Environmental and Social Monitoring Report...Sorong, Fakfak or Manokwari.. 5.1.2. Education Basic Education This program aims to improve the basic quality of education by assisting

Environmental and Social Monitoring Report

This report has been submitted to ADB by BP Berau Limited and is made publicly available in accordance with ADB’s public communications policy (2005). It does not necessarily reflect the views of ADB.

Project Number: 38919 October 2010 – April 2011

INDONESIA: Tangguh Liquefied Natural Gas Project Integrated Social Programme Tangguh LNG – Operations Phase

Prepared by BP Berau Limited Tangguh LNG Project Operator

Operator’s 6 Monthly Social Report

Integrated Social Programme

Tangguh LNG – Operations Phase

October 2010 – April 2011

1. OBJECTIVE AND SCOPE ………………………………………………………… 1

2. REPORT METHODOLOGY ………………………………………………………. 1

3. TANGGUH E&S ISP PERFORMANCE – EXECUTIVE SUMMARY ……….. . 2

4. TANGGUH LNG UPDATE ……………………………………………………….. 3

5. INTEGRATED SOCIAL PROGRAM …………………………………………….. 4

5.1 Social Management Plan ………………………………………………. … 4

5.1.1. Livelihood ………………………………………………………... ….. 4

5.1.2. Education ………………………………………………………… ….. 4

5.1.3. Health ……………………………………………………………... ….. 5

5.1.4. Governance ………………………………………………………. …. 7

5.1.5. Community Relations ……………………..………………….......... 8

5.2. Social Monitoring Plan …………………………………………………. …. 9

5.2.1. Livelihood ………………………………………………………... ….. 9

5.2.2. Education ……………………………………………………………… 12

5.2.3. Health ……………………………………………………………......... 12

5.2.4. Governance …………………………………………………………… 14

5.2.5. Community Relations .………………….………………………….. 16

6. NON-COMPLIANCE STATUS UPDATE ……………………………………….. 17

7. ADDITIONAL INFORMATION …………………………………………………… 17

8. EVALUATION RESULTS ………………………………………………………… 19

Appendix A

1

1. OBJECTIVE AND SCOPE

This is the 11th report provided for the Asian Development bank (ADB) and Japanese Bank for International Cooperation (JBIC) Lenders Group per the requirement under Section 1.12 of the ADB Tranche PSC Parties Agreement (or Section 1.18 of the JBIC Tranche). Scope of report includes monitoring of ISP Program Implementation for the period of October 2010 to April 2011 and program evaluation. In addition, LARAP completion progress is reported in Appendix A. 2. REPORT METHODOLOGY

This report has been prepared with reference to ISP monthly reports, site visits, discussions with various programme managers, and reports from ISP implementation partners, including British Council, MCC, and UGM.

October 2010 – April 2011 2

3. TANGGUH E&S ISP PERFORMANCE – EXECUTIVE SUMMARY

Tangguh LNG social programs have entered the second phase of their implementation, to mitigate the social risks of the early stage of operations. Our social strategy is focused on five areas: Livelihood, Education, Health, Governance, and Communications and External Relations.

In this second five-year period, the government and community are expected to increase their involvement and role in ensuring the socio-economic development of the areas, while Tangguh will act as a partner in these efforts. In this context, several independent institutions have signed agreements to cooperate in assisting governments and communities in their development.

In the education area, the program’s focus remains in capacity building for the education offices, improving the quality of teaching and learning processes in the Teluk Bintuni schools. Training and assistance activities have been conducted for the education office staff and teachers to enhance their abilities to educate their students.

In the health program, Tangguh continued to support and assist the local health offices in providing health services to the DAV communities. Starting this period, activities are also being carried out with health centers outside the DAVs, but to a lesser degree.

In the governance program, Community Action Plan activity continues to enhance community participation in the local development planning, whilst at the same time increase the community and local government ability in setting priorities for infrastructure development for the villages. In this period, we would like to synergize the development planning activities in the villages with government-run village consultations on development planning (Musrenbang) activity.

The governance program has also provided assistance to regency, district and village government officials, with the focus on planning and budgeting. New contracts have been signed with partners, and a recent survey shows that local government staff has a greater understanding of their roles and responsibilities, although most of them still does not implement their understanding while doing their roles as public servants. Programs have also been conducted to familiarize the DAV community members with the laws, and partnerships with government security officials have also proceeded. The Tangguh Joint Security Guidelines have been reintroduced to the local police force in both Manokwari and Bintuni.

The livelihood program continues to assist the DAV communities in managing the economics of agricultural and household activities. Stocking points that have been established in six locations continue to increase the supplies of fish and vegetables to the Tangguh LNG catering. As a result, the activity has also expanded the marketing of the communities’ fish and vegetable products.

After more than five years of implementation, these programs have begun to show results. They have contributed significantly to the socio-economic development in the Teluk Bintuni area, such as increased passing rates of students in elementary, junior and senior high schools, a decline in both malaria cases and diarrhea mortality.


Moreover, local government officials have clearly increased their abilities to serve their communities, the quality of farming products has improved and the markets for agricultural and fish products are continuously expanding. Last but not least, relations between the communities and the company have become much better.

