This is an existing operating hydro power plant and the IFC loan/project will not result in any changes in the plant’s footprint or operations. Hence, no land acquisition or resettlement nor incremental biodiversity impacts are expected on account of IFC’s proposed project. Further, no incremental impact on communities of indigenous people and on cultural heritage is also expected on account of the project. The Asahan-1 operation has no dam wall (relying instead on the existing Asahan-2 impoundment), a low daily traffic volume, security is not regarded as a sensitive issue in the local area and the nearest community is 4-5 km from this project site, hence PS 4 is not considered applicable to the investment. Land acquisition for the project was completed more than a decade ago and no legacy issues were surfaced during IFCs interactions with community leaders. The proposed IFC project will result in no incremental economic or physical displacement, hence PS 5 is not considered applicable.

The proposed IFC investment will not result in any incremental impacts on biodiversity. As a result, PS 6 is not considered applicable. Whilst anecdotal evidence suggests that scheme construction may have led to a decrease in fast-flow fish species and fishing activity amongst local villagers – due to diversion of Asahan River flow through the power tunnel – this impact occurred several years ago and is regarded as a non-reversible legacy impact. According to research conducted downstream for a similar scheme, it is considered unlikely that affected fish species were of high conservation importance, and local fishing activities were reportedly restricted to occasional, part-time fishing only, for home consumption or occasional sale. Biodiversity in the Asahan was already significantly modified prior to Asahan-1 construction due to the construction and operation of the Asahan-2 scheme with its three large dams that prevent fish passage up and downstream.

Although local Batak people share some characteristics of Indigenous Peoples, PS 7 is not considered applicable to this project as no incremental or ongoing adverse social impacts on local communities have been identified as a result of this proposed investment. As the project is already constructed, no incremental cultural heritage impacts are anticipated, hence PS 8 is also not considered applicable.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the Performance Standards.                                                  

 This is a Category B project according to IFC’s Environmental & Social Review Procedure because proceeds will not be used to expand or alter the existing operation’s environmental and social footprint. Having been operational for several years, the run-of-river hydropower plant was constructed in a highly modified stretch of the Asahan River, the flow of which had been significantly altered for decades by the earlier construction of three large (Asahan-2) dams.                                                  

 Environmental and Social Assessment and Management System/Policy

BDSN has a Health, Safety & Environment and Community (HSEC) policy consistent with the objectives of IFC Performance Standards. Further, PJBS has in place an integrated management system (IMS) certified to ISO 9001:2008, ISO 14001:2004; OHSAS 18001:2007 and ISO 55001:2014 covering O&M of Asahan-1 Hydro Power Plant (HPP). BDSN and PJBS’s ESMS are adequately implemented in the project.

Identification of Risks and Impacts

The project has been operational for over 7 years and no incremental impacts are anticipated as a result of the proposed investment/project. There was no Environmental Impact Assessment (EIA, referred to as an AMDAL in Indonesia) required for this project as construction began in the 1990s prior to the introduction of relevant regulations, and also as it was regarded as a government priority project. Following construction delays brought about by the economic crisis in the late 1990s, BDSN undertook an environmental audit of the project in 2010 as part of the Ministry of Environment’s licensing process. As part of this licensing process, BDSN also produced an environmental management scheme and an environmental monitoring scheme, locally referred to as a RKL and RPL, respectively, which are still in effect. Further, since the plant is in O&M phase, PJBS as part of the ISO certified IMS, has undertaken an aspect, impact, hazard identification and risk assessment for O&M activities.

