Gaining mutual trust through community development

Several oil and gas companies operating in remote areas in Indonesia have given assurances regarding their commitment to assisting the government to improve the welfare of the people through community development programs.

"We always involve the stakeholders in designing and implementing our community development projects because it is the local people who know exactly what they really need," said US- based oil company PT Caltex Pacific Indonesia's (CPI) corporate communications manager Harry Bustaman.

Caltex and several other oil and gas companies, including BP Indonesia, PT Exspan Nusantara, state-owned PT Perusahaan Gas Negara (PGN) and PT Unocal Indonesia consider partnerships in carrying out community development projects the key to success of their programs because through partnership all the parties involved can gain mutual trust.

For some long-term projects, community involvement starts with activities at the planning stage, such as conducting surveys, and ensuring that the planned programs can run effectively and meet the right targets.

Caltex, for instance, involved several students of the Bandung Institute of Technology (ITB) and Riau University (UNRI) in conducting a survey on the livelihoods of people living in densely-packed slum areas in Meranti Pandak village, located not far from Caltex's operating site before the company started its Meranti Pandak housing project.

Based on the survey, Caltex renovated many houses there and transformed each of them into two-story homes after learning that most of the people in the village earned additional income by renting out rooms. "Now, they (the householders) can use their homes not only as their residences but also for earning a living," he said.

Even though natural resource-based companies all are determined to grow together with local communities, they differ in the CD activities, depending on where the interests of the respective company and the community interact.

Since its operations in Riau province began in the 1950s, Caltex has designed and implemented lots of CD projects, with the construction of schools, roads and bridges being the top priority in the earlier years of its presence. "Local people's need for a senior high school was met by Caltex in 1956 when it built the Pekanbaru Senior High School (SMA)," Harry of Caltex said.

In cooperation with the local administration, Caltex has also built a polytechnic college in Riau to help produce graduates who are ready to work. "Since Riau has evolved into an industrial area, the demand for graduates who are ready to work has been on the rise," he noted.

Other Caltex's projects that benefit local people include providing training on agriculture and agribusiness, cattle breeding, fishing and weaving. "Thus, by raising local people's standards of living, including their education, health and welfare levels through CD programs, Caltex gains the trust of the local community," he added.

Like Caltex, PGN and PT Unocal Indonesia also see the involvement of stakeholders and local administrations as playing an important role in running CD projects successfully.

PGN's community development program dates back to 1996 when the company started to construct a natural gas transmission pipeline in Grissik, South Sumatera.

The company faces a great challenge as it has to serve lots of villages affected by its pipelines, which run for many kilometers. For instance, its Grissik-Sakernan-Batam-Singapore international gas transmission pipeline, which was completed in August of this year, is 470 kilometers in length and affects nearly 50 villages.

Despite the challenge, the PGN community development team has managed to run its programs well. The success of its programs is primarily due to the fact that the company allows representatives of the local community in each of the affected village to propose programs based on their real needs, according to PGN's senior community development advisor Liza Soenar Windarti.

Liza said that PGN provides funds or grants to finance the proposed projects. However, the affected villages are required to set up teams before starting out on any PGN-financed programs.

"These teams are responsible for managing the funds for the community project," she said.

The team members are entitled to be paid monthly honoraria in return for their time and service. "And this has turned out to be an effective means of implementing projects financed by PGN," she said, adding that six-months was the average length of a community development project.

Among the public facilities constructed under PGN's CD programs in different villages are irrigation networks, schools, mosques, village auditoriums and public health centers.

In its efforts to strengthen the economies of local communities, PGN also provides small enterprises in the affected villages with access to low-interest loans through its small enterprise and cooperatives development (PUKK) program.

Liza said that many people running small businesses had taken advantage of these loans since 1995 to develop their businesses. As of 2003, PGN has channeled some Rp 41 billion (about US$4.8 million) in loans, she said.

People (villagers) from the affected villages voluntarily take part in guarding the constructed pipelines thanks to the CD programs, Liza remarked.

Meanwhile, PT Unocal Indonesia said that its corporate social responsibility (CSR) programs focused on education, health and the environment because, based on field studies, these three areas were the ones that needed to be prioritized.

"With the CSR program in place since 1999, we want to become part of the local community in areas where we operate and wish to raise the welfare of the community in a broader sense," said PT Unocal Indonesia's corporate communication and corporate responsibility manager Tatang Sutanto.

Therefore, contributions to the community are not confined to the funding arena but include programs with long-term effects that are beneficial to local communities, such as providing training in relevant fields like agriculture, cattle breeding and fishing, he said.

"The programs have been successful due to our partnerships with all those involved, such as local administrations, non- governmental organizations (NGOs) and community empowerment organizations (LPM)," he noted.