4. TANGGUH LNG UPDATE

Tangguh is now fully in operation. In 2010 it produced 90 LNG and 21 condensate cargoes. By the end of April 2011 it had produced 26 LNG cargoes and 6 condensate cargoes. We had 4 recordable injuries between October 2010 – April 2011 which have been thoroughly investigated and lessons learned have been circulated internally. We continue to focus strongly on all aspects of HSE. Journey to Zero Incident campaign series has been started in 2011 early, the first round focused on PPE compliance campaign. An excellent final two months in the fourth quarter 2010, with zero recordable injuries.


5. INTEGRATED SOCIAL PROGRAM 5.1 The Social Management Plan Fulfilling social commitments continued as planned during the October 2010 – April 2011 reporting period. Program implementations have referred to the second stage of ISP strategies, with focus on development “with and by” the communities. The highlights of the monitoring activities are summarized as follows: 5.1.1 Livelihood

Micro-enterprises and Micro-finance

The programs provided the communities with wider economic opportunities to increase the incomes of both individuals and households through support for capacity building and access to finance and wider markets. During this period, the activities became more focused on agricultural and fishery programs as well as support for the development of local financial cooperation. To ensure that these programs are delivered as planned, Tangguh LNG has established a contract with Bina Swadaya to help farmers; fishermen and local businesses develop capacities, assets and markets.

Bird’s Head Business Empowerment Program

In the Papua “Bird’s Head” level, business empowerment program enter in the new phase to empower local business institution such as Chambers of Commerce and Industry (Kadin Papua) and Papuan Oil and Gas Partner Forum, while continued mentoring for selected local business people in Sorong, Manokwari, Fakfak and Bintuni. New contract has awarded by PT Andalan Unggul Konsultan.

Workforce Management

During the operational phase, the Tangguh workforce management continued to maintain manpower commitments to their targeted Papuans. The recruitment process still follows the previous procedures established during the construction phase. Employee recruitment from the DAVs through the Tangguh Workforce Management (WFM) is based on contractor requests. The WFM sends a letter to the heads of villages to obtain recommendations regarding the names of community members who are selected for further health and administration processing. Applicants from outside the DAV recruitment process apply through respective contractors companies; they are then acknowledged administratively by Manpower Agency of Teluk Bintuni, Sorong, Fakfak or Manokwari.. 5.1.2. Education

Basic Education

This program aims to improve the basic quality of education by assisting the local Teluk Bintuni administration to manage the education sector as well as increase the participation and teaching-learning process of the students and educational providers. A partnership was established between Tangguh LNG and the British Council in 2006


to supply technical assistance for the Education Agency of the Teluk Bintuni Regency. This ended in 2010, and the British Council was again awarded an additional 3 years to continue the education program until 2013. A partnership was also formed with the Sampoerna Foundation to accelerate improvements to the quality of the schools in Tanah Merah to meet national standards. The schools in Tanah Merah are expected to be a model for other schools in Teluk Bintuni.

During this period, support for education in the teaching-learning process and school operations in DAVs were handed over to the local Bintuni government. Technical assistance for three foundations to operate schools in DAVs is continuing through the British Council.

Vocational Training

The training center in Aranday (BLK) has been handed over to the local government of Teluk Bintuni. However, Tangguh LNG continues to provide support to improve community capacity through courses that are organized in cooperation with livelihood and community development programs.

Tangguh LNG has also continued its partnership with the University of Cendrawasih to deliver intermediate literacy and arithmetic training in the DAVs, which aim to improve the abilities of DAV community members to read, write and do basic math.

To meet the employment target in the EIA and as part of a Papuan Development program, the Tangguh LNG launched a scholarship program and internship opportunities for students who come from Teluk Bintuni and especially from DAVs. Partnership has performed with several local universities in Papua such as the University of Cenderawasih, University of Papua, University of Science and Technology (USTJ), etc. Scholarships are also provided to outstanding Papuan students who are studying in top universities in Java, as well as to high school students who continue their studies in BUPER High School in Jayapura and technical school of oil and gas (SMK Migas) Cepu.

5.1.3 Health

Mediatama Ciptacitra (MCC) was signed a 3-year contract to provide community health programs and technical assistance to the local Bintuni government to improve its health services, especially in the DAV areas. The transition process from The Anak Sehat Papua (ASP/ Papuan Children’s Health) has been done smoothly. These programs focus on the following areas:

Mother and Child Health Program

MCH programs cover the following activities: (i) Nutrition posts, which encourage families to deal with their children’s nutritional problems. These integrated health post (Posyandu) are used to identify malnourished children. The catch-up immunization program for children under five is conducted in cooperation with the Community Health Center (Puskesman/health) and health administration of Teluk Bintuni. (ii) The Pregnancy Post, which involves village midwives who perform antenatal examinations, and provide both blood/iron supplement tablets and


education to pregnant mothers. Midwives are also kept on call to help with maternal emergency cases.

Sanitation and Clean Water Program

One of the strategies to promote and sustain the effectiveness of programs has been the establishment of the Community-Led Total Sanitation (CLTS) program, which is, as the title suggests, spearheaded by the community. This concept aims to facilitate the community in understanding the sanitary problems and fixing them by using these principles: no subsidies, no lecturing, the community as the leader and total participation of the community. This program starts with analyzing and planning, which then leads to executing and evaluating activities as well as maintenance.

