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by Cai U. Ordinario THE Asian Development Bank (ADB) will conduct a review of its public communication policy to ensure that the policies are still effective, transparent and relevant. The ADB will conduct the study from today to April 2010, during which time the Manila-based multilateral financing institution will seek views from various parties through the Internet. The review is a mandatory requirement for policies every five years. It will also conduct consultations with stakeholders like government officials, civil society and the private sector, both in developing member-countries and donors. “The ultimate goal of the consultations is to give all interested stakeholders the opportunity to improve the effectiveness of ADB’s public communication policy,” said Ann Quon, ADB Department of External Relations principal director. The NGO Forum on the ADB, a network of 250 civil-society organizations (CSOs), welcomed the move and said it was time to review the public communication policy since many of the poor, who benefit or become affected by the projects that the ADB has in the region, are not that well-informed. In a statement, the CSOs said they are hopeful that reviewing the public communication policy of the bank will lead to better project implementation. “It’s about time the ADB’s narrow information-disclosure policy is reviewed. If it is to be of use to communities facing displacement due to ADB-funded projects, the bank has to recognize that public access to information is not an option but a fundamental human right,” forum executive director Red Constantino said. Souparna Lahiri of the Indian-based National Forum of Forest People and Forest Workers said the review will also improve project participation in communities. Lahiri said that extensive consultations are needed to carefully examine the provisions and how best to improve them. Further, Leak Kay of Conservation Development of Cambodia said that access to information is one of the ways to empower and enable affected communities to participate in projects funded by the ADB. The current public communication policy, which took effect in September 2005, guides the ADB’s external-relations strategy and its stance on disclosure of information, with the aim of ensuring its business is widely known and understood. The policy recognizes that transparency is critical to the effectiveness, sustainability and accountability of ADB operations, and the trust and support of member-governments. A second round of public comments will be sought in October, before a revised draft document is submitted to the ADB’s board of directors in the first quarter of 2011. Final approval of the new policy is expected by next February.

By Abby Don As the Asian Development Bank gears up for the comprehensive review of its Public Communications Policy (PCP) by 2010, the NGO Forum on ADB has jumpstarted its own independent and parallel process of on-the-ground consultations. The series of community-level consultations kicked off in Yogyakarta, Indonesia on January 22-23, 2010. Spearheaded by the NGO Forum on ADB, Solidaritas Perempuan Kinasih and Forum LSM Yogja, the consultation was attended by project-affected people and non-government organizations monitoring ADB projects from Kalimantan, Java and Yogyakarta. YOGYAKARTA, 12 Feb 10 — “Access to comprehensive, accurate and timely information” is a strong sentiment expressed by communities from West Kalimantan and Java in Indonesia. Their current experiences exemplify how project-affected communities often find themselves on the receiving end of either misinformation or disinformation about the projects that are being planned by the Bank. There are misleading and inaccurate information circulated with regard to the number of households affected by the project, such as in the case of an ADB-funded regional road development project in Kambayan, West Kalimantan. The final draft of PPTA (Project Preparatory Technical Assistant) prepared by ADB says only 63 houses are directly affected on the proposed road-link in West Kalimantan. The people strongly disagree and stress that the number of affected households is more than 63, in fact, way beyond 63. The corridor of impact (COI) is one of the contentious issues. It seems that the Bank has not given this concern a forethought and consideration in determining the actual number of households that will be affected by the project. It was a unilateral decision made by the Bank’s consultant hired to prepare this Project and the Indonesian government. The project-affected people say that they were not informed. But beyond the numbers, the people’s concern is the far reaching implications of the project on their lives and livelihoods. The people’s feeling of uncertainty and fear are well founded. This is the sentiment of the people living nearest to the project site — “Our houses and land are taken away from us. We live very near the project site, and we are talking about just a few meters and not ten kilometers away as claimed by the Bank.” In Kalimantan Barat, access to information is again a pressing issue. Mr. Petrus Atus, a “binua” or head of an indigenous people’s village in Sambas district, said that they are not aware. Even SP Kinasih Yogyakarta, a non-government organization monitoring the Java south road project and supporting the concerns of project-affected people has this to say “There has been no public participation since the beginning of the road development project. People go there and just do measurements.” SP Kinasih underlined that information (and in the language understandable to the people) is wanting. According to SP Kinasih, the limited information is in English and accessible only through the ADB website. “We try to make information accessible to the affected people and seek audience with the local government, but even local officials cannot give information.” Similarly, other non-government organizations monitoring ADB-funded projects have problems accessing project-related information. During the consultation, Peoples Alliance for Citarum (ARUM) coordinator Mr. Dadang Sudardja underlined that it is a challenge getting accurate information on the US$ 500-million Integrated Citarum Water Resource Management Investment Program (ICWRMIP) financed by the Bank. ‘There have been no consultations with the families affected, almost nothing about the project. This is about demolition of houses and massive displacement of hundreds of families. We’ve been patiently requesting information since 2008, but until now nothing has been disclosed.” This is also evident in the experience of KIARA (Fisheries Justice Coalition) in monitoring the Coral Reef Triangle Initiative. The main problem, according to KIARA representative, is the lack of public consultation and the ideas did not come from the people. AMRTA Institute, the organization monitoring the West Jakarta Water Supply Development Project share similar sentiments. Mr. Irfan Zamzami noted that the ADB invokes that ‘certain information are confidential”, and withholds finance-related information, like the detail plan on how the loan was used. He also said that “this ADB-funded project is a pressing issue because water cost in Jakarta is the most expensive in Southeast Asia.” The on-the-ground realities in Java and West Kalimantan bespeak of the kind of inclusive and transparent information disclosure that the Bank is talking about. Undoubtedly, these affected communities have very little knowledge of, or worst, have no information at all on the ambitious Bank-financed regional road project. And in the absence of comprehensive, accurate and timely information, how do you expect people to have meaningful participation in the consultation and decision-making processes that directly affect their lives? It is time for the policy to catch up with reality. * The Asian Development Bank approved a Technical Assistance (TA) to prepare the regional road development project in West and East Kalimantan and southern part of Java Island. This assistance is in preparation of a project proposal by the government of Indonesia for a road development project in the aforementioned regions. The project preparatory technical assistance (PPTA) was included in ADB’s Country Strategy and Program 2006–2009 for Indonesia. The Government’s medium-term strategy for the Ministry of Public Works (MPW) identified road development in less developed regions, including northern Kalimantan and southern Java, as a priority.

