Environmental and Social Monitoring Report. INDONESIA: Tangguh Liquefied Natural Gas Project Compliance Monitoring Inception Report

Transcription

1 Environmental and Social Monitoring Report Project Number: June 2007 INDONESIA: Tangguh Liquefied Natural Gas Project Compliance Monitoring Inception Report Prepared by GHD External Panel for Environmental and Social Monitoring This report has been submitted to ADB by GHD and is made publicly available in accordance with ADB s public communications policy (2005). It does not necessarily reflect the views of ADB.

2 Tangguh LNG Project External Panel Compliance Monitoring Inception Report June 2007

3 Contents Executive Summary i 1. Introduction 1 2. The Objectives of the External Panel 2 3. External Monitoring Scope of Work Scope of Work Specified in the TOR Detailed Scope of Work Schedule of Work Conducted 9 4. Findings Environment Involuntary Resettlement The Integrated Social Program (ISP) and Social Issues 37 Appendices A Involuntary Resettlement People Interviewed B Consultant (External Panel) Liability

4 Executive Summary This is the Executive Summary of the Compliance Monitoring Inception Report of the External Panel following the inception visit of the External Panel to the Tangguh E&S Project site in March This Executive Summary should be read with the full report. The intent of the inception visit was for the External Panel to begin their familiarisation with the project, and to undertake a first compliance monitoring of specified aspects of the environment (including health and safety), involuntary resettlement, and indigenous peoples and integrated social programs associated with the project. An inception visit is provided for in the Terms of Reference. Background The External Panel is appointed for a three year period from February 2007 to undertake regular monitoring and evaluation of the Tangguh E&S Project located in Teluk Bintuni Regency of Irian Jaya Barat Province (formerly part of Papua Province), Indonesia. The External Panel is required to satisfy the Asian Development Bank (ADB) Tranche Lender s and Japanese Bank for International Cooperation s (JBIC) policy requirements for independent external monitoring and evaluation of environmental and social aspects of the Tangguh LNG Project. This includes the requirements to verify the internal monitoring of the Operator (Tangguh Project), report regularly to the Lenders and Operators on environmental and social compliance issues, review and comment on reports from the Operator, review and comment on Corrective Actions Plans, and report and advise on an ad hoc basis on environmental and social issues. The work of the External Panel is the subject of a contract with the Asian Development Bank, the Japan International Finance Management (Tangguh) Corporation, and Mizuho Corporate Bank Ltd. The External Panel is comprised of three specialist skill areas. These include an Environmental Team, a Resettlement Specialist, and an Indigenous Peoples and Social Issues Team. This report addresses the reporting requirements under the following headings:» Environment, and Health and Safety;» Involuntary Resettlement; and» Indigenous Peoples and Integrated Social Programme. This report presents the findings of the External Panel s inception visit, which are of necessity limited. The full Terms of Reference for the External Panel will be fulfilled over the three years of the contract. The time and resources available during the inception visit could not allow the External Panel to achieve a full understanding of all dimensions of what is a very complex project. Summary of Overall Findings The External Panel finds the environmental and social compliance performance of the Tangguh E&S Project to be satisfactory overall. Nevertheless, the External Panel identifies five apparent Level 1 Non Compliance issues, and hence all are reversible. These include three for Involuntary Resettlement, one for Environment, and one for the Integrated Social Programs, concerning the following matters (see main report). i

5 » Organic waste pit condition (Section 4.1);» Tasks associate with the Dimaga Foundation (Section 4.2);» Provision of LNG construction phase employment to village households (Section 4.2);» Monitoring and evaluation (Section 4.2);» Integration of gender and development perspectives across implementation of all activities and in accordance with Lenders gender policies (Section 4.3). There are some additional issues raised in environmental, health and safety, resettlement and social programme areas that if appropriately addressed could assist performance. Environment The regional environment is a relatively robust and dynamic natural system. The surrounding environment is found to be in generally good condition. The terrestrial environment adjacent to the construction site is protected by the secure perimeter that has been fenced. The External Panel saw no evidence to suggest that the marine environment has been adversely affected by installation of structures, pipelines or shipping activity associated with the project. With respect to all activities and compliance requirements associated with the construction stage, the External Panel notes that compliance issues and need for corrective actions have been raised in recent prior AMDAL audits by the Ministry of Environment (MoE), and the Operator and contractors have demonstrated consistent action to address compliance issues raised. The External Panel notes that for such a large and complex project constant responses to environmental management challenges will continue. The External Panel makes some comment on aspects of waste management on the construction site. The existence and condition of the organic waste pit appears to constitute a Non Compliance. Health and Safety The External Panel notes that as at March 2007 there have been 25 million man hours worked without a lost time injury/illness on the Tangguh LNG project. Given that the construction phase is currently operating at peak employee levels working on the Tangguh LNG Project construction site, this is a significant achievement. The External Panel concludes that maintaining this exceptionally good rate requires continued improvements especially with respect to safety training, site safety communication and collaboration, and in the effectiveness of the Subcontractor Supervision. This is important given that in 2008 large quantities of hydrocarbons will be introduced onto the work site presenting a significant increase in the range of hazards and risks. Involuntary Resettlement The Land Acquisition and Resettlement Plan (LARAP) for the Tangguh LNG Project sets a high standard in balancing the demands of a major international investment with international best practice, Indonesian law and with the special characteristics of the traditional adat system. The Lenders conducted due diligence and found that the LARAP meets the Involuntary Resettlement Policies of both ADB and JBIC, in terms of participative planning for compensation to restore lost assets, income and livelihoods; relocation; and rehabilitation to restore, or improve, the economic ii