Management Programs

BDSN has established a number of EHS procedures (ESMS) to cover its operations, including: risk identification, evaluation and monitoring; hazardous materials management; emergency procedures (power house and camp); natural resources monitoring and communication. Actual operational HSEC risks posed by the operation are relatively minor, being restricted mainly to Occupational Health & Safety (OHS) controls in the powerhouse, management of low volumes of hazardous waste (i.e. used lubricants) from periodic maintenance procedures, emergency procedures, and staff camp sanitation and maintenance. These are currently overseen by BDSN’s site manager and certain, e.g. OHS for the powerhouse, are managed by PJBS, the O&M contractor. Flow rates through the Asahan-1 HPP scheme are contractually governed by the Asahan-2 scheme and the Indonesian government and are required to remain almost constant year-round.

As mentioned above, BDSN has emergency procedures covering the powerhouse and camp areas. In addition, BDSN is a co-signatory to a Water Management and Operation Rule Agreement along with the Asahan Authority (a group of government agencies responsible for water management around and below Lake Toba) and Inalum, the Government-owned aluminum smelter which owns the Asahan-2 hydroelectric scheme. This agreement incorporates the operating rule for the cascade including required behavior under emergency situations, e.g. high flows. To ensure the management of potential cumulative impacts, Inalum and BDSN engage in frequent communication and data exchange to coordinate water management efforts across the Asahan-1 and Asahan-2 cascade and have developed signaling patterns and response procedures to prepare for high flow scenarios.

Further, PJBS’s ISO certified IMS includes procedures for: compliance with regulatory requirements; aspect, impact, hazard and risk identification and significance determination; managing EHSS risks and impacts from operations and maintenance; incident and accident handling, recording, reporting, investigation and analysis; emergency preparedness and response;  responsibility and resource allocation; training and awareness; communication and consultation; monitoring, recording, reporting and documentation of environmental and social performance; internal, corporate and third party audit of the ESMS; management review; and EHSS performance reporting to BDSN and PJB .

PJBS has deployed 24 outsourced security personnel and they are not armed. BDSN will require PJBS to, as part of the latter’s IMS upgrade, mentioned at ESAP # 1, develop and implement formal security personnel procedures that include amongst other aspects: delineation of clear objectives and permissible actions; procedures for recording, investigating, and implementing corrective actions for security incidents; investigating and implementing disciplinary actions for bona fide complaints against security personnel ; and a grievance mechanism for aggrieved members of community or employees . 

Organizational Capacity and Competency

Overall responsibility of managing E&S aspects is with Asahan -1 plant head/BDSN’s General Manager at the plant. Responsibility of implementation of the PJBS IMS is with PJBS’s plant manager.  While BDSN has not deployed any dedicated E&S staff, PJBS has deployed one health, safety and environment (HSE) staff, one human resource (HR) staff and one supervisor dedicated to E&S. Community relations is managed by BDSN’s plant head and by PJBS’s HR staff, who also leads PJBS’s corporate social responsibility (CSR) activities.

Monitoring and Review

BDSN is currently required to monitor and report on hazardous materials, sedimentation and water quality at the intake, with reports delivered to the regional government on a six monthly basis. Further, as part of the IMS, PJBS monitors: ambient noise levels, workplace environment quality; hazardous and other waste generation and disposal, health and accidents/incidents, training and drills, and employee and community concerns. [PJBS submits a monthly report to BDSN including E&S performance]. Further, PJBS’s IMS undergoes annual third party surveillance audit and annual internal corporate audit by PJBS corporate team. Corrective action based on audit findings are implemented, and closeout formally documented. The findings of these audits and overall performance monitoring feed into the annual management review process to assess efficacy of the IMS and to identify measures to further strengthen the IMS.

 Human Resources Policies and Procedures

BDSN has a total of 36 staff members of which 13 are located at the plant site and the remaining located either at its offices in Jakarta or in Medan, North Sumatra. The O&M contractor, PJBS, retains 44 staff on site. In addition, 24 outsourced security personnel and 6 outsourced housekeeping staff have been deployed by PJBS. There are in all 17 local community members are working at the camp or powerhouse in roles such as cleaning, and others working on a contract basis to remove and dispose of water hyacinth from the intake area taking employees of PJBS and BDSN together.

