documents.worldbank.orgdocuments.worldbank.org/curated/pt/... · Web viewThe level of investments has been insufficient in Indonesia to address the extremely low access to basic

ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK (ESMF)

FOR

INDONESIA INFRASTRUCTURE GUARANTEE FUND

(IIGF)

[April 2012]

E2487

TABLE OF CONTENTS

ABBREVIATIONS AND ACCRONYMS...................................................................................... IIIENVIRONMENT AND SOCIAL MANAGEMENT FRAMEWORK................................................41.1 PROJECT BACKGROUND...................................................................................................41.2 PROJECT OBJECTIVE.........................................................................................................41.3 PROJECT COMPONENTS AND FINANCIAL PRODUCTS..................................................41.4 RISK COVERED BY IIGF......................................................................................................51.5 TYPES OF PROJECTS..........................................................................................................71.6 ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK (ESMF)........................71.6.1 OBJECTIVE AND APPLICABILITY OF ESMF...............................................................................7

1.6.2 APPLICABLE POLICIES AND STANDARDS..................................................................................8

1.6.3 ENVIRONMENTAL AND SOCIAL SAFEGUARD PRINCIPLES...........................................................9

1.6.4 SAFEGUARDS PROCEDURES IN THE PROJECT CYCLE............................................................11

1.6.5 DUE DILIGENCE, INCOMPLIANCE AND AUDITS........................................................................17

1.7 INSTITUTIONAL ROLES FOR SAFEGUARDS MANAGEMENT AND IMPLEMENTATION ARRANGEMENTS..................................................................................................................... 181.8 INSTITUTIONAL CAPACITY BUILDING.............................................................................221.9 GRIEVANCES...................................................................................................................... 231.10 REPORTING...................................................................................................................... 23

Annex 1 Applicability of the World Bank Safeguards Policies to the IIGF Project.......................25Annex 2 Safeguards Procedures for Project Components 1 and 2............................................28Annex 3 Indigenous Peoples Planning Framework (IPPF).........................................................35Annex 4 Resettlement Policy Framework...................................................................................41

ii

ABBREVIATIONS AND ACCRONYMS

ACRONYM FULL FORMAMDAL Analisa Mengenai Dampak LingkunganBOC Board of CommissionersBOD Board of DirectorsCA Contracting Agency CAS Country Assistance StrategyCBO Community Based OrganisationCSO Civil Society OrganisationEIA Environmental impact assessmentESMF Environmental and Social Management FrameworkESSF Environmental and Social Safeguards FrameworkFS Feasibility StudyGA Guarantee AgreementGAP Guarantee Application PackageGFA Guarantee Facility AgreementGOI Government of IndonesiaIBRD International Bank for Reconstruction and DevelopmentIIGF Indonesia Infrastructure Guarantee FundIGFP Indonesia Infrastructure Guarantee Fund ProjectIPs Indigenous PeoplesIPP Indigenous Peoples PlanIPPF Indigenous Peoples Planning FrameworkLARAP Land Acquisition and Resettlement Action PlanMoF Ministry of FinanceNOL No-Objection LetterOM Operations ManualPA Professional Agency (PA)PAP Project Affected PersonPI or PC Private Investor or Project CompanyPMRs Project Management ReportPPP Public Private PartnershipPRSP Poverty Reduction Strategy Paper (PRSP)RA Recourse AgreementREA Regional Environmental Assessment RMU Risk Management Unit in the Ministry of FinanceRPF Resettlement Policy FrameworkSOPs Standard Operating ProceduresTOR Terms of ReferenceTS Tracer StudyUKL UPL Upaya Pengelolaan Lingkungan dan Upaya Pemantauan LingkunganWBG World Bank Group

iii

Environment and Social Management Framework

1.1 Project Background1. The level of investments has been insufficient in Indonesia to address the extremely low access to basic infrastructure services and to meet the growing demand for infrastructure resulting from rapid urbanization and growth. As public funding alone is not enough to fill the financing gap in infrastructure, there is need for implementing market-oriented policies of infrastructure financing based on international best practice, tailored to the Indonesian context. To address these issues the Government of Indonesia (GOI) has made some progress in the area of infrastructure public-private partnerships (PPPs), including establishing a supportive regulatory and institutional framework, and pursuing several PPP transactions. However, progress to date has generally been generally slow owing to a number of institutional, financing and governance issues.

2. The GOI has been taking steps to address some of the constraints outlined above. For instance, the GOI has begun to strengthen the project preparation process to improve the quality of feasibility studies prior to bidding. The GOI is also developing the Indonesia Infrastructure Financing Facility (IIFF) to mobilize long-term local currency funds to finance PPP in infrastructure.

3. The GOI is keenly aware that the private sector considers infrastructure PPPs in Indonesia high-risk investments and has been considering offering guarantees. However, the Government has realized that simply offering more guarantees without addressing the underlying reasons contributing to heightened perceptions of risk associated with infrastructure projects may not be the most appropriate response to mitigate private sector concerns. The GOI has therefore developed the Infrastructure Guarantee Fund (IGF) as an independent public entity to address the concerns of the private sector, with the following objectives:(i) Facilitate PPP deal flow by providing GOI guarantees to mitigate risk to private sector stemming

from government actions (or inactions) in well prepared PPP projects.(ii) Improve the quality of PPPs by establish a single window for appraising all PPPs requiring GOI

guarantees and providing guidance to contracting agencies on how to prepare bankable PPPs.

(iii) Provide clear and consistent rules for how CAs can take advantage of guarantees vis-à-vis the IGF for well prepared PPPs

(iv) Ring-fence GOI liability vis-à-vis guarantees to PPPs.

1.2Project objective4. The Project Development Objective (PDO) of the Infrastructure Guarantee Fund Project (IGFP) is to strengthen the Infrastructure Guarantee Fund (IGF) as a single window institution to appraise infrastructure Public Private Partnership (PPP) projects requiring government guarantees. This will be achieved by:

(i) Providing capital to help the IGF issue additional guarantees to mitigate specific and contractual government-related risks associated with infrastructure PPP projects appraised by WB.

(ii) Enhancing the institutional capacity of the IGF via the provision of technical assistance (TA) for the development of guarantee appraisal procedures, business processes, standard documents, corporate governance, and other critical functions of the IGF.

(iii) Enabling the IGF to provide technical assistance and other necessary assistance to Contracting Agencies (CAs) for the preparation of PPP projects seeking government guarantees.

1.3 Project Components 5. Component 1. WB-Supported IGF Guarantees. The Project will provide US$25 million to support IGF in issuing its own IGF guarantees for qualifying projects. Qualifying projects will be those which are appraised by the WB and meet WB policies as well as other reputational risk considerations. In order to prevent the mingling of this $25 million with IGF capital, the WB loan proceeds under Component 1 will only be advanced (i) into a separate escrow account of the IGF;

4

and (ii) only after project(s) that will potentially benefit from associated IGF guarantees have been identified and appraised by IGF and the WB.

6. Component 2. Technical Assistance (TA). The Project will provide a loan for Technical Assistance (TA) in the amount of approximately $4.6 million to develop IGF’s institutional capacity to appraise and monitor projects as a single window for government guarantees for infrastructure PPPs, manage allocated capital, build capacity in Contracting Agencies (CAs), and develop standardized documents and procedures for preparing PPP projects – the adoption of which would become conditions for eligibility for IGF guarantees. IGF will also use part of these funds to IGF to provide technical assistance and other necessary assistance to Contracting Agencies (CAs) for the preparation of PPP projects seeking government guarantees.

1.3 Sources of Guarantees

7. Qualified PPP projects passing the IIGF’s screening/appraisal criteria will be eligible to receive government guarantee(s). Such guarantees would include one or a mixture of: (a) IGF guarantees (using IGF capital); (b) IGF guarantees (backed by WB funds from the SIL on-lent to IGF and ring fenced in a separate escrow account for projects which are appraised by the WB and meet WB policies as well as other reputational risk considerations); and (c) direct GOI/MOF guarantees1. All IGF guarantees which are backed by WB capital will also be appraised by the WB.

1.4 Risk Covered by IIGF8. The typology of risk which have been identified by IGF in consultation with private sector and based on the Indonesian experience and for which IGF can provide coverage on PPPs are captured in Exhibit 1.

9. The IGF guarantees can provide coverage for the following risks:(i) Breach of contract risk(ii) Changes in laws and regulations(iii) Delays/failures relating to land acquisition(iv) Delays/failures relating to approvals of licenses and permits(v) Delays/failures relating to financial close(vi) Failure to enforce against illegal activity(vii) Termination risk

10. The IGF can utilize the WB loan proceeds under Component 1 cover a subset of risks identified above, and may include the following:

(i) Breach of contract risk, which could include, inter alia, the following types of breach of contract:

a. Failure of the Contracting Agency (CA) or the sovereign to comply with financial payments contractually agreed to the concessionaire for e.g., off-take contractual agreements, such as with water treatment plants or electricity generation plants, contractually agreed shadow tolls, contractually agreed annual (or lump sum) subsidies, contractually agreed availability payments, contractually agreed minimum revenue guarantees etc.

b. Failure by CA to adjust, in a timely manner, contractually agreed service tariffs, or unilateral changes in tariffs by Government or CA that were not contractually specified.

c. Failure to integrate with network, when agreed in the contract for example commitments to improve or develop feeder roads, linkages and connectivity to ports and airports, third party licensing agreements etc.

d. Failure by CA or the sovereign to deliver on other contractually agreed inputs e.g. fuel supply by a sovereign-owned entity for a private power generation project

1 The issuance of a direct MOF guarantee will only be done on an exceptional basis involving large projects requiring guarantee coverage which exceeds the IGF capacity vis-à-vis its capitalization and financial strength.

5

(ii) Changes in Laws and Regulations that adversely affects the financial equilibrium of the concessionaire2 in so far as these translate into payment obligation by the CA/government under project contracts. IGF guarantees utilizing WB loan proceeds may cover governmental contractual undertakings which may include sovereign contractual undertakings or those of a political sub-division (such as regional or municipal contractual undertakings), plus state-owned enterprises.

11. WB loan proceeds will not cover the following risks:(i) Delays/failures relating to land acquisition(ii) Delays/failures relating to approvals of licenses and permits3

(iii) Delays/failures relating to financial close(iv) Failure to enforce against illegal activity(v) Termination risk

12. The table below summarizes the risks covered by IGF guarantees utilizing IGF’s own capital, IGF guarantees utilizing WB funds, and MOF guarantees under the IGFP framework.

Exhibit 1: Project Debt Risk Coverage under the IGFP Framework

Risks covered IGF guarantees*

IGF guarantees using WB funds

MOF guarantees**

(i) Breach of contract risk, including inter alia:

a. Failure of the CA to comply with financial payments contractually agreed to concessionaire

()

b. Failure by CA to adjust, in a timely manner, contractually agreed service tariffs, or unilateral changes in tariffs by Government or CA that were not contractually specified

()

c. Failure to integrate with network, when it was agreed in the contract ()

(ii) Changes in laws and regulations ()

(iii) Delays/failures relating to land acquisition ()

(iv) Delays/failures relating to approvals of licenses and permits ()

(v) Delays/failures relating to financial close ()

(vi) Failure to enforce against illegal activity ()

(vii) Termination risk ()

Notes: * IGF guarantees backed by the WB loan (component 1) will cover only a subset of risks, as indicated in column 2.

** The possible coverage is presented in brackets to reflect the fact that MOF should not be thought of as a “regular” provider of guarantees, and that these will only be considered on an exceptional basis.

2 The material change in the financial equilibrium of the concessionaire is defined as an occurrence of events (that) fundamentally alter the equilibrium of the contract either because the cost of a party’s performance has increased or because the value of the performance a party receives has diminished, and (a) the events occur or become known to the disadvantaged party after the conclusion of the contract; (b) the events could not reasonably have been taken into account by the disadvantaged party at the time of the conclusion of the contract; (c) the events are beyond the control of the disadvantaged party; and (d) the risk of events was not assumed by the disadvantaged party. (Mandri-Perrott & Guasch, Optimizing Project Finance Solutions in the Water Sector, and UNDROIT Principles of International Commercial Contracts).3It must be noted however that a WB funds could cover revocation of a license or permit once a contract has been entered into as this would constitute a material government failure to honour the terms of the contract to which it is a party.

6

13. The nature and scope of the risks to be covered by the IGF for a particular project will be determined through IGF’s risk assessment methodology and as a result of consultations with the project sponsors and their respective lenders. As a result of this assessment the IGF will determine the most suitable risk(s) to be covered and the most appropriate guarantee structure. Based on the nature of the risks to be covered, the size of the project, and credit enhancement requirements by project lenders, the IGF will determine, in consultation with WB, which guarantees will be provided by the IGF using its own capital, by the IGF using WB funds, MOF guarantees, or a combination thereof.

1.5 Types of Projects4 Supported by IIGF

14. PPP projects that may be guaranteed by IIGF will involve one of the following types of investments, as specified in Presidential Regulation No. 13 of Year 2010: a) Transportation infrastructure for airport services, harbour services, and railroad facilities;

b) Road infrastructure (toll roads and toll bridges);

c) Irrigation infrastructure (ducts for raw water);

d) Drinking water infrastructure (supply, transmission, distribution, treatment);

e) Wastewater infrastructure (collection, conveyance, treatment);

f) Solid waste management infrastructure (transportation and disposal facilities);

g) Telecommunications and informatics infrastructures (telecommunication networks and e-government infrastructure);

h) Electricity infrastructure (generation5, transmission, distribution – including geothermal); and

i) Oil and natural gas infrastructure (oil and natural gas transmission and distribution).

15. The infrastructure projects to be guaranteed will be either:a) Projects fully prepared by the Contracting Agency (CA), and then constructed and operated by the Private Investor or Project Company6 (PI or PC) under the PPP agreement; or

b) Projects that have already been prepared and partially or fully constructed by the CA, and then transferred to the PI for construction completion and/or operation under the PPP agreement.

1.6 Environmental and Social Management Framework (ESMF)

1.6.1 Objective and Applicability of ESMF 16. The objective of the Environmental and Social Management Framework (ESMF) is to establish a set of policies and guidelines for the screening, appraisal and supervision of the environmental and social aspects of all projects7 applying for a guarantee through the IIGF, irrespective of the source of funding and for associated activities or projects that are (1) directly and 4 Project in this document refers to a PPP which is appraised and/or guaranteed by IGF.

5 IIGF under its own regulations may support coal-based power generation PPPs. IIGF may only use the SIL to guarantee such a PPP if the PPP meets the following criteria: (i) there is a demonstrated developmental impact of the subproject, including improving overall energy security, reducing power shortage or increasing access for the poor; (ii) there is assistance to identify and prepare low carbon sub/projects; (iii) energy sources are optimized, looking at the possibility of meeting the country’s needs through energy efficiency (both supply and demand) and conservation; (iv) after full consideration of viable alternatives to the least cost (including environmental externalities options), and when the additional financing from donors for their environmental cost is not available; (v) the design of the coal subproject involves use of the best available technology (BAT) to allow for high efficiency and, therefore, lower greenhouse gas (GHG) intensity; and (vi) an approach to incorporate environmental externalities in the subproject analysis will be developed. The IIGF will have an agreement with the World Bank that it will be involved in pre-screening of any subproject involving coal-fired power plants.6 Private Investor and Project Company is used interchangeably in this document

7

significantly related to the guaranteed projects; (2) necessary to achieve the objectives of the guaranteed projects; and, (3) carried out, or planned to be carried out contemporaneously to the guaranteed projects.

17. The ESMF outlines (i) the World Bank safeguards policies as well as Indonesian laws and regulations, and international standards that will apply to projects to be screened by IIGF, and (ii) the arrangements that will be put in place to ensure that these policies are implemented successfully and that projects meet all these requirements.

18. Projects benefitting from IIGF guarantees using WB loan proceeds could potentially be of two types:(i) Type I (projects prepared under IIFF): Projects prepared through the IIFF (the IIFF was jointly supported by the World Bank, IFC, ADB, DEG and other donors and will operate with an Operations Manual which complies with both the Bank Safeguards Policies and IFC Performance Standards). Therefore, for the purposes of appraisal, these projects would require only adequate due diligence by IIGF to confirm compliance with the IIFF’s OM. IIGF will identify specific actions required to address non-compliance issues and remediation, if any.

(ii) Type II (projects not prepared under IIFF): These projects will require an in-depth assessment of design, implementation procedures and supervision requirements to assess the project’s compliance with IIGF’s OM.

19. The ESMF is included in the OM and will be used to guide the IIGF in carrying out due diligence and in addressing compliance of projects in the implementation of the environmental and social safeguards instruments. The IIGF will carry out due diligence for Type I projects and other projects that have safeguards instruments ready prior to project appraisal and have been prepared prior to this ESMF and OM, or that have acquired land or that have implemented the EMP and IPP prior to project appraisal. Recourse mechanisms to deal with non-compliance with the ESMF (and project specific safeguards instruments) will be detailed in the OM.

20. Based on the ESMF, detailed procedures for the environmental and social review of projects will be incorporated into IIGF’s Operations Manual (OM), covering project screening, appraisal, construction, operation and handover. The OM will specify the roles and responsibilities of the IIGF, CAs, and PIs, during the project screening/preparation, construction, operation, and handover phases.

21. The OM will be used to develop Guidance Notes to assist the CAs during the project screening/preparation phase and the PIs during the project construction, operation, and handover phases. The OM will describe the establishment and capacity building of IIGF’s Environmental and Social Management System (ESMS) as well as assistance to CAs and IPs for safeguards strengthening and Project implementation. Other social issues beyond the scope of the environmental and social safeguards, such as potential conflict in a community as a result of non-safeguards related issues, etc. will be dealt with through procedures that will be developed exclusively on case by case basis.

1.6.2 Applicable Policies and Standards

22. All projects to be guaranteed by IIGF are expected to have moderate to significant environmental and/or social impacts. However, the scale, type and location of impacts will only be confirmed at project preparation stage by the CAs.

23. Preparation of projects by the CA, and the construction, operation and handover of projects by the PI will be conducted in conformity with the requirements of OM. IIGF will follow one set of safeguards requirements that will comply with:

a) The Indonesian laws and regulations;b) The seven World Bank Safeguard Policies that could be triggered by the infrastructure

projects to be guaranteed under this Project: Environmental Assessment (OP/BP 4.01); 7 “Project” in this document refers to a PPP which is appraised and/or guaranteed by IIGF.

8

Natural Habitats (OP/BP 4.04); Pest Management (OP 4.09); Physical Cultural Resources (OP 4.11); Involuntary Resettlement (OP/BP 4.12); Indigenous Peoples (OP 4.10); Safety of Dams (OP/BP 4.37); and

c) International standards on Labor and Occupational Health & Safety24. The resulting set of standards will be elaborated in detail in the OM, which provides detailed procedures, institutional arrangements, processes and control points for implementing the ESMF. Further, the OM specifies the safeguards screening mechanisms, instruments to be prepared, consultation and disclosure requirements for IIGF projects during the preparation, construction, operation and handover stages. The OM will include specific detailed instructions for each of the above safeguards requirements; more specifically on the relevant Indonesian laws and regulations, and International standards on Labor and Occupational Health & Safety.

25. This ESMF is accompanied by an Indigenous Peoples Planning Framework (IPPF -–Refer to Annex 3) and a Resettlement Policy Framework (RPF – Refer to Annex 4) that specified guidelines for procedures, requirements and protocols to be followed by a project applying for a guarantee through the IIGF, and affecting the Indigenous Peoples and impacting project affected persons (PAPs) as results of land acquisition, respectively.

26. In addition, CA Guidance Note and PI Guidance Note will be prepared by project effectiveness. These guidance notes, which will be based on the OM, will specify all the safeguards responsibilities to be undertaken by CAs and PIs for any project guaranteed under this Project.