6 and social base of those affected (ADB Policy on Involuntary Resettlement 1995; and, for JBIC, World Bank Operational Directive (OD) ). The External Panel finds that the phases of physical construction, now almost completed, and relocation, which is fully completed, have been generally successful. Nevertheless, it is in the resettlement affected villages that the Project issues are most immediately apparent. The challenge is now to fulfil the LARAP commitments to an equally high standard. This means completing several outstanding entitlement commitments. It includes activating the Dimaga Foundation, which is designed to replace lost resources, to support the achievement of improved incomes, livelihoods and living standards amongst resettlement affected villagers. It means revitalizing agro forestry, fisheries and enterprise extension work, in anticipation of the phasing down of Project construction work; and resolving current problems in the recruitment of construction workers from resettlement affected villages. It also means attention to Handover Agreements that will ensure continued sustainable operation of the new community assets and facilities. There is a need to re focus on the commitments contained in the LARAP. Within the broader Integrated Social Program (ISP), the LARAP coordination, record keeping and reporting systems need streamlining and enhanced visibility. Monitoring and evaluation systems require special attention to meet the original LARAP commitments. A socio economic survey, conducted to professional standards, is urgently required as scheduled in the LARAP. Monitoring and evaluation data will form the necessary basis for answering those key questions that are explicit in the LARAP objectives: for example, have the livelihoods of those people displaced to make way for the Project been improved? Is their quality of life better than it was? Indigenous Peoples and Integrated Social Program The Integrated Social Program (ISP) has been developed and approved as fulfilling the social, cultural and economic commitments of the Tangguh Project s AMDAL and Lenders Indigenous Peoples policies. It describes 14 components that will be implemented (including LARAP) in order to promote the participation of indigenous people in Tangguh operations; ensure that the region s indigenous people benefit from development interventions; and to mitigate any actual or potential adverse impacts. In addition to the ISP, an Indigenous Peoples Development Framework (IPDF) has been produced which describes how any iterations of the ISP during the Project s long time frame will be managed to maintain compliance with Lenders Indigenous Peoples policies. The key function of the Indigenous Peoples and Social Issues (IPSI) Team is to review and verify compliance in the implementation of the ISP to fulfil the requirements of the Indigenous Peoples policies of ADB and JBIC. The reviews are to be undertaken at 6 monthly intervals over the 5 year period 2006 to 2010 with a mid term review in Evidence regarding implementation of the ISP during this first visit was collected from reports; field observations; presentations and discussions with personnel in Jakarta and the Tangguh site, representatives of multi lateral, national and local partners, and women, men and children in four Directly Affected Villages (DAV). iii

7 The review finds that the implementation of the ISP components is compliant with the Lenders Indigenous Peoples policies, although there are areas where efforts need to be made to ensure improved compliance with the ISP in the implementation of activities. Delays in the implementation of some component activities have been experienced and the External Panel will undertake assessment of their compliance in future visits. While the implementation of the ISP components was found to be compliant overall, a Gender and Development perspective is not being applied to all activities as is required in Section 7.4 of the ISP document. This, however, appears to be the result of an internal contradiction of the ISP document where there is no requirement within each component to integrate a gender perspective and, furthermore, the Women s Empowerment component does not address the question adequately. The women s participation targets in education, vocational education and microfinance and micro enterprise which are required in the Women s Empowerment component do not appear to have been sufficiently defined and data provided to the External Panel were not sex disaggregated nor in a form which would enable assessment of whether the participation targets are being met. In order to improve compliance with the ISP, the IPSI Team s findings include that there is a need to review procedures and ensure medical supply to village workers; to address teacher absenteeism in directly supported DAV schools; to strengthen the women s outreach and participation target activities; and to improve transparency in the CAP activities. Monitoring and evaluation of activities requires strengthening. The team found the Operator ISP staff to be committed, competent and disciplined and well received in those villages visited by the team. Papuans occupy key ISP staff positions and efforts have been made to ensure a good gender balance. The ISP is well resourced and while there is good evidence that all components are being initiated in compliance with policy, some are more advanced than others. Within each component program there are sound mechanisms to ensure continuous transfer and ownership by government and local stakeholders, though progress in that will depend on reliable monitoring and evaluation and possibly modifying some programs to keep pace with a changing socio economic and political landscape that is in turn influenced by the pace of the Tangguh LNG Project development. iv

