Environmental and Social Issues – Port Development & PPP Pilot Projects in Indonesia

1. Environmental and Social Issues – Port Development & PPP Pilot Projects in Indonesia 16 June 2014

2. In this session we will: Review the legislation and regulatory framework • PPP Regulation • Environmental and Social Study (EIA) • Land Acquisition and Resettlement Plan (LARAP) Environmental Issues for Port Projects • Consideration • Dredged material management • Marine/Coastal Ecology • Air Emissions • Waste Management (General waste, waste water, solid waste) • Hazardous materials and oil management • Noise • Biodiversity & Ecological Resources • Traffic management • Visual Impact • Sustainability and Climate Change Social Issues for Port Projects • Social & Community Amenities • Ecosystem Goods/Services • Public Health and Safety • Occupational Health and Safety Land Acquisition in the Public Interest • General Issue from other experiences • Potential issue for port project • Mitigation

3. Review of Legislation & Regulatory Overview A.1 PPP Regulation • PPP project requiring EIA and LARAP • PPP Stage of implementation of Cooperation project A.2 Environmental and Social Study • Indonesian Regulation – AMDAL • Related Regulations • Activity Required AMDAL • AMDAL Commencement • Public Involvement and Participation • AMDAL Components • Environmental Components Regulation • AMDAL Process • Environmental Permit • AMDAL Permitting Process • International Framework – ESIA • Project Requiring International Funding • IFC Performance Standard • Comparison Summary • ESIA Process vs. AMDAL Process A.3 Land Acquisition • National Standard for Land Acquisition • Related Regulation • Basis Requirement • Basis Policy • Grievance Mechanism • Flow Activities • LAP and LARAP • Parties Involved • International Standard for Land Acquisition • International Standard Requirements • Basis Requirement • Basis Policy • Grievance Mechanism • Flow Activities • LAP and LARAP • Parties Involved • Comparison Summary • Gap between National Standard and International Standard

4. A.1 PPP Regulation PPP projects require EIA and LARAP There are two regulations on PPP that mention the need of Land Acquisition and Resettlement Plan (LARAP) and Environmental Impact Assessment (EIA) to support a PPP Project including : • BappenasRegulation No. 3 /2012 (Operating Guideline Manual for Public and Private Partnership in Provision of Infrastructure) • Environmental Analysis (Article 4 point 3b) and Environmental and Social Compliance (Article 7 point 4a) • Land Acquisition and Resettlement Action Plan (Article 4 point 3a) • Ministry of Transportation Regulation No. PM 83/2010 (Guidelines for Implementing Public Private Partnership in Provision of Transport Infrastructure) • Environmental and Social Study (Appendix section IV.A.2.4 and section C.2.a.4) EIA and LARAP process will refer to the related regulation which will be described in the following sections

5. A.1 PPP Regulation Grey Area in the Regulation - AMDAL • PPP Regulations require AMDAL and land acquisition documents as part of the process. However, the starting times are not clear. • AMDAL regulation stipulates that the AMDAL process cannot begin until the project is approved and is publically announced • The AMDAL committee cannot be formed until the project is approved/announced • Land acquisition cannot officially commence until the project is approved/announced.

6. A.1 PPP Regulation PPP Stage of Implementation of Cooperation Project Identification and selection of Cooperation Project Determination of Priority Identification and selection of Cooperation Project Readiness Study of Cooperation Project Completion of Feasibility Pre-Study • Procurement Plan of Business entity • Implementation of Procurement of BU • Preparation of Signing Cooperation Contract Planning of Implementation Management of Cooperation Contract Management of Implementation of Cooperation Contract Output: List of Project Priority of Documents of Preliminary Study Output: Periodical Report of Implementation of PK Management Output: List of Project Priority of Documents of Preliminary Study Output: Documents of Feasibility Pre-Study Output: Obtaining of Funding; EPC Contract; Operational Contract Output: Documents of Cooperation Contract Documents of Security & Regress Contract 9 - 12 Months 10 - 23 Months 2 - 5 Months 6 - 9 Months Confirmation/Approval of Provision of Government Support and/or Government Security Process of Application of Need of Government Support and/or Government Security Process of allocation, clearing, supervision & monitoring of Provision of Government Support and/or monitoring & evaluation of implementation of Security Contract & Regress Contract ENVIRONMENTAL STUDY /BU ENVIRONMENTAL STUDY / PJPK PROSPECT OF LAND ACQUISITION Source : Bappenas Regulation 3/2012