By Tea Soentoro What is the incentive for affected people when their case is filed to ADB’s accountability mechanism was one of the significant questions raised during a briefing session on ADB’s accountability mechanism hosted by the Office of Special Project Facilitator (OSPF) and the Office of the Compliance Review Panel (OCRP) for civil society groups on 19 November 2009 at Discovery Suits, Manila. Robert May of OSPF and Bruce Purdue, the Secretary of OCRP, presented ADB’s accountability mechanism.[1] Present in the session were also Rusdian Lubis, Chair of CRP, Tony La Viña, member of CRP, and some other ADB staff. About 15 representatives of Manila-based NGOs, among others Transparency International, Affiliated Network for Social Accountability in East Asia and the Pacific, WWF, PRRM, LRC, PSI and the NGO Forum on ADB attended the session. That question raised after the two hours of discussion might reflect a skepticism to the accountability mechanism, among others, due to the narrow scope of its terms of reference, its difficulties in defining immaterial harms and long-term impacts, its site specific corrective measures without touching the project as a whole, and its incapability to restore lives of uprooted affected people. As mentioned by Lubis, the briefing session was a part of ADB’s accountability mechanism outreach program to civil society groups. After Manila, another briefing sessions will be held in Jakarta and Sidney (or Melbourne). It seems that those two offices need a pro-active approach because only a small number of cases were filed. This condition can be perceived as ADB is doing the job well. This is a matter of existence too as Purdue said “… and therefore it might downsize the Offices…” Since the Board approved the new Accountability Mechanism in May 2003 and has taken effect since December of the same year, OSPF received only 24 complaints. Out of which, 15 cases were found not eligible because they were not addressed to the Operation Department before going to accountability mechanism; 8 were eligible and 1 is still under review. Meanwhile, only 3 claims were filed to the OCRP. However, May felt encouraged as many of the 24 complaints were submitted during the past two years. It shows some improvement due to active outreach and also more NGOs are working with affected people, he said. May’s statement still didn’t answer a question raised about their assessment on why not many cases were brought to the accountability mechanism. It seems that those offices are ignorant to various matters that can be the reasons for this situation: lack of information to affected people about the accountability mechanism. They are not aware that they can file their grievances. Furthermore, most borrowers are not informed about this mechanism; even ADB’s consultants and staffs of the project. Affected people also fear their oppressive governments that’s why they don’t want to show their disagreement to a project. Lack of confident that the accountability mechanism can solve the problem in favor of the affected people is another reason for this situation. Though the accountability mechanism handles grievances of affected people due to ADB projects –from infrastructure to co-financing and financial intermediaries– the scope of handling is too narrow because it only looks at direct and material harm caused by a project, and targets cost effective solution. Regarding a question on how to define or quantify material harm related to damage or lost of cultural site, the answer was “…it is the matter of interpretation… the material harm can be defined broadly to include such damage or loss…” Another question that was not answered was about immaterial harm and long-term impacts from ADB’s Sharia banking project, as an example. The ADB is indirectly promoting the compliance to Sharia law by Muslims.[2] In a country such as Indonesia, Sharia law is a manifestation of the raising Islam fundamentalism that, among others, targets women to forcedly comply with and therefore leads to gender injustices. May said “… I really don’t know how to answer the question, and need to look at the case when it comes to me…” However, Purdue said that he wasn’t sure that ADB is not allowed to involve in project with religious dimension. The ADB is not allowed to intervene in the political affairs of a country, he said, though he was aware that the Sharia issues are becoming a political matter in a country such as Indonesia. Lubis added that the accountability mechanism is not the right venue to address this issue. The issue on eligibility was raised particularly for projects that have already been closed– after the submission of the Project Completion Report (PCR)–but harm to people is still ongoing, just like in the case of the privatization of the power industry in the Philippines. Though those offices are aware that some projects have longer impacts beyond the submission of the PCR, they have to work within the terms of reference of the accountability mechanism. The role of OSPF is limited to facilitating or mediating only a problem that evolved directly from a project. Purdue said, once the financial stake is out, no more can be done. Therefore, a participant suggested that the scope of the accountability mechanism should be broadened by covering the continuing damage of a project and the scope of damage itself. Regarding sanctions for non-compliance of a project to a policy of the ADB, they said the ADB is responsible for the project, not for the individual persons. According to Purdue, there are many factors that cause non-compliance. It could be some departments at the ADB or could be the borrowers. So there is no sanction or punishment to individuals. He continued that the significant change is to admit the problem and have the willingness to change the problem to make it more accountable. Furthermore, Purdue said that the CRP cannot cure non-compliances to the policy, but look for solution to correct them. La Viña added that the ADB will act accordingly on the recommendations from OSPF and OCRP to solving a specific problem. Therefore, it should be kept in mind that accountability mechanism is about correction of the problem that has occurred at the project level and there is no mandate to stop the project. Though on the other hand, the ADB cannot prescribe what governments should do. The ADB will not interfere with governments, but only give recommendation because it is a matter of sovereignty of the countries. Reaction to this statement came from a participant who said the sovereignty issue is a false issue. In