8 1. Introduction This is the first report of the independent External Panel for the Tangguh E&S Project and is submitted as a Compliance Monitoring Inception Report resulting from the inception visit to the site. This is provided for in the Terms of Reference for the External Panel. The External Panel is engaged to assist the operator and the lenders with monitoring, reporting and advising on three aspects of the Tangguh E&S Project over the next three years. The lenders for the project include the ADB Tranche, Commercial Tranche and Japanese Tranche lenders. The operator is the Tangguh Project. The aspects to be reported on over the three year period are:» Environment, and Health and Safety;» Involuntary Resettlement; and» Indigenous Peoples and Integrated Social Programme. This report presents the findings of the first compliance monitoring of the project undertaken by the External Panel that took place in March 2007, and covers the three main aspects of the project (above) in the current construction phase of the project. The Tangguh LNG Project is located on the south side of Bintuni Bay, Teluk Bintuni Regency, Papua Barat Province (formerly part of Papua), Indonesia. The project will extract natural gas from large offshore reservoirs and pipe it to a LNG plant for conversion to LNG after which the LNG will be exported by tanker to markets in Asia and beyond. Construction commenced in 2005 and is due for completion in 2009, with production expected to commence in The project has an anticipated operational life of over 25 years. The activities associated with the development of the Tangguh LNG Project commenced in 2002/03 by starting to develop resettlement area of Tanah Merah Baru. The Tangguh LNG Project is taking place in a remote part of Indonesia with limited economic and land use development. The location has a physically challenging equatorial climate with high rainfall, and notable disease vectors (e.g. malaria). There are broad conservation and bio diversity values, and important environmental protection issues. The social and political context is complex and dynamic, with a range of governance, welfare and security issues. The LNG construction site itself, is challenging. 1

9 2. The Objectives of the External Panel The overall objectives and functions of the External Panel, as stated in the Terms of Reference (August 2006), are as follows: 1. To satisfy the ADB Tranche Lender's and JBIC's policy requirements for independent external monitoring and evaluation of environmental and social aspects of the Tangguh E&S Project; 2. To verify the internal monitoring undertaken by the Operator; 3. To report regularly to the Lenders and the Operator on environmental and social compliance issues that arise in connection with the Tangguh E&S Project, having regard to the following: 3.1 The environmental and social provisions contained in the PSC Parties Agreements; 3.2 The Environmental and Social Documents (as construed in accordance with each PSC Parties Agreement); and 3.3 The applicable environmental and social policies and safeguard requirements of the ADB Tranche Lender and JBIC (see Appendix 1 for the applicable policies as at the date of this document); 4. To review and comment (for the benefit of the Lenders and the Operator) on reports delivered by the Operator for the purposes of: 4.1 Paragraph (B) of Section 1.12 (Certain Environmental, Involuntary Resettlement and Indigenous Peoples Matters) of the PSC Parties Agreement ADB Tranche; 4.2 Paragraph (a) or (b) of Section 1.12 (Environmental Reports) of the PSC Parties Agreement Commercial Tranche; or 4.3 Paragraph (B) of Section 1.18 (Certain Environmental, Involuntary Resettlement and Indigenous Peoples Matters) of the PSC Parties Agreement Japanese Tranche; 5. To review and comment (for the benefit of the Lenders and the Operator) on Corrective Action Plans prepared by the Operator as required under the environmental and social provisions contained in the PSC Parties Agreements; and 6. To report to and advise the Operator and the Lenders on an ad hoc basis in relation to environmental and social issues that arise in connection with the Tangguh E&S Project. 2

10 3. External Monitoring Scope of Work This section presents the scope of work as specified in the External Panel Terms of Reference (August 2006), the scope of work for each of the three External Panel teams, and the schedule of work undertaken during the inception visit. 3.1 Scope of Work Specified in the TOR Environment Having regard to the RKL and RPL reports submitted to the Indonesian authorities during the relevant audit period and the environmental provisions contained in the PSC Parties Agreements, review and verify environmental compliance of the Tangguh E&S Project (including the performance of activities conducted under the Construction Documents) over the relevant audit period with the mitigation measures and related monitoring requirements prescribed in the AMDAL Documents, as well as additional mitigation measures and monitoring requirements that the Tangguh E&S Project has agreed with the Lenders to carry out; and Recommend measures or activities to be taken by the Tangguh E&S Project to improve its environmental compliance, with particular focus on Level 2 E&S Non Compliance. In addition to conducting the foregoing annual environmental compliance monitoring, the environmental team may be asked from time to time to report to or advise the Operator and the Lenders on specific environmental or health and safety issues that may arise in connection with the Tangguh E&S Project Involuntary Resettlement Resettlement external monitoring is required to assess the progress in implementing the Operator s Land Acquisition and Resettlement Action Plan (LARAP) dated 4 July 2006 that is scheduled to be completed in This includes verifying the internal monitoring undertaken by the Operator; reporting on social compliance in light of ADB and JBIC Policies on Involuntary Resettlement (IR); and reviewing reports delivered by the Operator on IR. Specifically, the IR specialist is required to: a) Review compliance of IR implementation with the LARAP and lenders IR policies; b) Review the effectiveness of measures to restore or enhance AP s quality of life and livelihood; and c) Undertake a completion audit in The LARAP focuses upon several affected groups: communities of Tanah Merah and host Saengga and Onar. 3