7. A.2 Environmental and Social Study Overview A.2.1 Indonesian Regulation – AMDAL • Related Regulations • Activity Required AMDAL • AMDAL Commencement • Public Involvement and Participation • AMDAL Components • Environmental Components Regulation • AMDAL Process • Environmental Permit • AMDAL Permitting Process A.2.2 International Framework – ESIA • Project Requiring International Funding • IFC Performance Standard A.2.3 Comparison Summary • AMDAL Process vs. ESIA Process

8. A.2.1 Indonesian Regulation - AMDAL Related Regulations • Indonesian Government Law No. 32 of 2009 (Protection and Management of Environment), • Government Regulation No. 27 of 2012 (Environmental Permit), • Decree of the Minister of State for the Environment No. 05 of 2012 (The types of Businesses and/or Activities Required to comply with Environmental Impact Assessment) • Decree of the Minister of State for the Environment No. 16 of 2012 (Guidelines for Preparation of Environmental Documents).

9. A.2.1 Indonesian Regulation - AMDAL Activity requiring AMDAL Annex 1 to MOE Regulation 5/2012 provides a list of activities which will require preparation of an AMDAL. Pursuant to Annex 1 of MOE Regulation 5/2012 a port development project will require an AMDAL/EIA to be prepared if it involves: Construction of a jetty (sheet pile or open pile) with a length of more than 200m or size of more than 6,000m2; Construction of a jetty with a massive size; Construction of a breakwater with a length of more than 200m; Construction of a floating facility with a capacity of more than 10,000 DWT; and Reclamation with a minimum reclamation size of 25 hectares, minimum disposed material of 500,000 m3, or minimum length of 50m.

10. A.2.1 Indonesian Regulation - AMDAL AMDAL Commencement • Under Government Regulation (GR) No. 27/2012, the AMDAL document can be assessed by an AMDAL Committee when the location of the port is in accordance with the spatial plan and master plan of the port jurisdictional area. • The AMDAL Committee consists of The AMDAL Committee will be KLH/environmental agency and other related institutions depending on the level of project scope consist of (but not limited to) member of Ministry of Public Works, Ministry of Transportation, Bappeda, Spatial Planning Agency, Transportation Agency, Public works agency, marine and fishery agency, experts from university (environmental, social, etc.), NGO, and impacted community • The AMDAL can only be compiled by a person/company that has a certificate of competence of an AMDAL compiler. Under normal circumstances, the agency that would submit the AMDAL to the committee is the Port Authority. • If the project is implemented as a PPP, then the AMDAL should be prepared by the Government Contracting Agency (GCA) (PenanggungJawabProyekKerjasama)

11. A.2.1 Indonesian Regulation - AMDAL Public Involvement and Participation • Requirements based upon Decree of Bapedal Head no.8 Year 2000 • The Port Authority (who is submitting the AMDAL as the project proponent) will undertake public announcement and consultation in line with the regulatory requirements for engaging all affected stakeholders and the observers appointed to overview the AMDAL process

12. A.2.1 Indonesian Regulation - AMDAL Public Involvement and Participation • The Port Authority will initiate all communications with the AMDAL Committee, Environmental Agencies, and relevant local government, institution, NGOs and other stakeholders associated with the AMDAL activities • The Port Authority should facilitate and organise public announcements pertaining to the AMDAL activities through mass media, arrange and conduct the required public consultation process with the communities within the affected Regency, sub districts and any other areas that are considered as part of the study area

