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World Bank Boosts Coal in Indonesia

Published by MAC on 2013-10-13
Source:, statement

World Bank Boosts Coal In Indonesia


11 October 2013

The World Bank Group (WBG) is aiding an Indonesian coal-based power plant, one of the largest coal-fired power plants in southeast Asia, despite its propagated policy of discouraging coal.

According to a recently released report from the environmental group Oil Change International, the World Bank's infrastructure program in Indonesia stipulates policies and government subsidies that promote the accelerated development of over 16 GW of coal power projects in the country ahead of developing feasible renewable alternatives.

The report "World Bank Accelerating Coal Development in Indonesia" [1] said:

The World Bank-created and financially backed Indonesia Infrastructure Guarantee Fund (IIGF) awarded its first government guarantee of US$33.9 million to the Central Java Power Project, a 2000 MW ultra-super critical coal plant. The Bank states that the guarantee is critical for obtaining long-term infrastructure finance. Moreover, the WBG served as the transaction advisor to this mega coal project, in which role the Bank arranged financing for the project, promoted the project to investors, and supported the project's expansion.

Heike Mainhardt , senior subsidies analyst with Oil Change International, writes in The Price of Oil [2]:

This huge coal project has incited strong local opposition including a lawsuit and multiple protests by thousands of local residents resulting in violent clashes with project security and the military. There is still time for the World Bank to do the right thing and halt this dirty coal project as well as further WBG support of coal development more generally.

In July, the World Bank Group (WBG) released its Energy Directions paper, in which the Bank pledged to limit coal lending to rare circumstances - only in countries with no feasible alternatives to coal. In order for this pledge to have any significance, the World Bank must immediately reverse its active support for massive coal developments in Indonesia.

Heike Mainhardt writes:

To avoid locking Indonesia into a future of dirty, climate-destroying coal and making a mockery of its Energy Directions' pledge to limit coal financing, the World Bank must:

Kate Sheppard writes in Huffington Post [3]:

The International Finance Corp., the private sector arm of the World Bank, is serving as the transaction adviser for the coal-fired power plant in Indonesia. As the transaction adviser, the IFC described its role as "helping ensure that the bidding was conducted according to international best practices and that the project met international environmental and social standards."

In addition, the World Bank in 2010 provided a $30 million loan to the Indonesia Infrastructure Guarantee Fund, created by the government of Indonesia to obtain financing for the power plant as well as railways to transport coal and transmission lines. The project is to be built and operated as a joint venture between Andaro Power of Indonesia and two Japanese companies.

"If they're going to take the energy directive seriously, they should tell Indonesian government that this fund shouldn't apply to coal projects," Heike Mainhardt told Huffington Post.

Josef Skoldeberg, an IFC spokesman, said the organization began involvement in the Indonesia project in 2008, and was not covered by the energy directive.

"The Energy Strategy Directions Paper is not a backward-looking document,but lays out direction for our future engagements in the sector," said Skoldeberg. He said the energy directive "applies to World Bank Group investments and advisory services in the energy sector, as well as privatization support that would enable investments." On people's protest, Kate Sheppard writes:

There have been major protests against the plant in Indonesia. "Around 7,000 villagers who living around the proposed site of Central Java Coal Power Plant are strongly opposed to the huge coal power project," Arif Fiyanto of Greenpeace South Asia-Indonesia, told The Huffington Post via email. "The local community insists that the coal power plant will harm their livelihood, like what happened in other areas with coal power plants."

On US position, Kate Sheppard writes:

US president Barack Obama in June called for an end to U.S. funding for fossil fuel projects abroad unless the projects use technology to capture emissions. Since that announcement, the U.S. has declined to finance a coal plant in Vietnam through the Export-Import Bank. Oil Change International argues that the policy shift should also apply to projects like the one in Indonesia.

"As the World Bank's largest shareholder, the United States has a particular say in the World Bank's operations," Mainhardt said in a blog post accompanying the report. "The U.S. government needs to be clear that the President's pledge is comprehensive and covers all forms of coal financing, including policy loans and financial intermediaries."

[1] Oil Change International, September 2013

[2] "World Bank Accelerating Coal Development in Indonesia", Sept 25,

[3] Posted: 09/25/2013, "World Bank Aids New Coal Project Abroad, Defying
Policy, Environmental Group Says",

Groups Protest World Bank Support for Destructive Dams and Fossil Fuels

Civil Society Alliance Demands Clean Local Power for the Poor

12 October 2013

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Washington DC - The World Bank should shift its energy lending away from dirty power plants toward clean local energy for the poor, a coalition of civil society organizations said today during a protest outside the Bank's annual meeting. The Power 4 People coalition - coordinated by International Rivers, Amazon Watch, and Jeunes Volontaires pour l'Environnement, and supported by 60 organizations from 31 countries - said it would urge governments to move global energy finance away from the World Bank if the multilateral institution did not abandon its focus on dirty energy projects. Under President Jim Kim, the World Bank has been increasing support for mega-dams and gas projects, while continuing to neglect renewable energy and rural electrification.

Peter Bosshard, Policy Director of International Rivers, introduced the Power 4 People campaign at the protest. "After development banks have spent hundreds of billions of dollars on dirty energy projects, 1.3 billion people remain without access to electricity," Bosshard said. "Decentralized renewable energy solutions are more effective at reducing energy poverty, protecting the environment and mitigating climate change."

Jamil Junejo, the Programs Manager for Pakistan Fisherfolks Forum, warned about the World Bank's plan to fund new mega-dams, including on the Indus and the Congo rivers. Mega-dams" Junejo said, "have destroyed ecosystems and impoverished millions of people. I see this with our fisherfolk communities in Pakistan, where hundreds of thousands of people have lost their livelihoods to mega-dams. Energy conservation and decentralized renewable energy sources are the best ways to bring power to the people."

Delphine Djiraibe, a Chadian human rights attorney who was awarded the Robert F. Kennedy Human Rights Award, has closely followed the World Bank's socially and environmentally disastrous Chad-Cameroon Pipeline Project, where, she argued, the Bank's "model" private-public partnership further impoverished the population of the oil-producing region and the entire country. Djiraibe said that oil revenues were a factor in the nation's 2005-2010 armed conflict, calling them a "curse". She commented at the protest that "it appears that the Bank has learned little from its experience and is proposing to do still more massive projects where the risks are placed squarely on the most vulnerable populations."

Bernardino Morales from the Ngobe indigenous group in Panama recalled that large dams and fossil fuel projects destroy the rivers and forests on which millions of people, including indigenous peoples, depend for their livelihoods. "The construction of the Chan 75 Dam has caused severe destruction with our indigenous community in Panama, and the World Bank has refused responsibility for it" said Morales. "Energy projects must respect the rights of the people they are supposed to serve, and meet highest social, environmental and human rights standards."

The Power 4 People coalition calls on the World Bank and other development banks "to stop funding destructive forms of energy and shift support to energy conservation, energy efficiency and decentralized renewable energy solutions." Development banks need to create dedicated financing mechanisms, indicators and timetables to make such a transformation happen. As long as they continue to fund destructive forms of energy, governments should shift their funding to institutions and mechanisms that are more effective at ensuring universal access to modern energy services.

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