Deforestation of natural forests in Pohuwato, Gorontalo by several companies, to meet the needs of wood pellet exports to South Korea and Japan (Photo: IGGM Adi)
by IGG Maha Adi – Chairman Green Press Indonesia and Bertha Challenge Fellow 2024
Indonesia’s forests and biodiversity are being damaged due to energy transition program. Wood pellets are produced by cutting down tropical rainforests which actually increases emissions. Government and companies deny even though our investigation prove otherwise
- For three months, Green Press and beritalingkungan.com investigated the impact of wooden pallet exports that are destroying natural forests in the Gorontalo region of Sulawesi.
- Our investigations showed that the damage of 28 thousand hectare of Indonesia tropical forest indeed happening but the government and companies is spreading disinformation about the destruction.
A short report was received by the Indonesia Maritime Security Agency or (Bakamla) of the Central Maritime Zone in Manado, North Sulawesi in the first week of August. Investigators from Bogor-based The Forest Watch Indonesia (FWI) provided convincing information about a suspicious ship that was sail from Trikora Port in Gorontalo to Japan, with illegal cargo on the night of August 15th. The Commander of the State Ship (KN) Gajah Laut-404, Lt. Col. Tri Haryanto decided to follow the clue and prepared his men to carry out an ambush. After almost a night of lurking in Tomini Bay, at 02.00 in the morning they found a suspicious ship at position 00°05’416″ N – 123°07’549″ E or in the waters of Tomini Bay, Gorontalo.
Commander Tri Haryanto then ordered his personnel to open radio communication with the ship to confirm his suspicions. The ship was ordered by Commander Gajah Laut to turn off its engine. Later, upon knowing that the captain of the ship has a Filipino accent, communication was conducted in Tagalog. It did obey and turned off its engine. He also introduced himself as the captain of the MV Lakas ship from the Philippines.
The ship was ordered by Bakamla to raise the Indonesian flag. According to Indonesian shipping laws, any foreign ship that enters a port, while the ship is in port, and is about to leave a port in Indonesia should raise the Indonesian flag in addition to its national flag. After communication, personnel of Bakamla decided to further inspect the ship. They made for the Lakas, which was apparently drifting slightly on the very calm sea of that night.
On the stern of the black ship, in white paint, it said LAKAS MANILA. Further, the patrol boat KN Gajah Laut still approached the right side of Lakas, where some patrol officers jumped full of weaponry, some on standby. It did not resist the arrest warrant to stop activities.
As a navy officer told Green Press about the ambush, upon a quick inspection it turned out that the MV Lakas was from the Philippines, captained by Eduardo Hermosa Abiga with 17 crewmen. The said cargo ship left at night from the Special Terminal Port of Trikora Village, Popayato, Gorontalo, which is specifically designed to serve as an anchoring point in the distribution of wood pellets to the port of Fushiki, Japan.
Unfortunately, they were not able to present several significant documents like Certificate of Analysis, Certificate of Origin, and Certificate of Shipper Declaration, necessary for transportation of dangerous goods, to which, according to IMSBC, wood pellets belong, in category B.
It was finally confirmed after the hatch was opened that indeed MV Lakas was carrying 10,545 metric tons of wood pellets, but it was suspected to be illegal. MV Lakas was registered at IMO number 9726736 and weighed 13,522 tons but without complete documents, everything including all its crew, was secured and taken to the nearest Gorontalo port for further inspection.
Recently, an investigation by Forest Watch Indonesia (FWI) found that pellet export practices had been conducted up to 21 times, including by transhipment in the middle of the sea, which until today is still controversial due to weak government supervision.
Transhipment of wood pellets at sea from a small boat to an export vessel in the waters of Tomini Bay, Gorontalo, Indonesia, which is suspected of being illegal by environmental activists (Photo: FWI)
The Pellet Economy
Biomass energy, especially derived from wood pellets, remains one of the prima donnas in accelerating Indonesia’s energy transition program to replace coal, often referred to as “dirty energy” that can worsen the climate crisis. Director of Forest Product Processing and Marketing Development of the Ministry of Environment and Forestry Ristianto Pribadi said that based on data there are currently 44 Forest Product Utilization Business Permit (PBPHH) units in 15 provinces which produce wood pellets. “In Gorontalo, there are two PBPHH units with a production capacity of 1.14 million m3 per year, making it the largest nationally,” he said.
