Mekong Watch CATFISH TALES
13 June 2002 Issue #2
CONTENTS
1. JAPANESE POLICY NEWS: Beginnings of a Compliance Mechanism for JBIC's
New Environmental Guidelines
2. MEKONG WATCH ACTIVITY NEWS: WSSD Prep Com IV--General Impressions (7
June)
3. MEKONG WATCH ACTIVITY NEWS: ODA--Official Development Assistance or
Overly Destructive Assistance? Workshop on Japanese ODA at Indonesian
People's Forum (WSSD Prep Com IV)
4. PROJECT UPDATE/JAPANESE MEDIA: Japanese Corporations React to Prachaub
Kirikan Project Delay
5. To Subscribe/Unsubscribe
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1. Japanese Policy News: BEGINNINGS OF A COMPLIANCE MECHANISM FOR JBIC'S
NEW ENVIRONMENTAL GUIDELINES
The first consultation meeting of the Japan Bank for International
Cooperation (JBIC) on a compliance mechanism for its new environmental
guidelines was held on 7 June 2002.
As mentioned in the first issue of "Catfish Tales," the environmental
guidelines were a product of a consultative process which involved a study
group of NGOs, academics, and ministry officials who were able to have
in-depth discussions on concrete content of the guidelines. JBIC has also
acknowledged the need for a mechanism to ensure implementation of the
guidelines once they are put into effect in October 2003.
Unlike the process to draft the environmental guidelines, JBIC has decided
to develop its compliance mechanism through a series of public
consultations. While public consultations are useful for getting input
from a wide range of interested people, we are concerned about how
discussions at these consultations will (or will not) be incorporated into
the final mechanism.
Today's meeting did nothing to alleviate the concerns. There were two
notable differences from the study group to draft the environmental
guidelines:
1. The chair of the meeting was also the person responding to
questions. While the content of today's meeting was only to outline how
the consultations will proceed, concerns raised were responded to by the
chair, and there was no discussion. In future meetings, we want to have
concrete discussions on policies and procedures for a compliance
mechanism. We do not want to raise concerns and spend time developing
concrete recommendations only to see them disappear into the walls of JBIC.
2. There was a surprisingly strong corporate presence. We of course have
nothing against corporate participation in this process. In fact,
constructive input from the corporate sector would be valuable. We are
concerned, however, that the participants from the corporate sector have
come not to strengthen the implementation of JBIC's environmental
guidelines with a compliance mechanism, but to ensure that the mechanism
does not disrupt their business activities.
The purpose of the meeting was simply to tell participants how discussions
would proceed, and from the remarks of the corporate sector, it is clear
there is going to be a struggle ahead. Issues raised by corporate
representatives included:
a. It is necessary to re-examine the need for an independent compliance
mechanism. Bringing in a third party to ensure compliance is costly and
time consuming. JBIC can be trusted to adequately implement its own
guidelines, and the current system is sufficient to handle complaints from
local people.
b. JBIC looks too much at multilateral policies, such as the World
Bank's. It was implied that it is more important to look at the guidelines
of other national Export Credit Agencies, and that Japan should not be
taking the lead.
c. To implement projects efficiently requires things to be done in a
timely manner. The compliance mechanism should not interrupt the flow of
business.
It is a concern that at a meeting to begin a process to establish a
compliance mechanism, there is a strong call to re-evaluate that need and
halt the process. It is also unfortunate that guidelines of other ECAs are
weak, and are not so useful in developing a compliance mechanism for JBIC's
environmental guidelines here in Japan.
Interesting to note, however, that an official from the Ministry of Finance
brought a list of topics he hoped to have covered in the upcoming
discussions, and this included the issue of requesting a halt to
construction and/or disbursement for projects which are to be inspected
under the new compliance mechanism.
The next meeting is to be scheduled sometime at the end of this month.
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2. Mekong Watch Activity News: WSSD PREP COM IV--GENERAL IMPRESSIONS
"Brackets" may be the most remembered word from the World Summit on
Sustainable Development Prep Com IV held in Bali. Frustration may be the
most dominant sentiment. The Chairman's Text was filled with bold and
brackets, indicating disagreement among delegates, weakening the text and
building frustration among both NGOs and delegates. The Japanese
delegation was not unique in watering down text, being frustrated with the
negotiation process, and being a target of frustration by Japanese (and
international) NGOs.
