Head of Sub-district 3Field Officer 3KPM-IPB 1) Perception, Measurement & Master Result of 4 Database Operator (External Monitoring Consultant) understanding & support Inventory Measuremen & for the project and land Implemented by Land Inventory: Signed and acquisition process from Acquisition Committee Approved by Land the APs with involvement from Owners, Village Head, Village (2) Mintues of PGN and APs, including: Land Acquisition Socialization (1) Land, Committee and PGN (2) Crops & (3) Structures

1 Area Coordinator 1 Land Acquisition Committee 2 Field Coordinator 2 Head of Sub-district 3Field Officer 3KPM-IPB Master Result of Announcement of Revised Master Result of 4 Database Operator (External Monitoring Consultant) Measuremen & Result Measurement & Inventory: Signed and Notification and Inventory Approved by Land announcement of Owners, Village Head, measurement & Land Acquisition inventory result in an Committee and PGN official notification (signed by Land Acquisition Committe) put in notification board in Village Head Office or Village Head House with Village 1 month period for complaints / request for revisions. Request for revision of result will be handled by repeating the measurement & inventory process.

1 Senior Advisor III Comdev Affairs 1 Land Acquisition Committee 2 Head of Land Acquisition Team 2 Head of Sub-district 3 Area Coordinator 3 KPM-IPB Compensation (1) Minutes of 4 Field Coordinator (External Monitoring Consultant) Revised Master Result of Negotiation Compensation 5 Field Officer Measurement & Negotiation is based on Negotiation 6 Database Operator Inventory the revised master result of measurement & (2) Statement of inventory. Negotiation is Compensation conducted directly Agreement Village between land owners and PGN mediated by Land Acquisition Committe

1 Head of Land Acquisition Team 1 Land Acquisition Committee 2 Area Coordinator 2 Head of Sub-district 3 Field Coordinator 3 KPM-IPB Compensation Legal documents include 4 Field Officer (External Monitoring Consultant) (1) Minutes of Payment : (1) SPMH-Tanah, (2) 5 Database Operator Compensation Compensation is paid to Minutes of Negotiation the eligible APs Compensation Payment witnessed by Land and(3) Master (2) Statement of Acquisition Committe Nominated Payment List Village Compensation Agreement

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APPENDIX 10 LAND ACQUISITION COMPENSATION PAYMENT PROGRESS REPORT

(As of 12 July, 2006)

MEASUREMENT PROGRESS PAYMENT RESULT % LOCATION PROGRESS

(M 2) (M 2) (Rp)

SOUTH SUMATRA PROVINCE TOTAL (A) 6,644,080.00 5,426,738.00 82% 41,104,740,019.00

LAMPUNG PROVINCE TOTAL (B) 4,733,586.25 4,733,586.25 100% 53,315,018,104.50

Total ( A + B ) 11,377,666.25 10,160,324.25 89% 94,419,758,123.50

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APPENDIX 11 LARP EXTERNAL MONITORING INCEPTION REPORT

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External Monitoring Land Acquisition and Resettlement Plan (LARP)

SSWJ Phase II Gas Transmission Projec t

Oleh KPM-IPB (Komunikasi & Pengembangan Masyarakat - Institut Pertanian Bogor)

Prepared for : PT. PERUSAHAAN GAS NEGARA (Persero), Tbk

Reported to: Asian Development Bank

June 2006

Content : 1. Introduction 2. Methodology 3. Monitoring Report

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1) Introduction

Land acquisition is one of the most important processes that must be completed before the South Sumatra – West Java Gas Transmission Project Phase II can be started. Because of the importance of land acquisition process, PGN had formulated a Land Acquisition and Resettlement Plan (LARP) which contains guidelines for the activities in the process. The goal of LARP is to ensure that the whole process is conforming to regulations, prevent adverse social impact, and can be completed according to schedule.

This external monitoring report contains evaluation and review of the implementation of LARP. The monitoring report can provide PGN with valuable information for assessing LARP implementation at various stages and to identify problem areas and recommend mitigation measures for efficient implementation.

