The Pertamina Refinery Project That Turns Tuban Residents Suddenly Become Billionaires Is Worth IDR 210 Trillion

Tuban residents suddenly get rich (Screenshot via Twitter)

JAKARTA - Residents of Sumurgeneng Village, Jenu District, Tuban Regency, East Java suddenly become billionaires after receiving land acquisition money. PT. Pertamina (Persero) together with a Russian oil company, Rosneft, will build a new fuel oil (BBM) refinery on the land.

Corporate Secretary of PT. Pertamina International Refinery Ifki Sukarya explained, the project worth 15 billion dollars or around IDR 210 trillion (assuming an exchange rate of IDR 14,000 per dollar) is one of the National Strategic Projects (PSN) stipulated in Presidential Regulation No.109 of 2020.

Ifki said, the purpose of building the Tuban Grass Root Refinery (GRR Tuban) project is to increase the crude oil processing capacity by 300,000 barrels per day (BPD) and will produce Euro V standard fuel in the form of gasoline around 80,000 BPD, diesel (gasoil) around 100,000 BPD and Avtur around 30,000 BPD.

The Tuban Refinery project will also be integrated with a petrochemical refinery that produces 3.75 million tons per year. Ifki said, with the presence of a refinery in Tuban, the future fuel needs could be met from domestic refineries, thereby reducing imports.

Not only reducing imports, said Ifki, the refinery construction will also absorb 35 percent of the domestic component level (TKDN), absorbing 20 thousand workers during construction and 2,500 during operation. In addition, during the initial development phase, Pertamina absorbed 271 local Tuban workers.

"Pertamina appreciates all parties who have provided support from the central government, local governments, the community, and other stakeholders so that the Tuban GRR Project is progressing well even though in the midst of a challenging pandemic," he said in an official statement quoted by VOI, Friday, February 19.

Based on Pertamina data, the payment for community land for the Tuban refinery was completed on December 10, 2020. The land acquired has reached 99 percent of the target area of 377 hectares of residents' land.

The principle permit for Perhutani's land by the Investment Coordinating Board (BKPM) was issued on January 12, 2021. The Tuban refinery project is targeted to be operational in 2026.

Ifki explained that the land acquisition for the Tuban GRR project had gone through all the mechanisms stipulated by Law Number 2 of 2012 concerning Land Acquisition for Development for Public Interest.

"The law has regulated the procedures for land acquisition for the construction of refineries, namely planning, preparation, implementation of land release by agencies," he said.

The Tuban Refinery project is part of the Pertamina refinery mega project program which consists of the Refinery Development Master Plan (RDMP) and the new refinery (GRR). Through this refinery megaproject, the company targets to increase the capacity of the BBM refinery to a total of around 1.4 million BPD in 2027 from the current 1 million BPD with a total investment estimated at around 43 billion dollars or around IDR 602 trillion (assuming an exchange rate is IDR 14,000 per US dollar).

Pertamina does not intervene in the amount of land acquisition value

Subholding Refining & Petrochemical Corporate Secretary of PT. Kilang Pertamina Internasional, Ifki Sukarya, said Pertamina did not intervene in the land compensation appraisal process for the Gorss Root Refinery Tuban (GRR Tuban) project.

Ifki emphasized that the assessment was carried out by the Public Appraisal Service Office (KJPP), which was then determined by the Tuban National Land Agency (BPN).

Land acquisition for the development of GRR Tuban has been completed and is in accordance with applicable provisions through Law Number 2 of 2012 concerning Land Acquisition for Development for Public Interest. More: https://t.co/g1SFSAYolb#EnergizingYou pic.twitter.com/heA4q0SdsX

— PERTAMINA (@pertamina) February 19, 2021

"The value of land replacement refers to the results of the KJPP assessment independently and assisted by the local BPN," he told VOI, Thursday, February 18.

Not only that, but Ifki also emphasized that the land acquisition was in accordance with the company's principles, namely not to harm the residents whose land was affected.

Unfortunately, however, he did not specify how much Pertamina had spent on land acquisition to build the national project.

"Of course, the value (paid) varies. On average, residents own a large area of land. The larger the land area, automatically the greater the replacement money they receive," he said.

Getting money, Tuban residents choose to buy a car

Money illustration (Pixabay)

Land acquisition for an oil refinery construction project in Sumurgeneng Village, Jenu District, Tuban Regency, suddenly made residents become billionaires. The residents of Sumurgeneng Tuban received compensation from the land acquisition in the range of billions of rupiahs.

"There are residents who receive compensation of up to IDR 26 billion, some receive IDR 9 billion. It depends on how much land is being compensated," said the Head of Sumurgeneng Village, Gihanto, Wednesday, February 17.

Gihanto said the residents who bought the car together came from a group of residents, the proceeds from land acquisition money. According to him, local residents receive payment of IDR 600-800 thousand per meter. Meanwhile, the number of affected residents reached 280. They agreed that their land would be sold for a national project.

According to Gihanto, the number of cars bought by the residents was 176 units. "Yesterday's circulated video only 17 new cars, one house bought two to three new cars," he said.