The CLTS method also emphasizes the importance of improving awareness of behavioral changes to promote sanitation, especially in terms of developing habits of using proper and safe restrooms.

Malaria Control

This program supports the Bintuni administration and village communities to control malaria. A survey was conducted to determine the malaria prevalence rates in each DAV during the rainy and dry seasons; this survey involved the Village Malaria Workers (JMK). The malaria control approach was also conducted by JMK through social marketing; the campaigns in many areas were also supported by posters that were put up in various places in the villages as well as information disseminated through a film on malaria and the role of JMK. During this reporting periods ASP also supported health administration of Bintuni to replicate the malaria control system established in DAVs to others area of Bintuni.

Diarrhea Prevention

This program supports the Bintuni administration to control diarrhea, which has become a seasonal epidemic in the DAVs. The awareness campaign has continued through information sessions and promotions involving Posyandu (Integrated Health Post) cadres, news from Teluk (Kadate) bulletins, posters and radio broadcasts. Prevention efforts have also included providing Oralit at the houses of the Posyandu cadres and village drugstores (KOT3).

The Tangguh Community Health Program is also working with the faculty of the Community Health University of Gadjah Mada to conduct surveys of diarrhea outbreaks in the DAVs. The survey results will be used to support the health agency of Teluk Bintuni to formulate diarrhea prevention strategies, especially for the DAVs area.

HIV/ AIDS Prevention

To anticipate the spreading of STDs, including HIV/AIDS, throughout the area and among the Tangguh LNG’s workers, ASP has developed programs to improve the awareness of the risks of such diseases through communication, information and training as well as the promotion and distribution of condoms to workers within the


LNG site, Babo Base Camp and the DAVs. ASP has also partnered up with the Regional HIV/AIDS Prevention Committee (KPAD) in FakFak, Manokwari and Bintuni regencies.

ASP’s contract will end in December 2010, currently tender process for next community program is underway.

5.1.4 Governance

Government programs assist the local government in delivering public services in the villages, districts and regencies.

At the community level, programs continue the CAPs and involve both community and government participation in development and security around the Tangguh LNG area. The participation of women and other adat community members is important to strengthen civil society.

Government

Partnerships with various institutions have continued to support the capacity building of local government officials in the regencies, districts and villages. The 3 years partnerships at the regency and district village level have been awarded to UGM. .

ICBS

The programs aim to support the development of security forums in the DAVs in which community leaders, government officials and national security forces meet together to solve security issues within and around their areas. During this period, Tangguh LNG had supported human right training to the government security officials and law awareness to the communitiesin villages.

Community Action Plan (CAP) and Infrastructure development

As per our commitments, this section describes the community development activities conducted in Weriagar, Mogotira, Tomu, Ekam, Taroi, Tofoi, Otoweri and Tomage, which are the Directly Affected Villages (DAVs), and Irarutu III and Sebyar Rejosari. Community development in Tanah Merah and Saengga are discussed in the sub-chapter on Resettlement of Tanah Merah Village.

PBM Evaluation

Community participatory planning (PBM or Perencanaan Bersama Masyarakat) is the process to ensure that community aspirations have been adopted. CAP documents produced from the PBM process will ensure that the communities can make their own development priorities. Principally, “PBM and evaluation” is conducted annually in the DAVs, but some villages conduct it once every two years because some program priorities need to be integrated. Starting this2010, the Tanah Merah, Saengga and Onar communities have implemented PBM and CAPs for the first time.

Clean Water Program for the Community


This program aims at providing people in the DAVs with access to clean water. The availability of clean water is a necessity that directly affects the improvement of community health quality.

Infrastructure Development

This program aims to support the improvement of the social and public facilities in the DAVs, which indirectly affect the quality of health, education and local economic growth. The implementations of infrastructure projects need the participation of community members in terms of manpower and materials.

The handover of public facilities and the implementation of the CAP programs in the RAVs are one step further towards helping the communities adjust to their new lives. The agreement to hand over the water and electricity facilities was signed between Tangguh LNG and the local Bintuni government in 2008, with the transition period starting in May 2010.

The 1999 agreement stated that LNG Tangguh would deliver public and social facilities to the community and government. Therefore, with the end of the LARAP program, the Tangguh LNG is renovating damaged public and social facilities to ensure that the facilities will be handed over in good condition.

Capacity Building

This program aims to improve the communities’ livelihood skills. The training and mentoring include generators motor repairs, cooking, sewing, fisheries, agriculture, post harvesting, management skills etc.

5.1.5 Community Relation

Tangguh LNG recognizes that the success of the project depends on the relationships with various stakeholders, including the communities, government and non-government organizations.

Tangguh LNG therefore established the Community Relations (Comrel) Team before construction started in 2002 to manage the communities’ aspirations and interests in the DAV. In 2006, grievance procedures were implemented in the DAVs to give the communities a chance to channel their complaints related to the project.


5.2 The Social Monitoring Plan (RPL)

Implementation of the social programs continues as per plan. Achievements during this period are listed below.

5.2.1 Livelihood

Micro-Enterprises and Micro-Finance

• Delivered 141 tons agriculture and fishery product from Arguni, Tanah Merah, Babo and Bintuni stocking points to LNG Tangguh catering.

• Delivered 6 farmers from Babo, Tomu, Ekam and Taroi in participation agricultural training at Agricultural Training Center (KPPT) Salatiga, which 2 were women.

