The objective of the Project is to contribute to Indonesia’s renewable energy capacity and decarbonization goals by supporting the installation and operationalization of a 100-megawatt greenfield utility-scale solar photovoltaic project.
The Project involves the development, construction, operation, and maintenance of a greenfield ground-mounted solar photovoltaic power plant with a capacity of 100-megawatts, located in Pasuruan, East Java province, Indonesia.
Applicable Policy and Categorization. The Project will be co-financed with the Asian Development Bank (ADB) as the lead co-financier. To ensure a harmonized approach to addressing the environmental and social (ES) risks and impacts of the Project, and as permitted under AIIB’s Environmental and Social Framework (ESF), ADB’s SPS will apply to the Project in lieu of AIIB’s ESF alongside national legislation and good international practices. AIIB has reviewed ADB’s SPS and is satisfied with the fact that: (a) it is consistent with AIIB’s Articles of Agreement and materially consistent with the provisions of AIIB’s ESF, including the Environmental and Social Exclusion List (ESEL) and the relevant Environmental and Social Standards (ESSs); and (b) the monitoring procedures that are in place are appropriate for the Project. ADB has categorized the ES risks of the Project in Pasuruan as Category B for Environment, B for Involuntary Resettlement and C for Indigenous Peoples (IPs) since no presence of IPs has been found in the Project area. This categorization is equivalent to Category B if AIIB’s ESF were to be applied.
Environmental and Social Instruments. A draft Environmental and Social Impact Assessment (ESIA) including an Environmental and Social Management Plan (ESMP), and a draft Land Acquisition and Livelihood Restoration Plan (LALRP) have been prepared. These draft instruments provide detailed ES risks and impacts, ES management measures, and monitoring commitments required for Project implementation. The draft ES instruments have been consulted with relevant stakeholders and are disclosed here (link 1, link 2) and on AIIB’s website to meet the disclosure requirements of AIIB’s ESF. In addition, the Environmental and Social Action Plan (ESAP) has been finalized with the Borrower to be part of the Finance Documents which consists of important commitments in terms of actions, timing and resources to fulfill the ESIA/ESMP recommendations.
Environmental Aspects. During the construction stage, various activities such as mobilization of heavy equipment and parts, land preparation, and installation of solar panels can have adverse environmental impacts. These include air quality impacts, noise pollution and vibration impacts, soil contamination from the use of heavy equipment, runoff, and soil erosion leading to water quality impacts, and potential loss of habitat and species due to land clearing and traffic congestion and deterioration of roads due to heavy traffic movement. During the operation period, key environmental impacts include surface water quality due to wastewater discharge from solar modules cleaning, impact to ecosystem services such as important provisioning services due to competition of various uses of natural resources, and impacts on biodiversity such as avian fauna mortality due to collision and/or electrocution on overhead power transmission lines, and disruption of wildlife movement and/or migrations due to barrier effect of solar PV arrays. Mitigation measures have been proposed in the ESIA/ESMP to address these impacts, including development and implementation of a waste management plan, monitoring of identified key species during the commissioning and operation of power transmission lines to review the current risk and impact, ensuring provision of buffer between Project footprint and nearby existing wildlife corridor, if any, and consideration of potential environmental impacts in selecting preferred technology and finalizing detailed design.
Social Aspects. Key social risks and impacts are land acquisition and economic displacement of farmers, sharecroppers, and a shop owner in the Project footprint. It is estimated that the Project will impact 85 households comprising 178 people. The Project will not involve any physical displacement or residential relocation except for physical relocation of one shop. The Project will require approximately 401.5 acres of land for permanent acquisition and will create a transmission line right of way over an additional 21.1 acres. Of this, approximately 397.2 acres is state-owned and managed land, which will be acquired by a formal agreement. The remaining land is privately owned and will be acquired through Negotiated Settlement. The state-owned land is being used by plantation workers, honey-bee farmers, security guards and field coordinators who will be provided with the right to continue their economic activities or employment in adjacent land owned by PT Perkebunan Nusantara and therefore no adverse economic impact is expected. The construction of transmission towers will result in the loss of some agricultural land and assets of affected farmers (i.e., crops, trees, structures) within the towers’ footprint. The construction of the transmission lines will result in temporary impacts during construction and some restrictions on the use of land under the stringing and tower pads. The LALRP will be finalized before first disbursement and prior to any impact occurring.
Gender Aspects. The Project conducted gender analysis as part of the ESIA, including identification of vulnerable groups. Gender is mainstreamed into all aspects of ES risk and impact assessment and management with specific measures for women being introduced in the ESMP and LALRP. Potential risks related to sexual exploitation and abuse and sexual harassment (SEA/SH) were also assessed and measures have been put in place to mitigate these risks including prioritizing employment of qualified local workers, training on Gender Based Violence and SEA/SH, a Code of Conduct for all workers, safe worker accommodation and toilets for men and women, and having a female officer as part of the Grievance Redress Mechanism (GRM) team.
Occupational Health and Safety (OHS), Labor and Working Conditions (LWC). The Project may also have potential OHS risks as the construction and operation of the Project may involve potential electrical hazards during the installation and energizing (commissioning) of solar panels and related electrical infrastructure. Further, bodily harm may result in the improper manual handling of heavy solar panels for optimal positioning on mounting structures, exposure to chemical hazards such as adhesives and sealants, and fire hazards when working with battery storage system, along with safety aspects of using heavy equipment for land clearance for Project site and access roads as well as poor living conditions in the workers’ camp if not properly located and constructed. These risks have been assessed as part of the ESIA, and mitigation measures have been included in the ESMP. In addition, as part of the enhanced supply chain due diligence, the Sponsors have provided evidence of a functioning supply chain management system.
Stakeholder Engagement, Consultations, and Information Disclosure. A Stakeholder Engagement Plan (SEP) has been developed to plan and manage stakeholder engagement activities throughout various stages of Project implementation. Relevant stakeholders have been identified and consulted on the draft ES instruments. The draft ESIA/ESMP and draft LALRP are disclosed in English, with an executive summary provided in the local language, ensuring accessibility for local stakeholders. These documents have been published on the websites of PLN IP, ADB and AIIB.
Project GRM and Monitoring Arrangement. PLN has an existing external communications mechanism to address concerns of individuals and other stakeholders including project-affected people promptly and transparently. Information on the established GRM and Bank’s Project-affected People’s Mechanism (PPM) will be disclosed in an appropriate and timely manner. AIIB will work closely with ADB and the Lenders ES Advisor in collective ES monitoring regularly, including regular ES meetings and site visits, to confirm that agreed upon ESMP and ESAP commitments are fully implemented. The Borrower will submit semi-annual ES monitoring reports, based on the agreed format, to the Lenders with an overview of the implementation of the ESMP, LALRP, status of the GRM, and effectiveness of livelihood restoration efforts.
Asian Infrastructure Investment Bank
Geoffrey Leonard
Investment Officer
Dong Mei
Investment Associate
Paul Gandouly
Investment Analyst
PT PLN Indonesia Power Renewables and Vena Energy Indonesia Pte Ltd.
Yudianto Permono
Vice President of Generation Business Development
