Cirebon Coal-fired Power Plant Projects, West Java, Indonesia

[Urgent Statement]
Regional Court Revokes the Environmental Permit
JBIC Must Immediately Review and Repeal its Loan Agreement for the Illegal Project!
— Japanese Groups Strongly Object to JBIC Premature Decision to Provide Financing, Ignoring the Judicial Judgement in the Host Country —

*This is a translation – The original statement was written in Japanese.

Statement

April 20, 2017

Friends of the Earth Japan
Japan Center for a Sustainable Environment and Society (JACSES)
Kiko Network
350.org Japan

Following objections from local villagers, the regional court in Bandung, West Java, has revoked the environment permit for 1000MW Cirebon coal-fired power plant expansion plan, known as Cirebon 2 on April 19.

Despite an ongoing legal challenge, the Japan Bank for International Cooperation (JBIC) had already concluded a loan agreement for Cirebon 2 on April 18, the day immediately before the court verdict was due.

A coalition of Japanese groups are calling on JBIC to immediately review and repeal its decision to provide financing for Cirebon 2, as the project is illegal according to local law and in violation of the “JBIC Guidelines for Confirmation of Environmental and Social Considerations” (Guidelines) which require “the compliance with environmental laws of the host nation and local governments concerned” and “the submission of environmental permit certificates issued by the host governments.”

JBIC confirmed in its response in the Diet on April 13 that it had recognized the progress of this court case. Thus, JBIC’s decision to proceed with financing the power plant is in clear violation of local people’s rights and the judicial decision in the host country.

In addition, the decision to finance the project was made even though it was impossible for JBIC to clearly confirm compliance with its own guidelines.

We express our strong and serious objection against JBIC’s premature decision to finance Cirebon 2, which prioritises the company’s profit over the local people’s rights, whilst ignoring a judicial decision in the host country and in contravention of its own guidelines.

The currently operational 660MW unit of the Cirebon coal-fired power, backed by both JBIC and Marubeni, has already caused numerous environmental and social impacts. A formal objection against JBIC was submitted last November 2016 by the local villagers who had lost their livelihoods, such as small-scale fisheries, shellfish picking, salt-making, and farming, and who were concerned about deteriorating health conditions due to air pollution.

Effective countermeasures have still not been put in place and Cirebon 2 is expected to worsen the situation.

JBIC has also made its decision to provid USD 3,730 million in finance within this one year for two other controversial projects in Indonesia, namely Batan coal-fired power plant in Central Java (2,000 MW) which has caused serious human rights violations, and Tanjung Jati B re-expansion coal-fired power plant in Central Java (Unit 5 and 6 with 2,000 MW), from which French commercial banks withdrew from the bank consortium in line with their commitments to reduce coal finance.

Regarding Cirebon 2, a French bank, Credit Agricole, has withdrawn for the same reason. Countries all over the world have urged the Japanese government to immediately reject funding of Cirebon 2 as such funding will undermine global efforts to dramatically decrease carbon emissions in line with the Paris Agreement.

The Japanese Government and JBIC must immediately review and repeal its decision to finance Cirebon 2, in accordance with the wishes of the local community and civil society, whilst recognising the recent judicial decision and the international trend of divestment from coal-related projects.

*Cirebon Coal-fired Power Plant Project in West Java, Indonesia
The Cirebon Project – Unit 1 with a capacity of 660 megawatt has been developed by a consortium PT. Cirebon Electric Power (CEP) consisting of: Marubeni (32.5%), Korea Midland Power (27.5%), Samtan (20%), and Indika Energy (20%). PT. CEP signed a 30-year power purchase agreement (PPA) with the Indonesian state power utility Perusahaan Listrik Negara (PLN). The project has cost USD 850 million. JBIC, the Export-Import Bank of Korea, and private banks made a loan agreement with CEP with co-financing USD 595 million (USD 214 million from JBIC). The Unit 1 Plant started its commercial operation in July 2012.
In the Cirebon Project – Unit 2 with a capacity of 1,000 megawatt, Marubeni (35%), Indika Energy (25%), Samtan (20%), Korea Midland Power (10%) and JERA (10%) have invested in, and have established PT Cirebon Energi Prasarana (CEPR). CEPR entered into a 25-year PPA with PLN. The expansion project was estimated to require an investment of USD 2.1 billion, for 80 percent of which JBIC, the Export-Import Bank of Korea, and Japanese and Dutch private banks are considering their co-finance. At the local level, PT. CEPR has been pushing through the construction of access road and land clearing before the commencement of main construction. The Unit 2 Plant is expected to be operational in 2020.

Related Information

Press Release from WALHI(FoE Indonesia): Court orders government to revoke Cirebon coal power plant permit -JBIC should respect Indonesian law and drop financing plans(PDF