Indonesia : Aligning Asian Development Bank and Country Systems for Improved Project Performance

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Frequently Asked Questions

What is Country Safeguard System (CSS)?

Country Safeguard System (CSS) means a country’s legal and institutional framework, consisting of its national, subnational, or sectoral implementing institutions and relevant laws, regulations, rules and procedures that pertain to the policy areas of environmental and social safeguards. Therefore, under ADB’s Safeguard Policy Statement 2009 (SPS), the use of CSS for an ADB financed project can be at the national, subnational, sector, or agency level.

What is CSS in the context of ADB proposal in Indonesia?

In the context of the ADB proposal in Indonesia, the term “CSS” specifically refers to the “agency level” use of environmental and social safeguard by the state electricity agency PLN for future ADB financed projects.

What is the background of the CSS assessment?

At the Government of Indonesia’s request, ADB in 2015-16 undertook a background study of the Country Safeguards Systems. This draft study highlighted the importance of strategic use of CSS by meeting the requirements of the SPS and complying with Indonesia's environmental and involuntary resettlement legislation.

The draft background study suggests that, while Indonesia’s legal and regulatory framework for environmental protection and involuntary resettlement is considered generally comparable with ADB SPS 2009, the capacity of government agencies to apply the framework varies quite significantly.

The draft background study was then used in a detailed assessment of PLN’s capacity in implementing CSS in its operation. This assessment process is still ongoing, and it includes the recent consultations series with stakeholder from BAPPENAS, local government, sector agencies, development partners, PLN offices at central and regional level, and civil societies.

Why does the CSS assessment only cover PLN, and no other agencies?

Energy sector, particularly electricity, is a priority of the Indonesian government, as explained in the National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, RPJMN). Meanwhile for 50 years of its operation in Indonesia, ADB has financed 23 energy projects totaling $3.91 billion in the country, and PLN is our main counterpart. Also, PLN already has at least a safeguard arrangement and related technical guidance in place. The government therefore selected PLN to be the agency for this pilot initiate.

What are the benefits of applying CSS?

The proposed use of CSS for PLN directly supports the internationally accepted goals of country ownership and harmonization. It will eliminate the need for PT PLN to produce two sets of documents to satisfy the requirements of: (i) the Indonesian legal system, and (ii) ADB’s SPS. The use of PLN’s CSS would therefore lower the transaction cost of complying with ADB environment and involuntary resettlement safeguards.

Moreover, with continuing oversight and support from ADB, the proposed use of CSS will strengthen PLN’s capacity to identify and address environmental and social impacts.

We are also confident that this initiative will have a positive demonstration effect, inspiring and incentivizing other government agencies and state-owned enterprises to strengthen their safeguard-related capacity as well, towards the same end.

How was the CSS assessment being financed?

The CSS assessment is financed by an ADB technical assistance (TA) on “Aligning ADB and County System for Improved Project Performance” (TA-8548). This $1.5 million grant TA aims to increase alignment of ADB and government systems and procedures to prepare and implement projects, and one of its outputs is a review of the CSS.

The TA was led by BAPPENAS with the support of Ministry of Environment and Forestry, and the National Land Agency (Badan Pertanahan Nasional, BPN). Four sector agencies participated during the preparation of the background study. The commencement of the TA and its implementation was delayed due to 2014 presidential election and subsequent restructuring of related agencies.

The technical assistance to finance this assessment was approved in 2013, but why was it only in 2017 that the first consultation was conducted?

Between 2014 until mid-2016, the first phase of consultation process was conducted with key stakeholders (relevant ministries, sector agencies and development partners). Through this consultation process, the first draft and second draft of the background reports completed and available for wider consultations with relevant civil society organizations (CSOs)

The background assessment was completed in late 2016, and only after that the Indonesian government and ADB agreed to conduct a detailed assessment of the suitability of CSS for PLN at the agency level.

Around 10 focus-group discussions/FGDs were conducted with relevant government stakeholders. Consultation with wider stakeholders including CSOs in March and April 2017 was conducted after the draft assessments disclosed.

ADB believes that only with some reasonable quality outputs that consultations will produce meaningful outcome.

Why did the CSS consultations took place only in few cities?

The first-round consultation process took place in 11 cities where PLN’s projects are located.

The principle is for ADB to provide opportunity to as many relevant stakeholders as time and resources permit, to provide feedbacks to the report. Due to the limitation, ADB has been strategic in consulting stakeholders and conducted meetings at regions where ADB currently or potentially provides significant support to PLN operation.

Beyond those physical consultations, ADB remains open to receive feedback. Such feedback can be provided through the web form, or email ([email protected]).

In the draft CSS report’s disclaimer, why does ADB avoid taking responsibility?

It is the requirement in ADB that for documents related to ADB Board of Directors’ meeting, ADB will be responsible for the final recommendation and relevant papers submitted to the Board. The current CSS report, still being a draft, bears the standard disclaimer applicable to all ADB final TA consultant’s reports.

Despite the disclaimer and the nature of the report, it was prepared jointly by a team of consultants together with a cross-departmental team from ADB. During the assessment process, the ADB team closely supervised the consultants, and provided guidance and inputs to their works to ensure compliance with ADB’s standards.

What is ADB’s policy in disclosing this draft CSS report?

ADB team has been following ADB Public Communication Policy 2011 and Safeguard Policy Statement 2009 to disclose the draft equivalence and acceptability assessment upon its completion.

What does the current CSS assessment for PLN cover?

The CSS assessment for PLN covers:

• an equivalence assessment for environment safeguards;
• an equivalence assessment for involuntary resettlement safeguards;
• an acceptability assessment for implementation of environment safeguards;
• an acceptability assessment for implementation of involuntary resettlement safe-guards; and
• a gap-filling action plan to address specific gaps in the assessment.

Does the use of PLN’s CSS mean ADB will not be involved in the safeguard implementation anymore?

Not at all. The use of PLN’s CSS does not relieve ADB of its due diligence and loan supervision responsibilities. ADB will continue to fully exercise its due diligence and to review and supervise the implementation of safeguards plan for all projects under the CSS. ADB’s supervision of approved projects will follow the same procedures as for any other ADB-financed project.

Will PLN’s projects that use CSS and financed by ADB make it ‘immune’ from the ADB’s Accountability Mechanism?

No. The use of CSS in ADB-financed projects by PLN does not exempt it from the scope of ADB’s Accountability Mechanism.

Can PLN use CSS in all its ADB-supported projects?

No. CSS, once approved, would not be applied to highly-sensitive and highly-complex projects. “Highly-sensitive and highly-complex projects” are projects that ADB deems to be highly risky or contentious or involve serious and multidimensional and generally interrelated potential social and/or environmental impacts.

What if PLN do not follow the action plan to fill the identified gaps?

The implementation of the action plan will be legally binding. The action plan also has an agreed timeframe, with some actions need to be completed prior to ADB Board of Directors’ approval, and some others prior to the project financing.

There will also be several long-term actions to support PLN continue improving its capacity to prepare, implement and monitor social and environmental safeguards for its projects. ADB will regularly monitor the implementation of the CSS-related action plan.

For more information on this subject, please contact the project’s team at: [email protected].