Though fundamental reasons may differ, there was one area of agreement
between Japanese NGOs and the Japanese delegation, and that was regarding
the 0.7% target for ODA. The Chairman's text calls for donor countries to
reach a target of 0.7% of GNP as ODA to developing countries. Ambassador
Ishikawa from the Ministry of Foreign Affairs (MOFA) simply said that
reaching such a target was impossible, as it would require doubling Japan's
ODA budget. Japanese NGOs expressed reluctance to join the call for
increasing ODA budgets due mostly to the current quality of ODA and the
problems Japanese ODA has created in developing countries. Communities in
developing countries have had their livelihoods turned upside down and
environments damaged as a consequence of some Japanese ODA projects. Until
these problems can be adequately addressed, it is difficult to advocate for
increasing the budget (see the next article on the Japanese ODA workshop).
But are these problems going to be adequately addressed? From the
discussions with the Japanese delegation at the Prep Com IV, it doesn't
seem likely to happen soon. While the delegation was good about making
time to meet with NGOs, frustration among NGOs was evident because
discussions were of a question-and-answer nature rather than consultations.
Mekong Watch asked the Japanese delegation about the Japanese government
position on Strategic Environmental Assessments (SEA). The Chairman's Text
calls for SEA to be conducted, and this is based on an EU Directive which
calls for assessments to be made of the environment at early stages of
plans or programs BEFORE decisions are made. But this part of the
Chairman's text was bold and bracketed.
The Japanese delegation's response was that the Japanese government was
reluctant to agree with the paragraph for two reasons. One reason was
because the concept of SEA is not yet fully developed. According to one
delegate, even delegates from the EU were not able to fully explain the
concept. The second reason was more conditional. If the phrase, "taking
into consideration the situation of individual countries" were included,
then it could be possible for the Japanese government to agree. It seems
that even after the end of Prep Com IV, this section has still not been
agreed upon.
Another bracketed part of the Chairman's Text was a call for an
international framework or convention on access to information and public
participation in decision making processes. Here too, the Japanese
delegation was reluctant to endorse this section of the text. And again,
this is based on an E.U. initiative, the Aarhus Convention on Access to
Information, Public Participation in Decision-making and Access to Justice
in Environmental Matters.
Concerns of sovereignty and wanting to avoid interfering in the domestic
affairs of other countries is one reason [excuse] for the Japanese
government's reluctance to support these paragraphs. To have an
international framework, however, would actually be very beneficial because
then it would no longer be considered a simply domestic issue. The
Japanese government, however, does not seem interested in pushing at the
international level either, in spite of the fact that the Japan Bank for
International Cooperation's new environmental guidelines calls for
sufficient information disclosure in recipient countries for projects
financed with Japanese official funds.
Last, "ownership" was a key word in the Japanese delegation. We found the
use of "ownership" to be unfortunately selective. There are times when
conditionality is placed on projects, such as with the Agriculture Sector
Program Loan in Thailand, for which JBIC is providing half the funds. So it
is reasonable to assume that placing conditions for environmental
protection on official financing is not out of the question. And yet, when
local people raise concerns about development projects, we hear endlessly
about how placing conditions interferes in domestic affairs and how
recipient countries should have a sense of ownership. This raises the
question, whose ownership? We need to go beyond ownership of governments
and see development plans owned by local people who are most directly
affected by them.
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3. Mekong Watch Activity News: ODA--OFFICIAL DEVELOPMENT
ASSISTANCE? OVERLY DESTRUCTIVE ASSISTANCE? WORKSHOP ON JAPANESE ODA AT
INDONESIAN PEOPLE'S FORUM (WSSD PREP COM IV)
2 June 2002
With participants from backgrounds almost as diverse as the contents of
paragraphs in the Chairman's Text for the WSSD, a workshop entitled
"Japanese ODA since Rio--Is it Accountable? Is it just?" was held in
Bali. It was co-hosted by the Indonesian People's Forum and the Japan
Forum for Johannesburg (JFJ).
After an explanation of ODA and a review of the past 10 years by the Japan
Center for a Sustainable Environment and Society (JACSES), specific case
studies of ODA projects which have brought negative environmental and
social impacts were explained by Mekong Watch, the Japan NGO Network on
Indonesia (JANNI), and Bali Focus (a local NGO taking up development
issues). Then, discussion was turned over to the floor, and a wave of
concerns were raised by participants.
The first to speak began with, "I am a victim of the Kotopanjang Dam." He
spoke of how villagers were resettled without adequate respect for their
rights. Another spoke of how his brother's community was impoverished as a
result of the Asahan Hydropower Plant, while it was the wealthy who had
moved to the area from Java who could afford to benefit from the
Japanese-funded school and hospital there.
People from Bali also expressed their concerns about potential social and
environmental impacts of two Japanese ODA projects in the planning stage in
their communities. Their concerns included the lack of consultation,
insufficient information disclosure, corruption, and poor communication
between communities and the developers and companies involved.
An activist from Thailand also explained about the problems around the
Agricultural Sector Program Loan, half financed by JBIC, and how it was
hurting small farmers. A woman from the Philippines lamented the fact that
as far as she could see, the benefits of ODA projects went only to the
companies that implemented them.