Biomass co-firing, said PLN-the State Electricity Company- the only company allowed, until now, to produce and trade in electricity in Indonesia, is fairly cheap. It is one of the clean solution alternatives to reduce emissions from fossil fuel power plants and is an effort to reduce carbon emissions. The electricity maker plans for 52 coal-fired power plants (PLTU) in Indonesia to use energy derived from biomass as one source with a portion of 5-10% in 2025. Their data estimates that at least 8-14 million tons per year will be required, which needs to be met from HTE production.
The president director of PLN Darmawan Prasodjo said to journalists that it was a part of the green transformation being carried out by PLN to minimize carbon dioxide emissions produced by power plants. “The total carbon emission which has been successfully reduced through co-firing in 33 PLTUs is 391 thousand tons of carbon dioxide,” he said. The company will use five biomasses for co-firing coal-fired PLTUs, namely sawdust, wood chips, palm shells, corncobs, and solid combustible fuel. As much as 383 thousand tons of biomass is needed by the company to support co-firing at 33 PLTU locations. Particularly for Gorontalo Province, according to data from the Central Statistics Agency, wood pellets are the commodity that dominates exports in the province from January to September 2024. Head of BPS Gorontalo Province Mukhamad Mukhanif said that in general from January to September 2024, Gorontalo Province recorded exports worth 46 million US dollars and wood pellets contributed 18 million US dollars or 40 percent of total exports.
Forest Damage
In fact, since last January, members of the Gorontalo Regional Representative Council highlighted the licensing problem owned by one of the companies located in Londoun Village, West Popayato District, Pohuwato Regency. The company named PT Biomasa Jaya Abadi (PT. BJA) is suspected of destroying 28 thousand hectares of Pohuwato forest and violating several regulations, including licensing regulations for business actors in the Gorontalo Province.
This company has also manipulated its business activities from palm oil to producing wood pellets, similar to renewable alternative fuels. Besides BJA, at least seven other companies export wood pellets from East Kalimantan and South Kalimantan. They supply their raw materials with two palm oil companies turned to be HTE (energy plantation forest), PT Banyan Tumbang Lestari and PT Inti Global Laksana, both operated in Gorontalo on the area of 27,353.53 hectares or approximately 28 thousand hectares. The product is also an export commodity, just like abroad, which is not cheap. Based on the Wood Legality Information System, the average price of biomass wood pellets is IDR 2,170 per kilogram. Operating since 2022-14 August 2024, FWI stated, BJA had exported wood pellets 21 times to Japan and South Korea with an export volume of 230,000 tons.
Evidence of wood pellets confiscated from the MV Lakas vessel by the Indonesian Bakamla patrol which was to be exported by PT BJA from Gorontalo to Japan, which is suspected of being illegal by environmental activists. (Photo: Bakamla)
Illegal Exports
The question is, given the huge domestic need for biomass, why export it to Japan and Korea? No one was able to answer clearly other than because of the high price disparity between the export and domestic markets. According to the wood pellet market price, if in the domestic market the price of wood pellets is worth IDR 2,200/kg, then in the Japanese market it is IDR 8,900/kg.
Yet nine months since members of the regional parliament investigated PT Biomassa’s activities, they have failed to publish the results to the public. Forest Watch Indonesia decided to conduct an independent investigation and found that the illegal exports continued right until this report was written.
Green Press dan beritalingkungan.com search of the company profiles using the official data from the Directorate General of General Legal Administration (AHU), beneficiaries from BTL, IGL and BJA’s activities are big-capital companies and entrepreneurs related to the authorities. People affiliated through Provident Investasi Bersama Tbk.
