Chinese-backed dams are being built in Indonesia to form Southeast Asia’s largest hydroelectric project, powering the new capital city, Nusantara. However, the Kayan Cascade project has faced controversy over permits and potential displacement of local communities, along with environmental impact concerns. President Jokowi has promised an 80% renewable energy supply target for Nusantara, including solar, wind, and hydropower from Kayan Cascade. Kayan Hydro Energy, an affiliate of Chinese state-owned enterprise PowerChina, is set to complete the US$17bn project by 2027, despite delays and disputes over compensation with indigenous people.

Construction is proceeding on the Kayan Cascade hydropower project, backed by China, which will power Indonesia’s new capital city, Nusantara. The dam project, located in the North Kalimantan province of Borneo, is slated to become Southeast Asia’s largest hydroelectric project. The current capital, Jakarta, has issues including severe congestion, flooding, and rising sea levels. Nusantara is set to be inaugurated in summer 2024, but concerns remain about potential displacement of nearby communities and environmental impacts caused by the Kayan project. The project is designed to consist of five dams with a total capacity of 9 gigawatts, and it will supply electricity to the provinces of South, Central, East, and North Kalimantan, as well as industrial zones such as the planned Kalimantan Green Industrial Park. Civil society groups and local communities have sought clarity and assurances over the environmental impacts and displacements. The project has generated disputes with Indigenous people in surrounding Peso district over compensation for displacement due to the project. The construction of the first Kayan dam will begin in 2021 but has been hampered by delays and a slow permitting process.