the contract of the privatization of the power industry with the Philippine government, for example, the ADB required a particular policy reform. This was a clear evidence that ADB had intervened to the government’s sovereignty. A double standard is in practice. The accountability mechanism has two separate but related phases – the consultation phase under OSPF and Compliance Review Phase under OCRP, according to Purdue. The SPF is for problem solving at the project level, and once the problem is shifted to addressing a policy of the Bank, it is then brought to the CRP as it is about Bank’s compliances with the policies. He emphasized that the CRP is not an appeal panel of the consultation phase if the complainants are not satisfied with the results of the consultation. For example, if complainants go to CRP because the compensation rate is lower as expected, this would be found as not eligible. Complaint process starts at the consultation phase at the SPF to look for solutions first, then it can be continued to be filed to CRP. Not only project affected people, but ADB Board of Directors (BOD) can also file a complaint. However, they can go directly to CRP without going through the process of the SPF. Furthermore, Purdue explained the institutional arrangement of accountability mechanism: SPF is reporting to the ADB president; meanwhile CRP as an independent panel is reporting to the BOD. The ADB president is the chair of those two entities–the management and the BOD. This explanation invited a response about the president’s conflict of interest. Integrity, independency and output of decisions are questioned due to these dual positions. “The best system cannot help if the people in it are corrupt,” said a participant who is a judge. Purdue responded that this position is as stated on the Bank’s charter and has never been amended, though it can be done. However, he said, there is system of check and balance and more approach to accountability. Many issues raised during the briefing session are key points for the next review of the accountability mechanism. However, Purdue said that they are yet to determine the date; but for sure, the review will be done next year. The Board will decide on this soon, and the management will do the review. The briefing sessions are the start and ground work for the review. However, it still remains open whether the review is capable to fill principle gaps as raised during the briefing session and to make the new accountability mechanism more accountable and responsible to project-affected people by restoring their–material and immaterial, direct and indirect, short and longer terms–loss of livelihood and also open for a possibility to review the whole project once it proves harming people. Otherwise, the accountability mechanism will continue to serve its existing purpose, which is an image polishing that the ADB is accountable to people, and furthermore that this financial institution will again miss the point of being accountable and responsible. Endnote: 1 More information about OCPF at www.adb.org/spf, and OCRP at www.compliance.adb.org 2 Living complies with Sharia law is among others pray 5 times a day, fast during Ramadhan (fasting month), Muslim dress code for women (head cover), zakat (donation) and borrow money from Sharia financial institutions

BEKASI, 2 Dec 09 — Hundreds of Indonesians living along the Kalimalang Canal were displaced. Local shops serving as primary source of income for local families were demolished. According to local NGOs, the massive displacement is connected to the ADBfunded Citarum water resource management project. About to be demolished. Photo by Diana Goeltom/DebtwatchIn a statement issued today, the People’s Alliance on Citarum, known locally as Aliansi Rakyat untuk Citarum (ARUM), said the series of forced displacements since July of this year have been done without compensation provided to affected people. ARUM alledged, “the brutal displacement” is tightly related [to] the Integrated Citarum Water Resource Management Investment Program (ICWRMIP) funded by the Asian Development Bank (ADB). Amrul Mustopa of the Bekasi-based NGO El-Kail said the the displacements of families happened during the months of July, August, September and the most recent one in 13 November. “The brutal displacements were always so sudden, and always ended up with the people clashing with the Satpol PP [the one executing the displacement],” he said. “It was no surprise that the people had strongly refused the porcess of abolishing their home[s], private properties and livelihood without any compensation,” he added. Debtwatch, a member of ARUM, said that they have conducted dialogues with the ADB since March 2008 and submitted an analysis of the project’s resettlement plan which the Bank ignored. “The resettlement plan of the ICWRMIP is misleading since [it] does not provide an adequate and accountalbe estimat[e] number of peole [who] will be affected by the project, directly or indirectly,” Diana Goeltom of Debtwatch said. Rows of houses along the Kalimalang Canal before the July demolition. Photo by Diana Goeltom/DebtwatchAccording to Goeltom, there is no clear program and relocation place for the households who have been displaced by the project. The document mentioned that there will only be 872 households that will be displaced by the project. “But by assessing the field, we clearly saw that there will be more people who will be affected than the number that was mentioned in the document, especially when we saw the people who are living and having their livelihood along the embankment of Kalimalang,” Goeltom added. ARUM also cited cases where people have been displaced on the basis of squatting. One local person who requested not to be named said, “I have lived here since 1970 along with my family. I bought the land with an official letter from the authorit[ies].” He opened a small shop in front of their house. But now, he doesn’t know where they should go. “What should I do now? My shop is being demolished. How am I going to feed my family?” His family is one of the many that is not included in the ADB’s list of 872 households that will be affected by the project. ARUM is planning to file a complaint through the ADB’s Accountability Mechanism. “The displacment of households is violating the ADB’s own [Safeguards] policy; hence, we will help the affected people file the complaint to ADB’s Accountability Mechanism,” ARUM coordinato Dadang Sudardja said. In April 2009, the ADB approved a $500-million loan to the government of Indonesia for the rehabiliation of the Citarum river under the Bank’s Multi-tranche Financing Facility (MFF). The first tranche of the ICWRMIP was allocated for the rehabilitation of the West Tarum Canal, well known as the Kalimalang Canal, that passes throught the districts of Karawang and Bekasi, and Bekasi City