While the workforce is small and divided between BDSN and PJBS, BDSN has developed an employee handbook in Bahasa that spells out working conditions and terms of employment for its staff members. PJBS also has formal human resource policies and procedures.

Working Conditions and Terms of Employment

BDSN’s HR policies are made available to all staff and it covers: recruitment, transfer/rotation, benefits, wages, leaves, hours of work, overtime, dispute resolution, performance evaluation, termination and such other.  BDSN and PJBS staff share BDSN’s accommodation facilities located between the intake works and powerhouse. The accommodation facilities have all basic amenities, and facilities.

Workers’ Organization

The workforce is small and there is no evidence that BDSN bars employees from forming or participating in union activity. PJBS employees at the project site/plant have formed a union which is awaiting formal recognition and registration. The delay in recognition of the PJBS union at Asahan-1 is due to the fact that unit/plant level unions are also being formed at other plants/units where PJBS deployed staff and PJBS intends to seek recognition and registration of all the unit level unions at once. However, PJBS has a union at the corporate level that enters into collective bargaining agreement with PJBS. The unit level PJBS unions will be affiliated to PJBS corporate union. 

Non-discrimination and Equal Opportunity

While there is no evidence that BDSN and PJBS discriminate on the basis of personal characteristics, BDSN will, as part of the HR policies upgrade mentioned at ESAP # 2 formally articulate policy on Non-discrimination and Equal Opportunity, communicate it to all staff, and put in place appropriate formal procedures to ensure adherence to it. 

Retrenchment

No retrenchment is anticipated in the foreseeable future. However, BDSN will, as part of the upgrade of its HR Policies and Procedures mentioned at ESAP # 2, put in place retrenchment policy covering collective dismissals that meets PS2 provisions.

Grievance Mechanism

BDSN manages employee grievances through its dispute resolution process. Further, PJBS has in place a formal employee grievance redress procedure. Employee grievances have been received and resolved through PJBS’s grievance redress process at the plant. Also, given the small size of the workforce, grievances are received and resolved through direct individual level interactions. However, BDSN will, as part of the HR upgrade mentioned at ESAP#2, upgrade its existing employee grievance redress process to: (a) provide for anonymous complaints and confidentiality protection and assurance of non-retribution, where the aggrieved person so desires; (b) delineate time bound steps to be taken upon receipt of a complaint; and (c) detail procedures for documentation, analysis and reporting of grievances received and resolved to senior management. Further, BDSN will require PJBS to also upgrade their employee grievance redress procedure to also along the same lines as upgrade of its own procedures.

Protecting the Work Force

BDSN and PJBS have in place formal HR Policies and Procedures for prevention of child and forced labor.

Occupational Health and Safety

No lost time injuries have occurred in the plant in the last 3 years. While BDSN’s plant head/General Manager oversees overall OHS management, OHS is managed by PJBS through its OHSAS 18001 certified IMS. The IMS includes: OHS Policy; OHS objectives; roles and responsibility allocation; safety training procedures for employees; provision of safety and hazard signage; workplace environment quality monitoring; procedures for provision and use of personal protective equipment; emergency response procedures; accident investigation, reporting and corrective action procedures; safe work procedures for various activities that exposes workers and employees to hazardous conditions; fire prevention and control procedures; defensive driving training for drivers; medical surveillance program; [access to medical facilities]; periodic internal and corporate audit; and management review. The IMS is adequately implemented on the ground with: adequate signage; training and record keeping; controlled noise and  vibration; appropriate housekeeping; adequate illumination; clean floors with low  slip/trip risks; provision of hydrant and extinguishers; marking of assembly points; provision of emergency exits; biannual workplace monitoring; OHS criteria in supplier/vendor evaluation and selection etc. However, use of safety shoes in the plant by workers needs to be further improved. The company will as part of its ESMS upgrade process mentioned at ESAP # 1, commence monitoring lead and lag safety indicators.