11 3.1.3 Indigenous Peoples and the Integrated Social Programs The key function of the IPSI Team is to verify that the implementation of the ISP by the Tangguh E&S Project adheres to the applicable indigenous peoples policies of the ADB Tranche Lender and JBIC. 3.2 Detailed Scope of Work Scope for Environment (Ecology, Waste Management, and Safety & Health) The Environment Team addressed the diverse environmental aspects of the project, including general condition of the regional and local environment, its vulnerabilities and the apparent degree of environmental risk and adverse impact. This is in addition to the specified environmental elements in various management plans, and as directed by all existing and relevant statutory compliance requirements. Additionally, the team addressed the Safety and Health activities, processes and systems associated with the project and as required under the HSE operational policies of the Operator and contractors. The AMDAL is the main reference for Environment Team (especially waste management compliance requirements). Mitigation and management of impacts have been provided for in comprehensive AMDAL documents, and especially the RKL report. The implementation of waste and other environmental management plans has been carried out continuously and monitored. The Operator has put considerable effort into implementing the AMDAL requirements particularly for waste management. General environmental management implementation can be confirmed from key reports accessed by the External Panel as references during the compliance monitoring process. These include:» AMDAL documentation;» MoE AMDAL audit reports;» TIAP reports;» Due diligent audit report, ERM Nov 2005;» Six monthly RKL RPL implementation report;» Environmental, Health and Safety Report Tangguh LNG Project, Indonesia, (Reporting Period: April October 2006);» Tangguh LNG Project: Monitoring Plan (STP monitoring, RO brine water, seawater quality, ambient air, emission monitoring); and» Tangguh LNG Project: Management Plan (environmental management, land conservation, waste management). The AMDAL (and its RKL RPL) were cross referenced to other AMDAL implementation reports and previous auditing report. In conducting its work the environment team focussed on the following aspects:» Solid waste management (collection/transportation and treatment: landfill, incinerator);» Liquid waste (sewage treatment plants);» Air emission (especially from incinerator and general ambient air monitoring); 4

12 » Diesel usage and power generation facilities;» Brine water discharge from desalination plant. Facilities observed during the first compliance monitoring include:» Landfill facilities for non hazardous waste;» Central waste accumulation area;» Incinerator for non hazardous waste;» Composting and organic waste dryer equipment;» Solid waste transportation system;» Incinerator for hazardous waste;» Hazardous waste storage facilities;» Combo docs, drilling mud processing facilities;» Brine water discharge;» Food waste landfill (organic waste pit);» Fowex (food remains processing equipment);» Sewage treatment plant (STP camp stage 3 (Zone B and C); and» Sludge filter press in STP Scope for Involuntary Resettlement The TOR requirements for the IR Specialist are set out below and compared with the scope of work as conducted by the External Panel.» Review of the Operator s semi annual progress reports The External Panel reviewed the first such semi annual progress report (April to October 2006)» Review of the Project s IR resettlement management system, resources and record keeping The External Panel reviewed the staffing chart, monthly reports and grievance records; and interviewed key resettlement staff, including the (outgoing) Vice President of Tangguh ISP and her (outgoing) Deputy VP, the (newly appointed) Senior Manager of Tangguh ISP, the Field Manager of Tangguh ISP, and the two LARAP Supervisors, who are both based at Tanah Merah village.» Review of progress with delivery of outstanding entitlements and compensation The External Panel discussed several outstanding issues with ISP staff, including the Dimaga Foundation, agathis tree compensation, completion and handover of village infrastructure, facilities and utilities. The External Panel discussed the path to sago stands at Manggosa, with ISP staff and with the Kampung Head of Tanah Merah Baru. 5

13 » Review of issues arising from rehabilitated housing in host villages The External Panel reviewed records and discussed this issue with ISP staff, but site visits were too limited for detailed assessment in Saengga and Onar Lama.» Review of progress towards sustainable operation of replacement infrastructure and services The External Panel discussed the functioning of facilities and the handover plan with ISP staff and the head of Tanah Merah Baru, and, in general terms, with the head of the Cooperatives of Tanah Merah Baru and Onar Baru. The Panel reviewed the Operator s Handover Plan Activities.» Review of progress against LARAP schedule and disbursements against budgets The External Panel reviewed progress against the LARAP implementation schedule (Table 1.4). The first six monthly report anticipates that the budget update will be included in the second six monthly report for the period November 2006 April If full year budget data are provided, this will constitute a good basis for a review of disbursements.» Assessment of extent to which households have been able to achieve access to replacement forest, garden and coastal resources The field visits focused on this issue in interviews with leaders and villagers in Tanah Merah Baru, Onar Lama and Onar Baru.» Review of progress towards effectiveness of livelihood restoration programs The field visits focused on this issue in interviews with leaders and villagers in Tanah Merah Baru, Onar Lama and Onar Baru. The Panel also reviewed reports of the Independent Advisory Panel on Resettlement.» Review of community engagement and information dissemination activities conducted in the review period and of their effectiveness The External Panel assessed community awareness and understanding of Project activities during the field visits; and discussed these activities with the LARAP supervisor. The External Panel noted earlier reports of the Independent Advisory Panel on Resettlement that found informed community participation and ownership in the relocation process to be a world class performance 1.» Review of grievance records and Project responses to ensure timely and effective closeout; and current complaints The External Panel attended a presentation by the ISP Grievance Officer on grievance; reviewed several sample records from Saengga and Onar Baru, together with the Project responses; and reviewed a Project booklet entitled Handling Community Grievances (March 2006). 1 See, for example, page 13 and Appendix page 1 of the Independent Advisory Panel on Resettlement, 2004, First Field Report on Population Displacement and Resettlement in the BP Tangguh Project, by Professor Michael Cernea and Dr. Ayse Kudat, March 31; and pages 5 and 6 of the Second Field Report, November