Bank watchdog NGO Forum on the ADB hit the Asian Development Bank today for what it called a “sham of a review of the ADB’s energy policy”. Forum executive director Red Constantino called the move as “bait and switch trickery demonstrating the bank’s contempt for public scrutiny and basic due diligence.” The ADB announced in 2006 it was drafting an energy strategy paper that would operationalize the energy policy it approved in 1995, which would remain unchanged. The Forum said "for three years the ADB repeatedly informed its stakeholders that the ADB's 1995 energy policy will be sustained and that comments will only be for the ADB strategy draft, which bank officials said would operationalize existing energy policy." In a surprise move last week, the regional bank said it was about to launch an updated energy policy based on a document that, the ADB admits, was "developed as an energy strategy." The ADB released its first energy strategy draft in 2007. It was described by participants to the consultations held by the ADB in the same year as "mediocre" and "confused." The ADB did not disclose subsequent drafts and released a revised strategy version relabelled as an "upgraded energy policy" only last Saturday, after emails demanding full disclosure and public consultations flooded the ADB. Forum executive director Red Constantino called the move as "bait and switch trickery demonstrating the bank's contempt for public scrutiny and basic due diligence." "Is the ADB really so beholden to shady power players that it will short-circuit its own process, tamper with its own papers and change institutional policy just to favor the interests of dirty energy peddlers?" asked Constantino. "Aspirational climte-related language in the so-called Updated Energy Policy draft appears to have been added to mask the insertion of dangerous text, such as the provision which now encourages the ADB to rapidly increase its support for scandal-infested coal-mining activities across Asia," Constantino said. The ADB's operating energy policy explicitly states that the regional bank will not support coal extraction operations unless these are for mine-to-mouth, "captive use" projects. In the draft submitted last January 16 to the ADB board, the bank is allowed to finance coal extraction if coal is deemed for "substantial use" of a mine-to-mouth project. "The change is insidious," Constantino said. "The word 'substantial' will be defined incredibly loosely. A mine-to-mouth coal-fired power project merely has to state that its power station will utilize a "substantial" portion of the coal it extracts and it can export equally substantial coal tonnage to other countries. This would not be possible under the current 'captive use only' policy restriction," said Constantino. The ADB was forced to pull out of a controversial coal mine project in Phulbari, Bangladesh in 2007 because the project's design included the export of Phulbari coal to India, which conflicted with the ADB's "captive use only" policy for coal extraction. The Forum called for an official Board-level inquiry over what it called "document tampering" by the ADB team managing the energy strategy review process. The Forum said it has evidence that "the 2007 energy strategy draft on display in the ADB website is "materially different from the paper that it posted and distributed in 2007".

Asian Development Bank President Haruhiko Kuroda opened the 41st Annual Meeting of the ADB today under a hail of questions from civil society groups critical of the ADB’s pursuit of private sector development at the expense of  poverty-alleviation efforts and community and environmental interests. “The corporatization of Asia is obviously the main agenda under the ADB’s Long-Term 2020 Strategy,” said Isagani Serrano of the Philippine Rural Reconstruction Movement. “It is clear forty-one years after its founding that there is no future for Asia’s poor under the ADB. Under the ADB, physical, economic and political displacement of communities in Asia will be massive,” Serrano said. ​ The Madrid meeting is taking place under a pall of doubt, as criticism from civil society stakeholders and the ADB country shareholders converged regarding the legitimacy and direction of the ADB’s role in Asia. Debate within the ADB recently spilled over to the public arena, particularly involving its investments in off-shore private equity funds, and an unprecedented delay in the vote to replenish the Asian Development Fund. Replenishment of the ADF is usually agreed months ahead of the ADB Annual Meeting. The ADF provides grants and low-interest loans to the Asia and Pacific’s poorest countries. The new ADF will cover the period of 2009-2012. ​ “The ADB can boast all it wants about the replenishment of the ADF but the fact is that the delay is a reflection of dissatisfaction and disagreements amongst the Bank donors,” Stephanie Fried of Environmental Defense Fund said. During the negotiation, the US made a strong connection between the ADB’s Safeguard Policies and replenishment of the ADF. ​ Last week, the Financial Times reported on material risks associated with over US$600 million in ADB investments close to 40 offshore private equity funds, many of which are domiciled in the Cayman Islands. “We are deeply concerned at the near-total lack of transparency regarding these funds and their unclear relevance to poverty-alleviation efforts,” said Titi Soentoro of the Indonesian group, NADI. “The ADB has environmental and social safeguards which must be applied to private equity operations but we see no evidence that this is happening,” said Red Constantino of the Bank watchdog NGO Forum on the ADB. “We have requested that President Kuroda release the names of all companies and projects financed by these funds as well as all of their social and environmental assessments.” ​ “If the ADB actually applied meaningful environmental and social standards to private equity funds, this would be a true breakthrough in the realm of alternative investments,” said Fried. ​ Kuroda was left with a number of questions to be answered regarding corruption in ADB projects in Afghanistan, the use of child labor in an ADB projects in Central Asia and development projects gone awry in ADB developing member countries such as West Seti in Nepal.

