Resource-rich Bojonegoro relies on non-oil commodities

Ridwan Max Sijabat and ID Nugroho , The Jakarta Post , Bojonegoro | Fri, 09/05/2008 11:30 AM | East Java

Pasiran, a resident of Banyu Urip village in Ngasem subdistrict, some 110 kilometers from the East Java provincial capital of Surabaya, is deeply disappointed with the central government.

The 40-year-old strongly regrets the government's decision not to employ him in a local infrastructure development project led by Cepu Mobil Ltd, a unit of the US-based mining giant ExxonMobil Ltd.

Expecting employment from recent exploration activities in the area, Pasiran said he and his sons -- like many other villagers -- had been refused a part in the project, forcing him to migrate to the city amid the province's prolonged drought.

"I know I'm uneducated and unskilled, but I can contribute something to the infrastructure development project," Pasiran told The Jakarta Post recently.

Ngasem is one of the least-developed subdistricts in the regency, with a majority of its inhabitants living in poverty.

The subdistrict has a four-hectare oil and gas field in Banyu Urip, where the Oil and Gas Implementing Body (BP Migas) is still putting infrastructure in place, including a road.

The oil field is part of the Block Cepu fields, a contract for which has been won by ExxonMobil.

Villagers have several times taken to the streets in protest over employment practices related to the project, closing the road leading to the project site. They blame BP Migas for failing to uphold its social responsibility to empower locals.

BP Migas employed several local senior high school graduates and undergraduates as security guards for the project, but it was done merely to meet minimum ethical requirements and not to empower residents, Pasiran said.

Bojonegoro Regent Suyoto, who supports the protests, said BP Migas and Cepu Mobil have agreed to pave the road in Ngasem and other subdistricts to help accelerate development in the regency.

He warned his constituents, however, not to assume planned exploration of the large oil and natural gas fields in the region would improve their standards of living, as the fields belong to the central government and foreign company.

Speaking to the Post recently at his office, Suyoto said vast teakwood forests and oil fields were not necessarily something to be proud of.

Neither will make the regency more economically prosperous, because the regency will receive only a relatively small share of the profits, he added.

"The teakwood forest belongs to state forest concession PT Perhutani, whose profits go directly to the state while the oil fields belong to the central government," Suyoto said.

Once Cepu Mobil Ltd. starts operation, with a capacity of 400,000 barrels of oil a day -- according to Suyoto -- Bojonegoro will receive 1.5 percent of the profits or about Rp 2 trillion (US$217 million) a year.

"This will not make this regency, with 1.3 million inhabitants, rich," said Suyoto, who is entering his second year in office.

The regent would not elaborate, though the additional funds are certain to boost Bojonegoro regency's current Rp 812 billion budget.

He added his administration is concentrating on repairing the regency's poor roads and on developing irrigation ditches along the Bengawan Solo river, to revitalize the agricultural sector.

Bojonegoro is the second poorest regency in the province, after Trenggalek, Suyoto said. Half of Bojonegoro's budget went to public works projects, including for infrastructure development, particularly an irrigation system and roads.

"A better irrigation system and road networks are two key factors in solving our many social problems including poverty, unemployment and an unhealthy environment," he added.

To assist the poor, the administration has been trying to maximize the central government's health and education programs, Suyoto said.

More than 48 percent of the poor (572,000 individuals) have enjoyed the benefits of the public health program (Jamkesmas), received cash assistance and taken part in the national anti-unemployment program, he added.

"Our main goal is to provide clean water, irrigation facilities and paved roads within three years. Then we will move toward intensifying our education program," said Suyoto, a former lecturer at the August 17, 1945, University in Surabaya.

He admits to an obsession with improving the regency's human development index (HDI) by doubling farmers' per capita income and by improving their health conditions and education.

"We will continue introducing new varieties of rice, melon, soybean, corn and other plants to improve farmers' productivity," he added.

To help realize the regency's goal of raising 400,000 cows a year, he has encouraged his constituents to use harvested rice stems as feed, he said.

"We have also invited a number of state and private banks to provide soft loans to farmers to support the regency's program to promote non-oil commodities," Suyoto added.