1.6.3 Environmental and Social Safeguard Principles

27. The following table lists the Principles that will be followed by IIGF:

Environmental and Social Principle Remarks

Environmental Assessment Incorporates the following elements: Screening and categorization of projects Social and environmental (S&E) assessment, S&E management Organizational capacity Training Community engagement and consultation Monitoring, reporting and continuous

improvement

Natural Habitats Promote environmentally sustainable development by supporting the protection, conservation, maintenance, and rehabilitation of natural habitats and their functions

Physical Cultural Resources To assist in preserving physical cultural resources and avoiding their destruction or damage. Physical Cultural Resources includes resources of archaeological, paleontological, historical, architectural, religious (including graveyards and burial sites), aesthetic, or other cultural significance

Dam Safety To assure quality and safety in the design and construction of new dams and the rehabilitation of existing dams, and in carrying out activities that may be affected by an existing dam

Pest Management To minimize and manage the environmental and health risks associated with pesticide use

9

and promote and support safe, effective, and environmentally sound pest management

Indigenous Peoples Avoid potentially adverse effects on the IP’s communities

When avoidance is not feasible, minimize, mitigate, or compensate for such effects

Design projects affecting IPs to ensure that the IPs receive social and economic benefits that are culturally appropriate and gender, and inter-generationally inclusive

Engage in a process of free, prior, and informed consultation with the affected IPs leading to broad community support involving Indigenous Peoples including Indigenous Peoples Plans

Involuntary Resettlement Involuntary resettlement should be avoided where feasible, or minimized to the extent possible. During the process of preparation of projects, the potential impacts of land acquisition should be assessed so that, where feasible, design alternatives to minimize adverse impacts can be identified as early as possible.

Persons who lose land and/or other assets as a result of land acquisition for projects should be provided with prompt and fair compensation.

Project Affected Persons (PAPs) who must move to another location as a result of land acquisition for projects should be (i) meaningfully consulted about compensation and relocation options, (ii) offered opportunities to participate in the planning and implementation of relocation plans, and (iii) assisted during the relocation process.

PAPs who loses income sources or means of livelihood as a result of land acquisition for projects should be assisted in their efforts to restore their livelihoods and standards of living.

In a proposed project, informal occupants without land rights, as defined in Section III, paragraphs 17 and 21 in the RPF (enclosed), are entitled to compensation for the loss of assets other than land, plus relocation assistance (if they must relocate as a result of land acquisition for the project) and rehabilitation support (if they suffer losses of income and/or livelihoods). Informal occupants of land include occupants of both privately owned land and public land.

Adequate consultation with PAPs

10

Safeguards Procedures

28. The safeguards procedures that will be used under this Project are specified in the OM. More specifically:

(i) IIGF intends to be the intake point for all infrastructure guarantees. IIGF will screen and appraise all projects - regardless of the source of guarantee financing - based on the ESMF as elaborated in the OM.

(ii) For projects for which IIGF will issue a guarantee using IIGF capital or MOF capital, IIGF will fully appraise and thereafter supervise all projects in accordance with the OM.

(iii) A sub-set of IIGF guarantee projects will be backed by an IBRD loan (component 1). For those projects, the World Bank will also conduct its own appraisal and supervision.

(iii) For projects that do not receive an IIGF guarantee backed by the IBRD loan , the World Bank will not review or supervise the project with respect to the preparation, construction, operation, or handover of the projects.

(v) The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance (component 2), including the IIGF’s appraisal of projects that do not receive an IIGF guarantee backed by the WB loan component.

29. For all projects, IIGF will disseminate information about actions taken by IIGF to manage potential environmental and/or social risks, as one of the communication strategies to reduce reputational risks.

1.6.4 Safeguards Procedures of IIGF in the Project CycleA. Project screening and preparation (for Type I and Type II Projects):

30. CA screens each project to eliminate those that are ineligible for guarantee coverage by WB-supported IIGF guarantees. The Table below provides a list of projects for which IIGF will not be providing guarantees (i.e. exclusions list) based on non-eligibility for financing by the World Bank.

Exclusions Listi. Any activity with the use of radioactive materials (including nuclear power generation)

ii. Drift net fishing in the marine environmentiii. Introduction of genetically engineered organismsiv. Gambling, casinos and equivalent enterprises v. Mining or excavation of live coral

vi. Any activity that affects conversion or degradation of a critical natural habitat (e.g. national park or other government designated protected area).

vii. Commercial logging operations for use in primary tropical moist forest. viii. Production or trading of wood or other forestry products from unmanaged forestsix. Purchase of logging equipment for use in primary tropical moist forest. x. Production of lead paints

xi. Production or trading of tobaccoxii. Production or trading of radioactive materials. xiii. Production or trading of products containing PCBsxiv. Production or trading of alcoholic beverages xv. Production or trading of weapons and munitions. xvi. Production and/or use of asbestos containing products

xvii. Production, distribution and sale of illegal pesticidesxviii. Production or trading or use of un bonded asbestos fibres

xix. Production or trading of ozone depleting substances (ODS) subject to international

11

Exclusions Listphase out

xx. Production or trading of pharmaceuticals subject to international phase outs or bans. xxi. Production or trading of pesticides/herbicides subject to international phase outs or

bans. xxii. Production or trading of any product or activity deemed illegal under host country

laws or regulations or international conventions and agreements xxiii. Production or activities involving harmful or exploitative forms of forced labour/harmful

child labourxxiv. Production, trading, storage, or transport of significant volumes of hazardous

chemicals, or commercial scale usage of hazardous chemicalsxxv. Production or activities that impinge on the lands owned, or claimed under

adjudication, by Indigenous Peoples, without full documented consent of such peoples

xxvi. Trading of wildlife or wildlife products

31. CA screens the project to ensure compliance with all Indonesian environmental and social regulatory requirements based on available project documentation. This framework applies to all projects in the public interests, as defined in Presidential Regulation No. 36/2005 (Perpres 36/2005) on “Land Provision for Development Activities in the Public Interest”, revised by Presidential Regulation No. 65/2006 (Perpres 65/2006), and the Implementation Guidelines No. 3/2007 for Perpres 36/2005 and Perpres 65/2006 issued by the National Land Agency (Badan Pertanahan Nasional—BPN) as well as Law 2/2012 on Land Acquisition for Development in the Public Interests. The new Law includes the following projects as public interest: national security and safety; public road, toll road, tunnel, railway, rail station, and operational facilities for train; reservoir, dam, irrigation, water supply channel, waste water system and sanitation channel, other structures for irrigation; ports, airports and terminal; oil, gas and geothermal infrastructure, power plants, transmission and electricity distribution lines; telecommunications and informatics infrastructure; solid wastes management and disposal; government hospital; public safety; government public cemetery; social and public facility, public green space; natural and cultural conservation; government offices; slum upgrading, land consolidation and low-income housing; government education facilities; government sport facilities; and public market and parking.

32. CA further screens the project to identify the applicable Safeguards Policies as specified in the ESMF and OM. The OM will include a screening checklist of each of the seven World Bank safeguards policies applicable to this Project.

33. For each safeguard policy triggered, CA determines the safeguards instruments with the guidance from the ES experts of the IIGF as needed, to meet the Project requirements.

(i) CA agrees with the Indonesian regulatory agency(ies) on the safeguards study to be undertaken, particularly in the preparation, review and approval process of Environmental Impact Assessment (AMDAL). Depending on the administrative coverage of the project impact areas, the AMDAL could be reviewed and approved by an AMDAL commission of District/Municipality, or province, or of the national government (i.e. Ministry of Environment)

CA prepares an Environmental Assessment (EA) (AMDAL or UKL/UPL)8 report for a project that triggers World Bank’s Environmental Assessment and/or Natural Habitats Policy. The EA will also include an Environmental Management Plan (EMP) that covers mitigation measures during the

8 The environmental assessment (EA):

(i) Identifies and assess the potential environmental and social impacts of the subproject in the subproject’s area of influence;

(ii) Includes an analysis of alternatives that justifies the selected option as the one with the lowest environmental and social risk; and

(iii) Prescribes an EMP (based on the selected alternative) that will specify a mitigation plan (i.e. a plan with the measures to prevent, mitigate and/or compensate for the potential adverse environmental and social impacts of the subproject) and an environmental monitoring plan with an implementation schedule and budget, identifying the institutional roles and responsibilities and training needs.

12

construction, operation, and handover phases of the project. In case of significant pest management issues in the project’s area of influence9 are identified, CA prepares a Pest Management Plan (PMP). In case of the project’s adverse impacts on physical cultural resources, CA prepares a Physical Cultural Resources Management Plan (PCRMP).

(ii) For large or high hazard dams10, CA engages an expert panel conduct a safety review with the preparation of detailed plans; and for small dams CA has generic dam safety measures designed by qualified engineers.

(iii) Based on the RPF and its details in the OM, CA prepares a Land Acquisition and Resettlement Action Plan (LARAP) in the case that a project needs to acquire land involuntarily causing involuntary resettlement, loss of land, assets, source of incomes and disturbance or loss of livelihoods, or access to resources. In the case that CA requests the local government or other government entity to acquire land, the CA will have to collaborate with the local government or other local government entity in preparing a LARAP. In the case the CA is planning to acquire land through direct negotiations between them and the land owners, the CA needs to prepare a LARAP (refer to RPF section IX).

(iv) CA prepares an Indigenous Peoples Plan (IPP) in the case that a project affects IPs communities positively or negatively within the project impact area as defined by the EA, IPPF and the OM.

(v) CA prepares a Tracer Study and a Correction Action Plan for the IPs communities, respectively, in the case that a project had prepared LARAP or IPP before the CA had been familiar with the ESMF, IPPF and RPF as specified in the OM, or had acquired land, or had handled IPs communities prior to the approvals of the LARAP or IPP (a Previously Prepared Project).

(vi) Specific details of all identified types of potential impacts – cumulative, induced, indirect impacts, social impacts other than those covered by RPF and IPPF, occupational health and safety impacts etc. shall be detailed in relevant documents.

(vii) Previously Prepared Projects - The IIGF will carry out a due diligence for proposed projects that have characteristics as mentioned in para. 18 above. This may also includes Type I (IIFF Prepared Projects) projects that are partly or wholly will be financed by the IIFF. It is expected that implementation of LARAP and/or TS and or Corrective Action for IPs for this type of projects would be in line with the IIGF’s RPF, IPPF, and OM. IIGF will identify specific actions required to address non-compliance issues, if any.

(viii) The type II projects (Non-IIFF Projects) will require an in-depth assessment of the project’s design (including the preparation of LARAP and TS), implementation procedures and supervision requirements to assess the projects’ compliance with the IIGF’s OM.

(ix) Draft LARAP, IPP, Tracer Study and Correction Action Plan for the IPs will be submitted by the CA to the IIGF as part of project appraisal documents for approval. The IIGF will give a No Objection to the CA to proceed with the implementation of the approved LARAP, IPP, Tracer Study and Correction Action Plan, as applicable.

(x) CA implements the approved LARAP and IPP for activities that have to be implemented prior to project construction or at any time as indicated by the approved LARAP and IPP. It is anticipated that PI has to implement part of the activities specified in the approved LARAP and IPP, for instance,

9 Subproject “areas of influence” defined as the area likely to be affected by the project, including all its ancillary aspects, such as power transmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the project (e.g., spontaneous settlement, logging, or shifting agriculture along access roads). The area of influence may include, for example, (a) the watershed within which the project is located; (b) any affected estuary and coastal zone; (c) off-site areas required for resettlement or compensatory tracts; (d) the airshed (e.g., where airborne pollution such as smoke or dust may enter or leave the area of influence; (e) migratory routes of humans, wildlife, or fish, particularly where they relate to public health, economic activities, or environmental conservation; and (f) areas used for livelihood activities (hunting, fishing, grazing, gathering, agriculture, etc.) or religious or ceremonial purposes of a customary nature.

10 Large dams are those dams with a height greater than 15 meters. High hazard dams are those dams with a height in the range of 10-15 meters with design complexities, located in high seismic zones, and with difficult soil/geological properties for foundations; and also include dams that retain toxic materials.

13

for the rehabilitation support for income restoration and livelihood recovery, and for activities that are related to construction, etc. CA will coordinate with PI as required.

(xi) During the project appraisal, the IIGF will also assess the capacity of the CA submitting project proposals wishing for applying for a guarantee. In the case that the CA has lack of capacity in environmental and social safeguards management, the IIGF will provide assistance to strengthen their capacity.

34. The controls by IIGF are as follows:

(i) Review and comments on CA’s screening recommendations and consultant ToR for preparing the instruments of environmental and social safeguards.

(ii) Clearance of the screening package for the preparation of the safeguards report(s) by CA.

(iii) Review and comments on the EIA, LARAP, IPP, Tracer Study and Corrective Action Plan for IPs prepared by CA, as applicable.

(iv) Carry out due diligence for the Type I projects and for other projects that have prepared LARAP and IPP prior to the familiarity with the IIGF’s RPF, IPPF and OM, or projects that have acquired land and handled IPs prior to project appraisal.

(v) Provide clearance and approvals for the draft LARAP, IPP, Tracer Study and Corrective Action Plan for IP once the IIGF has the capacity to do so.

(vi) Ensure that the responsibility of the CA and/or PI for environmental and social safeguards management are included in the Recourse Agreement between the IIGF and the CA, PPP Agreement between the CA and the PI, IIGF Guarantee Agreement between the IIGF and the PI,.

(vii) Provide clearance for the implementation of the EMP, LARAP and IPP, as applicable, in the bidding documents for project construction and operation for PI (for Type I and Type II projects), and for project construction by CA (in the case CA carry out part of the construction).

35. Support from the World Bank is as follows:

The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

B. Project construction by CA (for Type II Projects):

36. CA implements the EMP (and PMP/PCRMP, if applicable) as well as activities in the LARAP and IPP (see Annex 3 and 4 for more details) to be implemented during the project’s construction phase.

37. CA continues to implement the approved LARAP or IPP, especially those related to rehabilitation supports to the PAPs until they recover their livelihood and income. CA will continue to consult the IPs communities during project construction to ensure that the agreed activities in the IPP are consistently implemented. All land, compensation and resettlement and livelihood assistance must be provided prior to commencement of construction or at any time as specified in the LARAP and IPP. In a proposed project, informal occupants without land rights, as defined in paragraph 20 of the RPF (enclosed), are entitled to compensation for the loss of assets other than land, plus relocation assistance (if they must relocate as a result of land acquisition for the project) and rehabilitation support (if they suffer losses of income and/or livelihoods). CA to implement the corrective actions as specified in the approved TS or corrective action plan for the IPs.

38. CA to implement corrective actions in the case that it has incompliance with the implementation of the approved LARAP.

14

39. The control by IIGF is as follows:

(i) Review, supervise and assess the compliance of construction-phase EMP implementation, as well as any activities required by the LARAP, IPP, TS and corrective action plan for IPs as well as corrective actions for the incompliance of implementation of the approved LARAP;

(ii) Provide a No Objection for the preparation of the bid package for construction or operation by PI or for part of the construction that will be carried out by CA

40. The support by the World Bank is as follows:

The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance, regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

C. Transfer of the project from CA to PI (for Type I and Type II projects)

41. CA prepares the Request for Proposal (RFP) for project guarantees, covering the construction (for Type I and Type II projects), operation, and handover phases. CA evaluates the bids received from PIs, and selects, negotiates and extends contract to the successful bidder.


(i) Review and provide a No Objection to the issuance of the RFP.

(ii) Review of CA’s bid evaluation and provide a No Objection to the decision for the selection of successful bidder and its contracting.

43. The support by the World Bank is as follows: The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance, regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

D. Project construction by PI (for Type I and Type II Projects):

44. PI implements the EMP (and PMP/PCRMP, if applicable) for the project’s construction phase.

45. In the case that the approved LARAP and/or IPP implementation are to be done or continued by the PI, PI continues to implement these two instruments, especially those related to rehabilitation supports to the PAPs until they restore their livelihood and income. PI will continue to consult the PAPs and/or IP communities during project construction to ensure that the agreed activities in the approved LARAP and IPP are consistently implemented (refer to annexes 3 and 4 for more details)


(i) Review of the implementation reports of the EMP, LARAP, IPP and TS or corrective action plan or corrective actions to address the incompliance, as applicable, as they are implemented by PI during project construction (e.g. compliance with the EMP for the construction phase, continuous rehabilitation supports to the PAPs as necessary; and IPP implementation and consultation with IP communities, etc.).

(ii) Supervise and monitor the implementation of the EMP, approved LARAP, IPP or TS, or corrective action plan for the IPs or corrective actions to address incompliance, as applicable.

47. The support by the World Bank is as follows: The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance, regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or

15

supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

E. Project operation by PI (for Type I and Type II Projects):

48. PI implements the EMP (and PMP/PCRMP, if applicable) and LARAP, IPP, TS or corrective action plan for IPs or corrective action to address incompliance of the LARAP, as applicable, during project’s operation phase. For instance, the approved LARAP may require livelihood restoration measures to be continued during this phase.


(i) IIGF and the CA supervise the safeguards aspects of PI’s project operation (e.g. compliance with the EMP for the operation phase, including assessment of environmental and social impacts of the project operation; implementation of IPP and LARAP, and consultation with the IP communities as specified in the IPP, TS, corrective action plan for the IPs and corrective actions to address incompliance of LARAP implementation, as applicable). IIGF supervision involves review of monitoring information presented in the implementation reports of the safeguards instruments by the PI as well as field visits of the project facilities, if necessary.

50. The support by the World Bank is as follows: The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance, regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

F. Project handover by PI (for Type I and Type II Projects):

51. PI implements the EMP and LARAP, IPP, TS, Corrective Action Plan for IPs or corrective actions to address incompliance with LARAP implementation for the project’s handover phase. A consultant engaged by PI conducts an environmental and social audit of project facilities to identify potential environmental liabilities and remaining social issues, and devise a mitigation (e.g. remediation) plan with a budget and implementation schedule. PI provides reports to CA and IIGF. IIGF will consolidate the reports from all PIs and submit it to the MOF and share it with the Bank.

52. The controls by IIGF are as follows:

(i) IIGF supervises all the safeguards aspects of PI’s project handover (compliance with the EMP and LARAP, IPP, TS, Corrective Action Plan for IPs or corrective actions to address incompliance with LARAP implementation for the handover phase). IIGF’s supervision involves review of monitoring report containing information presented by the PI as well as field supervision visits of the project facilities to check any environmental liabilities and remaining social issues resulting from PI’s operation of the project. Any deficiency, such as site contamination will be restored to specified standards by the PI.

(ii) IIGF review the monitoring report of the PI as well as audit report on environmental and social safeguards, and carry out field visits as necessary to validate or confirm the information provided in these reports.

(iii) Based on (ii) above IIGF approves or disapproves the handover. In the latter case, the IIGF request the PI to make corrective actions to remedy the environmental and social impacts and have to be completed prior to the hand over.

53. The support by World Bank is as follows: The World Bank will, during supervision, review IIGF’s use of the OM in the activities funded by the World Bank technical assistance, regardless of the source of financing of the guarantee for a particular project. The World Bank will not review or supervise projects which are not supported by an IIGF guarantee backed by the World Bank loan (component 1).

16

1.6.5 Due Diligence, Incompliance and AuditsEnvironmental Assessment

54. The environmental audit will be conducted during transfer of management responsibility of the project from one party to another (e.g. during transfer of the constructed project facilities to the PI, or during handover of the project by the PI). The audit would also assess the gaps between the required measures and the actual implementation, pending issues and recommendation to improve the implementation of the mitigation measures.

55. The environmental audit / due diligence will be used to:

(i) determine the nature and extent of all potential environmental issues and adverse impacts from an existing facility; (ii) prescribe an EMP that will identify appropriate measures mitigate and/or compensate for the potential adverse environmental and social impacts of the project; and (iii) determine whether the CA and/or the PI have adjusted the originally planned mitigation measures during project implementation and why and was it appropriate.

Indigenous Peoples

56. In the case that a CA has carried out some activities involving IP communities who would be affected by the proposed project prior to applying for a guarantee from the IIGF, the CA will submit to IIGF a report of the handling of the IPs as part of the appraisal document package. The IIGF will review the report and undertakes a due diligence assessment in reference to the OM. Should there be inconsistency between the handling of IP communities and the requirements in the OM, the IIGF will request the CA to prepare a corrective action plan for the affected IP communities in accordance with the OM.

57. It is anticipated that due diligence would mainly include Type I projects by which they are partly or wholly finance by the IIFF project. It is expected that implementation of IPP for this type of projects would be in line with the IIGF’s RPF and OM. IIGF will identify specific actions required to address non-compliance issues, if any, and request the CA to prepare a corrective action plan.The type II projects will require an in-depth assessment of the project’s design (including the SA and preparation of IPP), implementation procedures and supervision requirements to assess the projects’ compliance with the IIGF’s OM. If the CA cannot prepare and implement an acceptable corrective action plan, the IIGF and the World Bank will not provide guarantee for CA’s private investor.