In 2000, the Government of PNG requested assistance from the Asian Development Bank (ADB) for the preparation of an agro-industry development project to generate income-earning opportunities for the rural population. A project preparatory technical assistance (PPTA) was approved in November 2000. 1 The Prime Minister of PNG stated, “The Government, in recognition, identified the Oil Palm industry as a vehicle and growth strategy to enhance the economic and socio-indicators of Papua New Guinea. The Government through the PNG-ADB Nucleus Agro Enterprise Project, has identified areas in PNG which are suitable for Oil Palm Development, such as: Turubu/Sepik Plains in East Sepik, Bewani in West Sepik, Amazon Bay in Central Province and Arowe in West New Britain Province.”2 Thus,the Nucleus Agro-Enterprises project (NAEP) was approved for lending by the ADB to the Independent State of Papua New Guinea on 18th December 2001. In October 2001, the government endorsed a proposal from Ramu Sugar in PNG to set up an 8,000 hectares oil palm plantation in Usino-Bundi in Madang province. About 6,500 hectares would be operated by Ramu Sugar and the other 1,500 hectares by smallholders. In August 2001, the governor of the East New Britain province, which currently has no oil palm plantations, announced that the province would start to encourage the establishment of oil palm plantations. The provincial government plans to convert a large area of land in the Open Bay area of North Baining for this purpose. In August 2001, the governor of Morobe province presented a pre-feasibility study on a 30,000- hectare oil palm project on the border of the Morobe and Gulf provinces. In June 2002, the Oil Palm Industry Corporation (OPIC) announced that a large number of new oil palm projects could be developed in PNG within the next five to ten years if current feasibility studies on proposed projects are completed and approved by the government. The ADB provided its first loan for oil palm development to PNG in 1986. The project completion report rated the project as partly successful. During appraisal, the project cost was estimated at $49.9 million. The output from the Project was about 70,000 tons of fresh fruit bunches in 1998. The peak harvest of about 107,000 fresh fruit bunches was expected by the year 2004. The total number of project beneficiaries was 1,731 or 79 percent of the appraisal target of 2,200 farmers. The report stated that, “the farmers are very enthusiastic about this enterprise and virtually all are planning to plant an additional two hectares of oil palm. Overall, the project impacts are significant and the Project is rated as generally successful.”3 According to a 2001 ADB news release on the PNG NAEP, “Agricultural production in PNG is the mainspring of growth and the principal tool for reducing poverty in rural areas.” These enterprises will in turn provide much needed employment to subsistence farmers, shifting them away from the informal subsistence economy. The Bank claimed that this will improve incomes and standards of living in rural areas throughout PNG. However, the project was heavily criticized for promoting export-driven approach to development rather than respecting and building on PNG’s wise constitutional principles of culturally-sensitive and ecologically-sustainable development. Environmental and Social Impacts According to the ADB-OED report, “Land degradation, as a result of oil palm cultivation, is not expected to be significant as the Project has avoided steep land and gullies as planting areas. In addition, the rapid buildup of palm fronds on the floor of interrows minimizes soil erosion risks and conserves soil fertility.” However, the report stated, “the concern on the environmental impact from oil palm development is from the mill processing of FFB was not addressed at appraisal as the processing of the fruit bunches by the plantation palm oil mills was regarded as outside the scope of the Project. However, the processing of smallholder’s FFB by the privately owned mills would result in generation of additional waste. Because the privately owned mills have failed to install proper treatment plants, the waste is being discharged directly into the sea. The Government has established guidelines for palm oil waste treatment. Unfortunately, no monitoring is being undertaken to ensure that palm oil mills comply with the guidelines. It was observed that the full complement of treatment ponds necessary to treat palm oil waste has not been established in the mills. Thus, the discharge from these mills could have some adverse effect on the coastal ecosystem. It is important that the PNG Bureau of Water Resources monitor the situation regularly as untreated mill effluent could cause damage to the reef and inshore marine life.” The report further stated, “there are no control measures to minimize air pollution from the burning of fruit fiber and empty shells in the mills. While the mills’ contribution to the greenhouse effect is negligible, the fallout of fine dust is both a nuisance and a health hazard to nearby residents.” According to the local environmental Group CELCOR, many of the ADB-funded large-scale monoculture cash crops projects have been controversial as they were often socially and environmentally damaging. ADB has received much criticism for using poverty reduction as a front to subsidize and support the private sector. Furthermore, the conversion to cash crops often results in irreversible environmental damage. This is particularly significant for PNG since no less than 65 percent of its land are still forested and are ecologically intact. And over 85 percent of its five million population are dependent on a healthy and intact natural environment for survival. In Oro Province, oil palm plantations have encroached upon the habitat of the world’s largest and endangered Queen Alexander Birdwing butterfly, which is endemic to the area. Further expansion of oil palm in Oro Province would increase the risk of extinction of this butterfly specie. There were concerns that in East New Britain, the Open Bay oil palm proposal would threaten one of the most spectacular cave systems on Earth –- the Caves of Pomio. The rivers have been drained from inland areas where the oil palms are planted. The downstream of the operation has affected the livelihood of the people. Villagers complained of reduced food supplies