• Conducted Households Economic Training (PERT) in Otoweri, Tomage, Onar, Taroy, Tomu and Ekam, 153 households participated

• Saving campaign in DAVs, 100 poster distributed • Conducted cultivation and fertilization training in Tanah Merah, Saengga, Tofoi

and Babo, 112 farmers participated; • Conducted mentoring session on subsistence agriculture in Weriagar,

Mogotira, Tomu and Ekam, 50 farmers participated • Conducted mentoring session for cooperatives and saving - loan business

group (UBSP) in Otoweri, Tomage, Onar, Taroy and Sebyar Rejosari; • Completed construction of cooperative building in Tofoi.

Picture 1. Mentoring business management for Saving and Loan Unit (UBSP) members


Picture 2. Fishery product from Arguni Stocking Point

BHBEP

• Assisted Chambers of Commerce and Industry (Kadin Papua) and Papuan Oil and Gas Partner Forum on work program planning and website development. Total number of Papuan Oil and Gas Partner Forum are 197 companies, of which 36% were owned by indigenous Papuan

• In cooperation with Teluk Bintuni Development Foundation (YPTB) and Tax office conducted workshop on tendering processes and tax familiarizations, 22 local business people attended.

• Continued mentoring session on business processes for selected 42 unique firms in Teluk Bintuni, Fakfak, Sorong and Manokwari.

• Conducted training on business processes for 22 local businesses people, of which 2 were women and 3 were indigenous Papuan.

Workforce Management

The number of operational workers has continued to increase, during March 2011 total 3296 people worked at the LNG Tangguh site, of which 2948 employee worked in Tangguh Operation, and the 348 employee working for Tangguh Turnaround Project.

The updated numbers of workers are summarized below:


Table 1. Number of Operation Workforce at Tangguh LNG Site Original %DAV %Total Papua

Skillfull DAV

Bird's Head

Others Papua National Expatriate Total Actual Target Actual Target

Unskilled 120 0 0 0 0 120 100% 100% 100% 0% Low-skilled 455 279 4 0 0 738 62% 70% 100% 100% Semi-skilled 112 255 23 73 0 463 24% 8% 84% 49% Skilled 19 204 73 1006 5 1307 1% 0% 23% 14% Manager/ Supervisor 1 38 14 243 24 320 0% 0% 17% 7% Total 707 776 114 1322 29 2948

Source: Tangguh WFM Team, March 2011

The tables above show percentage of Papuan workforce has met the total target of 54% vs. 41%, except for the low-skilled level originating from DAVs was still under the target.

To achieve long term target, company established an integrated program named Papuan Capability Development Program with activities includes planning implementation and monitoring every year.

1. Company conducted direct and in-direct recruitment for operator and technician positions to joint challenger program that will be feeder pool for the long-term managerial and technical position.

2. Delivered Papuan Fresh Graduate Internship Program for six month work in any department and contractors under Tangguh LNG. The internship opportunity has given work experiences to candidates to compete in the recruitment process at any industry

3. Provided structured training and career development for LNG operators 4. Established Papuan development programs in BP with the aim to improve

competitiveness and career development of Papuan employee according to the principles of transparency and meritocracy

5. English language training program for Papuan employee to improve communication skills in English

6. Delivered scholarship program for outstanding Papuan students who are study in selected Papuan universities i.e. University of Cenderawasih, USTJ, University of Papua.

7. In-cooperation with Sampoerna Foundation provided scholarship program for outstanding Papuan students who are study in the top universities in Indonesia.

8. Delivered scholarship program for Bintuni’s students to continue study at SMK Migas Cepu, SMA BUPER Jayapura and Surya Institute with the aim to improving technical skills and student success in competition into top Universities in Indonesia. Total 120 students from Papua received scholarship, which 40 are women.


5.2.2 Education and Vocational Training

• Conducted student accessibility assessment in Weriagar, Babo, Tofoi, Kelapadua, Onar

• Conducted education baseline survey in Bintuni, Moskona and Manimeri • Completed construction of 3 classroom and 2 teacher houses • Conducted teacher training on mathematics and Bahasa Indonesia, 91 teachers

attended • Completed Literacy training in Tofoi • Conducted early class pedagogy training in Babo, 36 teachers attended. • Conducted school management training in Tanah Merah by Sampoerna

Foundation, 9 teachers attended. • Conducted mentoring session on mathematics, english, social and natural

sciences in Bintuni, Manimeri and Moskona, total 123 teachers participated. • Provided education assistances for a total of 604 students from DAVs through

CAPs and Dimaga programs, of which 260 were female.

Picture 3. Mentoring on Supervisory School for Education Officers in Teluk

Bintuni

5.2.3 Health

• Hold malaria education in Tomu, Ekam, Taroi, Arandai and Babo, 277 locals attended

• In collaboration with local government of Bintuni conducted family planning campaign in Babo, Tanah Merah, Saengga, Weriagar and Mogotira, 187 locals attended.

• Conducted education training on maintenance of rain water collection facilities in Tanah Merah, 5 households participated.