58. The IIGF will monitor the implementation of the IPP by the CA and/or PI (as applicable). The CA has to establish a corrective action plan if there is incompliance of the IPP implementation. The corrective action plan will have to be reviewed and approved by the IIGF or by the World Bank as applicable. The IIGF may request the CA to postpone the start of the construction work or the ongoing construction works, or operations, or handover, as applicable (in the case that activities related to IPs are continued during construction, operation or handover), until the correction action plan is approved and activities specified in the approved correction action plan are implemented, as applicable. The approved correction action plan will have to be amended in the relevant Agreements11.

Involuntary Resettlement

59. In the case that the CA and/or PI have implemented resettlement prior to the submission of the appraisal document to the IIGF, they have to prepare a Tracer Study (TS) that (i) explains in detail the procedures, requirements and outcomes of land acquisition and resettlement that had been carried out, (ii) analyzes whether land acquisition and resettlement had been carried out in accordance with this RPF and the OM; (iii) provides corrective actions that will address issues due to the gaps between the requirements in the RPF and OM and in the implementation of land acquisition and resettlement.

11 Subproject Agreement between the World Bank and the PI, IIGF Guarantee Agreement between the IIGF and the PI, Recourse Agreement between the IIGF and the CA, and PPP Agreement between the CA and the PI, as applicable.

17

60. Due diligence is anticipated for Type I projects by which they are partly or wholly finance by the IIFF project. It is expected that implementation of LARAP and/or TS for this type of projects would be in line with the IIGF’s RPF and OM. IIGF and WB (as applicable) will identify specific actions required to address non-compliance issues, if any, and request the CA to prepare a TS. The type II projects will require an in-depth assessment of the project’s design (including the preparation of LARAP and TS), implementation procedures and supervision requirements to assess the projects’ compliance with the IIGF’s OM.

61. In the case that a CA and/or PI do not consistently implement the approved LARAP and/or the approved TS, the IIGF and WB (as applicable) will not issue a No Objection for the commencement of the project construction, or operation, or hand over, as applicable, until the implementation of the approved LARAP and TS are satisfactorily implemented.

62. In the case that the CA and/or PI do not implement the activities (incompliance) in the approved LARAP or TS after the signing of the Recourse Agreement, IIGF Guarantee Agreement and/or PPP Agreement, either to be implemented during construction, operation and/or hand over stage, the IIGF will request the CA and/or PI to stop the construction, operation and/or handover until the corrective actions are implemented satisfactorily.

Audits

63. The PI will hire an independent consultant to carry out an audit of the overall implementation of the LARAP, IPP, TS and corrective action for LARAP, and Corrective Action Plan for IPs, to address the incompliance of LARAP and IPP implementation, respectively as applicable, during project construction and operation prior to its hand over to the CA12.

64. The Audit report will be reviewed by the CA and IIGF, and if implementation of IPP, LARAP, TS and corrective actions for IPs are acceptable, the IIGF will provide a clearance and approval for the CA to receive the project hand over.

65. In the case that the IIGF has not had adequate capacity in environmental and social safeguards management, the World Bank will review the audit report. If necessary, the IIGF, the CA and the World Bank will carry out a joint field visits to verify the findings of the audit report.

1.7 Institutional Roles for Safeguards Management and Implementation Arrangements

66. The specific roles of institutions involved for safeguards management under the IIGF Project are as follows:

(i) Contracting Agency (CA) will prepare projects, including screening for safeguards risks and identification of and prepare relevant safeguards instruments such as EA/EMP, environmental audit/EMP, IPP, LARAP13, Tracer Study, Corrective Action Plan for IPs or corrective action for compliance of the LARAP implementation. CA will be responsible for implementing the approved IPP, LARAP, Tracer Study, Corrective Action Plan for IPs or corrective action for compliance of the LARAP implementation, as applicable. In some projects where CA is responsible for the partial or full construction of the project, CA will also be responsible for implementing the EMP and IPP, LARAP, Tracer Study, Corrective Action Plan for IPs or corrective action for compliance of the LARAP implementation during the construction phase, as applicable.

(ii) Private Investor (PI) will be responsible for project construction, operation and handover, including implementation of safeguards aspects. PI will also be responsible for environmental liabilities occurring during construction (if responsible for construction) and operation of the project investment, and also for remediating the environmental damage to specified standards. In addition, PI 12 Audit will also be needed if the PI for construction and for operation is different. The process will be similar but clearance and approval from the IIGF and the World Bank will be given for the CA to proceed with the bidding for operation.

13 If the CA request assistance from a local government or other government entity to acquire land, it has to collaborate together during the LARAP preparation.

18

would be also responsible to implement the approved LARAP, IPP, TS, and corrective action plan for the IPs and corrective action for the incompliance of the LARAP implementation, as applicable, as some activities may have to be implemented during the construction and operation phases such as rehabilitation support for income restoration and livelihoods.

(iii) IIGF will provide a single window operation in processing guarantees for infrastructure projects in Indonesia. For all projects IIGF, will apply one set up safeguards standards which are incorporated in the OM. IIGF will provide guidance to CA in meeting the safeguards requirements of the CA during the project preparation phase or construction phase in the case that it may also construct the project. It will also supervise PI implementation of the safeguards instruments during the project construction, operation and handover phases together with the CA. IIGF will report on the status of the preparation and compliance of the implementation of all environmental and social safeguards instruments along with other aspects of projects to the MOF.

(iv) Ministry of Finance (MoF) will monitor the performance of IIGF management to ensure that it complies with the IIGF policies, including the Operations Manual. The MoF will share the IIGF’s report including safeguards-related aspects with the Bank.

67. The following table depicts the roles and responsibilities of IIGF, CA, PI and WB during the project preparation and implementation:

Project Stage Institution Responsibility

SUB

PRO

JEC

T PR

EPA

RA

TIO

ON

Consultation IIGF 1. Provide guidance to CA on ESMF, including IPPF and RPF, that are incorporated in the OM;

2. Provide capacity building to potential CAs and PIs3. Examine eligibility of projects for guarantee coverage

under IIGF;4. Identify applicable environmental and social safeguards

instruments through screening

CA 1. Provide preliminary information on project scope and characteristics to IIGF to establish eligibility for IIGF guarantee;

2. Screen project on IIGF’s guidance to: (i) evaluate the environmental and social risks associated with the project construction and operation; (ii) determine the depth and breadth of Environmental Assessment (EA); (iii) recommend an appropriate choice of EA instrument(s) suitable for a given project; (iv) determine appropriate social safeguards instruments; types of LARAP, SA needed and scope of IPP

Appraisal IIGF 1. Review and endorse EA (including EMP), PMP, PCRMP, LARAP, IPP, Tracer Study and Corrective Action Plan for IPs and Corrective Actions to address compliance of LARAP implementation, as applicable, prepared and submitted as part of the appraisal package by the CA

2. Assess capacity of the CA in environmental and social safeguards management

19


CA 1. Prepare an Environmental Assessment (EA) report, including Environmental Management Plan (EMP);

2. In case of significant pest management issues in the project’s area of influence, prepare a Pest Management Plan (PMP);

3. In case of the project’s adverse impacts on physical cultural resources, prepare a Physical Cultural Resources Management Plan (PCRMP);

4. Prepare a Land Acquisition and Resettlement Action Plan (LARAP)14, in case a project needs to acquire land and/or resettlement;

5. Prepare an Indigenous Peoples Plan (IPP) in case a project affects IP communities;

6. Prior to the start of construction, implement the approved LARAP and the approved IPP;

7. Prepare a Tracer Study or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable, particularly in the case of Type I projects or other types of projects whereby land has been acquired and IPs has been dealt with prior to appraisal

8. Arrange public consultation9. Disclose the approved safeguards instruments, such as

AMDAL (including RKL/RPL or EMP), LARAP, IPP, Tracer Study or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable, of the project through website and local media; and,

10. Submit environmental and social safeguards instruments in the appraisal package to the IIGF

World Bank 1. For potential projects proposed by IIGF to get WB loan-backed guarantees, review the appraisal report of the IIGF for that particular project, and carry out further analysis and appraisal.

2. On the basis of the review of the IIGF appraisal report, provide a No Objection for the safeguards instruments prepared by the CA.

3. Carry out field visit to verify the information provided in the environmental and social safeguards instruments submitted in the appraisal package

4. During supervision, review the IIGF’s use of the OM in the appraisal stage, particularly the selection and fulfillment of the safeguards instruments prepared by the CA. As necessary, carry out field visits for selected projects to verify the information provided in the safeguards instruments.

IMPL

EMEN

TATI

ON

Construction IIGF 1. Based on the Implementation Report provided by the CA and/or PI, monitor, supervise, and approve the implementation compliance with the approved EA (including EMP), PMP, PCRMP, LARAP, IPP, Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

2. Review and provide approval for the due diligence and compliance instruments, such as Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

14 in collaboration with a local government or government entity in the case land is acquired by the later party;

20


CA / PI (as the case may be)

1. Implement the EMP (and PMP/PCRMP, if applicable), LARAP and IPP, as applicable

2. CA (or PI, if applicable) to continue to implement the approved LARAP and IPP;

3. Prepare Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable and submit to CA (in the case of PI) and to IIGF for approval

4. Implement the corrective actions recommended in the Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

5. Receive inputs from beneficiaries on the implementation of EMP,

6. Prepare a monthly Implementation Report on the progress and status of the implementation of the safeguards instruments above and submit it to the CA (in the case of PI) and IIGF (in the case of CA)

7. Disclose the Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

8. Disclose the implementation of the Tracer Study, or Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

World BankDuring supervision, review the IIGF’s use of the OM in the project construction stage. Reference for review will be based on the implementation report prepared by the PI and submitted to the CA (and CA submits it to IIGF). To check the compliance of the IIGF in the use of the OM during the construction stage by PI, the World Bank will review and assess the report in terms of the compliance of selected projects on the implementation of construction-phase EMP, LARAP, IPP, TS, corrective action plans for IPs or corrective actions to address the incompliance or LARAP implementation. The World Bank may carry out field visit to verify the report.

Operation IIGF 1. Based on the implementation report from the PI, monitor and approve the implementation compliance of the EMP (and PMP/PCRMP, if applicable) and LARAP, IPP, Tracer Study, Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

PI 1. Implement the EMP (and PMP/PCRMP, if applicable), LARAP, IPP, Tracer Study, Corrective Action Plans for the IPs and corrective action to address incompliance of LARAP implementation, as applicable

2. Prepare and submit Implementation Report to the CA or IIGF for the implementation of the above safeguards instruments

21


World BankDuring supervisions, review the IIGF’s use of the OM in project operation by PI, by reviewing and assessing the implementation reports prepared by the PI and submitted to the CA (which is further submitted to the IIGF) on the compliance of the implementation of the operation-phase EMP, LARAP, IPP, TS, Corrective Action Plan for IPs or corrective actions to address incompliance with the LARAP implementation for selected projects, as applicable.

68. World Bank Role. The World Bank will, during supervision, for all projects, review the IIGF’s use of the OM in the activities funded by the World Bank technical assistance. This may include assessment of information received from IIGF submitted through MoF, and may include field visits to check IIGF projects in the field to assess that it adopted and applied the OM satisfactorily. In particular, assessment of the compliance of the IIGF in implementing the OM covers, but not limited to the following, whether IIGF (a) approves projects after conducting appropriate appraisal, including on safeguards aspects, (b) monitors and supervise the performance of the CA with respect to the PPP agreements and contracts, including the commitments made by the PI vis-à-vis safeguards, and (c) reports to the WB through MoF on project performance vis-à-vis financial as well as safeguards risk management as defined in the OM.

69. For Component 1, IIGF guarantees backed by the World Bank loan, appraisal and supervision will be done by IIGF, but will also be subject to appraisal and supervision by the World Bank in accordance with its own procedures. The World Bank will not review or supervise sub-projects which are not supported by Component 1.

1.8 Institutional Capacity Building

70. IIGF – being a newly established entity – has recruited an Environmental Specialist and will hire a Social Development Specialist by Project Effectiveness, to oversee the environmental and social aspects of the infrastructure projects during their preparation, construction, operation, and handover phases. These specialists will ensure that IIGF implement the detailed procedures, requirements and formats to be prescribed in IIGF’s OM that will comply with the Government of Indonesia’s laws and regulations, the seven World Bank’s safeguards policies, and international labor and occupational health and safety standards. IIGF’s environmental and social specialists will hire expert consultants to support detailed project reviews depending on specific project characteristics. In addition, a professional firm will be recruited to assist IGF in all phases of guarantee screening/appraisal/monitoring and further provide capacity building, including safeguards review and management.

71. As IIGF is responsible to implement consistently the Project’s OM, it is necessary that IIGF’s environmental and social development specialists as well as IIGF’s consultants be fully conversant with IIGF’s OM.

72. IIGF’s OM will be used to develop Guidance Notes prior to project effectiveness to assist the CAs during the project preparation phase (and possibly for construction phase as applicable), and the PIs during the construction, operation, and handover phases.

73. To plan for the implementation of the institutional capacity building measures, IIGF will take the following actions:

(i) Before Project negotiations IIGF will issue the TORs for the Environmental Specialist and the Social Development Specialist. These two specialists will be recruited by Project effectiveness.

22

(ii) Before Project negotiations, IIGF will build a capacity building plan for itself and potential CAs and PIs, and include a budget in the TA of the project’s component 3 to implement this plan.

(iii) During project appraisals, IIGF will assess the safeguards capacity of the CAs in managing environmental and social safeguards associated with the identified potential projects.

Stakeholder consultations and disclosure of safeguard documentation

74. The IIGF and World Bank have organized four rounds of consultations, and held a number of bilateral meetings, with Contracting Agencies (CAs) and Private Investors (PIs) on safeguards management and the ESMF under the IGFP. Feedback received from interactions with key stakeholders has been very valuable and incorporated in subsequent drafts of the ESMF and IGFP project documentation. Summaries from these consultations are presented in Annex 5.

75. The IGF and WB have organized multiple rounds of consultations with CAs, PIs and NGOs on safeguards management and ESMF under the IGFP. Feedback received from interactions with key stakeholders has been very valuable and incorporated in subsequent drafts of the ESMF and IGFP project documentation. In addition, the IGF has held numerous meetings with potential PIs. Project related information, including the safeguards aspects were disseminated through IIGF’s website. The final draft version of the ESMF was disclosed at the IIGF’s Website and at the World Bank’s InfoShop prior to appraisal. A Communication Strategy shall be developed to address any public misperception that the World Bank is responsible for all projects guaranteed by the IIGF and to disseminate information about actions taken by IIGF (such as ESMF/OM) to manage potential environmental and social risks.

76. The consultations and disclosure carried out to date are appropriate, given the fact that specific IIGF projects to be guaranteed by IIGF have not yet been firmly identified. IIGF project specific safeguards instruments will be determined through screening by IIGF’s clients, i.e. the CA. IIGF’s clients (CA and/or PI) will disclose draft and final versions of EA reports, Land Acquisition and Resettlement Action Plans (LARAPs), Indigenous Peoples Plans (IPP), etc., both in English and Bahasa Indonesia, EA TOR for Category A projects will be made available in a public place accessible to affected groups, local NGOs and other stakeholders. If needed, the IPP will be translated to the IPs’ language.

1.9Grievances

77. The ES Unit/Division of the IIGF will establish a grievance redress mechanisms (GRM) that will allow public, affected IP communities or individuals, and PAPs to file complaints and to receive satisfying responses in timely manner. The system will also record and consolidate complaints and their follow-ups. This system will be designed not only for complaints regarding the preparation and implementation of LARAP, IPP and TS, but also for handling complaints of issues (including environmental and other social safeguards issues) related to the projects guaranteed by the IIGF and the Word Bank under this project. The IIGF will hire a professional to manage the GRM, and this expert will closely work with the ES Unit/Division.

78. At the project level, the relevant CA and/or PI will have to establish a grievance redress mechanisms (GRM) for complaints related to the guaranteed project. The CA and/or PI have to assign a staff to be responsible in managing the GRM system. The system will receive, and properly follow up complaints from the public, IP communities or individuals, and PAPs in a timely manner, as well as records complaints and their follow-ups. The CA and/or PI could use its existing GRM system, if it is already available and well-functioned with procedures and mechanisms that are in line with the requirements of the GRM as specified in the OM. Otherwise, the CA and/or PI will have to improve its current GRM system and capacity to be able to implement the GRM as specified in the OM.

79. Details on the procedures, requirements, documentation, and reporting formats of the GRM at the project level, i.e. at the IIGF, and at the project level, i.e. at the CA and/or PI level, will be incorporated in the OM.

23

1.10 Reporting

80. The IIGF will prepare a Quarterly Implementation Report (IR), to be submitted to the MOF and shared with the Bank. The IR contains, among others, the status and progress of the project appraisals including environmental and social safeguards aspect, implementation of safeguards instruments (compliance and due diligence), and follow-up actions to address issues, if any; and the implementation of the approved capacity building plan for environmental and social safeguards. The Quarterly Implementation Report provided by the CA on safeguards will be incorporated in the IR. In the event of non-compliance with the ESMF as specified in the OM and/or safeguards instruments by CAs and PIs in any phase of the project cycle, appropriate recourse measures will be undertaken by the IIGF and/or WB.

81. The IIGF will also incorporate the appraisal status and implementation progress of the implementation of the environmental and safeguards instruments in its quarterly report to be submitted to the MOF, which will be then shared with the Bank.

82. The CA will prepare a Quarterly Implementation Report, to be submitted to the IIGF. The Report contains, among others, the status and progress of the preparation and implementation of environmental and social safeguards instruments and follow-up actions to address issues, if any. This report will be prepared based on the Quarterly Implementation report provided by the CA. This report will include information provided by the Quarterly Implementation Report of the PI.

83. The PI will prepare a Quarterly Implementation Report, to be submitted to the CA. The Report contains, among others, the status and progress of the preparation and implementation of environmental and social safeguards instruments and follow-up actions to address issues, if any.

84. All of the above reports will incorporate supervision reports as applicable.

85. The IIGF will also submit an External Monitoring and Evaluation Report, which among others contains the compliance evaluation of the implementation of the safeguards instruments in reference to the OM, to be submitted to the MOF and shared with the Bank. This Report will be prepared by an Independent Consultant annually. IIGF will make the External Monitoring and Evaluation Report public.

86. The CA and the PI will also prepare an Audit Report on the compliance and effectiveness of the implementation of the environmental and social safeguards instruments, and submitted to the IIGF (and shared with the Bank as necessary) for approval, prior to the bidding for the construction, and/or operation, and/or hand over.

24

Annex 1 Applicability of the World Bank Safeguards Policies to the IIGF Project

Safeguard Policies Triggered:

Yes No

Environmental Assessment (OP/BP 4.01) X

The project will guarantee infrastructure projects that would belong to the following infrastructure projects: (i) transportation infrastructure for airport services, harbor services, and railroad facilities and infrastructure; (ii) road infrastructure (toll roads and toll bridges); (iii) irrigation infrastructure (ducts for raw water); (iv) drinking water infrastructure (supply, transmission, distribution, treatment); (v) wastewater infrastructure (collection, conveyance, treatment); (vi) solid waste management infrastructure (transportation, disposal facilities); (vii) telecommunications and informatics infrastructures (telecommunication networks, e-government infrastructure); (viii) electricity infrastructure (generation, transmission, distribution - including geothermal); and (ix) oil and natural gas infrastructure (oil and natural gas transmission and distribution).

A preliminary list of possible projects has been identified. As these projects have not been fully defined and others have not been identified, an Environmental and Social Management Framework (ESMF) will be prepared by IIGF by project appraisal and will have to be approved by the Bank. The ESMF will include: (i) the background information on the project, (ii) the project objective, (iii) project components and financial products, (iv) types of projects; (v)objective of ESMF, (vi) applicable policies, (vii) methodology for the environmental and social assessment of projects [including: (a) classification of projects based on the level of environmental and social risks, (b) studies required considering a project's environmental and social risks - environmental assessment/environmental auditing, (c) public consultation requirements, (d) disclosure requirements, and (e) environmental and social management tools], (viii) environmental supervision during construction and operation; (ix) implementation arrangements of projects (institutional responsibilities), (x) consultation and disclosure of ESMF, and (xi) exclusion list of sectors or subsectors.