from the river and coastal region, contaminated water, as well as skin irritation after the introduction of oil palm in their area. PNG is known for its extensive and diverse coral reef and fringing reef systems. However, there is a concern that increasing land clearing for timber and subsequently for oil palm will increase the amount of pollutant and sedimentation entering the coastal region. Excessive nutrients run-off from the residues of fertilizers used in oil palm plantations are corrosive to the fragile and sensitive reef systems. This inevitably contributes to the destruction of pristine reef systems and hence, valuable fish breeding and spawning grounds. Oil palm processing mills are usually located close to urban centers for ease of transportation and access to infrastructures. In Popondetta in the Oro province, the entire town and surrounding area have been infested with flies which are health hazards. The stench of rotting waste from the mill could be smelled for kilometers and the smoke from the Higaturu palm oil processing mill could be felt from as far as the Managalas plateau. ADB Safeguard Policy Violations Like many large-scale projects, the introduction of agro-enterprises in PNG also brought many complex and costly social problems once unknown to rural PNG. Indigenous Peoples Policy The change that comes with this kind of externally imposed project is often disruptive and undermines the existing customary system and structure which has sustained local communities for as long as they can remember. Often, not everyone in the community is in agreement with the agriculture project. Sometimes, customary land boundaries are crossed to establish the crops. In other times, the parent company leases out lands to people from other areas for their agriculture plots resulting in communal tension and misunderstandings. This manipulation of land use and transfer of tenure is not based on customary process and often results in discontent and anger within a community and among communities. Conflicts from land disputes increased as these kind of schemes are introduced. The transition from subsistence to cargo or cash-dependency has both social and economic ramifications. According to CELCORE, “It is unfair and patronizing to classify rural Papua New Guineans as ‘rural poor’ as they have access to abundance of resources as long as their land remains intact and the natural environment healthy.” The natural environment forms the basis for their subsistence and strong cultures and social safety net. However, agriculture projects as proposed by the ADB drastically undermined this strong system as these projects often require major cultural shifts and restructuring of community activities and relationships. Growers essentially lose control of their lifestyle once they become bound to a long contractual arrangement with the parent company of NAEP, they said. Rise in drug and alcohol abuse was found as a major social problem. Money from cash crops production has increased the purchasing power of growers. Often, men were the key recipients of money from the produce even though the entire family may have been involved in the whole production cycle. Unfortunately, alcohol is one of the most popular items purchased by men in places with smallholder scheme. They also claimed that rise in crime rate was also very high in these project areas. Landowners and smallholders in existing oil palm project areas are unhappy with the low return from their labour and once productive land. Many growers complained that big promises were made to coerce them into accepting oil palm as a good development project just to find themselves trapped in a situation of total dependency on the oil palm company and commodity price fluctuations. Normally, growers allocate the best farmland available in their charge to oil palm. According to local people, the oil palm cultivation is not the best crop. However, it was introduced to produce oil for developed nations such as Australia. Environment Policy The ADB-OED report accepts that some environmental issues were not addressed in the project. According to CELCORE, “downstream communities often bear the brunt of waterway pollution which is another source of communal conflicts.” Due to the long delay in project start-up, the scheduled two-year project has just completed its first quarter of implementation. Selection of subprojects and pilot projects has recently completed so the analysis is based on one of out the total of four key activities to be undertaken by TASMU. No field monitoring of any of the selected projects has been carried out. The focus of the feasibility studies and piloting of projects of the Nucleus Smallholders Agro Enterprises Project offers a lot of scope for the ADB to implement its environmental guidelines and policy. In the Report and Recommendation of the President to the Board of Directors on a Proposed Technical Assistance Loan to Papua New Guinea for Nucleus Agro-Enterprises in November 2001, specific assurances in relation to the environment were given by GOPNG. These assurances which have been incorporated into the Loan Agreement were: (i) The Government, through DNPM1 (Department of National Planning and Monitoring) and TASMU, will ensure that- a) environmental concerns are fully taken into account from the time of the formulation of selection criteria to the completion of the subproject feasibility studies; b) opportunities exist to maximize potential environmental benefits and minimize environmental conflicts and costs; and c) any investment proposal resulting from a subproject feasibility study is tested on the basis of environmental parameters as well as technical and financial parameters. (ii) All environmental mitigation measures identified as the result of a subproject feasibility study or pilot project investment plan will be incorporated into the project design and followed during project construction, operation, and maintenance in consultation with the Government’s Office of Environment and Conservation and in accordance with ADB’s environmental guidelines. These agreements were also reflected in the Environmental Considerations of the Loan Covenant. Specifically, it stipulated that: The Borrower (GOPNG) shall ensure that TASMU and the Screening Committee ensure that in evaluating and/or funding any Subproject in which environmental considerations are involved (including