13. A.2.1 Indonesian Regulation - AMDAL AMDAL Components Terms of Reference (KA ANDAL) • Includes: Introduction (Background, Purpose, Study Implementation), Scooping (Project Description, Interrelationship the proposed activity with other activity, Baseline Study, Public Consultation Result, Hypothetical Impact, Focusing Subject Study) , and Methodology (Data Collection and Analysis, Important predicted impact method, important predicted impact method) • The results of the public announcement and participation are incorporated into the document • It is submitted to the regional authority by the AMDAL appraisal committee. • It is assessed by a technical team • Subject to a satisfactory assessment, the committee will approve the KA ANDAL

14. A.2.1 Indonesian Regulation - AMDAL AMDAL Components ANDAL, RKL and RPL • The ANDAL analyses the impact of the project based upon the baseline condition and the anticipated project impacts • The RKL and RPL provide the mitigation measures and monitoring requirements for project implementation • The ANDAL, RKL and RPL are submitted to the regional authority by the AMDALL appraisal committee • These parties will coordinate to review the document, provide comments, and approve the final AMDAL

15. A.2.1 Indonesian Regulation - AMDAL Environmental Component Regulations

16. A.2.1 Indonesian Regulation - AMDAL AMDAL Process • AMDAL is a process • Consideration at National Provincial or Regency Level, depending on the footprint of the project

17. A.2.1 Indonesian Regulation - AMDAL Environmental Permit • The Port Authority of GCA will submit an application for environmental permit to the mayor or Bupati. • The application is supplemented with: • AMDAL documents & letter of feasibility • Business establishment documents • Business activity profile • The environmental permit application will be publically announced • The community/stakeholders may comment • If no changes are required, the permit is issued and it is announced to the public

18. A.2.1 Indonesian Regulation - AMDAL AMDAL Permitting Process • AMDAL generates a letter of Environmental Feasibility • Then follows the Environmental Permitting Process

19. A.2.2 International Framework - ESIA Projects Requiring International Funding If international funding is required, this will trigger an International Environmental and Social Impact Assessment (ESIA) The system to be applied depends on the lender (e.g. IIF, AusAID, JICA, ABD, IFC etc.) IFC Guidelines (EHS Guidelines and Performance Standards) are usually a good guide to what is required. Most follow a convention called the Equator Principles

20. A.2.2 International Framework - ESIA IFC Performance Standards Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts Performance Standard 2: Labour and Working Conditions Performance Standard 3: Resource Efficiency and Pollution Prevention Performance Standard 4: Community Health, Safety, and Security Performance Standard 5: Land Acquisition and Involuntary Resettlement Performance Standard 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources Performance Standard 7: Indigenous Peoples Performance Standard 8: Cultural Heritage Per IFC’s Policy on Environmental and Social Sustainability (January 2012)

21. A.2.2 International Framework - ESIA ESIA Process

22. A.2.2 International Framework - ESIA ESIA Guidelines IFC guidelines consider environmental impacts according to their Sustainability and EHS Guidelines, there are three that have relevance for port projects they are: • Policy on Environmental and Social Sustainability (January 2012) • Environmental, Health, and Safety General Guidelines (April 2007) • Environmental, Health and Safety Guidelines for Ports, Harbors, and Terminals (April 2007)

23. A.2.3 Comparison Summary ESIA Process vs. AMDAL Process Very Similar processes Environmental elements very close, however ESIA also addresses: • Climate change and sustainability • Visual impact • May involve stricter maximum allowable limits Social Elements Differ (especially with respect to Land Acquisition) • Wider scope of social survey for ESIA • AMDAL considers the Indonesian legal framework for land acquisition (Law No. 2, 2012) • IFC extends to the “informal” loss of income • IFC extends to squatters • Big emphasis on informed consent, community consultation and restoration of livelihoods

24. A.3 Land Acquisition Overview A.3.1 National Standard for Land Acquisition • Related Regulation • Basis Requirement • Basis Policy • Grievance Mechanism • Flow Activities • LAP and LARAP • Parties Involved A.3.2 International Standard for Land Acquisition • International Standard Requirements • Basis Requirement • Basis Policy • Grievance Mechanism • Flow Activities • LAP and LARAP • Parties Involved A.3.3 Comparison Summary • Gap between National Standard and International Standard