The approach taken by PGN is for the long term benefit of both the affected land owner and PGN, in this case the land acquisition process should strengthen the good relationship between PGN and the people in the affected area and not the other way around. This is the reason of PGN choice of persuasive approach in land acquisition process. This is also a form of implementation of corporate social responsibility.

The large amount of land that must be acquired for the SSWJ Phase II project created complexities in the land acquisition process that required proper implementation strategy. The complexities also aroused from the dynamic and interaction among socio-economic conditions, specific culture and traditions, local political constellation. The problems were also increased by the intervention of freeloaders and land speculators.

Based on our observation, at least three important components are critical to the successful implementation of land acquisition : (1) high performing land acquisition team and construction team, (2) cooperative land owners/affected people, and (3) suitable scheme/land acquisition approach. Also important were intangible aspects that should be possessed by land acquisition team in implementing the LARP : politeness, creativity, patience, determination, honesty, and consistency.

Land acquisition activities implemented by PGN are based on Keppres No.55/1993. In this Keppres 55 regulated that the determination of compensation price must be based on the latest Nilai Jual Obyek Pajak (NJOP/Government Land Value) and prevailing market price at the time of the land acquisition process. However, the final price of compensation will be the result of negotiation between PGN and mediated by the local regency Land Acquisition Committee.

According to the regulation, the land acquisition process comprises of four stages : (1) socialization, (2) measurement & inventory, (3) announcement of measurement & inventory results, (4) compensation negotiation, (5) compensation payment.

Some general observations that can be concluded from the review of land acquisition implementation are as follows :

a) Full support of PGN management was very important in ensuring that the LARP can be implemented effectively b) Land acquisition is a complex and difficult undertaking, and therefore required determination, patience and proper strategy c) Gas pipeline construction and its subsequent operation can only be run smoothly in the long run if the land acquisition process is implemented in satisfactory manner both for PGN and for people in the affected area.

2) Methodology

The following indicators are used for monitoring and evaluation of LARP in this report: a. Methodology ; related to consistency in implementation with Keppres 55 as standard ensuring, (i) land acquisition activities have been implemented according to regulation, (ii) compensation payments have been disbursed according to regulation, (iii) progress of land acquisition and compensation according to the entitlement matrix, and (iv) public consultations have taken place as scheduled including meetings, groups, community activities b. Administration ; related to data management (documentation, storing, tracking and maintenance of data and reporting) on land from village level up to regency/province and Jakarta (PGN Head Office) c. Organization ; related to commitment and performance (coordination, consolidation, facilitation) of related institutions in the land acquisition activities, both internal and external as stated in Keppres 55/1993. The above indicators (methodology, administration, & organization) are applied for every stage of land acquisition process as required by Keppres No.55/1993 which includes the following stages : a) Socialization to people in the project affected area. This stage is aiming to create positive perception among people in the affected area to ensure that the project can accept the project and support the land acquisition process and the compensation for the acquired land. b) Measurement & Inventory; this stage included measurement and inventory of land acquired for the project. This stage is conducted by the land acquisition committee in each regency affected along with land owners. c) Announcement of Measurement & Inventory Result ; 1 month consideration period for the announcement of result of measurement & inventory is intended to give land owners sufficient time for land owners to submit complaints and request for revisions of the result of measurement and inventory. d) Compensation Negotiation; negotiation process mediated by Land Acquisition Committee in each regency. Price bases used in the negotiation are NJOP (Nilai Jual Obyek Pajak) and prevailing local market price. e) Compensation Payment; the ideal method of payment for PGN is through bank for security reasons. However, in most of the condition payment is done by cash payment

Based on the above indicators, the monitoring activities are implemented by direct monitoring in each affected area in different regency, through interviews and observations. The interviews and observations are focused on:

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a) Methodology : actual land acquisition implementation compared with what is required by Keppres 55 / 1993 b) Administration : review on land acquisition documents c) Organization : assessment on the effectiveness of coordination among institutions taken part in the land acquisition process (Land owners, PGN Land acquisition team, Land Acquisition Committee, Local government etc) d) Assessment on effectiveness of grievance redress mechanism