• Conducted behaviour campaign for school in Saengga and Tanah Merah, 273 students participated

• Conducted session trigering Community Lead Total Sanitation (CLTS) in Weriagar

• Conducted TB education by field facilitator in Tofoi, Weriagar, Tomu and Ekam, 108 locals attended

• Conducted Knowledge Practice and Coverage (KPC) survey in Saengga, Tanah Merah, Onar, Tofoi, babo and Aranday.

• Conducted Malaria prevalence survey in Tanah Merah, Saengga, Onar, Otoweri, Bintuni, Weriagar and Mogotira, 341 slides collected.

• Completed mentoring session for KOT3 in Aroba, Saengga, Otoweri, Tomu, Ekam and Onar.

• Conducted diarrhea treatment and prevention in DAVs

Picture 4. Clean water program through bio-filtration system in Ekam


Picture 5. Diarrhea survey in Babo

5.2.4 Governance

CAPs and Infrastructure Development

• Conducted PBM in Tomu, Ekam and Tofoi of which program priorities are public facilities renovation, agricultural, fishery programs, and skill training.

• Completed gutter installation for 50 houses in Otoweri • Completed 8 unit platforms and 500 litre tanks at Vocational Center (BLK)

Aranday • Completed stocking point building and genset house in Taroy • Completed 70% of public facilities renovation in Tanah Merah, Saengga and

Onar Baru

Picture 6. Community Participatory Planning in Tomu – CAPs Program


Government Capacity Building

• Completed governance baseline survey in DAVs by UGM • Continued mentoring session in planning and budgeting (Renstra) of Bintuni

agencies (education, health, youth, as well as marine and fishery), planning and development agency and legislative secretariat

• Restart governance capacity building program in the district and village level by the UGM, continued mentoring sessions as the previous programs that include planning, budgeting, roles and responsibilities, and administrative matters

• Total 269 government officials attended training and mentoring, of which 61 were women.

Picture 7. Mentoring Village Office officials in Weriagar

Civil Society Strengthening

• Media campaigned at local medias in relates to civil society program, with the targeted audience NGO in Papua Barat.

Integrated Community Based Security

• Conducted law socialization in by BP’s Security Team Incorporation with Fakfak Local Polices, 1807 villagers from Tomu, Ekam, Taroy, Wimbro, Babo, Sidomakmur, Tofoi, Tanah Merah, Saengga, Onar, Tomage, Otoweri, Goras, Kokas and Ubadari attended;

• Conducted re-socialization of Joint Security Guideline in Bintuni, Babo, Fakfak and Manokwari, 241 local police attended.


5.2.5 Community Relations

• Conducted mangrove re-vegetation in Weriagar, Taroy and Onar, 100 trees planted

• Continued support in community engagement of seismic activity in Weriagar and Mogotira

Picture 8. Installment of village news board in Weriagar

Picture 9. Regular meeting between Tangguh Community Relation team with

community leaders in Tomu


6. NON-COMPLIANCE STATUS UPDATE Tangguh ADB Loan Tranche Agreement defines non-compliance as follows: Level 1 E&S Non Compliance: “means any failure to comply with, or any action or omission which is inconsistent with, any Environmental and Social Requirement, but which failure, action, or omission does not constitute a Level 2 E&S Non Compliance.” Level 2 E&S Non Compliance: “means any failure to comply with, or any action or omission which is inconsistent with, any Environmental and Social Requirement, but which failure, action, or omission (considered either on its own or in conjunction with any other one or more such failure(s), action(s) or omission(s)): • Has resulted in or is reasonably likely to result in material damage or harm to, or a

material and adverse impact on, the environment; • Constitutes or is reasonably likely to constitute a “significant impact” for the

purposes of and as defined in the Indonesian Decree Concerning Guidelines for the Determination of Significant Impacts (BAPEDAL Decree No. KEP056/1994);

• Has resulted in or is reasonably likely to result in material damage or harm to, or a material and adverse impact on, the lives, livelihood, quality of life, health, safety, security, property or cultural heritage of affected people; or

• Has resulted in or is reasonably likely to result in the revocation of, or the refusal to grant, any approval, consent, permit or other authorization required for the implementation of the Tangguh E&S Project (but only to the extent that such approval, consent, permit or other authorization is required for implementation o the Tangguh E&S Project at that time.”

The last time the External Panel visited Jakarta and Papua was in April 2010, with the aim of fulfilling social compliance and related recommendations. During their visit, the External Panel found no non-compliance related to the social section. However, there were some notes regarding items that require remedial actions. (see Appendix A on LARAP remedial actions).

7. ADDITIONAL INFORMATION The second Tangguh Independent Advisory Panel (TIAP) performed their first review of the Tangguh Social programs in September. TIAP was first established in early 2002 to provide external advice to senior decision-makers regarding non-commercial aspects of the Tangguh LNG Project and the first TIAP members completed their tenure in 2009. The second TIAP focused its review process on security, human rights, governance and revenue management, whilst also maintaining an overview of other non-commercial issues. Its scope avoids duplication of independent external reviews carried out by the Tangguh Lenders Group.


The second TIAP’s visit has resulted in many positive observations, including its conclusion that: “Support for the Project and its potential to improve Papua is strong among government officials at all levels”. We understand the Panel feels that the Tangguh social programs are running well and delivering good results to the surrounding community. The new panel also confirms the conclusion reached by the first TIAP that: “There is near unanimous support for the Integrated Community Based Security (ICBS) program, from national leaders to the Kapolda (Papua Chief of Police) and the Pangdam (Papua Military Commander) to local villagers”.