By loan effectiveness, IIGF's OM will be completed based on the ESMF. The OM will include detailed procedures to be implemented by the Contracting Agency (CA) during the project preparation phase prior to requesting the guarantee from the IIGF and by the Private Investor during project construction, operation, and handover phases, following issuance of the guarantee by IIGF. In addition, the Manual will provide detailed guidance for IIGF's environmental and social specialists and their consultants to follow. The environmental and social requirements to be specified in the OM will follow the Indonesian requirements as well as the World Bank safeguards requirements (including World Bank's Operations Policies), as specified in the ESMF including RPF and IPPF (refer to Section Indigenous Peoples and Section of Involuntary Resettlement below)

It is most likely that all projects guaranteed by IIGF will have moderate to significant short-and/or long-term environmental and social impacts (i.e. EA Category A and B projects). However, the scale, type and location of impacts will only be confirmed at project appraisal by the CAs. The environmental instruments to be used under this project will include: (i) environmental assessment (EA) to be undertaken by the CA during preparation of the green field projects; and (ii) environmental audit associated with any construction undertaken by the CA during transfer of the constructed facility to the Private Investor. Impact mitigation measures and environmental management plans (EMPs) of projects for the construction, operation and handover phases will be prepared by the CAs as part of the EA according to the guidance provided to the CA by IIGF. The EMP will be implemented by the CA according to the OM (based on guidance provided by IIGF) during project preparation; and by the Private Investor (again, according to the OM based on the guidance provided by IIGF) during the construction operation and handover phases.

Natural Habitats (OP/BP 4.04) X

Each project will be screened to determine if the project will potentially cause a significant conversion (loss) or degradation of natural habitats, whether directly (during construction) or indirectly (during human activities induced by the project). If OP 4.04 is triggered, then the project's impact assessment on natural habitats or critical natural habitats will be conducted as part of the EA process,

25

Yes No

and the necessary mitigation measures will be prescribed for adverse impacts and included in the EMP along with a monitoring plan. These project preparation activities will be undertaken by the CA prior to requesting the guarantee from the IIGF, and reviewed by IIGF during the appraisal stage. The implementation of the EMP will be the responsibility of the Private Investor, following issuance of the guarantee by IIGF. IIGF will monitor the implementation by the Private Investor.

Pest Management (OP 4.09) X

The project will not provide any guarantee to projects that involve: (i) production, distribution or sale of illegal pesticides; or (ii) production or trade in pesticides/herbicides subject to international phase-outs or bans. In addition, in Indonesia, no pesticides are used for maintenance of the right-of-way of an energy transmission line or water pipeline. These activities will be specifically listed in an exclusion list to be included in the OM as well as IIGF guidance to the CAs and the Private Investors. However, this policy is triggered as the subject project may provide guarantees to projects that involve supply of irrigation water to agricultural activities. In such projects, pest and pesticide management issues will be addressed in an EA, and a separate pest management plan (PMP) will be prepared in case of significant pest management issues in the project's area of influence.

Physical Cultural Resources (OP/BP 4.11) X

Some of the projects receiving guarantees from IIGF may have adverse impacts on physical cultural property. During preparation, each project will be screened to identify the presence of physical cultural resources that might be adversely affected by project activities in the project's area of influence. As part of the EA process, the project's impacts on physical cultural resources will be assessed. If adverse impacts are identified, mitigation measures for avoiding or mitigating these impacts will be incorporated into the Physical Cultural Resources Management Plan. In addition, the Plan will include provisions for chance finds, any necessary measures for strengthening institutional capacity, and a monitoring system to track the progress of these activities. These project preparation activities will be undertaken by the CA prior to requesting the guarantee from the IIGF, and will be reviewed by IIGF during project appraisal. The implementation of the Physical Cultural Resources Management Plan will be the responsibility of the Private Investor, following issuance of the guarantee by IIGF. IIGF will monitor implementation by the Private Investor.

Indigenous Peoples (OP/BP 4.10) X

Based on available information on sectors and geography, projects may occur anywhere in the country, including rural areas that may contain IPs communities. Because projects may trigger OP/BP 4.10, IIGF will prepare an Indigenous Peoples Planning Framework (IPPF), approved by the Bank and disclosed by appraisal.

The CA will undertake the screening and the social assessment (SA) to evaluate the project's potential positive and adverse effects on the IPs. If the policy is triggered by a project, then on the basis of the SA and in consultation with the affected IPs communities, an IPP should be developed and implemented based on the IPPF by the CA or PI as appropriate.

IIGF will monitor, supervise and verify IPP's implementation in the field to ensure that the CA and/or PI implement the approved IPP. For all projects involving IPs, the IPP will be submitted to the Bank (through IIGF) for clearance before the project guarantee is granted. The TT should accompany IIGF on the field appraisal for the first 3 projects affecting IPs communities. (See Annex 3 for further details). In the case that the CA and/or PI have implemented activities that deal with IPs communities prior to project appraisal (due diligence), or are incompliance on the implementation of the approved IPP, they will have to prepare a Corrective Action Plans. The Correction Action Plan will have to be approved by the IIGF (or by the Bank until the IIGF has adequate capacity in environmental and social management) and satisfactorily implemented by the CA and/or PI, prior to the project approval, or prior to continuation of project construction and/or operation, as applicable.

Involuntary Resettlement (OP/BP 4.12) X

Based on the identified possible projects it is likely that many projects in the IIGF pipeline will require land acquisition, and thus, may require resettlement instruments including land acquisition and resettlement action plan (LARAP) as specified RPF (part of the OM). Impact areas will only be known after the project is identified and submitted to the IIGF and the CA (or in some cases, possibly the PI) conducts a detailed assessment of the project area. A Resettlement Policy Framework (RPF) as part of the ESMF will be prepared during Project preparation in accordance with the Bank's OP/BP 4.12 by

26

Yes No

the IIGF, approved by the Bank, and disclosed by appraisal. The approved RPF will serve as guidance for projects that involve involuntary resettlement.

The CA or PI will screen individual projects based on the site visits and project sitting, definition of project area for involuntary land acquisition/use and any unavoidable structure demolition, crop/asset destruction, livelihood displacement, restriction of access to natural resources that may be caused by the project construction following appropriate alternative analysis in the EA phase. The CA or PI (as applicable) will prepare the LARAP according to the OM, and the IIGF will be responsible for ensuring compliance with OM. The IIGF will ensure that the approved LARAP instrument has been implemented appropriately through document review and field verification. It is recommended that the Bank accompany IIGF staff on the field appraisal for the first 3 projects with LARAPs or until the capacity of the ES of IIGF in environmental and social safeguards management is adequate. The WB will have prior review right to review and approve the first three projects receiving IIGF guarantees. (see Annex 4 for further details)

In the case that the CA and/or PI have implemented activities involving land acquisition prior to project appraisal (due diligence), or are incompliance on the implementation of the approved LARAP, they will have to prepare a Tracer Study and Corrective Action Plans for the incompliance. The Tracer Study and the Correction Action Plan will have to be approved by the IIGF (or by the Bank until the IIGF has adequate capacity in environmental and social management) and satisfactorily implemented by the CA and/or PI, prior to the project approval, or prior to continuation of project construction and/or operation, and/or hand over, as applicable.

Safety of Dams (OP/BP 4.37) X

Some projects may involve construction of a large dam (a dam with a height greater than 15 meters) or a high hazard dam (10-15 meter dam with design complexities, located in high seismic zones, with difficult soil/geological properties for foundations, dams that retain toxic materials). For large dams, an expert panel review will be conducted, detail plans will be prepared and implemented, bidders will be prequalified, and periodic safety inspections of the dam will be conducted after dam construction. For small dams, generic dam safety measures designed by qualified engineers will be considered adequate. Those activities that will be undertaken during the project preparation phase are under the CA's responsibilities prior to issuing the guarantee, and others to be undertaken during construction, operation and handover phases are under the Private Investor's responsibility, following issuance of the guarantee by IIGF. IIGF will monitor the implementation of the safeguards management plans by the Private Investor.

Safeguard Policies Not Triggered:

Yes No

Forests (OP/BP 4.36) X

The project will not provide any guarantee to projects that involve: (i) commercial logging operations in primary tropical moist forests, (ii) purchase of logging equipment for use in primary tropical moist forests, or (iii) production or trade in wood or other forestry products from unmanaged forests. These activities will be specifically listed in an exclusion list to be included in the OM as well as IIGF guidance to the CAs.

Projects on International Waterways (OP/BP 7.50) X

The project will not involve any infrastructure investment activity that would impact international waterways.

Projects in Disputed Areas (OP/BP 7.60) X

The project will not finance any activity in disputed areas.

27

Annex 2-A IGFP Environmental Safeguards Procedures

Project Stage Project Types IIGF CA PI World Bank15

Screening and Preparation of the project by CA

Type I and Type IIProjects

CA screens project based on: o Project exclusions list for World

Bank financingo Compliance with the Indonesian

safeguards requirementso Applicable World Bank Safeguards

Policies.

For each policy triggered, CA will determine the safeguards instruments to meet the Project requirements. The safeguards instrument(s) may include:o Environmental Assessment/

Environmental Management Plan (EA/EMP) for all projects.16

o Pest Management Plan (PMP) in case the project involves use of production, distribution or sale of illegal pesticides; or production or trading of pesticides/ herbicides subject to international phase-outs or bans.

o Physical Cultural Resources Management Plan (PCRMP) in case the subject project has an adverse impact on physical cultural

15 These safeguards procedures are applicable only with respect to WB-supported IGF Guarantees issued by IGF and backed by the WB loan under Component 1.16EA evaluates a subproject’s potential environmental risks and impacts in its area of influence; examines project alternatives; identifies ways of improving subproject selection, siting, planning, design, and implementation by preventing, minimizing, mitigating, or compensating for adverse impacts and enhancing positive impacts; and includes the process of mitigating and managing adverse environmental impacts throughout subproject implementation. Subproject’s area of influence is defined as the area likely to be affected by the subproject, including all its ancillary aspects such as power transmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the subproject (e.g. spontaneous settlement, logging, or shifting agriculture along access roads). The impacts may include direct impacts, indirect (induced) impacts, cumulative impacts, social impacts, occupational health and safety impacts, etc. The area of influence may include, for example, (a) the watershed within which the subproject is located; (b) any affected estuary and coastal zone; (c) off-site areas required for resettlement or compensatory tracts; (d) the airshed (e.g. where airborne pollution such as smoke or dust may enter or leave the area of influence); (e) migratory routes of humans, wildlife or fish, particularly where they relate to public health, economic activities, or environmental conservation; and (f) areas used for livelihood activities (hunting, fishing, grazing, gathering, agriculture, etc.) or religious or ceremonial purposes of a customary nature.

28

IIGF reviews the screening recommendations and the consultant ToR for environmental and social safeguards, and provides comments.

Following Bank’s No Objection, IIGF clears the screening package for preparation of the agreed safeguards document by the CA.

IIGF reviews the safeguards report(s) and provides comments, and sends the report(s)/comments to the Bank for review/No Objection.

Following Bank’s No Objection of the safeguards package and the construction permit by the regulatory agency, IIGF clears the environmental safeguards package for:

o Project transfer to PI (for Type I Projects).

o Project construction by CA

property.(xii)A Dam Safety Report in case the

project involves construction of a large or high hazard dams, in which case CA will have an expert panel conduct a safety review with the preparation of detailed plans. For small dams CA will have generic dam safety measures designed by qualified engineers.

CA agrees with the Indonesian regulatory agency(ies) on the safeguards study to be undertaken.

CA submits its screening recommendations to IIGF along with the consultant ToR for environmental safeguards.

CA prepares the safeguards report(s) and submits it(them) to the Indonesian regulatory agency(ies) for safeguards and IIGF (for comments/clearance).

CA receives the project’s environmental license/permits from the Indonesian regulatory agency(ies).

(xiii) Bank reviews and provides comments/No Objection on the project screening recommendations and the consultant ToR for environmental and social safeguards.

(xiv) Bank appraises the project safeguards package, and provides comments/No Objection.

29

(for Type II Projects).

CConstruction of the project

Type I Projects (construction by PI)

IIGF reviews the scheduled EMP (and PMP/PCRMP if applicable) construction-phase mitigation and monitoring reports, and assesses compliance.

IIGF sends the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring reports, and its assessment of these reports to the Bank.

IIGF issues clearance for project operation by PI.

(CA ensures compliance of the environmental and social safeguards of its contract with PI)

PI implements the EMP (and PMP/PCRMP, if applicable) for the construction phase.

PI submits the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring reports to IIGF.

Bank evaluates the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring reports, and IIGF’s assessment of these report. This may involve audit of the constructed facilities at project sites. Bank provides comments, if any, or No Objection for project operation.

Type II Projects (partial/full construction by CA)

IIGF reviews the scheduled EMP (and PMP/PCRMP, if applicable) implementation based on construction-phase mitigation and monitoring reports, and assesses compliance.

IIGF sends the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring reports, and its assessment of these reports to the Bank.

CA implements the EMP (and PMP/PCRMP, if applicable) for the construction phase.

CA submits the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring reports to IIGF.

Bank reviews the scheduled EMP (and PMP/PCRMP, if applicable) construction-phase mitigation and monitoring by CA (including CA’s reports, and IIGF’s assessment of these report). This may involve audit of the constructed facilities at project sites. Bank provides comments, if any, or No Objection for the preparation of the guarantee bid package.

Transfer of the project from CA to PI


IIGF prepares the environmental and social safeguards sections of the guarantee Request for Proposal (RFP). IIGF sends the guarantee bid package to the Bank.

IIGF reviews and evaluates the guarantee bids (including the environmental and social

After awarding of the PPP contract (contract between CA and PI), CA sends the project’s environmental file to the relevant Ministry. The file includes the env./social studies for project appraisal, permits from Indonesian regulatory agency(ies), agreements with communities and other project stakeholders, inter-institutional commitments.

PIs submit their bids (including their approaches, qualifications and experiences on environmental and social safeguards).

Bank reviews the guarantee RFP (including the environmental and social safeguards sections) and gives No Objection to issue to potential bidders.

Bank reviews the bids by PIs (including the environmental and social safeguards capacity of the bidders).

30

safeguards capacity of the bidders).

Operation of the project by PI


IIGF reviews the scheduled EMP (and PMP/PCRMP, if applicable) operation-phase mitigation and monitoring reports, supervises project, and assesses compliance.

IIGF sends the scheduled EMP (and PMP/PCRMP, if applicable) operation-phase mitigation and monitoring reports, and its assessment of these reports and its supervision reports to the Bank.

(CA ensures compliance of the environmental and social safeguards of its contract with PI)

PI operates the project facilities while implementing the EMP (and PMP/PCRMP, if applicable) for the operation phase.

PI submits the scheduled EMP (and PMP/PCRMP, if applicable) operation-phase mitigation and monitoring reports to IIGF.

Bank supervises the scheduled EMP (and PMP/PCRMP, if applicable) operation-phase mitigation and monitoring by PI (including PI’s reports, and IIGF’s assessment of these reports) and IIGF’s own supervision reports, and provides comments (if any).

Handover from PI to CA


IIGF reviews the PI consultant’s report and comments on the terms of remediation or compensation by PI. IIGF provides a copy of its comments to the Bank.

IIGF checks/validates compliance reports (with field visits) and approves handover.

CA reviews the PI consultant’s report and shares it with IIGF and the Bank.

CA checks/validates compliance reports (with field visits).

A consultant engaged by PI conducts an environmental and social audit of project facilities to identify potential environmental liabilities and devise a mitigation (e.g. remediation) plan with a budget and implementation schedule. PI provides reports to CA, IIGF, and the Bank.

PI implements the remediation measures, and provides the compliance reports. to CA and IIGF

Bank reviews the consultant’s report and IIGF’s and CA’s comments, site visits. If necessary, the Bank formulates a joint action with IIGF and CA to be implemented by PI.

Bank checks/validates compliance reports (with field visits), and gives its No Objection to handover.

31

Annex 2-B IGFP Social Safeguards Procedures

No. Project Stage Project Type Responsibilities of Contracting Agency (CA) and/or Project Company (PC or PI in the main text)

Roles of IGF Roles of World Bank17

1. Project screening, preparation, and appraisal

Type I Submit the safeguards document of project to IGF and/or to the Bank for review : (i) LARAP, or (ii) Implementation Report of land acquisition; (iii) IPP, or (iv) Implementation Report of IPP or IP handling, as applicable

Revise the safeguards documents (i) LARAP, and (ii) IPP, in accordance to IGF and/or Bank comments, or prepare a Tracer Study (TS) and/or Corrective Action Plan for IPs.

Submit the revised safeguards documents to IGF and/or the Bank : (i) revised LARAP; or (ii) a Tracer Study (TS); (iii) revised IPP; or (iv) A Correction Action Plan for IPs

Reviews the safeguard document of project in reference to the OM

Prepares assessment report on the reviews of the safeguards documents and share it with the Bank

Assess capacity of the CA and/or PC and provide capacity building as necessary

Review the safeguard document of project and IGF’s assessment report in reference to Bank’s safeguards policies

Provides comments or a No Objection


Type II Screen the project based on : (i) Project exclusion list; (ii) Perpres 36/2005 and Perpres 65/2005; (iii) Perpres 13/2010

Determine the safeguards instruments Prepare and submit to the IGF and/or the Bank the

social safeguards instruments : (i) LARAP for involuntary resettlement in collaboration with the local government or other government entity in the case that land will be acquired by them; (ii) LARAP to acquire land through direct negotiation between the CA and/or PC and land owners, and (iii) IPP for project affecting the IP

Revise the safeguards documents incorporating the IGF and/or Bank’s comments

Submit the revised safeguards documents to the IGF and/or the Bank

Provides guidance to CA and/or PC in carrying out the screening and determination of instruments, in reference to the OM

Review the safeguards documents

Provides a review report on the safeguards documents and share it with the Bank


Provides guidance to CA and/or PC in carrying out the screening and determination of instruments, in accordance with Bank’s safeguards policies

Provides comments or a No Objection

Ensure that the approved safeguards instruments will be part of the guarantee agreement and in the bidding document for construction


2. Implementation of safeguards instruments

Type I Continue with construction (that has started prior to application for the guarantee)

Submit to the IGF and/or the Bank an implementation report of the approved safeguards instruments

Monitor and supervise the implementation of the approved safeguards instruments Share the monitoring and supervision report with the Bank

Monitor and supervise the implementation of the approved safeguards instruments and ensures that activities in the approved safeguards instruments are part of or amended in the contract document for the construction, as applicable.

17 These safeguards procedures are applicable to World Bank-supported IGF Guarantees only, I.e., those issued under Component 1 (IIGF Guarantees backed by World Bank loan). For other guarantee types (for IGF guarantees not supported by WB), these safeguards procedures remain applicable but WB’s reviews, comments and No objections should be done by IIGF, and not by WB.

32

Ensure that the approved safeguards documents will part of the guarantee agreement

3. Implementation of safeguards instruments during pre-construction

Type I and/or Type II

Implement the approved safeguards instruments: acquire land, assets, relocation, resettlement assistance, rehabilitation supports for livelihood recovery, etc, as applicable), carry out activities for the IP (i.e. consultation, adjustment on design, livelihood recovery activities, etc., as applicable)

Include activities specified in the safeguards instruments in the bidding document as applicable


Monitor and supervise the implementation of the approved safeguards instruments Share with the Bank on the monitoring and supervision report

Monitor and supervise the implementation of the approved safeguards instruments Provide a No objection to the CA and/or PC if the activities specified in the safeguards documents to be implemented during pre-construction is acceptable to the Bank.

4. Project construction Type I and II Continue to implement the approved safeguards instruments, for instance: rehabilitation supports for recovery of livelihoods; consultation with IPs during construction, etc. as applicable.