3) LARP Monitoring Results

a) Land Acquisition (LA)

i) Land Acquisition Schedule & Progress Table-1 shows the schedule and realization of SSWJ Phase II. Table-2 shows the progress of land acquisition process

Table 1. Land Acquisition Schedule Start Date Announc Target Measure- ement of Regency Sociali- Negoti- Comple- ment & Measure- Payment zation ation tion Inventory ment Schedule Result

Sumatera Selatan Province August Septem- January February February August 1. MUBA 2005 ber 2005 2006 2006 2006 2006 August August October November December August 2. Banyuasin 2005 2005 2005 2005 2005 2006 September October February August 3. Muaraenim July 2004 July 2004 2004 2004 2005 2006 Septem- Septem- October November August 4. Prabumulih June 2005 ber 2004 ber 2004 2004 2004 2006 August August October November February Comple- 5. OKU Induk 2004 2004 2004 2004 2005 ted Septem- Septem- October November January Comple- 6. OKU Timur ber 2004 ber 2004 2004 2004 2005 ted

Lampung Province August November Comple- 7. Waykanan July 2004 July 2004 July 2004 2004 2004 ted August Comple- 8. TUBA April 2004 June 2004 June 2004 April 2005 2004 ted October Comple- 9. LamTeng April 2004 April 2004 June 2004 July 2004 2004 ted August November Comple- 10.LamTim April 2004 June 2004 June 2004 2004 2004 ted

Table 2. Land Acquisition Progress

Measurement Total Actual Total Cumulative Regency Result (m 2) Compensation (m 2) Progress (%) South Sumatra 6,644,080.00 5,426,738.00 82% Lampung 4,733,586.25 4,733,586.25 100% Total 11,377,666.25 10,160,324.25 89% ii) Monitoring Objectives : (1) Process (methodology) of land acquisition process ; Based on observations and interviews, the land acquisition process implemented by PGN had already consistent with Keppres 55 /1993, with the following stages : (a) Coordination meeting / socialization with local government; this activities eventually resulted in the issuance PLP (Penetapan Lokasi Pembangunan/Construction Area Decision) and IP (Ijin Pembangunan/Construction Permit). (b) Socialization to the location of villages affected by the pipeline Right of Way; these activities aimed to encourage positive perception and good acceptance from the people in the affected area. From the local government down to village level, the activities clearly are attempts to approach the stakeholders so good support can be obtained for PGN. Also the socialization process is a form of statement of good intention from PGN so the project can mutually benefited PGN and the stakeholders in all stages of project life time: pre-construction, construction and post-construction (operation). (c) Measurement & Inventory; This activities is conducted in all area affected by the project right of way. The implementation is supervised by Land Acquisition Committee and also involving land owners or their representatives. This is to ensure that the land owners know exactly about the measurement and inventory process conducted on their land and can assure that it is conducted properly. This activities include all compensated assets : (i) land, (ii) crops, and (iii) structures. (d) Announcement of Measurement & Inventory Results; in this activities the land owner can submit complaints and request for revisions of measurement & inventory result in the period of 1 month. Observation in the field showed that there are still some complaints after the 1 month period, and although it is already pass the complaint period, the request from these land owners are still processed to resolve the problems by PGN and Land Acquisition Committee. (e) Compensation Negotiation; This activity takes place after all complaints regarding measurement & inventory have been resolved and accepted by the land owners. (i) The negotiations are conducted directly between PGN and the land owners, mediated by Land Acquisition Committee. (ii) In the event that the amount of the land owners presented in the negotiation sessions were not sufficient to conduct effective negotiation, the negotiation was conducted between PGN and representatives appointed by the land owners to negotiate on their behalf.