Historically, BTL and IGL were subsidiaries of Provident Agro Tbk, which has now changed its name to PT Provident Investasi Bersama Tbk (“Provident Investasi”). In July 2019, Provident Investasi sold the majority of BTL and IGL shares to PT Buana Pratama Cipta, 1% of the shares were owned by Heru Purnomo and 99% of the shares were owned by PT Reka Varia Tara (“Reka”).
Green Press tried to track Reka, but during the verification on August 5, 2024, it was not recorded in the AHU (General Legal Administration) Ministry of Justice that recorded all legal companies in Indonesia. While in the Mighty Earth report published in May 2024, it was stated that the ownership of Reka was in the hands of Andy Kelana who controlled 87.5 percent shares and Helena Adnan 12.5 percent shares.
The two men are Indonesian lawyers with the Jakarta-based law firm of Adnan Kelana Haryanto & Hermanto, or AKHH. The law firm describes itself as providing “legal advisory services” relating to mining, oil and gas, forestry and plantations, renewable energy, electricity and energy industries. One client of AKHH is Provident Capital, which set up Provident Investasi.
According to Mighty Earth, Andy Kelana and Helena Adnan hold BTL and IGL shares for and on behalf of the controlling shareholders of Provident Investasi, namely Winato Kartono, Edwin Soeryadjaya, Garibaldi Thohir, and Sandiaga Uno, through PT Saratoga Sentra Business. These people, it is suspected, have obscured their tracks through Reka, which is not registered in the AHU.
Mighty Earth also said the sale of shares of BTL and IGL was done so to protect the interests of the rightful owners in the Provident Group. Said Mighty, the sale was done as an internal transfer inside the group. Not only that, but the suspected involvement of Provident Investasi in the biomass business is also reflected in the profile of BJA, which is the company that purchases the raw materials for wood pellets from both BTL and IGL.
Our search of the data from the Directorate General of AHU accessed from July 30 to August 22 shows that BJA shareholders are affiliated either directly or indirectly with Provident Investasi. For instance, PT Sekawan Artha Lestari (SAL), which has 34.5 percent shares in BJA, has two directors from Provident Investasi, such as Tri Boewono and Budianto Purwahjo. The data also records Andy Kelana as owning 3.7% of BJA shares. There is also the name of Albert Saputro, President Director of PT Merdeka Copper Gold Tbk, a company founded by Provident Capital, listed as a commissioner of BJA. Furthermore, there is Hanwa Co., Ltd., a global trading company from Japan that is developing a ‘biofuels partnership’ with Provident Group, holding a stake of 20% in BJA.
PT EHB holds 41.8 percent shares of BJA, making it clearer that Provident Investasi ventured into the biomass industry in Gorontalo. The controlling shareholder of Provident Investasi, Garibaldi ‘Boy’ Thohir, sibling of the State Owned Enteprises (SOE) Minister Erick Thohir, owns 11.4 percent shares of EHB. There is also PT Surya Nuansa Ceria, a subsidiary of PT Saratoga Investama Sedaya Tbk (SRTG) owned by Sandiaga Uno, Minister of Tourism and Creative Economy (Menparekraf) also owns 38.6% of shares in EHB. The name Sakti Wahyu Trenggono, former Minister of Maritime Affairs and Fisheries (KKP) is also recorded as having 5.7% of EHB shares. On September 1, Green Press asked in a letter to Provident Investasi via the company’s official email about their relation to BTL, IGL, and BJA.
Forest Watch Indonesia (FWI) estimated the potential for state losses due to several exports not recorded in the official data. Other than highlighting the deforestation impact of this industry, the group also mentioned several companies implicated in North Gorontalo for these illegal exports. “This raises a big question mark. Does what happened in Pohuwato also happen in North Gorontalo?” said Rifki Gobel, Deputy Coordinator of the Gorontalo Province Student Executive Board (BEM) for Mineral Resources, Mining and Coal. Saturday (14-9).