Monitor and supervise the implementation of the approved safeguards instruments

Share the monitoring and supervision report with the Bank

Monitor and supervise the implementation of the approved safeguards instruments

5. Pre- project operation Type I and/or Type II

In the case that the CA and/or PC are not the same ones with those who construct the project:

The CA and/or the PC who constructed the project hire an independent consultant to carry out an audit on the implementation of the approved safeguards instruments during construction; results is submitted to the IGF and/or the Bank for review and No Objection

The CA and/or the PC who constructed the project prepares a Corrective Actions to address the incompliance of the approved LARAP implementation, and/or Corrective Action Plan for IPs, as applicable, incorporating Bank’s comments

Review the audit report and share the report on the results of the review of the IGF with the Bank Review the Corrective Actions to address the incompliance with the approved LARAP implementation and/or Corrective Action Plan for IPs, and share the results of the review with the Bank

Review the audit report and provide comments or a No Objection to proceed with the bidding for operation of the project Review the Corrective Actions to address the incompliance with the approved LARAP implementation and/or Corrective Action Plan for IPs, and provide a No Objection to proceed with the bidding for the operation of the project Ensure that the approved safeguard documents are part of the guarantee agreement for project operation stage and in the bidding document for project operation

6. Project operation Type I and Type II PC continues to implement the approved safeguards documents (Corrective Action to address the incompliance of LARAP implementation and Corrective Action Plan for IPs) after obtaining a No Objection from the Bank

PC submit to the IGF and/or the Bank an implementation report of the approved safeguards instruments

Monitor and supervise the implementation of the approved safeguards instruments (in particular for IGF Guarantee from the loan-backed) Share the monitoring and supervision report with the Bank

Monitor and supervise the implementation of the approved safeguards instruments and ensures that activities in the approved safeguards instruments are part of the contract document for the operation, as applicable.

Project operation Type I and/or II In the case that the CA and/or PC are the same ones with those who construct the project: PC continue to implement the approved safeguards instruments

PC submit to the IGF and/or the Bank an

Monitor and supervise the implementation of the approved safeguards instruments (in particular for IGF Guarantee from

Monitor and supervise the implementation of the approved safeguards instruments and ensures that activities in the

33

implementation report of the approved safeguards instruments

the loan-backed) Share the monitoring and supervision report with the Bank

approved safeguards instruments are part of the contract document for the operation, as applicable.

6. Pre-project handover to CA Type I and/or Type II

PC hire an independent consultant (IC) to carry out an audit on the implementation of the approved safeguards instruments during operation; results is submitted to the IGF and/or the Bank for review and No Objection

PC who operated the project prepares a Corrective Actions to address the incompliance of the approved LARAP implementation, and/or Corrective Action Plan for IPs during the operation stage, as applicable

Review the audit report of the IC and share the report on the results of the IGF review with the Bank Review the Corrective Actions to address the incompliance with the approved LARAP implementation and/or Corrective Action Plan for IPs, and share the results of the review of the IGF with the Bank

Review the audit report and provide comments or a No Objection to proceed with the handover of the projectReview

Review the Corrective Actions to address the incompliance with the approved LARAP implementation and/or Corrective Action Plan for IPs, and provide a No Objection to proceed with the handover of the project

7. Handover of project Type I and/or Type II

PC handover the project to the CA after obtaining a No Objection from the Bank

34

Annex 3 Indigenous Peoples Planning Framework (IPPF)

I. OBJECTIVE

1. The purpose of this Indigenous Peoples Policy Framework (IPPF) is to clarify the principles, procedures and organizational arrangements to be applied to indigenous peoples (IPs) for the IIGF projects. The IPFF provides guidelines to the IIGF to ensure that projects guaranteed by IIGF meet the World Bank’s Policy on IPs. The IPPF will guide the IIGF to ensure that CA prepares Indigenous Peoples Plan (IPP) for projects under consideration for guaranty by the IIGF in accordance with the Bank’s policy. Details of this IPPF will be incorporated into the IIGF’s Operation Manual (OM) to

guide the IIGF and its clients to ensure that all projects involving IPs are in compliance with the IPPF, and

guide the CAs and PIs (if applicable) in preparing and implementing the IPP.2. This IPPF applies for the Type I as well as Type II projects. Type I projects are those prepared through the IIFF project, which is jointly financed by the IFC, World Bank, ADB and other partners). Type II projects are those not prepared through the IIFF project.

II. KEY PRINCIPLES

3. The following principles will guide the preparation and implementation of projects affecting IP: Avoid potentially adverse effects on the IP’s communities When avoidance is not feasible, minimize, mitigate, or compensate for such effects Design projects affecting IPs to ensure that the IPs receive social and economic benefits

that are culturally appropriate and gender, and inter-generationally inclusive Engage in a process of free, prior, and informed consultation with the affected IPs

III. DEFINITION OF IPs

4. The definition of the IPs used in this framework in a generic sense refers to a distinct, vulnerable, social and cultural group possessing the following characteristics in varying degrees:

Self-identification as members of a distinct indigenous cultural group and recognition of this identity by others;

Collective attachment to geographically distinct habitats or ancestral territories in the project area and to the natural resources in these habitats and territories

Customary cultural, economic, social, or political institutions that are separate from those of the dominant society and culture, and

An indigenous language, often different from the official language of the country or region

5. Identifying ethnic groups within a project area that may fulfill the characteristics laid out in the World Bank's policies may be facilitated by the identification of “masyarakat adat” and “Komunitas Adat Terpencil”. As some communities that fall under these titles may not necessarily have the characteristics laid out in the World Bank's policies and as there may be other groups that may be categorized as IPs that do not fall under these categories, project proponents (CAs) should hire social scientists to undertake field visits and confirm whether or not groups would be categorized as IPs. In addition, CAs should consult with relevant social scientists, nongovernmental organizations, and community members themselves.

6. Identification of the presence of the IP communities in a project area will be done by the CA, through literature study, secondary information, consultation with relevant groups and on-site visit to confirm the presence of IPs. This activity is carried out during the project screening phase. The IIGF will reconfirm on the presence of the IP communities during the project appraisal through on-site visit.

35

IV. POTENTIAL IMPACTS ON IPs

7. Given the potential types of infrastructure projects which geographically may locate anywhere in the country, they might affect the IP communities either in positive way that would give social and economic benefits for the IP communities and/or have adverse effects on the IP communities. The type, size, scope, extent, and location of the impacts and their mitigation measures to address the negative impacts will be identified during the projects preparation by the CAs.

V. SOCIAL ASSESSMENT

8. In the case that IPs is present in, or have collective attachment to, the project areas, the IIGF has to ensure that the CA will undertake a social assessment (SA) to evaluate the project’s potential positive and adverse effects on the IP, and to examine project alternatives or measures where adverse effects may be significant. The SA will be conducted with a free, prior and informed consultation with the affected IP communities.

9. To carry out the SA, the CA engages social scientists whose qualifications, experience, and terms of reference are acceptable to the IIGF and, only with respect to those projects which will receive WB-supported IIGF guarantees, approved by the Bank.

10. The IIGF will ensure that the CA prepares a SA that includes the following elements, as needed, and its details are included in the OM:

A review, on a scale appropriate to the project, of the legal and institutional framework applicable to Indigenous Peoples.

Gathering of baseline information on the demographic, social, cultural, and political

characteristics of the affected Indigenous Peoples’ communities, the land and territories that they have traditionally owned or customarily used or occupied, and the natural resources on which they depend.

Taking the review and baseline information into account, the identification of key

stakeholders and the elaboration of a culturally appropriate process for consulting with the Indigenous Peoples at each stage of project preparation and implementation.

An assessment, based on free, prior, and informed consultation, with the affected

Indigenous Peoples’ communities, of the potential adverse and positive effects of the project. Critical to the determination of potential adverse impacts is an analysis of the relative vulnerability of, and risks to, the affected Indigenous Peoples’ communities given their distinct circumstances and close ties to land and natural resources, as well as their lack of access to opportunities relative to other social groups in the communities, regions, or national societies in which they live.

The identification and evaluation, based on free, prior, and informed consultation with the

affected Indigenous Peoples’ communities, of measures necessary to avoid adverse effects, or if such measures are not feasible, the identification of measures to minimize, mitigate, or compensate for such effects, and to ensure that the Indigenous Peoples receive culturally appropriate benefits under the project.

36

VI. INDIGENOUS PEOPLES PLAN (IPP)

11. In the case that a project affects the IP identified, the IIGF will ensure that CA will prepare an Indigenous Peoples Plan (IPP) on the basis of social assessment and in consultation with the affected IP communities. The CA integrates the IPP into the project design. The IPP will have to be approved by the Bank for only those projects which will receive WB-supported IIGF guarantees.

12. In the case when the IP are the sole or the overwhelming majority of direct project beneficiaries, the IIGF has to ensure that elements of an IPP should be included in the overall design, and a separate IPP is not required.

13. The IPP is prepared in a flexible and pragmatic manner, and its level of details varies depending on the specific project and the nature of effects to be addressed. The IIGF will ensure that the CA prepares an IPP that includes the following elements, as needed:

A summary of the social assessment; A summary of results of the free, prior, and informed consultation with the affected

Indigenous Peoples’ communities that was carried out during project preparation and that led to broad community support for the project;

A framework for ensuring free, prior, and informed consultation with the affected Indigenous Peoples’ communities during project implementation;

An action plan of measures to ensure that the Indigenous Peoples receive social and economic benefits that are culturally appropriate, including, if necessary, measures to enhance the capacity of the project implementing agencies;

When potential adverse effects on Indigenous Peoples are identified, appropriate action plan of measures to avoid, minimize, mitigate, or compensate for these adverse effects;

The cost estimates and financing plan for the IPP; Accessible procedures appropriate project to address grievances by the affected

Indigenous Peoples’ communities arising from project implementation. When designing the grievance procedures, the CA takes into account the availability of judicial recourse and customary dispute settlement mechanisms among the IP;

Mechanisms and benchmarks appropriate to the project for monitoring, evaluating, and reporting on the implementation of the IPP. The monitoring and evaluation mechanisms should include arrangements for the free, prior, and informed consultation with the affected IP communities.

VII. CONSULTATION AND PARTICIPATION

14. The IIGF has to ensure that where the proposed project affects IPs, the CA engages in free, prior, and informed consultation with them. To ensure such consultation, the CA:

Establishes as appropriate gender and inter-generationally inclusive framework that provides opportunities for consultation at each stage of project preparation and implementation among the CA, the affected IP communities, the IP organizations if any, and other local civil society organizations (CSOs) identified by the affected IP communities

Uses consultation methods to the social and cultural values of the affected IP communities and their local conditions and, in designing these methods, gives special attention to the concerns of indigenous women, youth and children and their access to development opportunities and benefits, and

Provides the affected IP communities with all relevant information about the project, including the potential adverse impacts, in a culturally appropriate manner at each stage of project preparation and implementation.

37

VIII. GRIEVANCES

15. The ES Unit/Division of the IIGF will establish a grievance redress mechanisms (GRM) that will allow public and the affected IP communities or individuals to file complaints and to receive satisfying responses in timely manner. The system will also record and consolidate complaints and their follow-ups. This system will be designed not only for complaints regarding IPs, but also for handling complaints of issues (including environmental and other social safeguards issues) related to the projects guaranteed by the IIGF under this project, including those IIGF guarantees that are supported by the World Bank loan. The IIGF will hire a professional to manage the GRM, and this expert will closely work with the ES Unit/Division.

16. At the project level, the relevant CA and/or PI will have to establish a grievance redress mechanisms (GRM) for complaints related to the guaranteed project. The CA and/or PI have to assign a staff to be responsible in managing the GRM system. The system will receive, and properly follow up complaints from the public, IP communities or individuals in a timely manner, as well as records complaints and their follow-ups. The CA and/or PI could use its existing GRM system, if it is already available and well-functioned with procedures and mechanisms that are in line with the requirements of the GRM as specified in the OM. Otherwise, the CA and/or PI will have to improve its current GRM system and capacity to be able to implement the GRM as specified in the OM.


IX. INSTITUTIONAL ARRANGEMENTS

18. In the case that the CA prepares the IPP, the ES Unit/Division IIGF will have to ensure that the CA prepares and implement it consistently with the OM in which this IPPF is part of. In the case that the staff of the ES Unit/Division does not have an expertise of IP, the IIGF will have to hire IP experts to assist them in reviewing the CA’s IPP and supervising its implementation.

19. The IIGF will have to ensure that CAs involve respective local governments, NGOs and CSOs where IP communities is affected by a project.

20. The IIGF may provide capacity building programs, e.g. training, to the CAs on the approach and measures to avoid or mitigate the adverse impacts on IP communities. In such training, the IIGF may want to involve the NGOs and CBOs that have expertise and knowledge about IPs.

21. An independent institution may be hired by the IIGF to carry out periodic monitoring and evaluation of the implementation of the IPPs prepared by the CAs.

22. The ES Unit/Division of the IIGF will ensure that CAs will report on the status and progress of the implementation of the IPP.

23. The WB may carry out an inspection of the site or location of candidates project with prior notification to the IIGF, although the inspection can be conducted independently. The WB will discuss the results of the inspection with the relevant local government agency, the CA of that particular project and with the ES Unit/Division of the IIGF.

24. Details of organizational arrangements will be developed as part of the Operation Manual.

25. The costs to implement the IPP will be borne by the CAs. The ES Unit/Division will have to ensure that the cost includes the costs for the implementation of the measures to address the adverse impacts on the IP communities. These measures should be incorporated in the project design.

38

X. REVIEW AND APPROVAL

26. During project appraisal, the draft IPP will be reviewed by the ES Unit/Division and results of the reviews along with the draft IPPIPP will have to be approved prior to the award of the guarantee to the Private investors (PIs). The World Bank will approve IPPs only for projects under Component 1 (IGF guarantees backed by the WB loans). IPPs for projects benefiting from other types of guarantees will be approved only by the IIGF.

27. Construction works can only commence after the IPP is satisfactorily implemented, except for activities that are to be implemented during construction and/or hand over to PIs. The IIGF will ensure that the IPP has been satisfactorily implemented.

XI. IMPLEMENTATION OF THE IPP

28. The CA will implement the approved IPP prior to the signing of the Recourse Agreement and IIGF Guarantee Agreement and/or Project Agreement, and PPP Agreement. Should there be some activities in the IPP that have to be continuously implemented after the signing of these agreements, such activities will have to be reflected in those Agreements.

29. In the case that some activities in the IPP has to be continuously implemented by the PI during the construction, operation, and/or hand over stage to the PI, such activities will be reflected in the IIGF Guarantee Agreement between the IIGF and the PI, , and the PPP Agreement between the CA and the PI.

XII. MONITORING AND REPORTING

30. Internal monitoring and reporting. Internal monitoring and reporting on the implementation of IPPs will be undertaken by the ES Unit/Division of IIGF with the assistance of an independent consultant, if necessary.

31. Monitoring reports will be produced by the ES Unit/Division of IIGF on a monthly basis and shared with other units of the IIGF, such as the disbursement, legal and technical units. These reports will include information on the status, compliance of the IPP implementation, grievances implementation, pending issues, if any, and strategies to address such issues.

32. External Monitoring and Evaluation. IIGF will carry out an external monitoring and evaluation for all portfolio projects annually. This activity will be carried out by an independent consultant to assess the effectiveness of the implementation of the measures in the IPP and to determine whether the implemented measures have enabled the IP communities to benefit from the projects and/or restore their standards of living and livelihoods, or whether they still face problems that merit further assistance. The budget for External Monitoring and Evaluation will be borne by the IIGF.

33. Documentation. Site visits during the screening phase, and the free, prior and informed consultation with the IP communities and relevant stakeholders during the SA and preparation and implementation of the IPP, as well as the broad community support resulting from such consultation will have to be recorded properly and well documented in the project appraisal document and in the project implementation progress reports (as applicable). The formats for documentation will be incorporated in the OM.

XIII. DISCLOSURES

34. The ES Unit/Division of IIGF will ensure that the CA makes the SA report and the draft IPP available to the affected IP communities in English and Bahasa Indonesia to the public by project appraisal in its website, in the CA website, and in Bahasa Indonesia in the respective local governments and in the NGOs networks working on IPs. IIGF will have to make the draft IPP in local language and make it available to the respective IP communities. The ES Unit/Division of IIGF will have to ensure that the CAs make the Implementation Report of the IPP available in the IP communities, respective local governments and to a wider public. The approved IPP will have to be disclosed in the same venues mentioned above prior to the approval of the guarantee for the project.

39

35. The consolidated report on the grievances and their follow-ups will be regularly made available to public through the IIGF website and/or CAs’ websites.

36. The corrective action plan (refer to Section XIV) will be disclosed in the IIGF, CA and PI websites as applicable. It will be also disclosed at the respective local governments’ website and in project site.

37. As needed, the IPP and corrective action plan will have to be translated into the IPs language.

XIV. DUE DILIGENCE AND INCOMPLIANCE38. In the case that a CA has carried out some activities involving IP communities who would be affected by the proposed project prior to applying for a guarantee from the IIGF and/or the World Bank, the CA will submit to IIGF a report of the handling of the IPs as part of the appraisal document package. The IIGF will review the report and undertakes a due diligence assessment in reference to the OM. Should there be inconsistency between the handling of IP communities and the requirements in the OM, the IIGF will request the CA to prepare a corrective action plan for the affected IP communities in accordance with the OM. The corrective action plan will have to be reviewed and approved by the IIGF, and by the World Bank for projects under Component 1 (WB-supported IGF guarantees).

39. It is anticipated that due diligence would mainly include Type I projects by which they are partly or wholly finance by the IIFF project. It is expected that implementation of IPP for this type of projects would be in line with the IIGF’s RPF and OM. IIGF will identify specific actions required to address non-compliance issues, if any. The type II projects will require an in-depth assessment of the project’s design (including the SA and preparation of IPP), implementation procedures and supervision requirements to assess the projects’ compliance with the IIGF’s OM.

40. If the CA cannot prepare an acceptable corrective action plan, the IIGF will not provide guarantee for CA’s private investor.

41. The IIGF will monitor the implementation of the IPP by the CA and/or PI (as applicable). The CA has to establish a corrective action plan if there is incompliance of the IPP implementation. The corrective action plan will have to be reviewed and approved by the IIGF and the World Bank (only with respect to projects that will receive WB-based IGF guarantees ) as applicable (refer to section X above). The IIGF may request the CA to postpone the start of the construction work or the ongoing construction works, as applicable or operations or handover as applicable (in the case that activities related to IPs are continued during construction, operation or handover), until the correction action plan is approved or until activities specified in the correction action plan are implemented, as applicable. The approved correction action plan will have to be amended in the relevant Agreements18.

XV. AUDITS42. The PI will hire an independent consultant to carry out an audit of the overall implementation of the IPP or the corrective action plan, as applicable, during project construction and operation prior to its hand over to the CA19. 43. The Audit report will be reviewed by the CA and IIGF, and if implementation of IPP and corrective action plan are acceptable, the IIGF will provide a clearance and approval for the CA to receive the project hand over. 44. In the case that the IIGF has not had adequate capacity in environmental and social safeguards management, the World Bank will review the audit report. If necessary, the IIGF, the CA and the World Bank will carry out a joint field visits to verify the findings of the audit report.

18 Subproject Agreement between the World Bank and the PI, IIGF Guarantee Agreement between the IIGF and the PI, Recourse Agreement between the IIGF and the CA, and PPP Agreement between the CA and the PI, as applicable.19 Audit will also be needed if the PI for construction and for operation is different. The process will be similar to paragraph 42-44, but clearance and approval from the IIGF and the World Bank will be given for the CA to proceed with the bidding for operation.

40

Annex 4Resettlement Policy Framework

I. OBJECTIVE AND SCOPE OF APPLICATION

1. The purpose of this Resettlement Policy Framework (RPF) is to clarify the principles, procedures and organizational arrangements for IIGF’s projects that involve involuntary resettlement20. This RPF applies for Type I projects and Type II projects. Type I projects are those prepared through the IIFF project, which is jointly financed by the IFC, World Bank, ADB and other partners). Type II projects are those not prepared through the IIFF project.

2. It is anticipated that land acquisition for projects to be guaranteed by IIGF can be acquired either by the CA and/or PI, through one or combination of these two approaches: (a) land acquired by local government or a government entity as requested by the CA and/or PI, except for projects that are not covered by Perpres 65/2006 (refer to paragraph 3 below); (b) land acquisition through direct negotiations between land owners and the CA and/or PI, and/or between land owners and local government or government entity if the size of the land to be acquired is less than one hectare.