Workers Engaged by Third Parties

BDSN and PJBS both do not have formal procedures to oversee contractor and sub contractor compliance with legal and PS2 requirements. BDSN will and also require PJBS to, as part of the ESMS upgrade process mentioned at ESAP # 1, develop and implement a contractor management and oversight procedure by including: (i) a comprehensive compliance checklist against the applicable legal requirements and PS2 provisions; and (ii) periodic internal audit procedure using the checklist.

Greenhouse Gases

The project was registered as a Clean Development Mechanism (CDM) project in 2011 via the UN-administered process. It realizes a calculated emission reduction of approximately 873,000 tons CO2eq based on a calculated baseline factor of 0.743 tons CO2eq for the North Sumatra grid, which is dominated by thermal generation using coal and diesel as feedstock.

Pollution Prevention

There is no material impact on ambient noise levels due to plant operation as the nearest community is located about 4km from the powerhouse.

Only sanitary wastewater is generated at plant site and in the worker accommodation camp. The wastewater is treated through septic tank and soak pit.

Segregated solid waste is collected in the plant and at the workers accommodation. The quantities are limited and disposed through authorized entities at municipal landfill sites.

Hazardous materials (oils/lubricants) and small quantities of hazardous wastes generated during maintenance activity (mainly used oils/lubricants, waste/residual paint, oil/paint soaked rags/material, empty oil/paint/chemical drum/barrels, battery etc) are kept within secondary containment duly segregated and disposed through entities authorized to handle and dispose hazardous wastes.

 Stakeholder mapping and Stakeholder Engagement Plan

The nearest communities are 4 or more km from the project site. Both BDSN and PJBS have identified the two nearest villages, Ambar Halim and Siruar for concerted engagement and CSR activities. BDSN will, as mentioned at ESAP # 3, formalize the existing community engagement process into a stakeholder engagement plan.

Consultation

IFC met briefly with leaders and representatives from both of the nearest villages. Village leaders noted that present-day relations with the project are positive and that they are generally able to speak to the BDSN General Manager on an as-needed basis. Further, they indicated that the CSR teams of BDSN and PJBS engage with the communities, who collect their expectations and work with the BDSN and PJBS project managers to address them. The leaders enumerated the various expectations that they have expressed to the company and confirmed that the company is addressing them progressively. Community leaders appreciated the CSR activities undertaken and proposed by BDSN including: installation of water pipes and taps, construction of a community hall, provision of garbage bins, installation of drainage channel and (forthcoming) classroom construction, and support govt. pilot project on farm productivity improvement, landslide reduction, family planning. A key expectation of the community is a desire for additional job opportunities and further investment in local infrastructure (e.g. access road, street lights).

External Communications and Grievance Mechanisms

There is a formal community grievance mechanism with escalation mechanism built in. BDSN will as part of the stakeholder engagement plan mentioned at ESAP # 3, strengthen this procedure by including: (a) time limits to escalation and resolution; (b) procedures for documenting grievances received and redressed; and (c) procedures for analyzing grievance related data to identify patterns and undertake systemic improvements as needed.

Information Disclosure and Ongoing Reporting to Affected Communities

BDSN will disclose the ESRS and ESAP to the neighboring communities in an appropriate form and language at a third party location nearby.

PT. BAJRADAYA SENTRANUSA

Address: Jl.Dharmawangsa VII no 7

Kebayoran Baru, Jakarta 12160

Contact Persons:

Mr. Adek Julianwar, President Director

Ph: +62 21 720 2117

E mail: ajul2707@gmail.com

Ms. Anna Oetomo, Corporate Secretary,

Ph: +62 815 8062580

E mail: annabdsn@gmail.com

PJB Services

Address: Jl.Dharmawangsa VII no 7

Kebayoran Baru, Jakarta 12160

Contact Person:

 Mr. Djatmiko

Ph: +62 852 34338260

E mail: djatmiko.malang@yahoo.com