25. A.3.1 National Standard for Land Acquisition Related Regulations • UUPA 5/1960 • Regulation of Ministry of Home Affairs No. 15/1975 (Provisions Regarding of Land Acquisition Procedures) (private and government) • Indonesian Law No. 2/2012 (Land Procurement for Development in the public interest) (commercial and public interest) (example port development on Article 10 d) • Presidential Regulation 71/2012 (Land Acquisition Implementation for development of public interest) (commercial and public interest) Note • Presidential Decree 55/1993 (public interest only) • Presidential Regulation No. 36/2005 amended by Presidential Regulation No. 65/2006 (commercial and public interest)

26. A.3.1 National Standard for Land Acquisition Basis Requirement • Law No 2/2012 and PR 71/2012 Requirement: • National, Provincial and Regional Spatial Planning • Developmental Priorities • Socio – Economic Survey • Location Feasibility • Cost Analysis and Development Benefit • Estimation of Land Value • Environmental and social impact • Other Study

27. A.3.1 National Standard for Land Acquisition Basis Policy - Involuntary Resettlement • Involuntary Resettlement Regulated Under: • Law No 2/2012 – umbrella regulation of land acquisition • Presidential Regulation No. 71/2012 • Head of BPN Regulation No. 5/2012 – details land acquisition activities • MOPA Regulation No. 72/2012 – budget and financial • MOF Regulation No. 13/2013 – budget and financial

28. A.3.1 National Standard for Land Acquisition Basis Policy - Entitlement Matrix • * Asset Loss is the property that will be impacted by the project (Act No. 2/2012 and PR No.71/2012) • ** Eligible parties is the project affected people including land owner, renter, employee, encroacher, etc.(PR No. 71/2012) • *** Entitlement is having a right to something (Act No. 2/2012 and PR No.71/2012) National Regulation and Policy Socio Economy Survey (Primary and Secondary) Ground Check (Site Visit and Observation) Entitlement Matrix

29. A.3.1 National Standard for Land Acquisition Basis Policy - Entitlement Matrix • Type of Loss base on Act No. 2/2012 and PR No.71/2012 • Land • Space above ground and underground • Structure • Tree and crops • Objects related to land • Another Loss can be assessed • Eligibility Parties base on PR No. 71/2012: • Land Rights Holders • Right to Manage Holders • Guardian (nadzir) for waqf land • Owner of formerly traditionally owned land • Customary law community • Party who possesses state land with good faith • Basic holder of land possession • Owner of structures, plants, and other objects related to land. • Entitlement base on Act No. 2/2012 and PR No.71/2012: • Cash payment • land to land • resettlement • shareholding • Another clausal

30. A.3.1 National Standard for Land Acquisition Activities Flow

31. A.3.1 National Standard for Land Acquisition Grievance Mechanism • No specific Grievance Mechanism required legally • As best practice many Land Acquisition processes of Government projects have included a grievance mechanism • The mechanism allows better communication between the government and the affected parties • Provides a formal method for addressing issues

32. A.3.1 National Standard for Land Acquisition LAP and LARAP • Land Acquisition Plan: • Purpose and objectives of development plan • Suitability with the Spatial Planning • Lay of the land/Project Location • Requirement of Land Area • General description of land status • Estimation of implementation of land acquisition • Estimated of time period of development implementation • Estimation of land value • Budget Plan

33. A.3.1 National Standard for Land Acquisition Parties Involved (4 Stages) • Law No 2/2012 and PR 71/2012 • Planning is conducted by the agency that requires the land, with assistance from the relevant technical agencies or they can be assisted by a designated professional body. • Preparation is conducted by the Governor. The Preparation Team will be established by the Governor and will consist of: • the mayor (or regent) [bupati or walikota], • SKPD (regional work units), • the agency that requires land, and • other relevant agencies. • In the event of objections from the public, the Governor will establish an Objection Assessment Team consisting of: • Provincial Secretary or administration official appointed as Chairman, • Head of BPN Regional Office, • the government agency in the local development planning, • the head of Office of the Ministry of Law and Human Rights, • the Mayor or appointed officials, and • academics.