3. This RPF applies to all projects in the public interest, as defined in Presidential Regulation No. 36/2005 (Perpres 36/2005) on “Land Provision for Development Activities in the Public Interest”, revised by Presidential Regulation No. 65/2006 (Perpres 65/2006), and the Implementation Guidelines No. 3/2007 for Perpres 36/2005 and Perpres 65/2006 issued by the National Land Agency (Badan Pertanahan Nasional—BPN) as well as Law 2/2012 on Land Acquisition for Development in the Public Interests. The new Law includes the following projects as public interest: national security and safety; public road, toll road, tunnel, railway, rail station, and operational facilities for train; reservoir, dam, irrigation, water supply channel, waste water system and sanitation channel, other structures for irrigation; ports, airports and terminal; oil, gas and geothermal infrastructure, power plants, transmission and electricity distribution lines; telecommunications and informatics infrastructure; solid wastes management and disposal; government hospital; public safety; government public cemetery; social and public facility, public green space; natural and cultural conservation; government offices; slum upgrading, land consolidation and low-income housing; government education facilities; government sport facilities; and public market and parking.

4. This framework applies for projects to be guaranteed by the IIGF, and any other associated projects that are (1) directly and significantly related to the guaranteed projects; (2) necessary to achieve the objectives of the guaranteed projects; and, (3) carried out, or planned to be carried out contemporaneously to the guaranteed projects.

5. This framework applies for projects that have involved involuntary resettlement prior to the application for the guarantee. As appropriate (refer to Section V of this RPF), the IIGF will carry out due diligence of the proposed project package during the appraisal in reference to this RPF.

6. The RPF will be incorporated and elaborated in detail in the IIGF’s Operation Manual (OM).

7. The Government has issued Law 2/2012 on Land Acquisition for Development in the Public Interest. In addition to the Perpres 32/2005 and Perpres 65/2006, this RPF and the Operation Manual accommodate relevant requirements of the new Law while ensuring compliance with the World Bank Policy OP 4.12 on Involuntary Resettlement.

II. KEY PRINCIPLES

8. The following principles will guide the preparation and implementation of projects requiring land acquisition:

Involuntary resettlement should be avoided where feasible, or minimized to the extent possible. During the process of preparation of projects, the potential impacts of land

20 The meaning of the term ‘resettlement’ can, depending on the case, include (a) acquisition of land and physical structures on the land, including businesses; (b) physical relocation; and (c) economic rehabilitation of project affected persons (PAPs), to improve (or at least restore) incomes and living standards.

41

acquisition should be assessed so that, where feasible, design alternatives to minimize adverse impacts can be identified as early as possible.

Persons who lose land and/or other assets as a result of land acquisition for projects should be provided with prompt and fair compensation.

Project Affected Persons (PAPs) who must move to another location as a result of land acquisition for projects should be (i) meaningfully consulted about compensation and relocation options, (ii) offered opportunities to participate in the planning and implementation of relocation plans, and (iii) assisted during the relocation process.

PAPs who loses income sources or means of livelihood as a result of land acquisition for projects should be assisted in their efforts to restore their livelihoods and standards of living.

Cut-off Date.The cut-off date for determining the persons eligible for compensation and other forms of support under this RPF will be the date of the announcement of the results of the census of the population affected by a project. Persons who occupy the area after this date will not be entitled to benefits under the RPF. The cut-off date for determining the eligibility for compensation and other supports under this RPF will be the date on which project affected persons, land and other assets attached to land, income sources, means of livelihood, and/or access to income sources, means of livelihood (refer to Section III paragraph 10 on types of impacts), are clearly identified through a census survey, provided that (i) all the land potentially affected by a project has been clearly delineated through aerial photography and/or ground survey; and (ii) information on the area delineated is disseminated in an effective, systematic and continuous manner to the affected persons within the delineated area.

III. TYPES OF PROJECT AFFECTED PERSONS (PAPS) AND THEIR ENTITLEMENTS

9. There are two general categories of PAPs for the purposes of defining entitlements under this RPF:

PAPs with rights to the land affected by the project PAPs without rights to the land affected by the project

10. Types of impacts covered by this RPF:

(a) the involuntary taking of land resulting in relocation or loss of shelter, lost of assets or access to assets, or loss of income sources or means of livelihood, whether or not the affected persons must move to another location; or

(b) the involuntary restriction of access to legally designated parks and protected areas resulting in adverse impacts on the livelihoods of the affected persons.

11. PAPs with rights to the land affected by the project. According to Indonesian regulations, persons with rights to the land affected by projects in the public interest are entitled to compensation for loss of land and assets related to the land. Persons in this category include “lawful owners of the land affected, or anyone who has rights over such land, and the Nazhir or recipient of donated wakaf properties”.21

12. Land titles in Indonesia are regulated by Law No. 5/196022 and issued by the National Land Agency or Badan Pertanahan Nasional (BPN). Land titles, also called land certificates, include:

hak milik or right to own title, which confers full ownership rights over land and is roughly equivalent to Freehold title of English common law jurisdictions;

hak guna bangunan or right to build title, which confers the right to construct and own buildings on state-owned land;23

21 Perpres 36/2005, Article 16 (1) ; BPN Implementation Guideline, Article 43 (1). Wakaf is the dedication of properties by a Muslim through a will or otherwise for purposes recognized by Islamic law as pious, religious or charitable. 22 UU 5/1960, also known as UUPA (Undang-undang Pokok Agraria) or Basic Agrarian Law Act. Despite the word “Agrarian” in the title, UU 5/1960 does not only regulate rural land, but all land, including urban land, forests, rice lands, plantations, mines and coastal waters, including fisheries.23 A right to build title is typically granted to Indonesian citizens or legal entities for a maximum period of 30 years, and has to be renewed every 20 years. It can be converted into full a full ownership title (Hak Milik).

42

hak pakai or right to use title, which confers the right to use land for any purpose;24 and hak guna usaha – right to cultivate title, which confers the right to use state-owned land for

agricultural purposes.25

13. The vast majority of land in Indonesia is not registered at the BPN. Land rights are based on traditional title (hak adat) or documents issued by local officials that demonstrate land ownership, such as property tax receipts and contracts of sale of the land in question.

14. In proposed projects, the following persons and communities will be considered “holders of land rights”, i.e., persons or communities with rights to the land affected by a project:

PAPs holding land rights titles or certificates issued by the local office of the National Land Agency or Badan Pertanahan Nasional (BPN), including full ownership titles (hak milik), right to build titles (hak guna bangunan), right to use titles (hak pakai), or right to cultivate titles (hak guna usaha).

PAPs holding documents issued by local officials26 that demonstrate ownership (normally a property tax receipt,27 accompanied by other documents such as the contract of sale of the land in question and receipts of payment of public services, such as water and electricity);

communities with traditional land rights (hak ulayat); PAPs (individuals) with traditional rights (hak adat); and the Nazhir or recipient of donated wakaf land.

15. According to Perpres 36/2005, all holders of land rights affected by a project are entitled to compensation for loss of land and other assets on the land. In a proposed project, holders of land rights are also entitled to relocation assistance (if they must relocate as a result of land acquisition for the project) and rehabilitation support (if they suffer losses of income and/or livelihoods).

16. In a proposed project, PAPs who do not fall under any of the categories in paragraph 14 at the time the census begins, but have a claim to such land or assets (derived, for example, from adverse possession or from continued possession of public lands without government action for eviction), will be treated as holders of land rights, as long as such claim is recognized under Indonesian legislation28 or through a process specified in the resettlement plan.

17. PAPs without rights to the land affected by the project. PAPs who occupy the land required by the project, but do not have any recognizable legal right or claim to the land they occupy, fall under two categories:

renters or tenants, including agricultural tenants and sharecroppers (see para 18 and 19) informal occupants (see para 20 and 21) of the land without any land certificate or claims to

land (based on tax receipts or other evidence of ownership, adat rights, or other evidence of rights to land), including: - informal occupants of privately owned land (in residential, agricultural, commercial or

industrial zones) without rights to land derived from rental/lease agreements or adverse possession; and

- informal occupants of public land without a legally valid claim to such lands derived from its continued possession without government action for eviction, including occupants of sites such as roads, parks, or other public facilities in the Project area.

18. Renters or tenants. According to Law 20/1961 on the Revocation of Land Rights, people who lose their residence or their source of income as a result of the revocation of land rights should be provided with shelter (replacement housing) or replacement land.29

24 A right to use title (Hak Pakai – HP) is normally granted for a period of 25 years and can be renewed every 20 years. 25 The Land Cultivation Title (Hak Guna Usaha – HGU) is granted to Indonesian citizens or legal entities for periods of 25 to 35 years, and can be renewed every 25 years if the land is deemed to be managed and utilized properly. 26 Sub-district head (camat) or the village head (lurah or kepala desa).27 The property tax receipt (Pajak Bumi dan Bangunan – PBB). 28 According to Government Regulation 24/1997 (PP 24/1997), persons who occupy a parcel of land for twenty consecutive years are eligible to obtain a land title or certificate over such land. 29 Law 20/1961, Explanation of Article 2.

43

19. In proposed project, displaced renters who are in the project area at the time of the census will be assisted in finding a rental-house, or a housing site of similar size to the one lost, which can be rented or rent-purchased through affordable instalments.

20. Informal occupants. Under current regulation, occupants without land rights are not entitled to compensation, relocation assistance or rehabilitation support under Indonesian legislation, except for persons with cultivation and other use rights, who are entitled to compensation for the loss of assets related to the land.30 Informal dwellers and commercial establishments without rights to the land are not mentioned in Law 2/2012, Perpres No. 36/2005 (as amended by Perpres 65/2006) or in the BPN Regulation No. 3/2007; however, it is common practice among municipalities and other government agencies to offer them small cash payments to encourage them to leave the project area. This practice forces informal occupants to relocate to public or hazardous areas without access to basic infrastructure or services.

21. Notwithstanding the description of current regulation and common practice in paragraph 20, in each proposed project, informal occupants who are displaced by the project are entitled to compensation for the loss of assets other than land, plus relocation assistance (if they must relocate as a result of land acquisition for the project) and rehabilitation support (if they suffer losses of income and/or livelihoods). Displaced persons31 without land rights (see section III, paragraph 17) include both occupants of land for which title is held by another person and occupants of hazardous areas, such as rights-of-way of roads, and other public areas over which land rights cannot be acquired.

IV. INSTRUMENTS FOR RESETTLEMENT, PREPARATION, AND APPROVAL

22. Resettlement Instruments. In the case that the CA and/or PI will acquire land through the local government or government entity, they have to prepare a Land Acquisition and Resettlement Action Plan (LARAP) or an Abbreviated LARAP, depending on the anticipated impacts of land acquisition for a project, which is identified from the social and environmental assessment. If fewer than 200 PAPs are physically displaced, or if none of the PAPs lose more than 20% of their productive assets without the need to relocate, an Abbreviated LARAP will be prepared. Otherwise a full LARAP will be prepared. In preparing these LARAPs, the CA will collaborate with the local government or other local government entity.

23. In the case that a CA and/or PI will acquire land through direct negotiations between them and land owners, the CA and/or PI has to prepare a Land Acquisition and Resettlement Action Plan (LARAP).

24. The requirements, formats and outlines of a full LARAP, an abbreviated LARAP, and a LARAP for direct negotiations between land owners and the CA and/or PI will be incorporated in the OM.

25. Preparation and Approval of Resettlement Instruments. A LARAP will be part of the appraisal document to be submitted to the IIGF for approval. The IIGF will provide a No Objection if a LARAP is consistent with the RPF and the OM. After the IIGF’s approval, the CAs will confirm in writing that they are committed to comply with such obligations, including the provision of adequate budgets for activities under their responsibility. The land acquisition process can start only after the LARAP has been approved by the IIGF.

26. Implementation of Resettlement Instruments. During the implementation of a full LARAP or an Abbreviated LARAP, or a LARAP for the direct negotiation, the CA and the PI will provide regular progress reports to the IIGF (the ES Unit/Division). The IIGF will issue a No Objection for physical construction of a project once land acquisition is complete and the PAPs have been compensated according to the approved LARAP. Construction can commence after the PAPs have accepted the compensation offered and “relinquished” or “submitted” their rights to the land and assets taken for the project.32

30 Law 20/1961, Explanation of Article 2 and BPN Implementation Guideline, Article 43 (2).31 The term Displaced Persons (DPs) is synonymous with and in this RPF is used interchangeably with the term Project Affected Persons (PAPs).32 Perpres 36/2005, Article 3, paragraph 1; BPN Implementation Guideline, Article 67, paragraph 1.

44

27. During project appraisal, the draft LARAP or Tracer Study (TS-refer to Section V below) will be reviewed by the ES Unit/Division and results of the reviews along with the drafts of these two documents will be shared with the World Bank, and subject to Work Bank for approval (approval is required only for projects receiving WB-based IGF Guarantees. Until the ES Unit/Division’s capacity is satisfactory to the World Bank, it will review the draft of LARAP and TS and provide approval in the case that it has met the requirements set out in the OM. LARAP or TS will have to be approved prior to the bidding of the project to the Private investors (PIs).

V. IMPLEMENTATION OF LARAP AND TRACER STUDY: DUE DILIGENCE AND INCOMPLIANCE

28. In the case that the CA and/or PI have implemented resettlement prior to the submission of the appraisal document to the IIGF, they have to prepare a Tracer Study (TS) that (i) explains in detail the procedures, requirements and outcomes of land acquisition and resettlement that had been carried out, (ii) analyzes whether land acquisition and resettlement had been carried out in accordance with this RPF and the OM; (iii) provides corrective actions that will address issues due to the gaps between the requirements in the RPF and OM and in the implementation of land acquisition and resettlement. 29. Due diligence is anticipated for Type I projects by which they are partly or wholly finance by the IIFF project. It is expected that implementation of LARAP and/or TS for this type of projects would be in line with the IIGF’s RPF and OM. IIGF will identify specific actions required to address non-compliance issues, if any. The type II projects will require an in-depth assessment of the project’s design (including the preparation of LARAP and TS), implementation procedures and supervision requirements to assess the projects’ compliance with the IIGF’s OM.

30. The TS will be part of the appraisal document to be submitted to the IIGF for approval. The procedures, requirements and formats of the TS will be incorporated in the OM. The CA and/or PI will implement the corrective actions specified in the TS after the IIGF provides a No Objection.

31. Implementation of corrective actions in the Tracer Study. During the implementation of the corrective actions recommended in the TS, the CA and the PI will provide regular progress reports to the IIGF (the ES Unit/Division). The IIGF will issue a No Objection for physical construction of a project once the corrective actions have been satisfactorily implemented.

32. In the case that a CA and/or PI do not consistently implement the approved LARAP and/or the approved TS, the IIGF will not issue a No Objection for the commencement of the project construction until the implementation of the approved LARAP and TS are satisfactorily implemented.

33. The CA and/or PI will implement the LARAP prior to the signing of the Recourse Agreement and the IIGF Guarantee and/or Project Agreement, and the PPP Agreement. Should there be some activities in the LARAP or TS that have to be continuously implemented after the signing of these agreements, such activities will have to be reflected in those Agreements.

34. In the case that some activities in the LARAP or TS have to be continuously implemented by the CA and/or PI during the construction, operation, and/or handover stage to the PI, such activities will be reflected in the IIGF Guarantee Agreement between the IIGF and the PI, and the PPP Agreement between the CA and the PI.

35. In the case that the CA and/or PI do not implement the activities (incompliance) in the approved LARAP or TS after the signing of the Recourse Agreement, IIGF Guarantee Agreement and/or PPP Agreement, either to be implemented during construction, operation and/or hand over stage, the IIGF will request the CA and/or PI to stop the construction, operation and/or handover until the corrective actions are implemented satisfactorily.

VI. PROCEDURES FOR LAND ACQUIRED BY LOCAL GOVERNMENT OR A GOVERNMENT ENTITY AS REQUESTED BY THE CA AND/OR PI.

45

36. The procedures that must be followed to acquire land for public purposes are described in (1) the Law 2/2012 on Land Acquisition for Development in Public Interest, (2) Presidential Regulation No. 36/2005 (Perpres 36/2005) on “Land Provision for Development Activities in the Public Interest”, revised by Presidential Regulation No. 65/2006 (Perpres 65/2006) and (3) Implementation Guidelines No. 3/2007 for Perpres 36/2005 and Perpres 65/2006 issued by the National Land Agency (Badan Pertanahan Nasional—BPN). These procedures are summarized below, along with the supplemental actions that will be implemented in the proposed project (the supplemental actions are described in the indented paragraphs).

A. Definition of project area

37. The government institution that requires land for project submits the project proposal to the District Heads/Mayors of the districts/cities where the project is located or to the Governor of Jakarta (GoJ) in cases of project within the Special Capital Region of Jakarta.33 If the District Head/Mayor (or GoJ) considers that the project is appropriate, they issue a “determination of location”, defining the project area.34

B. Establishment of the Land Provision Committee

38. The District Heads/Mayors (or the GoJ) establish a Land Provision Committee (LPC) or Panitia Pengadaan Tanah (P2T) to facilitate land acquisition. The LPC is chaired by the District Head (Sekda) other regional head and includes members from relevant government agencies (e.g., Land Agency, Technical Agency requiring the land, Administrative Agency, sub-district head (camat) and chief of village (lurah).

C. Consultations with affected communities and/or holders of land rights

39. After the project area has been defined, the LPC explains the project to the affected communities and/or holders of land rights by way of public consultation, face-to-face consultations, and dissemination of information through the media.35

Supplemental actions or procedures: Consultation meetings are organized with all categories of PAPs (not just land owners).

PAPs are provided with information on the potential impacts of the project and their rights and obligations under the RPF.

The concerns expressed by the PAPs during the consultation meetings and the actions proposed to address such concerns are recorded in the LARAP.

D. Inventory of affected land and other assets

40. The LPC carries out an inventory of affected land and other assets.36 The inventory of affected land and other assets is carried out after the project designs are available.

Supplemental actions or procedures: The LPC carries out the inventory of affected land and other assets with the assistance of

a project consultant, if such assistance is requested by LPC. The inventory of affected land and other assets includes the following information for each

household that loses land or their assets: (i) total size of the plot affected, area to be taken for the Project, and area of the residual land; (ii) structures affected, indicating the percentage of the structure to be affected by the Project; the legal status of land to be taken; and (iii) description of land use in the lot affected – residential, commercial, agricultural.

The inventory distinguishes between total and partial land takings. In cases of partial land takings, the inventory will indicate if the residual land is economically viable. In cases of dwellings and business structures, the inventory will indicate if the residual land/building is sufficient for shelter or work place.

33 BPN Implementation Guidelines No 3/2007, Article 2, subsection (1); Article 5, subsection (3).34 Ibid, Article 5, subsections (1) to (3).35 Perpres 36/2005, Article 7, as revised by Perpres 65/2006; BPN Implementation Guideline, Article 8.36 BPN Implementation Guidelines No 3/2007, Articles 20 to 24.

46

E. Identification of displaced persons/households

41. The LPC produces a list with the names of the land owners or holders of land rights affected by the Project.37

Supplemental actions/procedures The LPC carries out a census of all the occupants of the affected area, including renters

and occupants without rights to the land affected. The date of completion of the census is the cut-off date to determine the persons in the Project area who are entitled to compensation, rehabilitation assistance and rehabilitation support. Subsequent inflows of people are excluded from these benefits.

The census of displaced persons/households is carried out with the assistance of a project consultant, if such assistance is requested by the LPC.

The census identifies the persons/households that must move to another location, distinguishing between:- PAPs who must move permanently and PAPs who must move temporarily; and- PAPs who can rebuild their homes within the residual land and PAPs who must move

to another location because their residual land is not economically viable. The census also identifies displaced persons or households that lose more than 20% of

their productive assets. A socio-economic study is carried out, covering all PAPs/PAHs that lose more than 20%

of their productive assets and/or are forced to move to another location. In such cases, displacement can affect the income-earning opportunities and livelihoods of displaced persons, which makes it necessary to collect basic socio-economic data on them, including data on income, sources of livelihood and living conditions, as appropriate. The survey will constitute the “baseline” of the social and economic conditions before the implementation of the Project. Progress in the implementation of income or livelihood restoration measures will be monitored against the baseline information generated by the survey.38

F. Dissemination of information on affected persons and assets

42. The list of affected assets and of the owners of the assets is announced in the village offices, municipal/district offices and in websites for 7 days and/or in two publications in order to enable the parties affected to raise their objections.39

Supplemental actions/procedures: The results of the inventory of affected persons and assets is displayed for 30 days in the

village office (kantor kelurahan for urban areas and kantor desa for rural areas) in order to enable affected persons to submit their objections. If affected persons raise objections within this period, the grievance procedure is activated.