resettlement, gender and other social dimensions), (i) Environmental concerns are fully taken into account from time to time in the formulation of detailed selection criteria to the completion of the SFS; (ii) Opportunities exist to maximize potential environmental benefits and minimize environmental conflicts and costs; and (iii) Any investment proposals resulting from an SFS is tested on the basis of environmental parameters as well as technical and financial parameters. However, these provision were not properly adhered to in this project In the loan document, the ADB said that it is formally committed to following its environmental policies including the Environmental Assessment Requirements and Environmental Review Procedures of the ADB. From the first Inception Report reviewed, it was evident that this requirement was conveyed to the executing agent, TASMU and GOPNG. How this translates into practice in the field remain to be seen. The following are some issues identified to date: In accordance with the 2003 guideline, (para 4) ADB’s environmental assessment process starts as soon as potential projects for ADB funding are identified. Environmental assessment is ideally carried out simultaneously with the pre-feasibility and feasibility studies of the project. In this project, some information related to the environment was captured in the RFA of the first batch of the potential projects but they were mostly very brief and have not included many of the components outlined in the guideline. It appears that the REA checklists have not been used contrary to the provision in the MOU. Relevant RDE checklists should have been used to categorize each of the projects selected during the preliminary rapid appraisal process under the new ADB policy. It appears that IEE was carried out in the RRA process which suggests that TASMU might have assumed that all potential projects fall into Category B without actually following through the REA process for categorization. However, the components of the IEE were different from those specified in the ADB guideline. Only one out of the six projects which went through the RRA process had been environmentally categorized. However, the categorization was based on the PNG Government and not as specified in the ADB environmental guidelines. The Bank’s stipulates that it is the borrower’s responsibility to carry out the EIA. And this was clearly reflected in the Loan Agreement. However, corruption and general governance failures within GOPNG as well as the capacity limitation of the Department of Environment and Conservation mean that this would be a highly unrealistic expectation. Lessons Learned The project did not assess the environmental and social impacts of the main project as well as its sub projects. The project did not properly follow the ADB environmental guidelines. The public participation was not adequate or did not exist at all. The project did not produce a social program to educate people parallel to increasing income. It created social tension in the local communities as their customary land rights was not properly considered during the design and implementation. -“We, the landowners are developing and will continue to develop OUR LAND on our own term. We therefore sternly warn all those parties involved in wanting to use OUR LAND for oil palm to STAY OUT! Any attempt to bring oil palm on our land will be strongly resisted.” Excerpt from a newspaper advertisement put out by a group of landowners in PNG, February 2003. (Footnotes) 1 ADB. TA 3545-PNG: Agro-Industry Development for $500,000, approved on 14 November 2000. 2 Address to the New Britain Palm Oil Limited & the business community in Kimbe, West New Britain. 3 ADB. “Asian Development Bank PPA: PNG 19122 Project Performance Audit report on the West New Britain smallholder development project (loan nos. 784[SF]/785-PNG) in Papua New Guinea.” 1999. 4 Tan, Lee. “NGO Forum on ADB Briefing Paper.” Australian Conservation Foundation/Friends of the Earth Australia,2003. 5 CELCORE. “Case study on Nucleus Agro Enterprise Project.” ADB and Environment. Manila: NGO Forum on ADB, 2003. 6 Ibid. 7 Ibid.

The Mae Moh Coal Power Plant has 13 generating units with a total capacity of 2,625 megawatt (MW). It is located in the mountains of Lampang province in northern Thailand. According to the Asian Development Bank (ADB), it has been involved in Mae Moh mine for financing several units. It approved a series of loans amounting to more than US$352 million for the past twenty years. The Electricity Generating Authority of Thailand (EGAT) constructed the plants in four phases from 1978 to 1996. It owns and operates the Mae Moh Power Plant which is fueled by an open pit lignite mine which produces 40,000 tons per day. With an area of 135 square kilometers, it is considered the largest coal-fired power plant in Southeast Asia. The project aims to answer the growing electricity demand in Metropolitan Bangkok and rural areas. According to the ADB and EGAT, the project is highly successful since the project objectives involving least-cost nature, system loss reduction, and system stability and reliability have been met. However in reality, taking into consideration the social and environment impacts, the project is far from being successful. Environmental and Social Impacts According to Greenpeace, the Mae Moh power plant approximately contributes more than four million tons of carbon dioxide emission in the atmosphere, annually. In addition, around 1.6 million tons of sulfur gas is released from the power plant into the air everyday. Such have caused severe health problems for the people near the site and have led to the deterioration of the environment. More than 200 people have died due to respiratory diseases and lung cancer ever since Mae Moh power plant was operated. (Jessica Rosien, 2004) Greenpeace further said that from the time of the implementation of the Mae Moh coal power plant, more than 30,000 people have been displaced and thousands acquired severe respiratory problems. This was due to the inhalation and exposure to sulfur dioxide emitted from the mine. The fly ash has also affected the crops of the villagers. According to one villager, her planted vegetables and fruits died because of the toxic that the coal power plant emitted. Another villager recounted that her pineapple plantation wilt over the years. Farmlands have been