34. A.3.1 National Standard for Land Acquisition Parties Involved • Law No 2/2012 and PR 71/2012 • Implementation Team consisting of at least: • external valuation team; • officials in charge of Land Acquisition affairs at BPN Regional Office, • head of local land agency, • provincial officials unit in charge of land affairs, • district head, and • headman and/or village head • Submission of results is implemented by BPN and submitted to the agencies that require land.

35. A.3.2 International Standard for Land Acquisition International Standard Requirements • Why follow international standards? • Projects that require international funding • Such as: IIF, World Bank, JICA, ADB, etc. • What are international standards? • Equator Principles III • World Bank Social Safeguard - OP 4.12 - Involuntary Resettlement • Specific with IFC Performance Standard 5 : Land Acquisition and Involuntary Resettlement

36. A.3.2 International Standard for Land Acquisition Basic Requirement • IFC PS 5 Planning Requirement • Final Project Design • Compensation and Benefit Policy for Displaced Persons • Community Engagement • Grievance Mechanism • Resettlement and Livelihood Restoration Planning and Implementation • Plan for Displacement • Maintain Private Sector Responsibilities Under Government-Managed Resettlement

37. A.3.2 International Standard for Land Acquisition Activities Flow

38. A.3.2 International Standard for Land Acquisition Basic Policy - Voluntary and Involuntary Resettlement • Voluntary resettlement is a willing buyer-willing seller situation, in which the an agreed upon outcome is established. • Involuntary resettlement may be required for projects in the public interest, or sometimes for private development. • Both voluntary and involuntary resettlement should follow national laws at minimum. • Involuntary resettlement under international standards may follow IFC or World Bank Guidelines (IFC Performance Standard 5 or World Bank Social Safeguard - OP 4.12 - Involuntary Resettlement, which provides more detail)

39. A.3.2 International Standard for Land Acquisition Basis Policy - Entitlement Matrix • *) Asset Loss is the property that will be impacted by the project • **) Eligible parties is the project affected people including land owner, renter, employee, encroacher, etc. • ***) Entitlement is having a right to something International Regulation and Policy (IFC – PS 5) Socio Economy Survey (Primary and Secondary) Ground Check (Site Visit and Observation) Entitlement Matrix

40. A.3.2 International Standard for Land Acquisition Basis Policy – IFC PS 5 - Entitlement Matrix • Type of Loss • Physical Displacement • Economic Displacement • Including temporary or permanent, and commercial area • Eligibility Parties • Owner of asset • Employers/Worker • Squatter, Illegal settlement • All parties that identify as Project Affected Peoples (such as: Vulnerable peoples) • Entitlement base • Cash compensation • Replacement land • Replacement Cost • Resettlement • No depreciation of structure • the entitlements of displaced persons provided under applicable national laws and regulations • etc.

41. A.3.2 International Standard for Land Acquisition Grievance Mechanism • IFC PS 5: • Establish a grievance Mechanism • Receive and address specific concerns about compensation and relocation raised by displaced persons or members of host communities in a timely fashion, including a recourse mechanism designed to resolve disputes in an impartial manner. • Timely redress of grievances through an effective and transparent grievance mechanism is vital to the satisfactory implementation of resettlement and to completion of the project on schedule. • Affected households and communities should be informed, as part of the consultation effort, of the process for registering grievances, should have access to this grievance mechanism, and know the possibilities of legal recourse available. It should be readily accessible to all and provide for fair, transparent and timely redress of grievances and special accommodations for women and vulnerable and marginalized groups to voice their concerns or make complaints.

