ResponseBank – The ResponsiBank Indonesia Coalition consisting of 13 civil society organizations in Indonesia, namely PRAKARSA, WALHI, PWYP Indonesia, Auriga Nusantara, KPI, PEKKA, ICW, Lokataru Foundation, INFID, INDIES, Kemitraan and YLKI Together with the Fair Finance Coalition of the Netherlands have sent various complaints to the banks that are financing the Cirebon PLTU project. ResponsiBank Coalition views banks as funders having a responsibility to ensure that their financing and investments do not harm environmental, social or governance aspects. Tuesday (24/1/2023).
This effort is motivated by the multi-sector impact caused by the PLTU on the surrounding community and is not in line with the Paris Agreement commitments contained in the NDC 2030 document regarding reducing carbon emissions. "We fishermen and farmers cannot cultivate fish or shrimp because of polluted sea water, closed waterways, and pollution from burning coal for PLTU operational activities. Salt production has also decreased due to obstructions to the flow of seawater and the impact of sea pollution," said Moh Aan Anwarudin, Chairman of the People's Community for Environmental Rescue (RAPEL) Cirebon.
This then spreads to the social and economic impacts of communities around the coast where people's income has decreased since the construction of the PLTU project. The construction of the PLTU also creates social conflict because there are people who are pro and contra to the PLTU development project.
In supporting data and information related to the impacts experienced by the community, the ResponsiBank Indonesia Coalition conducted a search for investors and financial service institutions that finance the PLTU 1 and 2 Cirebon projects. Since its establishment, the project has received financial support from ING Bank, JBIC Japan, Export-Import Bank of Korea (KEXIM), The Bank of Tokyo Mitsubishi UFJ, Ltd, Mizuho, Sumitomo Mitsui Banking Cooperation. The bank's financing practices are believed to violate international norms such as the Equator Principles, IFC Performance Standards, UN Global Compact, and OECD Guidelines for Multinational Enterprises. Responsibank is targeting ING as the lead consortium of project funders as an advocacy target. ING bank financing for the PLTU project reached USD 124 million. Apart from that, WALHI has officially filed a complaint with JBIC as the biggest funder of this project which reached USD 55 million.
Beginning in 2016, the ResponsiBank Indonesia Coalition had sent a complaint to ING due to the financing of the Cirebon Coal Power Plant 2. On 12 January 2018, ING responded with an explanation of how they had improved the general coal policy in 2015 and 2017. ING claimed the projects they had has complied with the Equator Principles and IFC Performance Standards.
"Our demand at that time was clear to ask ING to explain to the public what precise steps had been taken by the bank to prevent environmental destruction and human rights violations caused by PLTU Cirebon Unit 1 and PLTU Cirebon Unit 2. We also asked ING to explain to it was made public what appropriate steps were taken by the bank to prevent corruption and what steps were taken by ING after learning that the PLTU Cirebon Unit 2 environmental permit was obtained by bribing officials. If ING is not willing or able to provide concrete and in-depth answers to what ResponsiBank requested in the 2017 and 2018 complaints, and in questions 1 and 2: ING must stop financing PLTU Cirebon 2," said Ah Maftuchan, Coordinator of the ResponsiBank Indonesia Coalition.
The advocacy process carried out by Responsibank resulted in a meeting between representatives of the Cirebon community affected by the PLTU and ING representatives of the Netherlands and Singapore in June 2022, but the meeting did not produce a clear solution expected by the community. ING is not even transparent and tends to shift responsibility to the PLTU project manager. Even though as a project investor, ING is obliged to take responsibility for the negative impacts felt by the community.
The ResponsiBank Coalition stated that ING's complaint mechanism was ineffective. ING appears not to monitor the effectiveness of the complaints mechanism in Cirebon. Because the company has never communicated the existence of a complaint mechanism that can be accessed or used by the public. In addition, ING is also very confident in the effectiveness of the company's complaint mechanism, and stated that ING's decision to fund the project was because the company had taken steps according to standards in managing project risk.
The ResponsiBank Coalition also considers that ING does not take into account any information that comes from external sources. This goes against the due diligence process according to the OECD guidelines which state clearly that any due diligence process must be informed through engagement with stakeholders and by checking external sources.
Cases of non-compliance with law/corruption also cover the PLTU construction. Most recently, the KPK has named the General Manager of Hyundai Engineering Construction (HDEC), Herry Jung as a suspect in the alleged bribery case related to the licensing of the PLTU 2 Cirebon project. The alleged bribe was given to former Cirebon Regent Sunjaya Purwadisastra in the amount of Rp. 6,04 billion from the initial promise of Rp. 10 billion, which has now been detained by the KPK. Bribery related to PT. Cirebon Energi Prasarana which is working on the PLTU. ING stated in the meeting that ultra-supercritical technology has been applied, which it believes is the best and most efficient technology for coal-fired power plants to reduce emissions. Even though this technology is not used in the operation of PLTU Cirebon 1 which continues to pollute the air and water of the surrounding community with outdated technology.
ING mentioned during the meeting that there is no clear data on social impacts, while it is ING's obligation to check and verify information from external sources (news, etc) regarding impacts. This is contrary to the fact that ING stated that it had conducted a study for 2 years before financing the project. Why didn't ING ensure there was enough data on social impacts?
In addition, there were several questions that were not answered by ING during the meeting, such as follow-up steps to arrange meetings with all lending banks facilitated by ING, further investigations by an independent team, as well as transparency in the complaint handling process.
Furthermore, PLTU Cirebon unit 1 has been designated as a pilot project for the ADB Energy Transition Mechanism scheme. Dwi Sawung, WALHI's National Executive Energy and Urban Campaign Manager said, "In general we agree to the early retirement of PLTU Cirebon 1. This is directly acknowledgment by the Indonesian government, ADB and the project owner that this PLTU is causing climate change. But the ADB ETM process is in the dark without the participation of those affected by the PLTU operation. They are not even on the list of parties invited to the public consultation. How can the transition be fair while those affected are not invited to dialogue," he said.
Seeing the growing global agreement on green transitions and long-term development plans that lead to sustainable aspects, we encourage the following:
- Based on the UNGP guidelines, it is clearly stated that when impacts occur, related parties including the banking sector have an obligation to be responsible for overcoming these impacts, including by focusing on responding to complaints seriously, recovering losses suffered and steps to get out of the problems that have arisen.
- Diverting every line of investment and financing for PLTU construction that is currently underway and that has been planned to become a Renewable Energy generator development that is sustainable and equitable.
- Involve local communities as key partners in any sustainable development.
- Carrying out environmental and community economic restoration as a form of responsibility and an effort to achieve climate targets in Indonesia.
- Improving regulatory aspects governing financing and sustainable development