negatively affected by acid rain which is attributed to the sulfuric dioxide released by the coal power plant. In October 1992, when EGAT operated the 11 units at Mae Moh, people residing within the seven-kilometer radius of the plant fell ill with breathing difficulties, nausea, dizziness and inflammation of eyes and nasal cavities. After two months of operation, 50 percent of the rice fields were damaged by acid rain and around 42,000 people were found to have breathing ailment. In April and May 1996, six people in Mae Moh died of blood poisoning. Greenpeace further said that in 1999, more than 600 people suffered from respiratory problems caused by sulfur dioxide emissions. (Saksit Meesubkwang, 2006) In October 2003, the State Natural Resources and Environmental Policy and Planning Office found high levels of arsenic, chromium and manganese in almost all water sources within the vicinity of the plant. In May 2004, the Thai Provincial court awarded US$142,500 to the villagers for crop damages caused by the coal power plant. Greenpeace believes that this compensation is the government’s way of recognizing the plant’s disastrous effect to the lives of the people. Safeguard Policy Violations Environment Policy In its technical assistance completion report, the ADB admitted that “the Mae Moh power station, including the Mae Moh mine, has caused environmental and social problems, in particular, local air pollution causing public health problems.” (ADB, TA-CR, 2002) In 2002, Greenpeace Research Laboratories conducted a study on the Mae Moh coal power plant. Results of the study showed that Mae Moh power plant releases around 4.3 million tons (MT) of fly ash along with 39 tons of neurotoxin mercury annually. Fine powders of fly ash sample were collected which contained elements that are highly toxic to the environment, animals, humans and plants. Greenpeace said that sample from Mae Moh coal power plant contained very high concentrations of arsenic, mercury, lead and chromium. Arsenic is known to be carcinogenic to humans. It could easily enter groundwater and waterways. Mercury is a well-known neurotoxin. Lead is highly toxic and could damage the environment. It has a long residence time compared with most pollutants. Chromium is also a known carcinogen. To mitigate the negative impacts of the plant, pollution control devices, such as flue gas desulfurization (FGD) and ionizing wet scrubbers, were installed by the government. However, Greenpeace Research Laboratories stated that the sample ashes still contained very fine particulates, called respirable particles. These elements include arsenic, cadmium, chromium, cobalt, lead, mercury and zinc. Pollution control devices fail to contain these respirable particles. In the case of Mae Moh, mercury was not completely removed and still reflected high concentration in the sample collected. Greenpeace stated that end-of-pipe technologies cannot destroy toxic elements that were released to the atmosphere in gaseous form. Treatment of these hazardous elements will only result in the production of additional contaminated waste streams. Involuntary Resettlement Policy Due to the implementation of the project, more than 30,000 people have been displaced. According to reports, Thailand’s cabinet previously offered to build houses for those who were affected. However, there has been no progress about this plan until now. This clearly shows that the ADB and EGAT have no concrete plan and program to address the issue of resettlement of affected villagers. Compensation for the income loss due to farmland degradation was not even included in the implementation of the project. The villagers have to go through the process of filing law suits against the government just to receive just compensation. Lessons Learned The case of the Mae Moh Coal Power Plant is another proof that burning fossil fuel to generate electricity is detrimental to the environment and human health. This has been proven by the many people who acquired respiratory diseases and numerous individuals who died due to toxic elements that were produced by the plant. In the long run, the use of coal power plants does not promote sustainable development. In spite of pollution control devices, hazardous particles are still present at high levels in the environment. This only means that the only way to end the social and environmental disasters that a coal power plant brings is through a complete stop of its operation. This leaves the ADB and the government to resort to sustainable, renewable and environment-friendly sources of energy such as solar and wind-generation power. According to Greenpeace, there is a need for the ADB and the host governments of coal power plants to conduct an environmental audit. Based on the Mae Moh experience, there is a need to institutionalize resettlement programs. Just compensation and medical treatment should be provided to the victims of the coal power plant releases. The ADB should begin accepting responsibility for the social and environmental disaster that the coal power plant has caused the people of Mae Moh. The story of Mae Moh points out that the demand for electricity is not enough reason to take the environment and human life for granted. References: Asian Development Bank. “Project Performance Audit Report on the Third Power Transmission (Sector) Project (Loan 1170-THA) and Fourth Power Transmission (Sector) Project (Loan 1245-THA) in Thailand.” Manila: ADB, September 2002. Asian Development Bank. “Technical Assistance Completion Report.” Manila: ADB, March 2002. Brigden, K., Santillo, D., and Stringer, R. “Hazardous Emissions from Thai Coal-Fired Power Plants.” UK: Greenpeace Research Laboratories, 2002. Greenpeace Southeast Asia. “All Emission, No Solution: Energy Hypocrisy and the Asian Development Bank in Southeast Asia.” Greenpeace Briefing. May 2005. Greenpeace Southeast Asia. “An ADB Skeleton in the Closet: Mae Moh.” 2005 Greenpeace Southeast Asia. “Mae Moh: Coal Kills.” Bangkok: Greenpeace Southeast Asia, May 2006. Meesubkwang, Saksit. “More Locals Claim Poisoning by Mae Moh Power Station in Lampang.”Chiang Mai Mail. Vol. V, No. 26, June 24-June 30, 2006. Probe International. “New Generation Technology.” May 2000. http://www.threegorgesprobe.org/pi/index.cfm?DSP=content&ContentID=714 Rosien, Jessica. “ADB’s Dirty Involvement in Coal-Fired Power.” Bankwatch. Vol. III, Is. 2, December 2004.