14 » Assessment of any external risks to resettlement program The External Panel reviewed past Project reports, the risk analysis in the Operator s sixmonthly IR report, and, through field level discussions, built up a composite picture of risks during field visits. The External Panel reviewed this picture against the LARAP analysis of impoverishment risks and livelihood restoration strategies (Chapters 6 and 9).» Recommend compliance issues or other measures that might improve the execution of the resettlement program Recommendations are presented in Section 4 of the report.» Conduct a close out presentation of findings to the project management team The External Panel presented an overview of findings and recommendations to the Operator s Project management team on 29 March in Jakarta.» Prepare semi annual reports summarizing findings and recommendations arising from reviews and tracking of close out of recommendations from previous reviews This is the first semi annual report of the External Panel on IR, which sets out a number of issues to be tracked during the next review.» Respond to ad hoc requests on IR matters. No such requests have been received to date Scope of Work of the Indigenous Peoples and Social Issues Team The objectives of the Indigenous Peoples and Social Issues (IPSI) Team are to review compliance with the ISP, IPDF and Lenders respective indigenous peoples policies; review performance in the implementation of the Integrated Social Program (ISP) components, excluding the LARAP component, and undertake a mid term review. The key function of the IPSI team is to verify that the implementation of the ISP adheres to the applicable indigenous peoples policies of the ADB Tranche Lender and JBIC. Within the ISP are 14 components that are to be implemented in fulfilling the requirements of Lenders policies. One of these components is the Land Acquisition and Resettlement Action Plan (LARAP) that is specifically monitored by the Involuntary Resettlement specialist member of the External Panel. The other 13 components to be reviewed by the IPSI team are:» Governance and revenue management;» Civil society strengthening;» Bird s Head business empowerment;» Mitigation of in migration and adverse induced impacts;» Workforce and industrial affairs;» Governance;» Integrated community based security;» Basic education;» Vocational training;» Health; 7

15 » Women s empowerment;» Micro finance and micro enterprise;» Community action plans. The policy elements that are fulfilled by the approved ISP document are described in Paragraph 58 Part VII (B) of the ADB Policy on Indigenous Peoples as follows. For development interventions it supports or assists, the Bank will ensure that affected populations and persons are at least as well off as they would have been in the absence of the intervention, or that adequate and appropriate compensation be provided. Policy should ensure quality of opportunity for indigenous peoples, and that ADB Bank interventions affecting indigenous peoples are: 1. Consistent with the needs and aspirations of affected indigenous peoples; 2. Compatible in substance and structure with affected indigenous peoples culture and social and economic institutions; 3. Conceived, planned and implemented with the informed participation of affected communities; 4. Equitable in terms of development efforts and impacts; and 5. Not imposing the negative effects of development on indigenous peoples without appropriate and acceptable compensation. The key elements of an ISP as stated in Paragraph 38, Part VII of the ADB s Policy on Indigenous Peoples are: 1. Preparation, during project design, of a development plan that takes into full account the desires and preferred options of indigenous peoples affected by the project; 2. Studies to identify potential adverse effects on indigenous peoples to be induced by the project, and to identify measures to avoid, mitigate, or compensate for these adverse effects; 3. Measures to ensure the capacity or the strengthening of the social, legal, and technical skills of government institutions to be responsible under the project for dealing with indigenous peoples; 4. Involvement of appropriate existing institutions, local organizations, and non government organizations with expertise in matters relating to indigenous peoples; 5. Consideration in project design of local patterns of social organization, cultural belief, and ancestral territory and resource use; 6. Support for viable and sustainable production systems that are adapted to the needs and local environments and circumstances of indigenous peoples; 7. Avoidance of creating or aggravating the dependency of indigenous peoples on project entities, and instead promoting self reliance among these peoples; 8. Capacity building for indigenous peoples communities and organizations to facilitate and support effective participation in development processes; and 8

