Indonesia's Aceh revokes palm permit after legal challenge

JAKARTA Fri Sep 28, 2012 2:18am EDT

A excavator clears a ditch on a road owned by a disputed palm oil plantation firm near Sebangau Kuala, Pulang Pisau regency in Central Kalimantan June 19, 2012. REUTERS/David Fogarty

A excavator clears a ditch on a road owned by a disputed palm oil plantation firm near Sebangau Kuala, Pulang Pisau regency in Central Kalimantan June 19, 2012.

Credit: Reuters/David Fogarty

JAKARTA (Reuters) - Indonesia's Aceh province has revoked a controversial permit issued to a palm oil firm accused of breaching a ban on forest clearing, a spokesman said on Friday, in a rare climbdown following a legal challenge by environmental groups.

President Susilo Bambang Yudhoyono has set a goal of cutting greenhouse gas emissions by saving Indonesia's dwindling tropical rainforests, the world's third-largest, a pledge that won the promise of $1 billion from Norway should he succeed.

But the effort is being hampered by soaring global demand for palm oil, used in everything from biscuits to biofuel. Indonesia is the world's top producer of the edible oil, whose exports earn the country $20 billion a year.

Last year, the governor of Aceh breached a two-year ban on issuing permits to log and convert forests by giving permission for PT Kallista Alam develop 1,605 hectares (4,000 acres) of swamp, which includes protected peatlands.

The Aceh governor's move prompted legal action from environmental groups and probes by the police and government bodies, which led to the permit being revoked this week.

A spokesman for the Aceh province said the permit had been revoked on Thursday, and notification sent to Kallista Alam.

"It is important that there is rule of law in business and investing in Aceh, which provides benefits to the community," Muhammad Zulfikar, director of the Aceh chapter of the Indonesian Forum for the Environment (WALHI), said in a statement.

Officials of PT Kallista Alam could not immediately be reached for comment.

Former Aceh governor Irwandi Yusuf issued the permit to open 1,605 hectares of land for palm oil in the Tripa peatland area in August last year.

In the last few years, Indonesia has seen rapid growth in production of palm oil, with output this year expected to be between 23 million and 25 million metric tons (27.6 million tons), with around 18 million metric tons exported.

(Reporting by Reza Munawir in Aceh; Writing by Michael Taylor; Editing by Clarence Fernandez)