Deforestation
BJA is a company that processes wood pellets, which started its business in 2020. The raw materials were provided by PT Banyan Tumbuh Lestari (BTL) and PT Inti Global Laksana (IGL), companies operating palm oil plantations transformed into HTE. In 2010, BTL and IGL obtained location permits for palm oil plantations from the Regent of Pohuwato, Syarif Mbuinga, with Decree Number 171/01/VI/2010, which covered an area of 16,000 hectares and 12,000 hectares, respectively. BTL is situated in the Districts of West Popayato, Popayato, East Popayato, and Lemito. IGL is located in the District of Lemito, Wanggarasi.
In 2011, the company affiliated with Provident Agro Group obtained a permit from the Ministry of Environment and Forestry covering an area of 15,797.48 hectares for BTL and 11,860 hectares for IGL. In January 2022, Siti Nurbaya, Minister of Environment and Forestry, and President Joko Widodo announced that they had revoked the permit of the release of forest areas. The two firms were considered by the government at that time to have no operations in the field.
It turned out that the two companies had applied for a forest rights determination permit to the Ministry of Environment and Forestry in 2020, with an area of 15,493 hectares for BTL and 11,860 hectares for IGL. On May 13, 2020, the Ministry of Environment and Forestry finally approved the proposal with a forest rights scheme according to the proposed area. The decree to revoke the forest area release permit imposed on BTL and IGL did not change anything. In February 2020, the two companies also replaced plants with gamal and kaliandra, which were usually used as raw materials for wood pellets.
Through foreign ships from Panama, Hanwa Co., Ltd., being the importer in this business, sent wood pellets to the Fushiki-man’yo unloading port, Takaoka City, Toyam Japan and the Gunsan unloading port in Gunsan City, North Jeolla, South Korea. These two countries control Indonesian wood pellets for their energy transition interests. Where Japan’s ambition is 1,065 TWh electricity produced in the energy mix by 2030; while 3.7 – 4.6 % of this target will come from biomass.
On its part, the South Korean government announced a transition in its energy policy that it aims for 20% of the electricity to be produced by renewable energy sources until 2030. The electric current of these countries is majorly drawn from fossil fuel or coal-burning power plants. In these two countries, a number of their PLTUs are mixed with coal and wood pellets. This is claimed to be able to reduce emissions from the generation sector and is a carbon emission reduction strategy.
When we visited the forest clearing site in Papayato-Paguan at Pohuwato Regency in Gorontalo, we saw the logging trucks and dozens of loggers loading tropical woods to be transported to PT BJA. Unfortunately, no one was willing to be interviewed because the company had warned them not to give any information to strangers. “Please go to the manager, sir, we are just field workers,” said a logger who identified himself as Hasan.
According to Terry, the Popayato-Paguat Landscape is a water catchment area, habitat for animals, and an important corridor for biodiversity and various key species. It also connects the eastern and western regions of Sulawesi. If cleared for energy plantations, he said, the forest will be fragmented. He said, in this landscape 23 mammal species have been identified, 16 endemic species and four protected species, namely, anoa, babirusa, hornbill, and tarsisius. “There are 175 species of birds, with 41 endemic species, and 21 protected,” said Terry.
Deforestation of natural forests in Pohuwato, Gorontalo by several companies, to meet the needs of wood pellet exports to South Korea and Japan (Photo: FWI)
Rebuttals
A direct rebuttal came from the MV Laksa agent. According to PT Dalian Putra Maritim, the MV Lakas agent in Indonesia, the ship already had all the documents needed to export wood pellets. On August 18, after meeting with the Lakas agent, Bakamla decided to let the ship sail to its destination.
It is unfortunate that Bakamla did not explain why the captain did not bring all the mandatory documents when he sailed and was arrested at sea that night? Isn’t that against the rules? Doesn’t the status of the cargo need to be checked more deeply by the police? Until this news was published, there was no reply from both Bakamla and Gorontalo’s regional police office.
In the meantime, the Operational Director of PT BJA in Gorontalo, Burhanuddin denied that his three companies were affiliated with Provident Investasi. As an employee, he did not know more clearly who the shareholders are in the company or in its parent company. “BTL, IGL, and BJA have nothing to do with the status of Provident Investasi Bersama Tbk.” All these exports, he said, have been reported to all authorized agencies. As evidence, on 27 August, said Zunaidi, BJA received an award from the North Sulawesi Customs and Excise Regional Office as the largest export foreign exchange earner in Gorontalo.