16 9. Adequate lead time and arrangements for extending follow up, especially in dealing with indigenous peoples in remote or neglected areas where little previous experience is available. Consultation with indigenous peoples groups is key to developing an effective, accurate, responsive indigenous peoples development plan. The geographic extent of the ISP covers four vertically integrated geographical areas that are impacted by the project and which in turn influence one another s development. These include Irian Jaya Barat province, the Bird s Head area (including the regional centres of Sorong, Manokwari, and Fakfak), Teluk Bintuni Regency and nine Directly Affected Villages (DAV). Of these villages, three (Tanah Merah Baru, Onar Baru and Saengga) form a sub set of Resettlement Affected Villages (RAV). The 13 ISP components to be reviewed include elements of organisational capacity building as well as community development and participation. While there is the potential to focus on one or the other allowed in the scope of services, in this first visit, the IPSI Team reviewed the ISP components without focus on either capacity building or community development and participation in order to obtain an overview of all component activities, their implementation and the relationship between organisations and community development and participation. 3.3 Schedule of Work Conducted The External Panel team assembled in Jakarta on the 20 th and 21 st of March, The compliance monitoring commenced on 21 st March with a briefing by representatives of the Lenders and the Operator. For the next two to three days External Panel team members were free to review all relevant documentation associated with the project, to put questions to the Operator and the Lenders consultant. The External Panel Environment Team undertook fieldwork from Friday 23 rd March to Sunday 25 th March, returning to Jakarta on Monday 26 th March. A Close Out meeting for the fieldwork was given on Sunday 25 th March. While in the field the Environment Team visited all areas of the LNG plant, and was able to fly over the offshore gas production facilities (Decks and Castoro 8 VRB Deck and Jacket Location, exploration/production well sites, shipping areas and navigation channels, etc), and transects over the marine environment of Bintuni Bay, islands, and forest/terrestrial ecosystems. The External Panel Resettlement Team and Indigenous Peoples and Social Issues Team left for site on Friday 23 rd March travelling overnight, and undertook fieldwork from Saturday 24 th March to Tuesday 27 th March, returning to Jakarta on Wednesday 28 th March. The External Panel Resettlement Team visited Tanah Merah Baru, Onar Baru and, briefly, Onar Lama. The team was unable to visit Saengga as originally scheduled due to loss of two fieldwork days due to bad weather and logistical issues. The time at Onar Baru and Onar Lama was curtailed by tidal constraints. The External Panel IPSI Team visited the regency town of Bintuni and the DAV villages of Tomu, Ekam, Tomage and Otawary meeting with ISP staff and their village representatives, implementing partners, government and customary law officials, health workers, teachers, community leaders and ordinary villagers that included both indigenous people and migrants. 9

17 The team visited the Tangguh funded government vocational training centre (BLK) at Aranday, a Tangguh funded centre for fibreglass water tank construction, two village primary schools, a village health centre, a village malaria control project and witnessed some of the many projects funded by ISP Community Action Plan (CAP) grants. Between 21 st and 30 th March, the ISP team attended presentations from all key ISP program staff and partners USAID and UNDP that are working in areas of revenue management and civil society strengthening at both provincial and regency levels. While the Team visited and observed many village level ISP activities, poor weather meant they were unable to visit the DAV communities of Wiriagar and Mogotira scheduled for 26 th March. While at site, each team operated independently during the day, and came together in the evenings at the Babo base camp. On return to Jakarta, the collective External Panel made a Close Out presentation to the Operator on Thursday 29 th March. The various External Panel team members then undertook analysis of their findings and report writing through to departure on Wednesday 4 th April. The External Panel received full assistance from the Operator, Contractors and Sub contractors, and stakeholders in carrying out its task. Members of the community with whom the resettlement team and the indigenous and social issues team engaged also assisted the External Panel at all times. 10

18 4. Findings This section provides the principal findings of each sub team of the External Panel. The External Panel presents its advice mainly as findings, but has chosen to include some recommendations for the Land Acquisition and Resettlement Plan (LARAP) section. This is principally because the LARAP program is due to be completed in 2009 and the Resettlement team concludes that early advice in recommendation form is appropriate. In summary the External Panel finds the environmental and social compliance performance of the Tangguh E&S Project to be satisfactory overall. However, the External Panel identifies five apparent Level 1 Non Compliance issues. All are reversible. These include three for Involuntary Resettlement, one for Environment, and one for the Integrated Social Programs. 4.1 Environment The section presents the findings of the Environment team under the separate sub headings of:» Ecology;» Waste management; and» Safety and health. Ecology includes consideration of the overall construction site environment (offshore gas production facilities location and onshore LNG plant in total) as well as the external environment to construction areas (inclusive of areas within the controlled LNG Plant Fence, within the Property Boundary, and external to all of these). Waste management includes focus on the immediate construction sites (terrestrial and marine) and associated facilities, inclusive of the near shore marine environment and surrounding terrestrial environment in so far as these function as receiving environments and might be impacted upon by waste emissions (solid, liquid, particulate, and airborne emissions including noise). Safety and health focuses on all operating environments where workforce and human activity occurs, including the LNG site, offshore gas production locations, accommodation and all transport connections to and from these various sites to Babo and out of the project area Ecology The following are the observations and findings associated with the broader environmental setting of the Tangguh LNG Project. Adjacent Terrestrial Environment: The adjacent terrestrial environment includes all vegetated areas adjacent to site works, and further a field, including land areas:» Within the fenced security perimeter (LNG Fence);» Within the Property Boundary; and 11