In its report, the Panel provides several recommendations on the topics listed above. Most of these recommendations are aligned with Tangguh social investment strategy particularly on the Security and Governance programs. The second TIAP review report and BP response can be found in the BP website http://www.bp.com/modularhome.do?categoryId=4760&contentId=7009216.


8. EVALUATION RESULT

As part of its corporate responsibility, the Tangguh LNG has contributed to local government in efforts to improve community living standards in Teluk Bintuni and especially in the DAVs. The company believes that sustainable communities ensure sustainable operations. Social programs in ISP’s second strategy have been fully implemented at this stage, with focus on five keys areas: livelihood, education, health, governance, communication and external relations.

During this reporting period, livelihood programs continued to make good progress in developing local economies. Binaswadaya signed a new 3-year contract with Tangguh LNG to develop agriculture, fisheries and micro-economics, which were a continuation of previous economic development programs.

Since the implementation of the first ISP strategies, various economic development activities have been carried out, including the development of skills to catch fish, process harvests and manage agricultural programs. At this time, the activities have directly benefited the DAV communities by increasing household incomes.

Agricultural training and mentoring are continuing to run. During this period, six farmers from Tanah Merah, Saengga and Onar completed special agricultural training in KPPT Salatiga. A total of 36 farmers have attended the training since 2009, six of whom have succeeded in becoming mentors for other farmers in their villages. Mentoring sessions in Tofoi, Tanah Merah and Saengga focus on cultivation and fertilization skills for commercial crops. A banana plantation has been established in Tofoi.

Stocking points in Arguni, Tanah Merah, Tofoi, Babo dan Bintuni delivered 234 tons of fish and vegetables to the Tangguh LNG catering during this period. The Taroy stocking points have just been established, with the focus on delivering shrimp products. A collecting point in Tofoy has been constructed as a gathering center for vegetables from farmers before they are delivered to the market.


Figure 1. Vegetables, Fruit and Fish delivery to Tangguh LNG Catering (kg)

Source: Tangguh Micro-enterprises & Micro-finance, Dec 2010

In an effort to improve capacities in financial management, the Satunama Foundation conducted a Household Economics Course in the DAVs. Since 2008, a total of 344 households have attended. While Birds’ Head Business Empowerment Program provides institutional strengthening assistances on management and linkages to the Papuan Chambers of Commerce and Industry (Kadin Papua) and Papuan Oil and Gas Partner Forum.

In the workforce field, a total of 3296 people were recorded as Tangguh LNG workers in March 2011, 49.70% of whom came from Papua, and 15.72% of whom came from the DAVs. During the operational stage, workforce recruitment focused on experienced candidates in different skills levels, with less recruitment of unskilled workers.

In the field of education, the British Council is continuing to conduct mentoring sessions for the Bintuni Education Agency and support the local government in providing educational services in Teluk Bintuni. After five years of assistance, the education programs are beginning to show improvements in the educational quality in Teluk Bintuni, which is visible from the student passing rates and overall increases in the school enrollment rates.

Vegetables, Fruits and Fish delivery to Tangguh LNG Catering (kg)2008 - 2010

1,933

116,036

141,791

2008 2009 2010Year


Figure 2. Student Passing Rate in Teluk Bintuni

Source: Tangguh Education, Dec 2010 Figure 3. Overall Enrollment Rates of Teluk Bintuni

Source: Tangguh Education, Dec 2010

Gross Enrolment Ratio in Teluk Bintuni Regency 2006 - 2010

86.0789.8 91.7

96.4 99.465.8

75.3 75.983 85.4

20.5

33.9 44.3

52.476.2

2006 2007 2008 2009 2010

years

SMUSMPSD

Student Passing Rate in Teluk Bintuni2008 - 2010

93.27% 98.73%89.62%80.42%

91.20%

42.21%

20.32%

65.92%

89.59%

2008 2009 2010

Year

Elementary SchoolJunior High SchoolHigh School


In the area of health, Media Cipta Citra/Yayasan Sosial St. Agustinus (MMC / YSA) is continuing the ASP programs to support the local health agencies so that they can provide health services for the communities, with focus on preventing malaria, diarrhea, TB and HIV/ AIDS, as well as improving mother and child health, and clean water and sanitation. After five years of implementing community health, Tangguh LNG has contributed significantly to the quality of community health in the DAVs through improvement of health indicators as shown in following graphs:

Figure 4. Malaria Prevalence in DAVs

Source: Tangguh PEH, Dec 2010

There was a slight increase of Malaria prevalence in 2010. Several turn over of Malaria voluntary workers (Juru Malaria Kampung - JMK) by the Health Center (Puskesmas) in Magarina (Mogotira) and Selawir (iOnar) villages in 2010 has resulted in the increase in Malaria prevalence due to temporary lack of support for Malaria prevention. Re-capacity building and mentoring has been conducted for the new Malaria workers to support their role in controlling malaria in DAVs.

