SINGAPORE/JAKARTA, Sept 14 (Reuters): Environmental groups have submitted a formal complaint to the World Bank for providing financial support for two coal-fired power plants in Indonesia, violating a pledge to stop backing fossil fuels.
The World Bank's private sector subsidiary, the International Financial Corporation (IFC), is an indirect backer of the Suralaya coal-fired power complex via its equity investment in Hana Bank Indonesia, one of the project's financiers, a coalition of green groups said on Thursday.
The Suralaya plant - already the largest in Southeast Asia - has eight units in operation. Plans to build two more would emit 250 million metric tons of climate-warming carbon dioxide into the atmosphere, the groups said a letter to World Bank compliance ombudsman Janine Ferretti.
"Harm to local communities, including the forced eviction of those who were living on the project site, is already occurring," said the letter, sent on behalf of local grassroots organisations by Inclusive Development International, a U.S. non-governmental organisation.
The World Bank and Hana Bank Indonesia did not immediately respond to requests to comment.
The IFC vowed to stop investing in coal in 2020, but it continues to hold stakes in financial institutions with coal investments, like Hana Bank, as long as they have plans to phase out their exposure.
It said in updated rules this year that its financial clients must commit to not "originate and finance any new coal projects from the time IFC becomes a shareholder".
"IFC did not directly support the construction of the Suralaya coal-fired power complex and has not taken part at any stage in its development," an IFC spokesperson said.
"IFC has an equity investment in KEB Hana Indonesia, which is part of a syndicate of financial institutions that have been financing the project. IFC does not have the ability to stop its development."
The Helsinki-based Centre for Research on Energy and Clean Air (CREA) said on Tuesday that the Suralaya power complex has had a severe impact on air quality in the region, incurring over $1 billion in annual health costs.
CREA said it also contributes to hazardous smog in the capital Jakarta, which topped the list of the world's most polluted cities in August.
PT Indo Raya Tenaga, the developer of the Suralaya plants, has said it plans to power some of the new capacity with ammonia, along with coal, to reduce emissions.
The company did not immediately respond to an emailed request for comment.
According to the Global Energy Monitor think tank, Indonesia was one of 11 countries to commission new coal plants last year. Total coal-fired capacity reached 40.6 gigawatts last year, up 60% since 2015, with another 18.8 GW under construction, the third-highest amount in the world behind China and India.
Last November, Indonesia became the second country to enter into a Just Energy Transition Partnership that will deliver $20 billion in funds to help reduce its dependence on fossil fuels, but its announcement of investment plans has been delayed.
The JETP compels Indonesia to impose a moratorium on new coal-fired power plants, though there are exemptions for "captive" plants that serve other industrial facilities. (Reporting by David Stanway and Fransiska Nangoy; editing by Miral Fahmy and Jamie Freed) - Reuters