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(iii) The negotiations are led by Chairman of Land Acquisition Committee. (iv) The amount of compensation for assets are as follow : • Land ; negotiations for agreed amount of compensation are based on: Nilai Jual Obyek Pajak (NJOP) and prevailing local market price. • Crops ; negotiations are based on the price standard from the regency agricultural agency and formalized by letter of the head of regency (Bupati). • Structures ; negotiations are based on the structure compensation price standard from the regency public works agency and formalized by letter of the head of regency (Bupati). (v) Once the amount of compensation has been agreed upon by land owners and PGN, the Land Acquisition Committee issued a Minute of Negotiation containing the form and amount of compensation as agreed by both negotiating parties. (f) Compensation Payment; this activity is conducted by PGN and witnessed by Land Acquisition Committee. Ideally, the compensation is paid through bank transfer for security reasons. But in most cases, the compensation is paid with cash. Compensation is paid directly to the land owners or legitimate will holders.

Based on observations, public/affected people participation is the main platform in the land acquisition process. In every stages of land acquisition, PGN has always involved affected people and other stakeholders. With such approach, the expected outcome of the land acquisition process is to obtain positive perception and support of affected people for the construction and operation phase of the project.

(g) Some special policies implemented to handle problems arising in the land acquisition process (e.g. in case of deadlock in the negotiation) (i) In the case of co-ownership of land, crops, and structures by more than one person, and the whereabouts of one or more eligible owners are not known, the compensation payments for the missing owners are held in an escrow accounts by the district court. (ii) In the event of prolonged deadlock in the negotiation, the Land Acquisition Committee issues a decision on the form and amount of compensation, accommodating as far as possible the position, opinion, and suggestion of negotiating parties. (iii) Should the land owners can not accept the decision of Land Acquisition Committee above, they can submit official complaints to the Governor of the province. If the Governor and Land Acquisition Committee cannot resolve the problem then the dispute will be resolved by the district court (Pengadilan Negeri). During the disputation settlement, the compensation will be held in an escrow account by the district court.

(2) Land Acquisition Documents Review (administration) ; result of land acquisition documents review is shown in Table 3.

(3) Table 3. Land Acquisition Document Review Result

Village Level Land Owner Lever No Land Acquisition Stage Document Document Minute of 1 Socialization - Socialization Master List of 2 Measurement & Inventory Measurement & - Inventory Result Official Announcement Document Signed Announcement of 3 by BPN (Badan - Measurement Result Pertanahan Nasional / National Land Agency) Minute of Compensation 4 Compensation - Negotiation Negotiation 5 Compensation Payment Master List of 1 National ID Card Payment 2 Land Certificate Result of 3 Measurement & Inventory Statement of 4 Compensation Agreement Statement of Agreement to Transfer Ownership & 5 Release Right on Land, Crops & Structures Minute of 6 Compensation Payment

(4) Assessment on coordination mechanism among institutions and stakeholders of the land acquisition process; This aspect is important as the effectiveness of coordination among institutions and stakeholders is critical to the success of land acquisition. Coordination among institutions : land owners, PGN and Land Acquisition Committee showed a good spirit of mutual respect. However some cases in the field showed that land owners are the most easily influenced by freeloaders and land speculators. This is usually resulted in problems in the compensation negotiation stage that slow down the land acquisition process.

(5) Assessment of grievance redress mechanism; Complaints and grievances in the land acquisition process are mainly of two types: (a) complaints of the result of measurement & inventory, and (b) complaints on the final compensation amount in the negotiation. Observations and interviews showed that all complaints and grievances are handled in good manners. For type (a) complaint, the usual solution is to repeat the process of measurement and inventory. Solving the type (b) complaints

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are usually more difficult. The approach taken by PGN is solving type (b) complaint are persuasive and procedural (conforming to regulation). With persuasive approach multiple negotiation sessions are conducted until both PGN and the land owners can arrive at an agreeable compensation amount. However, if the negotiation turned into a deadlock, regulation in Keppres 55 / 1993 mandated that the case is tried in district court and the compensation is put into an escrow account by the court.

b) Resettlement Plan (RP)

No resettlement took place during the land acquisition process. For all affected structures (semi-permanent houses and huts), the structure owner prefer compensation in form of cash compensation. This is based on direct interview with structure owners and then followed up by formal ”Statement of Acceptance of Cash Compensation For Structure” signed by the affected structure owner.

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