Malaria Prevalence in DAVs2006 - 2010

4.8%

3.8%

2.4%

0.6%

1.2%

2006 2007 2008 2009 2010Year


Figure 5 . Diarrhea Cases in DAVs


Figure 6. Infant Mortality Rate (IMR), Neo-Natal Mortality Rate (NMR) and Maternal Mortality Rate (MMR) in DAVs


IMR, NMR and MMR in DAVs2006 - 2010

135

5060

4727

111

65 57 61

3519

6 0 015

2006 2007 2008 2009 2010

IMR (1000 of live birth) NMR (1000 of live birth) MMR (1000 of live birth)

Case Fatality Rate (CFR) Diarhea in DAVs2006 - 2010

4.70%

2.60%

6.30%

0.70%

3.90%

2006 2007 2008 2009 2010

Year


Maternal Mortality Rate (MMR) in 2010 has increased. This is due to fewer visits of government supported midwives to the DAVs and village community members’ still believing in the traditional (non-medical) midwifes to handle deliveries. This has led to less health monitoring of pregnant women by the government health office. Improvement efforts have been made by the Tangguh Public Environmental and Health Team together with the Health Office of Teluk Bintuni to encourage midwives to perform more frequent visits to the villages through strengthening of the Pregnancy Posts. Referral management system is also built to provide information to the Health Office of Teluk Bintuni in case of pregnancy with special conditions in the villages that need special attention from the Health Office and local health centers (Puskesmas).

In the sector of governance, PSKK UGM is continuing the mentoring activities with the Teluk Bintuni government officials at the regency, district and village levels as well. During this period, activities were focused on planning and budgeting.

In the DAVs, the community development program continues to support the communities in developing their villages through the CAPs program. After more than five years, the implementation of the CAPs program has progressed well since the communities conducted all the CAPs processes: from the planning through the participatory planning, as well as the implementation, monitoring and evaluations.

As part of the community-based security, the Tangguh LNG security team has familiarized the 24 villages surrounding the Tangguh LNG area with the laws. The purpose of these activities is to improve the communities’ awareness of the laws. The activities are in cooperation with the local Bintuni and Fakfak police.

Tangguh is interested in building and maintaining relationships with the communities, local governments and other stakeholders in the surrounding areas. The Tangguh External Relations and Community Relations teams continue to conduct regular meetings with the community and government officials and stakeholders to synergize social programs and especially maintain good long-term relationships.


Appendix A

No. Remedial Action identified in LARAP Completion Audit

November 2009.

Progress in November 2009

Estimated Completion Date

Operator’s response and Action status as of May 2011

1. Dimaga Foundation:

Constitute a new board of management with increased representation from the beneficiary groups, and an independent board member with relevant experience.

Operator in 2009 appointed an independent member of the Board of Trustees. It is moving towards local representation with the appointment of clan facilitators for Dimaga Foundation.

Will be substantially completed with appointment of Wayuri , Simuna and Soway clan facilitators.

December 2010.

Response:

Operator is in line with EP with regards to this commitment.

Status: Closed

Representative of the three clans have been appointed for Dimaga Foundation.

2. Appoint an independent financial advisor to provide investment portfolio advice.

In progress. The Operator is formulating a strategy to hand over management of the Dimaga Foundation to the beneficiaries. An independent financial advisor, with recognized credentials in giving prudent advice, can be appointed at any time.

December 2010. Response:

Operator is in agreement with EP with regards to this commitment, provided that the beneficiaries have a clear understanding around capital market dynamics and see the benefit of hiring an independent financial advisor.

Status: Ongoing


Operator is currently receiving financial advice from internal BP senior financial team. The strategy to build knowledge on investment for the Dimaga representatives has been prepared and is being implemented. The decision to hire an independent financial advisor will be made by the Dimaga representative once they have a good understanding of the capital market.

3. Incorporate inflation-adjusted

growth into capital base. Boost net returns to 3-5 percent per annum.

Investment strategy in progress.


Operator continues to put the effort to meet the LARAP commitment.

Status: Ongoing/Closed

The Operator continues to seek advice from internal BP senior financial team for the investment strategy. The investment strategy at the moment is Dollar deposit at the local bank, which is currently


giving a return of above 2%, down from 3% in the past. To gain a higher return, we are considering to split the deposit into Dollar and Rupiah currency while still ensuring the safest investment for Dimaga funds.

4. Public Utilities:

Repair the generator system at Onar Lama and agree on a plan for future maintenance with Onar Lama residents.

In progress. The External Panel supports Onar Lama request for overhaul of utilities as a demonstration training exercise.

December 2010.

Response:

Operator is in line with the commitment regarding utilities in Onar Lama.

Status: Closed

Generator system repair in Onar Lama was completed in 2010. Since 2010 the operating costs of the generator is handled under CAPs

5. Rationalise photovoltaic solar

technology. Photovoltaic technology to be removed.

December 2010. Response & Status: Closed

The photovoltaic system is no longer part of the electricity system in the RAV.


6. Review utilities to identify cost-effective system improvements, appropriate and sustainable technologies; and back-up arrangements.

In progress. Plans include providing separate generators to water pumps; and reducing electricity capacity from the current 900 to 450 w/h per household in line with current Indonesian standards.

Back up water tanks have been provided to houses and public facilities in Tanah Merah Baru through Koperasi Mayri. CAP to be an option for providing water tanks to other RAVs, if RAVs request it.

December 2010.

If kabupaten support for utilities fails (see below), the Operator will need to revisit this recommendation.

Response:

Operator is in agreement to deliver this commitment.

