APRIL halts Indonesia paper unit ops as forestry permit revoked

(Corrects to clarify attribution in second paragraph in this Oct. 20 story)

JAKARTA (Reuters) - Asia Pacific Resources International Limited (APRIL) has suspended forestry operations at its Indonesian pulp and paper subsidiary after the government canceled a long-term work plan citing environmental non-compliance.

PT Riau Andalan Pulp and Paper’s (RAPP) work plan was canceled on Oct. 17 after the ministry deemed that the company’s revisions to it did not comply with a regulation on peatland forests, according to a company statement sent to stakeholders dated Oct. 18 and reviewed by Reuters on Friday.

Ida Bagus Putera Parthama, the director general of production forests at the environment ministry, whose office canceled RAPP’s permit, declined to comment.

The cancellation has “put tens of thousands of jobs at risk,” the statement said.

Criticism of palm oil plantation owners and companies like APRIL, Asia’s second-largest pulp and paper firm, intensified after catastrophic 2015 forest fires blanketed the region in choking smog.

According to its president, APRIL operates a strict ‘no-burn’ policy.

Indonesian President Joko Widodo set up a peatland restoration agency in early 2016 to restore about 2 million hectares (4.9 million acres) of damaged peatlands, and imposed a moratorium on new concessions for palm oil.

APRIL has been in talks with the government over the replacement of roughly half of RAPP’s 480,000 hectares of plantation areas that sit on peatland.

“The ministry requires PT. RAPP to immediately designate a significant part of its current plantations into protection areas which would result in the loss of more than 50 percent of APRIL’s production areas,” the statement said.

The company has asked for the proposed “land swap” to be “gradual and sequential,” and has warned that it could result in more forests being cleared, it said.

APRIL is also reviewing its fiber supply plan to manage the impact of the changes on its output.

“We believe in responsible, science-based, long-term peatland management and this includes peatland protection and restoration,” the statement said.

Indonesia frequently faces criticism from neighboring Singapore and Malaysia for failing to curb the fires causing the smog, euphemistically known in the region as “haze”.

The 2015 fires were among the worst on record costing Indonesia an estimated 220 trillion rupiah ($16.5 billion) in economic losses, or about 1.9 percent of gross domestic product.

Draining and conversion of peatland, often driven by plantation companies, contributed to the intensity of haze from the fires, the World Bank had said.

The government says a stricter stance on burning and better coordination has resulted in fewer fires in 2016 and this year.

Additional reporting by Bernadette Christina Munthe; Editing by Vyas Mohan