It's Official (or is it)?

Well, it seems when things go bad they go bad across the board. A group of international petroleum geologists looking at the mud volcano (photo) in Sidoarjo in East Java have made a statement to the effect that the cause of this disaster was drilling and not some distant earthquake as claimed by the companies involved in the drilling.

The main company involved is part of the Bakrie empire. The Bakrie empire is slowly but surely unraveling as loan and debt pressure forces the group to sell off some of its best assets in order to make ends meet.

The petroleum geologists were meeting at a conference in Cape Town (South Africa). The view is not universal among the 74 experts in attendance. Three of them still consider the earth quake scenario the most likely cause.

These are the key reasons that drilling rather than the earthquake is the cause:

• the earthquake was too small and too far away to have had a role.
• the well was being drilled at the same time and only 150 m from the volcano site.
• the well took a huge influx of fluid the day before the eruption, resulting in pressures that the well could not tolerate.
• the pressure measured in the well after the influx provides strong evidence that the well was leaking and even evidence for the initial eruption at the surface.

Does this end the debate and have any implications for compensation. Probably not!

SMS -- Price Fixing

The Indonesian Commission for the Supervision of Business Competition (KPPU) has issued a decision that finds six mobile operators have engaged in a scheme that has resulted in price fixing for the provision of SMS services. The collusion between the operators has seen some IDR 2.8 trillion or the equivalent of USD 302 million being skewered from unsuspecting mobile and SMS users.

The six operators are Excelcomindo Pratama (XL), PT Telekomunikasi Seluler (Telkomsel), PT Telekomunikasi Indonesia (Telkom), Bakrie Telecom, Mobile-8 Telecom and Smart Telecom. I am an XL customer so perhaps I should be more annoyed than I am about this. I knew I was being speared in terms of how much I was paying but paid it anyway.

The KPPU ordered Telkomsel and XL to pay fines of IDR 25 billion each. The KPPU also ordered Telkom, Mobile-8 and Bakrie have to pay IDR 18 billion, IDR 5 billion, and IDR 4 billion, respectively. I guess the lower fines are representative of the size of the role they played in the price fixing scheme.

The fun part here is that the KPPU does not only issue decisions but considers itself to be the arbiter of what the proper costing of an SMS should be. By the KPPU's reckoning the cost of an a 160 character SMS should not be higher than IDR 114. I am not sure that the KPPU has the internal expertise to make these kinds of calculations nor am I sure that its role should be to stipulate the fees that can be charged in a free market.

I have no problem with the KPPU adjudicating whether or not there has been a breach of the law. The market will take care of what prices it can and cannot sustain for SMS messages.

I am looking forward to cheaper SMS messages though!

Mud and More Mud

Well, the Lapindo disaster that has devastated and paralysed Sidoarjo seems to be getting worse despite all the promises that things would get better and the victims would be looked after. The latest fiasco in this never ending drama is the collapse of the embankments that are supposed to contain the mud flow and prevent it from inundating more villages and farms.

The collapse of the embankments saw the surrounding rail lines and roads submerged in up to 80cms of hot stinking mud. And while the people responsible for the embankments twiddle their thumbs and look for someone to blame the mud continues to rise and is now above 1 meter in some places. Just as Bakrie has sort to blame an earthquake for the disaster the Agency responsible is also looking to blame God, this time too much rain. Yet, the reality is that as the earth continues to spew the hot mud out onto the surface the integrity of the land under the embankments is compromised and they have started to collapse under their own weight. So, if you cannot stop the flow then you must build secondary and tertiary containment walls to ensure that where one collapses you have another ready to pick up the slack.

The other problem that ensures people continue to become victims of this disaster is that people are refusing to relocate to other areas. This refusal is based on the fact that they have not been compensated as they are supposed to have been. But it is not only the local residents that are losing money and being affected by this, the government is losing money as well. The inundation of the railway tracks with thick mud means that trains cannot continue to run and tickets have to be refunded and alternative arrangements made.

The cost of the disaster continues to climb with each passing day. There are estimates now that losses will total in the tens of trillions of Rupiah. It is high time that Bakrie and his family made good on the compensation to the victims of this tragic environmental disaster and forked over some of that hard-earned cash he is sitting on. After all he is the richest man in Indonesia and as the Coordinating Minister for Community Prosperity it is about time some of that prosperity made its way to the people of Sidoarjo. This is especially so since his personal fortune has climbed from a miserly USD 1.2 billion to USD 5.4 billion in the space of 12 months.

Updates to follow on this story as it is not likely to come to an end any time soon!