Status: In progress

Separate generators to water pumps have been installed – Status: Closed

Discussion amongst Operator, Local Government of Teluk Bintuni and the community with regards to reducing electricity capacity from 900 to 450 W/h (due to the capacity of generator) is still progressing to build understanding and acceptance of the change.


7. Socialisation on utility payments.

In progress working through cooperatives, subject to community ability to pay.


Operator is on track to socialize this requirement to the community.

Status: In progress

A business unit under Mayri cooperative to manage the payments has been established and metering and payment procedure has been developed.

Part of the community has started to make electricity payments, however discussion amongst Operator, the cooperative and community is still progressing to improve understanding of payment process in order to build commitment.

8 Monitor progress in

cooperative performance in utilities management.

In progress. New agreements phase in kabupaten financing during 2011-12, with

2011-12.

ISP2 to monitor utilities.

Response:

Operator agrees with this action item.


cooperative management. All RAV cooperatives need capacity building for this role, especially Wermina and Yenadu.


Capacity building for cooperatives continues to ensure operations of public facilities are key deliverables for ISP Phase-2 program in 2011-2015.

Business units under cooperatives to manage utilities have been established.

9. Handover:

Conduct consultations with RAVs for permitting requirements, pre-conditions and establish rules and regulations for use prior to signing the Handover Agreements for Onar.

In progress for the new kampungs of Onar Lama and Onar Baru.

December 2010. Response & Status: Closed

Handover was completed in April 2011.

10 Complete the agreed list of repairs for all RAVs.

In progress. Contract for repairs to public facilities has been let. This should cover repairs in Onar.

December 2010.

Response & Status: Closed

Operator is in line with the commitment for repair as part of hand-over. We have completed all the renovation in the agreed list


12 Incomes and Livelihoods:

Examine and formulate actions to address apparent decline of incomes in Onar Baru and Onar Lama, and loss of trading and small business activities, since the 2001/2 Census. This is to improve incomes and livelihoods in line with the LARAP objectives.

Data disaggregation from UGM now show that household and per capita incomes have risen slightly in Onar Baru and Onar Lama but significantly less than in other RAVs. Income per capita in Onar Baru is well below all other RAVs. Expenditure per capita in Onar Baru has fallen since 2001/2 Census. Livelihood options remain limited in Onar.

The External Panel recommends that the ISP/LARAP team focus on diversifying and enhancing livelihood options in Onar,

December 2010, with follow-up action in ISP2 Livelihood program.

Response:

Operator is in progress in diversifying income sources in Onar Baru and Onar Lama. However, given that fishery is the main source of income, we may focus on strengthening the agriculture and fishery activity in the area.


To keep improving the livelihood of the DAVs, ISP-2 program will continue to explore opportunity to diversify the livelihood options, in addition to developing fishery and agricultural program in Onar Lama and Onar Baru

The LARAP commitment is that the community income must be higher than the income before the move. This has been achieved for Onar Baru as shown in the 2009 social economic study. However, the Operator continues to work


especially Onar Baru, over next 6 months.

with the community to improve the income level of Onar communities with the ISP-2 programmes.

Next survey to monitor the social and economic progress will be conducted in 2011.

13 Reconsider and formulate a

plan for the introduction of livestock for agricultural development.

The External Panel finds that, although there is insufficient expertise now at the kabupaten level to support systematic livestock introduction in RAVs, the LARAP Salatiga facilitators can assist where requested by communities, for example, in Onar Lama.

To be addressed by ISP/LARAP staff over next 6 months and in ISP2 Livelihood program.

Response:

Operator will observe and support the kabupaten initiatives on livestock programs. This is in-line with ISP-2 to develop programs with the community and local government. At the moment the efforts are focused on growing and sustaining the agriculture and fishery fresh products.


The operator is open with the suggestion as long as the kabupaten and community are ready to initiate livestock


programs.

Kabupaten has not yet initiated livestock programs.

14 Facilitate approval of prawn

and fish products produced and marketed by RAV women.

External Panel finds that BPOM in Sorong is responsible and recommends they be invited to Tangguh to facilitate approval.


Operator is in agreement to facilitate commercialization of fish products upon request from the community.

Status: On hold/Closed

Contact with BPOM in Sorong has been initiated by the RAV cooperatives, operator will facilitate if required by the community. However, due to the high demand for agriculture and fresh fishery products, the cooperative decided to put the BPOM approval process on hold and focus on the fresh products which do not need BPOM approval. Operator will continue to support once the cooperative


restarts the process of BPOM approval.

15 Investigate and address the

reasons for the apparent decline in fish and prawn incomes since 2001/2.

Under consideration. To be addressed by ISP2 Livelihood program.

Response & Status: Closed

The fishery survey conducted by Tangguh Environment team in 2009 has not shown any decline in fish and prawn resources. This claim of “apparent” decline in fish and prawn is not substantiated by the study. We have communicated this to the community and there has been no claim raised at the moment.

Objective and ScopeReport MethodologyTangguh E&S ISP Performance-Executive SummaryTangguh LNG UpdateIntegrated Social ProgramAdditional InformationEvaluation Result

Documents

Environmental and Social Monitoring Report...Sorong, Fakfak or Manokwari.. 5.1.2. Education Basic Education This program aims to improve the basic quality of education by assisting