Ecobusiness-Locals and advocacy groups in Indonesia have filed a complaint with the International Finance Corporation (IFC), the World Bank’s private lending arm, over “back-door” support for new coal-fired power plants under development.

The complainants say that a US$15.36 million equity investment in Hana Bank Indonesia supports the construction of two new coal plants, Java 9 and Java 10, which are expected to cause thousands of premature deaths and emit over 250 million tonnes of carbon dioxide.

The latest development adds to a feud local groups have had with the two new coal units since as early as 2020. Indonesia relies on coal for 60 per cent of its electricity needs, and have been struggling to replace the pollutive fuel with cleaner energy sources.

The investment into the subsidiary of South Korea’s Hana Bank was made in 2019, to support the bank’s growth strategy and finance its digital infrastructure ventures, according to an IFC filing. IFC also owns 10 per cent of Hana Bank Indonesia’s shares.

Java 9 and Java 10 would add 2 gigawatts (GW) in capacity to an existing 4GW Suralaya coal power complex in Banten province, just west of capital Jakarta. About 80 per cent of the new construction work has been completed and the plants could be completed in 2025, according to advocacy group Banktrack.

The complaint, filed with non-governmental groups PENA Masyarakat and Trend Asia from Indonesia, as well as US-based Inclusive Development International and Netherlands-based Recourse, was sent to the IFC’s Compliance Advisor Ombudsman.

The grievance letter asks for works on Java 9 and Java 10 to be stopped immediately, and if not possible, for the facilities to be “upgraded and modified” to reduce the social and environmental harms. The letter also demands “fair and full redress for harms already suffered”.

The Suralaya complex has already caused respiratory problems, and affected tourism, farming and fishing in the area, the groups said. Families have been forcibly evicted without adequate compensation for the expansion project, they added.

“The Java 9 and 10 expansion is totally unwarranted – electricity needs in the area are already being met and the Java-Bali grid is already oversupplied,” said Novita Indri, energy campaigner at Trend Asia.

“That’s the opposite of what’s needed to achieve the net-zero emissions target and undermines the Paris Agreement,” Novita said.

Complainants said the IFC “failed to identify” Hana Bank Indonesia’s new investments in Java 9 and 10, and did not appropriately assess the “mega coal project” against its social and environmental policies.

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Photo by: Melvinas Priananda/Trend Asia