19 » External to the Property Boundary. Site reconnaissance both on the ground and from the air (low level aerial transect by helicopter) reveals that the vegetated environment in the vicinity of the LNG Plant site is largely intact with no signs of adverse impact resulting from the Tangguh LNG project. Aerial reconnaissance reveals that the areas of Swamp Forest, Lowland Forest and Beach Forest within the LNG Plant security fence appear to be in superior condition to that outside. Visible signs of human activity in the external environment appear to cease at the perimeter fence corridor. The general state of vegetation cover appears to be in good condition within this perimeter. This is an observation only. No supporting data or survey work was obtained to validate this. In the immediate proximity of all cleared and developed sites and current construction sites associated with the LNG Plant, the immediate fringing zone and adjacent forest habitat similarly appears largely unaffected. Protection of specific terrestrial fauna and flora from workforce activities is verified as effective. Immediate action is taken against any individual found deliberately taking or harming wildlife, and the Operator staff confirmed such action in one rare incident. Emissions (dust, particulates, noise, etc) impact upon the adjacent environment appears negligible. The dilution and assimilative capacity of the terrestrial receiving environment should far exceed existing and anticipated emission levels during the construction phase. No solid waste (i.e. general rubbish) was observed to be entering the surrounding environment. The External Panel notes the total area so far cleared for the project is significantly less than that planned, owing to the a reduction in planned facilities (e.g. airstrip/landing site). Adjacent Marine Environment: The marine environment of Berau Bay and Bintuni Bay is a very dynamic and physically robust environment with significant tidal variation and strong tidal currents. Given the water depths, channel expanse and volume of in flowing rivers the External Panel concludes that this marine environment is sufficiently resilient to accommodate approved levels of construction and physical disturbance arising from the Tangguh LNG project. The External Panel notes that stringent control and monitoring of all activities in the marine environment (dredging, construction, drilling, etc) is conducted and that no adverse impacts have been identified. The External Panel notes that the Operator has various management provisions in place to protect marine fauna species, particularly dolphins known to frequent the marine environment to the west of Berau Bay. The latter includes repositioning the navigational channel for major shipping associated with the project. Other marine fauna will readily avoid disturbance and in the case of turtles, sometimes a major concern for such projects, it is noted that there are no likely or known nesting sites (requiring suitable sand beaches) in the vicinity of the project. According to the Operator, the Marine Mammals and Marine Reptile Survey confirms there is no turtle nesting at or near Tangguh site, the nearest being found in the Kokas/Pisang area more than 80 km away from the project site. The survey did not confirm the presence of whales in the vicinity of the project, the nearest sightings being at the mouth of bay far from the project site. Protection of fringing mangrove communities has been achieved through specific design and construction methods adopted for the Tangguh LNG project. This includes horizontal directional 12

20 drilling for major pipe work (from the gas fields) through the coastal fringe. It is also noted that less than the allowable area of mangrove clearance has in fact occurred. The Tangguh LNG Project is required to meet stringent requirements with respect to the disposal of various liquid wastes into the near shore marine environment. These include brine from the Reverse Osmosis Plant (ROP), treated effluent from the Sewerage Treatment Plant (STP), and some proportion of overall surface drainage. It is noted that the dilution and dispersion capacity of the Berau Bay and Bintuni Bay marine environment is high. The External Panel saw no evidence to suggest long term impacts or decline in the quality of the marine environment as a result of current construction activities, coastal engineering works, or shipping/vessel movements Site Environmental Management Surface Drainage, Slope Stabilization, Erosion Control and Top Soil Management The Tangguh LNG Plant site presents significant difficulties for construction activity, arising from very high rainfall, high surface run off, and large areas of exposed ground surface. Taking these factors into account, the External Panel concludes the management of these aspects to be effective. Slope stabilization practices were observed and it was noted that many shoulder areas and sloping ground resulting from cut and fill site earthworks were already well stabilised with vegetated ground cover, often in association with terrain fabric. Approximately 46 ha of the site are now stabilized. The External Panel understands that corrective actions have been taken to re seed and install additional surface runoff interception structures (e.g. vertical drainage) where erosion has persisted. It is also noted that a final Revegetation Plan is now completed. Surface drainage appears effective with sediment basins and discharge structures into the surrounding environment are in place throughout. High levels of surface runoff have a significant sediment load that is largely well contained. Step 1 Area: Materials Handling Jetty The existing fuel barge and fuel loading wharf are in poor condition. While a new and much improved refuelling installation is under construction the External Panel notes that it is important all facilities be appropriately maintained until decommissioned Waste Management This section provides the compliance monitoring results for waste management aspects in the Tangguh LNG Project. Generally, it was observed that overall waste management is consistent with the AMDAL requirements. The Operator has followed up the majority of recommendations from the latest environmental audit (AMDAL audit) carried out by MoE. While the audit report was provided to the Operator in early January 2007, the Operator has prepared and implemented many corrective actions with significant improvement by March Many aspects of waste management have been reviewed and improved. These include: 13