G. Valuation of affected land and other assets

43. Valuation of land. The value of affected land is determined by a Land Appraising Institution40 appointed by the District Heads/Mayors or the Governor. In cases where there is no Land Appraising Institution in the municipality or district or city where the project is located, or in the surrounding municipalities, the District Heads/Mayors or the Governor establish a “Land Appraisal Team” (LAT), which appraises the land based on the Selling Value of Taxable Objects (SVTO) or by observing the SVTO of the current year. The LAT can consider other factors affecting land price, such as location.41

Supplemental actions/procedures:

37 BPN Implementation Guidelines No 3/2007, Articles 20 to 24.38 The survey should permit the assessment of the impact of land acquisition and/or relocation on the PAP’s patterns of economic and social activity, including impacts on social networks and social support systems. The survey should produce all the information that is necessary to monitor the progress towards the full rehabilitation of displaced households. 39 BPN Implementation Guidelines No 3/2007, Article 23 (3).40 “Land Price Appraising Institutions” are defined in Article 1 of the BPN Implementation Guidelines No 3/2007 as “professional and independent institutions that possess the skill and ability in land appraisal”. Article 25, subsection 2, of the same Guidelines state that Land Appraising Institutions must be licensed by the National Land Agency.41 BPN Implementation Guidelines No. 3/2007, Article 26, subsection (1); Article 28.

47

The value of the affected land is determined by a Land Appraising Institution or a licensed land appraiser.

44. Valuation for buildings and other objects related to the land. The valuation for building and other objects related to land (including trees and crops) shall be conducted by the Head of Office in municipalities/regencies in charge of buildings, plants and other objects related to land, based on the price standard having been stipulated by the regulation of the Law.42

Supplemental actions/procedures: Buildings and other objects related to the land will be valued at their “replacement cost”,

i.e., the market cost of the materials to build a replacement structure with an area and quality similar to those of the affected structure, or to repair a partially affected structure, plus the cost of transporting building materials to the construction site, plus cost of any labor and contractors’ fees. In applying this method of valuation, depreciation of structures and assets will not be taken into account.

H. Compensation

45. Deliberations on the compensation. The results of the appraisal are submitted to the LPC and are used as the basis for the “deliberation” on the “form and/or the amount of compensation” between government institutions requiring the land and the owners affected.43 Affected owners include those people affected by the project regardless of land ownership status. The deliberation is conducted “directly and collectively” between the government institutions and the owners.44 If the number of owners makes direct deliberations impossible, the deliberations can be conducted in stages.45 The deliberation can last up to 120 calendar days.46

Supplemental actions/procedures: Before beginning the deliberations on the form and/or the amount of compensation, the

LPC will share the results of the appraisal carried out by the Land Appraising Institution or the licensed land appraiser with the affected land owners.

In cases where a Project displaces persons whose livelihoods are land-based, such persons will be offered replacement land whenever possible.

46. Compensation payment or offer. After the end of the deliberation period, the government institution requiring the land presents a compensation payment or makes a compensation offer, all of which is included in official reports. If the compensation is in the form of money, the LPC orders the institution requiring the land to pay the compensation 60 days at most since the date of the decree of the Land Provision Committee stipulating the form and/or amount of compensation.47 The invitation to receive compensation must be received by the land owners at least 3 days prior to the date of payment.48 If the compensation is in a form other than money, the timing of the compensation is agreed by the owners and the government institutions requiring the land. Persons who lose land or other assets should be compensated before their land and/or other assets are taken for the Project. 47. Forms of compensation. The compensation can be in the form of (1) cash; (2) substitute lands and/or buildings; (3) resettlement; or (4) a combination of two or more of the previous forms of compensation.49 Compensation in the form of replacement land and/or buildings will be given according to the wish of the owners and as agreed by the government institutions requiring the land.50

42 Ibid, Article 29.43 BPN Implementation Guidelines No. 3/2007, Articles 30 and 31.44 Ibid, Article 32, subsection (1). If a collective right is affected, deliberations are carried out by all holders of the collective right; and if a wakaf property is affected, deliberations are carried out with the parties as stipulated in Law No. 41/2004 on wakaf (Article 32, subsection (2). Wakif (charitable trust/endowment) is defined in Article 1, subsection (1) of Law No. 41/2004 as the legal act of a Wakif (the donator) in dividing and/or transferring part of their wealth either permanently or for a set period for religious purposes and/or public welfare in accordance with the Syar’iyah (Islamic Law).45 BPN Implementation Guidelines No. 3/2007, Article 33.46 Ibid, Article 37, subsection (1).47 Ibid, Articles 40 and 44.48 Ibid, Article 44.49 Perpres 65/2006, Article 13 ; BPN Implementation Guidelines No. 3/2007, Article 45.50 BPN Implementation Guidelines No. 3/2007, Article 45 (a).

48

Supplemental actions/procedures: If replacement land is offered, such land will be of equal or higher value, considering

factors such as size, location, productive potential, etc. In cases where a Project displaces persons whose livelihoods are land-based, such

persons will be offered replacement land whenever possible. The provision of cash compensation to this type of displaced person is not appropriate, except in cases where the land taken for the project constitutes a small fraction (less than 20%) of the affected asset and the residual land is economically viable or active markets for land exist near the Project area and there is sufficient supply of land.

If it is not possible to offer substitute lands to persons whose livelihoods are land based and who lose more than 20% of their productive assets, the procedures described in paragraph 37 will be followed.

48. In the case of wakaf properties (properties donated for religious or charitable purposes and that are put in a trust) compensation will be in the form of land and/or buildings and/or other facilities of at least the same value as that of the revoked wakaf properties.51 In cases where ulayat land (land over which a community has customary land rights) is affected by a Project, the compensation will be in the form of public facilities or other facilities that contribute to the welfare of the affected communities.52

Supplemental actions/procedures: Communities affected by the loss of land over which they have customary rights (ulayat

land) will be offered compensation based on consultations with them, and could consist of public facilities, replacement land or cash, depending on their preferences.

49. Grievance procedure. The owners that object the LPC’s decision on the form and/or amount of compensation can raise their objections to the District Heads/Mayors or the Governor or the Minister of Home Affairs accordance to their authority during a period of 14 days, following the LPC’s decision. These authorities must make a decision on the objections within 30 days and confirm or modify the form and/or amount of compensation.53

50. Before deciding on the form and compensation level, the District Head/Mayor or Governor or Minister of Home Affairs according to their authority can request advice, opinion, or expectation from (i) PAPs or their representatives who filed complaints; (ii) LPC, and/or (iii) local government/government entity, who later will inform the CA and/or PI who need the land for a project.

51. Decision made by the Head of District/Mayor or Governor or Minister of Home Affairs on the form and/or compensation level will be conveyed to the PAPs who filed complaints, and local government/government entity, who later will inform the CA and/or PI who need the land, and to the LPC. This decision will be used as a basis for compensation payment.

I. Procedures if negotiations fail (recourse measures)

52. If the land owners do not agree to relinquish their rights and the project location cannot be changed, the LPC proposes to the District Heads/Mayors or to the Governor or Minister of Home Affairs to apply Law No. 20/1961 (Revocation of Rights to Lands and Objects upon them).54 If these authorities or the Minister of Home Affairs decide to resolve the disagreement by revoking land rights on the basis of Law 20/1961,55 the LPC issues a decision on the form and/or amount of compensation and orders the government institutions requiring the land to consign the compensation to the District Court whose legal territory covers the location of the land for public interests.56 Projects can begin after the compensation has been consigned in the District Court and the District Head/Mayor or Governor (in the case of DKI Jakarta) has issued a decree for the implementation of the physical development.57

51 BPN Implementation Guidelines No. 3/2007, Article 45 (b).52 Ibid, Article 45 (c).53 Ibid, Article 41.54 Ibid, Article 19.55 Ibid, Articles 41 and 42.56 Ibid, Articles 38 and 40.57 Ibid, Article 67.

49

Supplemental actions/procedures: If the land owners affected by a project do not agree to relinquish their rights, the project

will be excluded from the Project’s program.

J. Exception in cases of small-scale acquisition

53. The procedures described above do not apply to projects requiring one hectare or less. In such cases, land should be acquired directly from the owner through a purchase, trade, or other method agreed by the government institution requiring the land and the owner and without the help of the LPC.58

VII. PROCEDURES IN CASES WHERE RELOCATION IS NECESSARY

54. Compensation for losses related to land acquisition for a project can be provided in the form resettlement or relocation.59

Supplemental actions/procedures: If a project forces people to move to another location, the LARAP will include a relocation

plan.

Procedures in cases of group relocation: Displaced persons may be offered serviced relocation sites, low cost housing, housing

provided through a Bank Tabungan Negara (BTN) credit facility, or other schemes organized by the appropriate level of government. Displaced persons can also form cooperative housing groups to construct housing, with the support of the local government or the government institution sponsoring the project in the public interest that caused the displacement.

Relocation sites should be chosen through consultations with displaced people and host communities, where applicable. Displaced persons should be:- provided with complete information on the resettlement sites selected, including

services and infrastructure, and the results of consultations carried out with host communities, if any.

- informed of the completion of the resettlement site at least one month before displacement, and they should be invited to survey the new site.

The characteristics and location of residential housing or housing sites should be at least equivalent to those of the old site.

Resettlement sites should have basic infrastructure, such as an access road (or footpath as appropriate), electricity, drainage system and water supply. If a piped water distribution network is not available, there should be wells that comply with health standards. They should also permit displaced persons to have adequate access to public transportation, health and educational services, jobs, employment opportunities, religious services, and sport facilities, according to the size of the new community.

The LARAP includes information on the timing of the move, logistics of transportation of people and belongings, and arrangements for temporary shelters and services, if necessary.

Displaced persons receive title (or land certificate) to their new sites and they do not bear the cost of such title. The title/certificate offers an equal or higher level of tenure security (whenever possible) than the title/certificate at the previous location. Land titles or certificates will be issued within 6 months from the date of displacement.

Procedures in cases where displaced households are responsible for their own relocation: Cash compensation to physically displaced persons will be paid before the move. Physically displaced persons will receive an appropriate relocation allowance, so they can

cover the costs of moving to the new site. The payment of relocation allowances will be documented in the LARAP.

58 Article 20 of Perpres 36/2005 and Article 54 of BPN Implementation Guideline No. 3/2007.59 Article 13 of Perpres 65/2006; Article 45 (a) of BPN Implementation Guideline No. 3/2007.

50

VIII. PROCEDURES IN CASES OF ECONOMIC DISPLACEMENT

55. Indonesian regulations do not address the economic impacts of displacement, i.e., the loss of income sources or livelihoods. However, IGF-backed sub-projects will apply the following procedures.

Supplemental actions/procedures: A socioeconomic survey will be conducted if some of the displaced persons or

households lose more than 20% of their productive assets or are forced to move to a different location. All affected persons/households should be identified through a census; but the socioeconomic survey should target the persons/households who lose more than 20% of their productive assets or who must move to another location. In such cases, displacement can affect the income-earning opportunities and livelihoods of displaced persons, which makes it necessary to collect basic socio-economic data on them. The survey will constitute the “baseline” of the social and economic conditions before the Project is implemented. Progress in the implementation of income or livelihood restoration measures will be monitored against the baseline information generated by the survey.60

Displaced persons whose livelihood is land-based are entitled to rehabilitation support if the following conditions are present: (1) cash compensation for land is not appropriate (see paragraph 31); (2) it is not possible to offer replacement land; and (3) 20% or more of the productive assets of the displaced persons are affected.

Displaced persons whose livelihood is not land based, but who lose their jobs or means of livelihood as a result of displacement, are entitled to rehabilitation support so they can find alternative employment or other means of livelihood.

Rehabilitation support should enable displaced persons to improve or at least restore their income levels and/or livelihoods. Rehabilitation assistance is provided in parallel with Project construction and implementation and can consist of job offers, skill and vocational training, transitional allowances, assistance to start a business, credit, etc., in addition to cash compensation for land and other assets lost.

The duration of the rehabilitation program should be specified in the LARAP.

IX. LAND ACQUISITION THROUGH DIRECT NEGOTIATIONS BETWEEN A CA AND/OR PI AND LAND OWNERS

56. As mentioned in paragraph 26 in Chapter IV above, a CA and/or PI will have to prepare a LARAP in the case they are planning to acquire land through direct negotiations between them and land owners. Similar to land acquisition that is acquired through local government or other government entity, the CA and/or PI have to compensate land, and assets attached to the acquired land, assist the PAPs in relocation, and/or restore the income levels and/or livelihoods of the PAPs. In the case that there is a host community in the relocation site, the CA and/or PI have to include them in the LARAP in the case that the relocation of the PAPs affects their social, cultural and economic living.

57. The compensation level should be decided based on consultations, informed, and fair negotiation between land owners and the CA and/or PI by which values of land and other assets attached to the acquired land are defined by the certified appraisal professionals/team61.

58. Resettlement assistance and income restoration programs and duration for their implementation will have to be developed and agreed by the PAPs through consultations.

60 The survey should permit the assessment of the impact of land acquisition and/or relocation on the PAP’s patterns of economic and social activity, including impacts on social networks and social support systems. The survey should produce all the information that is necessary to monitor the progress towards the full rehabilitation of displaced households. 61 The certified appraiser professional is under the “Masyarakat Asosiasi Penilai Indonesia” or the Indonesian Association of Appraisers Community” or “MAPI”.

51

59. Socialization, consultations, negotiations and agreements will have to be well-documented and included in the LARAP implementation progress report. This documentation should clearly demonstrate that the PAPs could say “no” to the sale and were under no pressure of expropriation if they decided not to sell.

X. GRIEVANCES

60. The ES Unit/Division of the IIGF will establish a grievance redress mechanisms (GRM) that will allow public and PAPs to file complaints and to receive satisfying responses in timely manner. The system will also record and consolidate complaints and their follow-ups. This system will be designed not only for complaints regarding the preparation and implementation of LARAP and TS, but also for handling complaints of issues (including environmental and other social safeguards issues) related to the projects guaranteed by the IIGF, including those IIGF guarantees that will be supported by the World Bank loan. The IIGF will hire a professional to manage the GRM, and this expert will closely work with the ES Unit/Division.

61. At the project level, the relevant CA and/or PI will have to establish a grievance redress mechanisms (GRM) for complaints related to the guaranteed project. The CA and/or PI have to assign a staff to be responsible in managing the GRM system. The system will receive, and properly follow up complaints from the public and PAPs in a timely manner, as well as records complaints and their follow-ups. The CA and/or PI could use its existing GRM system, if it is already available and well-functioned with procedures and mechanisms that are in line with the requirements of the GRM as specified in the OM. Otherwise, the CA and/or PI will have to improve its current GRM system and capacity to be able to implement the GRM as specified in the OM.


XI. ORGANIZATIONAL ARRANGEMENTS, FUNDING AND MONITORING

63. Organizational arrangements. In the case that the CA prepares the LARAP, the IIGF will have to ensure that the CA prepares and implement the LARAP consistently. Similarly, the CA and/or PI will be responsible to ensure that the local government or government entity prepares and implements the LARAP, with the assistance of project consultants if necessary. The CA and/or PI will have to work with the respective unit in the local government (e.g. the LPC, the local planning agency) who will have the following responsibilities : coordinate all aspects of the LARAP, including consultation activities, acquisition of land and other assets, relocation assistance and rehabilitation support; facilitate communications with project stakeholders; organize meetings to coordinate activities related to the LARAP and evaluate its implementation; and provide regular progress reports to the CAs on the implementation of the LARAP. The CA will report on the status and progress of the implementation of the LARAP to the ES Unit/Division of the IIGF. In the case that PI implement part of the LARAP or TS, it has to report to the CA.

64. An independent consultant team may be hired by the IIGF to carry out periodic monitoring and evaluation of the implementation of the LARAP or TS prepared by the local government and the CA and/or PI.

65. The World Bank may carry out an inspection of the site or location of candidate projects with prior notification to the IIGF, although the inspection can be conducted independently. The World Bank will discuss the results of the inspection with the relevant local government agency, the CA and/or the PI of that particular project and with the IIGF.

52

66. Funding. The cost of land acquisition will be borne by the CA and/or PI regardless of whether land acquisition is carried out by the local government or government entity or the CA and/or PI through direct negotiations with land owners. Costs of land acquisition includes at least, but not limited to: cost of survey, measurement and mapping the land; cost for consultations and negotiations; payment of compensation to the owners, resettlement assistance, relocation costs, rehabilitation costs to restore income and livelihoods; fee for the LPC (in the case land is acquired through local government or government entity); land acquisition team (in case land is acquired through direct negotiation between the land owners and the CA and/or PI), fee for the Land Appraising Institution or Land Appraising Team; costs for land splitting; costs for consignation of the compensation (if this is the case); certificate fee; and, coordination and monitoring costs.62

67. Capacity Building. The IIGF will continuously improve its staff and institution’s capacity in handling the environmental and social safeguards issues. Along with the capacity building needs in other subject areas, by negotiation the IIGF will develop a capacity building plan for its staff and institution (the ES Unit/Division) and for the CAs and PIs including for environmental and social safeguards. In the initial stage of the IIGF establishment, a reasonable option is to hire an environmental and a social safeguard expert, which will assist the IIGF in further developing the OM. These experts will be hired with the Terms of Reference approved by the Bank. The IIGF (i.e. the ES Unit/Division) will provide training, advice and guidance as well as monitoring and supervision for the CA and/or PI in environmental and social safeguards (including land acquisition and resettlement, Indigenous Peoples or IPs, etc)

XII. MONITORING AND EVALUATION

68. Internal monitoring and reporting. Internal monitoring and reporting on the implementation of LARAP (full and direct negotiation) and Abbreviated LARAP as well as TS will be undertaken by the ES Unit/Division with the assistance of environmental and social safeguards consultants, if necessary.

69. Monitoring reports will be produced by the ES unit/Division on a monthly basis and shared with other units of the IIGF, such as the disbursement and technical units. These reports will include information on the status and compliance of the LARAP and TS implementation.

70. Baseline information on affected assets and persons included in the LARAP and TS will be used to assess progress in the implementation of the LARAP and corrective actions in the TS and to evaluate the effectiveness of the compensation, assistance and support offered to affected persons.

71. External Monitoring and Evaluation. IIGF will carry out an external monitoring and evaluation for all portfolio projects annually. This will include among others: (i) assessment on the adequacy of the compensation provided and to determine whether the measures implemented as part of the LARAP have enabled the PAPs to at least restore their standards of living and livelihoods, or whether they still face problems that merit further assistance; (ii) assessment on how well the GRS has been working including an examination of documentation on how quickly complaints are answered/followed up and the number of closed and open complaints. Similarly, the IIGF will also monitor and evaluate the corrective activities recommended by the TS. These activities will be carried out by an independent consultant with the Terms of Reference approved by the World Bank. The budget for External Monitoring and Evaluation will be borne by the IIGF.

XIII. DISCLOSURES

72. The ES Unit/Division of IIGF will ensure that the CA disclosed the drafts LARAP and TS in English and Bahasa Indonesia to the public by project appraisal in its website, in the CA website, and in Bahasa Indonesia in the respective local governments and in the NGOs networks. The ES Unit/Division of IIGF will have to ensure that the CAs make the Implementation Report of the LARAP and TS both English and Bahasa Indonesia available in the IP communities, respective local governments and to a wider public. The approved LARAP and TS will have to be disclosed in the same venues mentioned above prior to the approval of a project’s guarantee.

62 Some of these items are specified in the BPN Implementation Guideline, Article 53.

53

73. The consolidated report on the grievances and their follow-ups will be regularly made available to public through the IIGF website and/or CA and/or PI’s websites.

74. The corrective action plan (refer to Section V above) will be disclosed in the IIGF, CA and PI’s websites as applicable. It will be also disclosed at the respective local governments’ website and in project site, as applicable.

XIV. AUDITS

75. The PI will hire an independent consultant to carry out an audit of the overall implementation of the LARAP, TS or the corrective actions to address the incompliance of LARAP implementation, as applicable, during project construction and operation prior to its hand over to the CA63. 76. The Audit report will be reviewed by the CA and IIGF, and if implementation of LARAP, TS and corrective actions are acceptable, the IIGF will provide a clearance and approval for the CA to receive the project hand over. 77. In the case that the IIGF has not had adequate capacity in environmental and social safeguards management, the World Bank will review the audit report. If necessary, the IIGF, the CA and the World Bank will carry out a joint field visits to verify the findings of the audit report.