When the people spoke, they addressed their concerns directly to Ambassador
Ishikawa of Japan, who also attended as a participant of the
workshop. Ambassador Ishikawa, the "Ambassador to NGOs" for the WSSD
process, responded to concerns raised by the participants to say he would
convey what they shared to those responsible in the Japanese government. He
seemed to be of the position, however, that overall, Japanese ODA was
benefiting the world. The problems faced by those who spoke at the
workshop, he attributed to "oversights" specific to those projects.
A representative of Nippon Koei, one of the companies involved in the ODA
projects in Bali also responded to concerns raised by Bali residents to say
that they were indeed already in consultation with communities and that he
was confused by the various responses they were getting from different people.
After the workshop was over, representatives of 19 NGOs and community-based
organizations signed a statement to the Japanese government demanding
accountability and justice in Japanese ODA. It listed the problems faced
by affected communities as a result of Japanese ODA projects which were
brought up at the workshop, reasons for these problems, and a list of 15
demands. Most of the demands were based upon paragraphs of the Chairman's
Text to the WSSD. While many of these paragraphs are still filled with bold
print and brackets, we believe it was important to demand that the Japanese
government take concrete steps to implement measures to ensure that
Japanese ODA is based on environmentally and socially sound policies and
practices.
Demands included respecting basic principles of human rights and cultural
diversity; measures to ensure corporate responsibility; integrating respect
for indigenous and local approaches to resource management in all relevant
ODA projects; stopping funding for large dams; implementation of Strategic
Environmental Assessments; and participation of affected communities in ODA
project planning, implementation and evaluation.
For a copy of the statement, please contact Mekong Watch.
For an article with more details on the ODA workshop, also see page 5 of
"Taking Issue," a daily newsletter by the Sustainable Development Issues
Network:
http://anped.org/PDF/Taking%20Issue%201-6.PDF
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4. Project Update/Japanese Media: JAPANESE CORPORATIONS REACT TO PRACHUAB
KIRIKAN PROJECT DELAY
For those of you following the Bor Nok and Hin Krut Coal-fired power plant
projects, you will know that the Thai government announced that
implementation of these projects is to be delayed. The 17 May issue of
"Bankok Shuuhou," a Japanese language newspaper based in Bangkok, covered
not only the fact that the Thai government is postponing the projects, but
got comments from some of the Japanese corporations involved. A
translation on an article from Bangkok Shuuhou which has comments from
three representatives of Union Power Development Corporation (UPDC) follows
the brief description of the projects below.
These two power plants, located in Prachaub Kirikan Province of Thailand,
have been the target of protest by local people and NGOs due to concerns
about environmental and social impacts the coal-fire plants could
bring. The Thai government's recent announcement has not necessarily put
everyone at ease, as the intention behind it is unclear.
The Thai government announced that Thailand has sufficient electricity
until 2007. Thai newspapers have called announcement a "cancellation" of
the projects, but UPDC, a conglomeration of Japanese companies implementing
the Hin Krut project, is saying this is postponement, not cancellation.
Please remember, UPDC's comments translated below do not reflect the
position of Mekong Watch! We are providing this translation for your
information...
From Bangkok Shuuhou. 17 May 2002 Issue. No.1010 Economics Section
(Translation by Mekong Watch. Originally in Japanese)
"Postponement is what the Thai Government Intends--Work will need to begin
in 2 years for electricity supply"
On 10 May, the Thai Government indicated that it considers the two power
plants planned for Prachuab Kirikan Province to be unnecessary for the time
being. How is the Thai Government's announcement being viewed by those
involved in the power plants?
We asked three from Union Power Development, the developer of the Hin
Krut Power Plant, for their comments. Those interviewed were UPDC
President Mr. Hashizume (Tomen), UPDC Board Member Mr. Hattori (Chuubu
Electric), and Mr. Yasuda, head of the Toyota Tsusho Corporation Energy Group.
Question: How do you view the Thai government's announcement?
Answer: The Government said, "Thailand's electricity supply can be
sufficiently met until 2007." There has been no more explanation than
this, so we are interpreting it to mean that the timing for beginning
operations has been postponed. Until now, plans were to begin operation of
the first generator in October 2005, and the second in January the
following year. This probably means that we can begin operation in
2008. We have not been contacted by the government directly, but according
to the announcement, the Electricity Generating Authority of Thailand
(EGAT) is supposed to discuss the timing of operations or compensation
issues with us. EGAT has already established a working group to examine
how development should proceed and compensation issues."
Question: Impressions of the content of the announcement?