21 » Intensive campaign/dissemination of waste segregation and improvement of waste transfer mode;» Review of incinerators and their maintenance to improve burning performance with the result of significant gas emission reduction; and» Review of wastewater plants and their maintenance to improve treatment performance. The External Panel notes two matters requiring attention. These concern the management of the organic waste pit and the operation of sewage treatment plants. The ANDAL states that solid waste will be disposed to landfill or incinerator (5 71) and all solid waste management will fulfil applicable regulations in Indonesia (5 88). The ANDAL also states that solid waste disposal should not have significant impact on flora and fauna as all non hazardous waste unable to be recycled or incinerated will be suitably disposed of in a sanitary landfill site (6 66). The RKL also confirms the plan to establish a sanitary landfill site (2 36). The Panel is unable to confirm the existence of a sanitary landfill site from the site inspection. An organic waste pit was inspected and found to be substandard and a potential source of pollution and health issues. The second issue concerns the operation of sewage treatment plan (STP) facility. It is apparent from six monthly RKL and RPL implementation reports that this facility has reached a critical operating level with the effluent from several STPs tending to fluctuate around required standards. This indicates overload conditions and reduced efficiency is being experienced. Evaluation of STP performance has been carried out and follow up action to improve maintenance has been taken. However, monitoring data still indicate the overload conditions for STP Step 3 Zone C. Findings for specific waste management aspects are as follows. Solid Waste Management Management of solid waste generated during the construction stage activities from all sites and supporting facilities, including solid waste from worker base camp and canteen facilities or from construction sites, is comprehensively addressed by the Operator in various documentation. One waste management program is outlined in the report Waste Management Program for Tangguh prepared by PT Prasmanindo Boga Utama (confirmed by the Operator s Environment Team Leader and KJP Environment Manager). Similarly a waste management plan has been prepared by KJP (document number 900 PLA HS 1067, rev 5A, March 2005). Solid Waste Segregation The Operator carries out waste segregation in the CWAA. This was confirmed from site observation and the waste records. From the AMDAL Compliance Tracking, it is confirmed the Operator has followed up the MoE audit recommendations to improve segregation by an active program to raise awareness. Continued improvement is anticipated. Total Solid Waste Capacity The comment is confined to the food remains component of organic solid waste, although it is noted that other sources do exist on site. Currently, organic solid waste is disposed direct to the organic waste pit while a composting option is still on trial. Observing the composting facilities (Fowex, dryer, and mixing) raises issues concerning the current capacity of these processing facilities. A review of organic waste treatment 14

22 capacity and its treatment options in a longer term plan would be advisable and could improve current practices. Waste Transportation Waste transportation is carried out by contractors and sub contractor under supervision by the main contractor, KJP. The External Panel found that all solid waste transportation is well directed to the centralised waste treatment facilities. Documentation was reviewed that indicates corrective actions taken to improve solid waste transportation, for example by covering solid waste in vehicles to avoid spill. There is no significant issue in terms of waste collection/transportation to the final designation area. Recyclable solid wastes are collected in a specific area called Central Waste Accumulation Area (CWAA). Clear signs are in place but improvements to this collecting area could be made by installing better fencing. Landfill Landfill cover various solid waste disposal areas including inert landfill, used drilling mud (water based mud from HDD for the pipeline), and organic waste landfill. KJP s waste management plan refers to the RKL document that specifically states: The landfills are to be a double lined (clay and synthetic membrane liners or two synthetic membrane liners) with leachate collection system. The landfill will have six groundwater monitoring wells. However, implementation of these requirements could not be confirmed during the site visit. Inert Landfill The External Panel was unable to view siting and design documentation for the inert landfill site (design study and soil testing), and notes that leachate collection structures were not apparent. The landfill site visited (known as KJP landfill) has been used to dispose inert/inorganic waste, and both non combustible and non degradable wastes are understood to be buried in this inert landfill. KJP s SOP (41 06/0) specifies the type of waste allowed in this landfill. The External Panel observed that filling of the landfill site is not very systematic with disposal apparently carried out from the front of landfill, whereas the normal approach is to fill from the back. KJP s SOP does not specify the filling and covering sequences. Addressing this would help maintain effective landfill operations. Drilling Mud (water based) Landfill This landfill site will be used to dispose used water based drilling mud from the Horizontal Direct Drilling (HDD) operation which is located near the shore area at the time of the site visit. The landfill will not be used for disposing of the mud from well drilling because a DCRI technique will be used. Similar to the inert landfill, siting for used drilling mud is also necessary if landfill method is to be used. Staff on site indicated the mud is mainly bentonite (i.e. not categorised as hazardous waste). The Operator confirms that the drilling mud has been tested and test result and other record related to the mud management has been documented. The used mud landfill is situated adjacent to the inert landfill and is still under preparation. Site observation did not allow confirmation on the design of the landfill. 15