42. A.3.2 International Standard for Land Acquisition LARAP - Integrated with PCDP • IFC PS 5, including: • Land Acquisition and Resettlement Action Plan (LARAP) – to document the plan, policy, affected parties, and results of land acquisition • The LARAP should include a Resettlement and Livelihood Restoration Planning and Implementation • Create a Public Consultation and Disclosure Plan to document the plan and implementation of public interaction and consultation • (note: The consultation process should ensure that women’s perspectives and other minority groups are obtained and their interests factored into all aspects of resettlement planning and implementation)

43. A.3.2 International Standard for Land Acquisition LARAP – Outline IFC PS 5 • Outline of a Land Acquisition and Resettlement Action Plan • Description of the project • Potential impacts • Objectives and studies undertaken • Regulatory framework • Institutional framework • Stakeholder engagement • Socioeconomic characteristics • Eligibility • Valuation of and compensation for losses • Magnitude of displacement • Entitlement framework • Livelihood restoration measures • Resettlement sites • Housing, infrastructure, and social services • Grievance procedures • Organizational responsibilities • Implementation schedule • Costs and budget • Monitoring, evaluation and reporting

44. A.3.2 International Standard for Land Acquisition Parties Involved • IFC PS 5 • Requires a Project to Adopt the Local Standard, including: • The organizational framework for implementing (identification of agencies responsible for delivery of resettlement measures and provision of services); • arrangements to ensure appropriate coordination between agencies and jurisdictions involved in implementation; • any measures (including technical assistance) needed to strengthen the implementing agencies' capacity to design and carry out resettlement activities; • provisions for the transfer of responsibilities to local authorities to manage facilities and services provided under the project

45. A.3.3 Comparison Summary Gaps between National and International Standard

46. B. Environmental Issues for Port Projects Considerations Primary Considerations • Dredged materials management • Marine/Coastal Ecology • Air emissions • Waste Management (General waste, waste water, solid waste) • Hazardous materials and oil management • Noise • Biodiversity & Ecological Resources • Other Considerations • Traffic management • Visual impact • Sustainability and climate change

47. B. Environmental Issues for Port Projects Dredged Material Management Construction • Soil contamination • Geotechnical issue • Possibility of soil erosion • Increased sediment suspension (turbidity) in marine water due to the dispersal of dredged sediment • Decreasing the water quality by increasing TSS and turbidity • Possible chemical disturbance to marine and coastal ecology • Habitat removal/degradation • Sea water quality decline Mitigation • Screening of dredge material • Appropriate disposal of dredge material • Careful selection of dredging method • Reducing the dispersion of contaminants by containment

48. B. Environmental Issues for Port Projects Marine/Coastal Ecology Construction • Possible chemical disturbance to marine and coastal ecology • Alternations of marine and coastal habitat caused by changes in sediment structure • Burial of benthic community caused by disposal of sediment • Decreasing light transmission to light-depended organism • Regression of sea grass and meadows • Disturbance of birds and marine animal • Reduced fishery resources and degraded fishery quality for recreational and food gathering activities • Worsening of water pollution Operation • Oil and mixtures leakages from ships damaging fishery resources, marine biota and habitat • Biodegradation of oil in water reducing dissolved oxygen needed by the biota • Impacted fishery resources by contamination of chemicals from leakages

49. B. Environmental Issues for Port Projects Marine/Coastal Ecology Mitigation • Construction : Appropriate planning of construction work, Reducing turbidity by using silt/turbidity curtains, Habitat enhancement or restoration, Environmental monitoring, Periodic inspection of construction activities by enforcement authorities or agencies, careful survey of ecological characteristic and restricting corridors of work. • Operation : habitat enhancement and restoration works such as creation of sea grass habitat for fishery resources recovery, expanding saltmarsh habitat and intertidal sand and mud flats for prey species, measuring in environmental management related to oil spoil and leakages, dust control, water quality protection and noise reduction measures.

50. B. Environmental Issues for Port Projects Air Emissions Construction • Dust particulates generation from construction activities including dredge/fill activity, transportation, equipment, grading/clearing, and onshore activity. • Exhaust emission from fuel consumption of diesel-fueled heavy equipment with emit toxic and some carcinogenic, Operation • Emissions from ships, cargo handling equipment, port-related truck trips • Exhaust emission from construction vehicle, plant, machinery and vessels. Mitigation • Construction - Minimize Dust Emissions, Exhaust Emission, and Volatile emission • Operation - Efficient off-loading operations and regulated limits on idling time