He claimed that the wood pellet processing company in Pohuwato, Gorontalo Province, has selected all permits for the company’s operational activities. The KLHK has given its green light to the business activities of PT BJA through the Issuance of the Decree (SK) of Menlhk No. SK. 267/Menlhk/Setjen/HPL.3/5/2021 dated May 28, 2021 regarding the Business License for Forest Product Processing (PBPHH).” “The license from the Ministry of Environment and Forestry is one of the legal bases for PT BJA to operate as it is now,” he said. The Regional Secretary of Gorontalo Province, Sofian Ibrahim, even added in the conference that the biomass industry has contributed to development in the region of Gorontalo. One of them is the biomass industry which actively contributes to increasing PNBP, which in 2024 has reached IDR 47.5 billion.
Meanwhile, the Ministry of Forestry and Environment (KLHK) which is most responsible to license all those companies, did not want to respond to questions from Green Press. Director of Forest Product Processing and Marketing Development, Ministry of Environment and Forestry (KLHK), Ristianto Pribadi actually appreciated the export of wood pellets from Gorontalo in a conference of the Indonesian Biomass Energy Producers Association in Gorontalo City in mid-September.
He added that based on KLHK data, currently there are as many as 44 units of Forest Product Utilization Business Permit or PBPHH in 15 provinces that produce wood pellets. “In Gorontalo, there are two PBPHH units with a production capacity of 1.14 million m3 per year, making it the largest nationally,” he said in his statement in Jakarta, Thursday. He also claimed that wood for the wood pellet industry has to originate from legal and legitimate sources, ranging from Industrial Plantation Forests, plantations that have business use rights, to Social Forestry managed by the community. He also said that the management of forest-product industries is getting better these days, and the application of Legality and Sustainability Verification System (SVLK) ensures that all the exported products come from sources of raw materials with good management.
“The forestry industry has a big role to play in regional development. The key is that it is socially acceptable, ecologically sustainable and profitable,” he said. He did not even mention the status of the wood processed by the three wood pellet companies suspected of destroying Gorontalo’s tropical forests, namely PT BJA, PT BTL and PT IGL and did not respond to the strong protests of environmental activists.
Disinformation
According to Indonesia’s Biomass Energy Producers Association data, in North Gorontalo Regency there is a wood pellet production company called PT Mitra Cipta Permata. It is suspected that the company secured supplies of wood raw materials from two HTI companies, PT Gorontalo Citra Lestari (GCL) and PT Gema Nusantara Jaya (GNJ). “Oddly enough, these two raw material supplier companies only have permits for the production of traditionally processed forest charcoal,” explained Rifki Gobel Deputy Coordinator of the Gorontalo Province Student Executive Board (BEM) for Mineral Resources, Mining and Coal.
Anggi Putra Prayoga, Manager of Campaign, Advocacy and Media Forest Watch Indonesia, explained that what the two did was not in accordance with what energy transition is. “Ministry officials have lied about there being no deforestation,” he told Green Press. Because, the production of wood pellet biomass will produce carbon emissions from the deforestation of the two companies. He explained that what both of them did was not in accordance with what energy transition is. Because, the production of wood pellet biomass will produce carbon emissions from the deforestation of the two companies. “What both companies PT Banyan Tumbuh Lestari and PT Inti Global Laksana had established was not an energy plantation forest, but an emission forest because they opened natural forests,” Anggi told beritalingkungan.com. He admitted that he did not yet have calculations of the volume of emissions resulting from forest destruction. He added from the analysis of satellite and spatial images by Forest Watch Indonesia in the 2021-2023 period, PT BTL deforested 1,105 hectares of natural forest and then processed the wood to make wood pellets.
“In addition, the Ministry did not even question the scandal of exporting renewable energy raw materials from Gorontalo. Indonesia is actually very much needed the wood pellet domestically but are instead exported solely for greater profits for companies,” he said.
IGG Maha Adi