XV. SUGGESTED OUTLINE OF A FULL LARAP78. In the case that a project affects more than 40 land owners (or more than 200 persons) the project will have to prepare a full LARAP. A full LARAP would have the following outline:

1. Description of the project. General description of the project and identification of the project area.

2. Potential impacts. Identification of (a) the project component or activities that will require land acquisition or give rise to resettlement; (b) the zone of impact of such component or activities; (c) the alternatives considered to avoid or minimize resettlement; and (d) the mechanisms established to minimize resettlement, to the extent possible.

3. Objectives. The main objectives of the LARAP.

5. Census of Project Affected Persons (PAPs) and inventory of affected assets. The results of the census and the inventory of assets, including the following information:

list of PAPs, distinguishing between PAPs with land rights and occupants without such rights who are nonetheless entitled to compensation and assistance as set out in the RPF; inventory of affected assets. total number of PAPs and Project Affected Households (PAHs64) number of PAHs who will lose more than 10% of their productive assets.

6. Socioeconomic study. The socioeconomic study should produce information to facilitate resettlement planning, such as the following:

the patterns of social interaction in the affected communities, including social networks and social support systems, and how they will be affected by the project; information on vulnerable groups or persons for whom special provisions may have to be made; public infrastructure and social services that will be affected;

63 Audit will also be needed if the PI for construction and for operation is different. The process will be similar to paragraph 73-75, but clearance and approval from the IIGF and the World Bank will be given for the CA to proceed with the bidding for operation.

64 Project Affected Households

54

social, economic and cultural characteristics of displaced communities; and baseline information on livelihoods and standards of living of the displaced population.

7. Legal analysis. The results of an investigation of any legal steps necessary to ensure the effective implementation of land acquisition and resettlement activities under the project, including, as appropriate, a process for recognizing claims to legal rights to land--including claims that derive from customary law and traditional usage.

8. Institutional Framework. The findings of an analysis of the institutional framework covering:

the identification of agencies responsible for resettlement activities and NGOs that may have a role in project implementation; an assessment of the institutional capacity of such agencies and NGOs; and any step that are proposed to enhance the institutional capacity of agencies and NGOs responsible for resettlement implementation.

9. Eligibility. Identification of the PAPs who will be eligible for compensation, resettlement assistance and rehabilitation support and explanation of the criteria used to determine eligibility, including relevant cut-off dates.

10. Valuation of affected assets. A description of the procedures or methods to calculate the value the assets affected by the project.

11. Compensation, resettlement assistance and rehabilitation support. A description of (1) the compensation packages to be offered to PAPs who lose land and/or other assets, (2) resettlement assistance to be offered to physically displaced persons, and (3) rehabilitation support to persons who lose income sources or livelihoods as a result of land acquisition for the project. The compensation packages, combined with other assistance and support offered to each category of PAPs should be sufficient to achieve the objectives of World Bank Operational Policy 4.12 on Involuntary Resettlement. The relocation options and other assistance offered to the PAPs should be prepared in consultation with them and should be technically and economically feasible, as well as compatible with the cultural preferences of the PAPs.

12. Site selection, site preparation, and relocation (in cases of group relocation). Alternative relocation sites considered and explanation of those selected, covering:

institutional and technical arrangements for identifying and preparing relocation sites, whether rural or urban, for which a combination of productive potential, locational advantages, and other factors is at least comparable to the advantages of the old sites, with an estimate of the time needed to acquire and transfer land and ancillary resources; any measures necessary to prevent land speculation or influx of ineligible persons at the selected sites; procedures for physical relocation under the project, including timetables for site preparation and transfer; and legal arrangements for regularizing tenure and transferring titles to resettlers.

13. Housing, infrastructure, and social services. Plans to provide (or to finance resettlers' provision of) housing, infrastructure (e.g., water supply, feeder roads), and social services (e.g., schools, health services);2 plans to ensure comparable services to host populations; any necessary site development, engineering, and architectural designs for these facilities.

14. Environmental protection and management. A description of the boundaries of the relocation area; and an assessment of the environmental impacts of the proposed resettlement3 and measures to mitigate and manage these impacts (coordinated as appropriate with the environmental assessment of the main investment requiring the resettlement).

15. Community participation. Involvement of resettlers and host communities:

2

3

55

a description of the strategy for consultation with and participation of resettlers and hosts in the design and implementation of resettlement activities; a summary of the views expressed and how these views were taken into account in preparing the resettlement plan; a review of the resettlement alternatives presented and the choices made by displaced persons regarding options available to them, including choices related to forms of compensation and resettlement assistance, to relocating as individuals families or as parts of pre-existing communities or kinship groups, to sustaining existing patterns of group organization, and to retaining access to cultural property (e.g. places of worship, pilgrimage centers, cemeteries); institutionalized arrangements by which displaced people can communicate their concerns to project authorities throughout planning and implementation, and measures to ensure that vulnerable groups are adequately represented; and measures to mitigate the impact of resettlement on any host communities, including consultations with host communities and local governments, arrangements for prompt tendering of any payment due the hosts for land or other assets provided to resettlers, arrangements for addressing any conflict that may arise between resettlers and host communities; and any measures necessary to augment services (e.g., education, water, health, and production services) in host communities to make them at least comparable to services available to resettlers.

16. Grievance procedures. Affordable and accessible procedures for third-party settlement of disputes arising from activities included in the LARAP; such grievance procedures should take into account the availability of judicial recourse and community and traditional dispute settlement mechanisms.

17. Organizational responsibilities. The organizational framework for land acquisition and resettlement, including identification of agencies responsible for the implementation of the LARAP, the delivery of resettlement measures and provision of services; arrangements to ensure appropriate coordination between agencies and jurisdictions involved in implementation; and any measures (including technical assistance) needed to strengthen the implementing agencies' capacity to design and carry out resettlement activities; provisions for the transfer to local authorities or resettlers themselves of responsibility for managing facilities and services provided under the project and for transferring other such responsibilities from the resettlement implementing agencies, when appropriate.

18. Implementation schedule. An implementation schedule covering all resettlement activities,from preparation through implementation, including target dates for the achievement of expected benefits to resettlers and hosts and terminating the various forms of assistance. The schedule should indicate how the resettlement activities are linked to the implementation of the overall project.

19. Costs and budget. Tables showing itemized cost estimates for all resettlement activities, including allowances for inflation, population growth, and other contingencies; timetables for expenditures; sources of funds; and arrangements for timely flow of funds, and funding for resettlement, if any, in areas outside the jurisdiction of the implementing agencies.

20. Monitoring and evaluation. Arrangements for monitoring of land acquisition and resettlement activities by the implementing agency, supplemented by independent monitors as considered appropriate by the Bank, to ensure complete and objective information; performance monitoring indicators to measure inputs, outputs, and outcomes for resettlement activities; involvement of the displaced persons in the monitoring process; submission of monitoring reports to the Bank; evaluation of the impact of resettlement for a reasonable period after all resettlement and related development activities have been completed; using the results of resettlement monitoring to guide subsequent implementation.

XVI. SUGGESTED OUTLINE OF AN ABBREVIATED LARAP

79. In the case that less than 40 households or 200 persons are affected by a project, an abbreviated LARAP will have to be prepared with the following outline:

56

1. Description of the project. General description of the project and identification of the project area.

2. Potential impacts. Identification of (i) the project component or activities that will require land acquisition; and (ii) the zone of impact of such component or activities.

3. Census of Project Affected Persons (PAPs) and inventory of affected assets. The results of the census and the inventory of assets, including (i) a list of PAPs, distinguishing between PAPs with land rights and land users without such rights who are nonetheless entitled to compensation and assistance as set out in the RPF; and (ii) an inventory of plots and structures affected. The information generated by the census should be summarized in a table

4. Legal analysis. Descriptions of legal steps to ensure the effective implementation of land acquisition under the project, including, as appropriate, a process for recognizing claims to legal rights to land--including claims that derive from customary law and traditional usage.

5. Eligibility. Identification of the PAPs who will be eligible for compensation and explanation of the criteria used to determine eligibility.

6. Valuation of assets and calculation of compensation for losses. A description of the procedures that will be followed to determine the form and amount of compensation to be offered to PAPs.

7. Consultations with persons who lose land and other assets. A description of the activities carried out to (1) inform PAPs about the impacts of the project and the compensation procedures and options and (2) give the PAPs opportunities to express their concerns.

8. Organizational responsibilities. A brief description of the organizational framework for implementing land acquisition.

9. Implementation schedule. An implementation schedule covering land acquisition, including target dates for the delivery of compensation. The schedule should indicate how the land acquisition activities are linked to the implementation of the overall project.

10. Costs and budget. Cost estimates for land acquisition for the project.

11. Grievance procedures. Affordable and accessible procedures for third-party settlement of disputes arising from land acquisition; such grievance mechanisms should take into account the availability of judicial recourse and community and traditional dispute settlement mechanisms.

12. Monitoring. Arrangements for monitoring land acquisition activities and the delivery of compensation to PAPs.

XVII. LARAP FOR LAND ACQUIRED THROUGH NEGOTIATIONS BETWEEN THE CA AND/OR PI AND LAND OWNERS.

80. The following is the suggested outline for a LARAP in the case that land is acquired through negotiations between the CA and/or PI and land owners:

1. Project description2. Project impact area3. Project affected persons4. Land requirements and characteristics of impacts (permanent or temporary impacts, land and other assets attached to the acquired land, the need for relocation, and affected income sources and livelihood, social and cultural impacts, etc.)5. Eligibility and entitlements6. Land and assets valuation by the certified appraisal professionals/team7. Land acquisition and compensation processes with timeline8. Public consultation, negotiation9. Dispute resolution10. Disclosures11. Payment mechanisms

57

12. Legal documents for the land and assets13. Institutional arrangements and financing14. Monitoring and implementation reporting15. Annexes of supporting documentation

Annex 5Summary of Consultations with Contracting Agencies and Private Investors

The IIGF and World Bank have organized three rounds of consultations, and held a number of bilateral meetings, with Contracting Agencies (CAs) and Private Investors (PIs) on safeguards management and the ESMF under the IGFP. Feedback received from interactions with key stakeholders has been very valuable and incorporated in subsequent drafts of the ESMF and IGFP project documentation. Summaries from these consultations are presented below.

1. Dialogue with the Private SectorFebruary 24, 2010

List of Private Sector Representatives

1. Oki Ramadhana, Executive Director, Goldman Sachs2. Marcos Siquerira, Fixed Income, Currency and Commodities, Goldman Sachs 3. Tuti Dewi Hadinoto, Partner, Hadiputranto, Hadinto & Partners4. Yoshihisa Fujimura, Chief Representative, General Manager, Mitsui & Co Ltd.5. Iko Pramudiono, Project Coordinator, Mitsui & Co Ltd.6. John Paul, Head, Theiss Indonesia7. Maria Wahono, Deputy Manager, Project Finance, Theiss Indonesia8. Adriansyah Makki, Dana Mulia Sukses

Key observations

1. There is demand and willingness to pay for IIGF guarantee products.

2. Private Sector representatives supported the consistency, clarity and transparency of procedures for issuance of GOI-supported guarantees, which the IIGF will be able to put into place under the “single window” concept.

3. The ability of IIGF to recover its capital from the line agencies through a recourse mechanism is critical toward establishing credibility of the IIGF.

4. The IIGF will have to proactively provide direction and assist CAs understand the IIGF’s products and appraisal processes.

5. It is important that in legal documents and official communications regarding IIGF, it is clarified that IIGF guarantees should not be viewed as “security” (which in Indonesia implies that payments can be made only after a court decision), but will actually allow IIGF to make cash payments in case of guarantee call.

58

6. The involvement of WB and its AAA-rated guarantees, and technical assistance to develop the institution and operational procedures of the IIGF, were seen as a big boost to the credibility of the IIGF.

7. The format of this dialogue was endorsed by the representatives and requests were made to continue this dialogue and possibly expand the scope of interaction by involving lenders, credit underwriters, and credit agencies. The involvement of other government agencies in this private sector dialogue was also suggested.

There was overwhelming agreement that Transaction Advisers were required to help CAs prepare bankable PPP projects; however, this was seen as being outside the scope of the IIGF.

2. Consultation with the Private Sector and Contracting Agencies12 May 2010

List of Private Sector and Contracting Agency Representatives1. Frans S. Sunito, Direktur Utama, PT Jasa Marga2. Reynaldi Hermansjah, Finance Director, PT Jasa Marga3. Takeshi Yamamoto, PT Matlamat Cakera Canggih (Joint venture of Marubeni)4. John Fildissis, Executive Manager Commercial Asia, Theiss Asia5. Maria Wahono, Deputy Manager, Project Finance, Theiss Indonesia6. Reza Benito Zahar, Director, Structure Products, Danareksa Sekuritas7. Anton Gunawan, Executive Vice President-Chief Economist, PT Bank Danamon 8. Justin M. Patrick, Foreign Advisor, Mochtar Karuwin Komar9. Shiv Dave, PT Adaro Energy Tbk10. Catur Andayani, Bank Mandiri11. Agus Dhartanto, Bank Mandiri

Agenda Update from Ms. Sinthya Roesly on IIGF’s organizational and operational readiness, including:

- Steps in the guarantee appraisal process- Types of risk covered by IIGF guarantees

Guidance to contracting agencies and private sector on the planned environmental and social safeguards approach

Question-and –answer discussion to address inquiries and concerns

Summary of discussions Detailed guidance was provided on the planned environmental and social safeguards

approach- Key issues

Clarity on safeguards and risk management provided early in the process. Number of necessary clearances obtained by contracting agencies ahead of

time. Continuity from project preparation to construction to operations and thus low

likelihood of safeguards elements being overlooked.- Safeguards guidance will provide details on carrying out safeguards management,

and workshops will be held to provide detailed guidelines.

The private sector representatives acknowledged that a key component of the value added by IIGF is its focus on the quality of agreements (e.g., concession agreements) in its appraisal of guarantees. Such focus provides comfort vis-à-vis clarity on the responsibilities and obligations of each party.

The private sector is pleased by the types of risk covered by IIGF guarantees (which would hold CAs accountable to their obligations under PPP contracts), as well as the range of contracting agencies that could participate (including regional governments).

59

3. Consultations on ESMF with Contracting AgenciesMay 27, 2010

Participants:

1. Mr. Rahmat Karnadi, Head of BPP-SPAM, Ministry of Public Works, (MPW)2. Mr. Asril Safei, Director for Traffic and Urban Transport, DG Railway, Ministry of

Transportation (MOT) 3. Mr. Prasetyo, Head of Division, Directorate of Traffic and Urban Transport, DG Railway, MOT4. Mr. Herry T Z, Vice Director of Freeway and Urban Road, DG Bina Marga, MPW5. Mr. Bambang Eko, Head of Investment Division, Toll Road Authority Board, BPJT, MPW6. Mr. Agita Widjajanto, Investment Division, Toll Road Authority Board, BPJT7. Mr. Wijaya Seta, Head of Land Acquisition Division, DG Bina Marga, MPW 8. Mr. Oscar Arief, Risk Management Unit, Ministry of Finance, MOF9. Mr. Ida Bagus Mardawa, PT. PLN10. Ms. Katnia Handayani, PT. PLN11. Mr. Jeffry, SOFRECO, Advisor to PT. PLN12. Mr. Koentjahyo, Advisor to Directorate of Traffic and Urban Transport, MOT13. Mr. Diki Zulkarnaen, Staff, Directorate of Freeway and Urban Road, DG Bina Marga, MPW 14. Ms. Sinthya Roesly, CEO, PT. Penjaminan Infrastruktur Indonesia (IIGF)15. Mr. Yadi R, CFO, PT. Penjaminan Infrastruktur Indonesia (IIGF)16. Mr. Kamran. M. Khan, Task Team – IGFP, the World Bank17. Mr. Andri Wibisono, the World Bank18. Ms. Indira Dayu Dharmapatni, the World Bank19. Mr. Andrew Sembel, the World Bank20. Mr. Pratyush P. Prashant, CRISIL Infrastructure Advisory, IIGF Consultants

Agenda:

Update from Ms. Sinthya Roesly on IIGF’s organizational and operational readiness, including:

- Steps in the guarantee appraisal process- Process of the recourse mechanism- Role and responsibility of the CA and IIGF in the PPP agreement

Presentation from Ms. Sinthya Roesly on IIGF’s Environment and Social Safeguard Management Framework

Question-and –answer discussion to address inquiries and concerns

Summary of discussions

Ms. Sinthya Roesly highlighted that the objective of the ESMF is to prepare PPP projects as per international standards in relation to environment and social safeguards and to enhance the project’s bankability by effectively addressing these issues for foreign investors and foreign lenders. The ESMF will be applied to a project that proposes to use the Partial Risk guarantee from the World Bank. The review will be carried out by the IIGF and the process will be detailed in the IIGF’s Operation Manual.

Ms. Sinthya Roesly updated the Contracting Agencies (CAs) on IIGF’s appraisal process and criteria for project appraisal. It was emphasized that the CAs should clearly stipulate the risk allocation in the PPP agreements and develop a comprehensive risk mitigation plan to ensure that the CAs meet their obligations under the PPP agreement. The IIGF suggested that CA should view the risk mitigation plan as a critical area when signing PPP agreements.

It was acknowledged that IIGF’s participation in the process is a clear value-add for serious investors, as it provides for more transparency in provision of government guarantees across sectors and clarity on the claims processing, as well as in increasing the certainty and timeliness of a payments to the private sector and lenders.

In responding to the questions raised by CAs in relation to IIGF’s involvement, it was clarified that the IIGF will involve itself in the project from beginning of project preparation. The early

60

involvement is important, as it enables the CAs to obtain guidance from IIGF in relation to structuring the guarantee of the project and to assess and understand the potential risk exposure to be borne by IIGF. However, IIGF will not take on the responsibility of project preparation, which shall continue to vest with the CAs.

The IIGF will be equipped by the right to recourse from the CA on the guarantee when the claim is paid. The recourse framework will be governed by a new Presidential Decree. The framework requires a recourse agreement signed by IIGF and CA. When the guarantee is called and claim is paid, the IIGF has the recourse to CA. In the event that the CA is not able to pay to IIGF, the MOF shall compensate IIGF first, and then the MPF shall claim the payment made from the CA through the APBN Mechanism. This framework has a precedent, in 10,000 MW power generation project of PLN where the framework has been successfully implemented.

The BPJT raised their concerns on the toll road projects that are stuck / languishing and suggested IIGF should provide guarantees to the projects, and include such guarantees also in the new Presidential Decree. IIGF suggested the BPJT to bring this proposal and discuss with RMU, since the support or providing the guarantee to the projects on-halt is an interdepartmental policy issue.

The BPJT informed IIGF that in toll road sector the government has established the Environment Committee chaired by the Ministry of Environment. The Committee’s task is to evaluate all environment issues in toll road projects. To avoid duplication of efforts in project review/ appraisal, BPJT suggested that IIGF could become a member of this committee. IIGF will review this suggestion.

The World Bank presented that the IIGF will follow one set of regulations on the ESMF that consist of:

o The Indonesian law and regulation, ando The World Bank Policies that could be triggered; (i) Environmental assessment, (ii)

Natural habitats; (iii) Pest Management; (iv) Physical Cultural Resources; (v) Involuntary Resettlement; (vi) Indigenous People; and (vii) Safety of Dams.

The BPJT raised their concern that the Land Acquisition and Resettlement Action Plan (LARAP) is rarely required in toll road. MPW has initiated the LARAP concept in the Waru – Juanda Tol road in east Java. However it could not be implemented as Waru – Juanda toll road was one of the ‘problem’ projects. According to their experience the LARAP is required for Urban Toll road and development of dams.

BPJT informed the IIGF and the World Bank that the government has used the independent appraisal to determine the land price in toll road sector. The payment of land acquisition consists of the land price plus the compensation (compensation for the loss of asset other than land, transportation, etc). On an average, the payments range from 1.1 to 1.8 of the land market price. However, the standard operation procedure to determine the compensation payment has not been developed by the National Land Agency (BPN). Therefore they suggested the BPN to issue such the guideline.

BPJT reminded the IIGF and the World Bank based on their experiences the affected people preferred to receive payments rather than being resettled.

The IIGF team thanked the CA for their participation and agreed to take their views into consideration while finalizing its operational procedures.

61

Documents

documents.worldbank.orgdocuments.worldbank.org/curated/pt/... · Web viewThe level of investments has been insufficient in Indonesia to address the extremely low access to basic