Answer: Every country reviews its demand for electricity and the
timing for construction of power plants, so this in normal. But in this
announcement by the Thai Government, it is not clear what kind of energy
policy will succeed the last one, or concretely when there will be a need
for the power plant. The Thai Government has shown no consideration for
the private electric companies which participated in this plan at its
invitation. This is extremely unfortunate. We participated because the
government said they would purchase electricity, but for some reason there
has been a lot of criticism saying it is the private companies which are
bad. I cannot understand this. Mere postponement brings on considerable
cost. If they are going to cancel, then all the investment until now will
be wasted. Of course, depending on the government's decision, we will be
requesting compensation."
Answer: Since the change to the Thaksin Government, Thailand has
become very inward-looking. Consistency in policy seems to have
disappeared. Power plants require a year of planning, and four years for
construction to operation. In order to recover the 1.3 billion dollar
investment, it takes another 25 years. In order to carry out this kind of
long-term plan, consistency and stability are essential. Thailand's
private sector electric power plans are under the direction of the
government, and that's whey we are participating. We hope they will not
betray our trust."
---Billions of yen already invested---
Question: What is the current situation of the power plant plans?
Answer: We have invested several billion yen into the purchase of
land, the environmental impact assessment, and costs for obtaining various
permits. The costs to obtain necessary permits has been especially
high. Construction has not yet begun, and only the land has been cleared
of vegetation. It will take about 4 years to construct the plant. If we
are to begin supplying electricity in 2008, we need to begin construction
sometime in 2004."
Question: What is the background to the private sector's involvement in
electricity supply?
Answer: In the mid-1980's, Thailand enjoyed rapid economic growth and
the demand for electricity increased dramatically. There was a lack of
electricity, so blackouts occurred. But the condition of Thailand's
Electricity Authority was not necessarily good, so the Thai government
planned to bring in private financing into power generation. Therefore in
1995 there was bidding, and of 32 groups, 7 were chosen. Of these, two
groups have already begun operation of their power plants."
Question: What are the plans for the construction and operation of the
power plants?
Answer: As for us, we had expected that electricity supply by private
electric power companies would gradually begin between 1998 and
2002. However, due to the economic crisis and continued economic
stagnation, demand for electricity dropped, so the plan for the private
sector to supply electricity was unavoidably postponed, and the period for
beginning new electricity supply was postponed from 2001 to 2005. Then, in
October of the same year, the Cabinet decided to have the project go ahead,
and permission for construction was given under the Thaksin government in
June of last year. But that has been overturned by this new announcement."
---Use of Coal for Risk management---
Question: What is the reason for using coal as the source of electric power?
Answer: The reason we are using coal is because 70% of the sources of
Thailand's electricity is natural gas. There is great risk in depending on
one type of energy source, and it is better to diversify. So we put in a
bid for a coal-fire power plant. Oil could also be considered, but because
the cost is connected to that of natural gas, it is not so effective for
reducing the risk. For example, if something happens in the Middle East,
then the prices of both jump, and the cost of electricity must also
rise. As for coal, both the supply and cost are stable around the
world. There is also the benefit of coal being about 10% cheaper than both
natural gas and oil.
Question: Is there an option for you to change plans to use natural gas?
Answer: The residents and NGOs who are against the project are against
the construction of the power plant itself, so even if we changed the
resource from coal to natural gas, I do not imagine that they would
approve. And it isn't easy to change fuel at this stage. If we change
plans originally made for coal, all the environmental assessments and
getting the necessary permits would have to be done all over again.
Question: What about the movement against the project by residents?
Answer: In regard to Hin Krut, most of the residents are in
favor. Only the village next to the power plant is against it. But the
mass media is covering this as if everyone is against it. They are against
it because they think with the power plant, the sea will be polluted, they
won't be able to catch fish, and the lifestyle of the residents will be
changed. But we are preparing the newest air quality control systems, and
we can meet Thailand's environmental protection standards. In addition, we
plan to establish fisheries to protect the fishing industry and release
fry. So there will be no problem in catching fish.
Question: What are your thoughts now?
Answer: Whatever happens, in the future there will be a need for the
power plant. As I mentioned earlier, construction takes time, so if plans
are pushed back too far, then there is a chance that we will not be able to
provide electricity in time when the demand for electricity grows. There
needs to be sufficient time provided in order to provide a stable
electricity supply. We are confident that we can contribute to Thailand
with this power plant project. Diversification of electricity generating
sources is indispensable for a stabilizing electricity supply. Electricity
is an important infrastructure for economic development, so preparing this
is essential for economic growth. As for environmental problems, we will
follow the standards. We will also contribute to the area's development by
providing funding for occupational training and regional development, and
plan assistance for the fishing industry.
(interviewer: Noboru Mizutani, Reporter)
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