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Date:  Mon, 08 Jul 2002 13:40:33 +0900
From:  Mekong Watch Japan <info@mekongwatch.org>
Subject:  Mekong Watch CATFISH TALES Issue #2 (13 June 2002)
To:  catfish@mekongwatch.org
Message-Id:  <200207080440.g684eXNL005294@smtp14.dti.ne.jp>
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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.


**************************



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.



*************************

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


**************************

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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