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Gas Negara

PT PERUSAHAAN GAS NEGARA ( PERSERO )

JL. K.H ZAINUL ARlFlN NO. 20 TELP. 021.6334838 JAKARTA

Expansion of West Java Gas Distribution Domestic Gas Market Development

Project

Environmental and Social Impact Assessment and

Environmental Management Plan (EIA - EMP)

Revised, February 11, 2005

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Administrator31682

ACRONYMS AND ABBREVIATIONS USED

AMDAL

ASME

ANDAL

ANSI

B A I C

BAPEDAL

BAPEDALDA

ComDev

EIA

EMF

EMP

EMS

HAZAN

HAZID

IPB

GIS

MIGAS

mmscfd

MRS

MSWD

NPS

PGN

QRA SCADA

S M S

THT

IF1 I S 0

Analisis Mengenai Dampak Lingkungan Hidup -- Analysis o f Impacts on the Liv ing Environment

American Society of Mechanical Engineers

Analisis Dampak Lingkungan - Environmental Impact Analysis American National Standards Institute

Business Assessment and Information Centre

Badan Pengendalian Dampak Lingkungan Hidup - Environmental Impact Management Agency

Badan Pengendalian Dampak Lingkungan Hidup Daerah - Regional Environmental Impact Management Agency

Community Development

Environmental Impact Assessment

electromagnetic fields

Environmental Management Plan

Environmental Management System

Hazard Analysis

Hazard Identification

Bogor Agricultural University (Znstitut Pertanian Bogo)

Geographical Information System

Ministry o f Mines and Energy, Directorate General O i l and Gas

mil l ion standard cubic feet per day

Metering and Regulation Station

Maintenance and Safety Works Division

Nominal Pipe Size

PT Perusahaan Gas Negara (PT PGN Persero)

Quantitative Risk Assessment

Supervisory Control and Data Acquisition

Safety Management System

Tetrahydrothiophene

international financial institution

International Standards Organization

LH

MNKLH

NGOs

PCB s

PET

PIU

PLN

RKL

RPL

S I L SOP

UKL

UPL

WHO

(Menteri) Lingkungan Hidup - Ministry of Environment Menteri Negara Kependudukuan Lingkungan Hidup -- Ministry of State for Population and Environment

Non-Governmental Organizations

polychlorinated biphenyls

Project Environmental Team

Project Implementation Unit

PT Perusahaan Listrik Negara

Rencana Pengelolaan Lingkungan -Environmental Management Plan

Rencana Pemantauan Lingkungan - Environmental Monitoring Plan Sector Investment Loan

Standard Operating Procedure(s)

Upaya Pengelolaan Lingkungan -- Environmental Management Procedures Upaya Pemantauan Lingkungan -- Environmental Monitoring Procedures

World Health Organization

i i

EXECUTIVE SUMMARY

1. Introduction

This Environmental & Social Assessment / Environmental Management Plan (EIAEMP) has been prepared by PT Perusahaan Gas Negara [PT PGN (Persero) Tbkllas part o f i t s preparations for the proposed Domestic Gas Market Development Project wi th the World Bank.

Prior to the regional economic crisis, the Bank considered providing a loan to PGN for a transmission and distribution project to increase gas utilization in West Java. The original project design involved both construction o f a transmission l ine f rom gas fields in South Sumatra to West Java and the extension o f the gas distribution network in West Java. An Environmental Assessment Study for the then considered project was prepared by PGN. During the crisis, the project was postponed by the Bank and finally dropped.

By the time project discussions resumed in November 2001, the Japanese Bank for International Cooperation (JBIC) had agreed to finance the Sumatra-Java transmission pipeline. The Government then requested a World Bank loan to expand the West Java gas distribution system under the proposed Domestic Gas Market Development Project.

This summary synthesizes the full Environmental Impact Assessment (EIA) Report prepared by PGN based on detailed Indonesian environmental assessment analyses and studies, completed and approved b y the AMDAL Commission (under the Ministry o f Mining and Energy) in 1999 and updated and re-approved by the Central AMDAL Commission (under the Ministry o f Environment) in November 2003. The EIA Report covers PGNs gas distribution expansion plan in West Java partly financed by the Bank and complies with the World Banks environmental and social requirements (including operational policies on environmental and social safeguards).

2. T h e Project

The proposed project aims at expanding the supply and utilization o f natural gas, the cleanest fossil fuel, in Indonesias domestic market to improve economic efficiency and reduce pollution resulting f rom the heavy reliance on fuel o i l and diesel.

The project consists of: (i) a gas distribution component to expand gas utilization in Bantenmest Java region, and (ii) a capacity building component to strengthen PGNs (the project owner) financial, planning, engineering and management capability. The project i s l inked to a Japan Bank for International Cooperation (JBIC) financed gas transmission project to bring gas from South Sumatra to Bantenmest Java region.

The distribution project comprises: (i) construction o f class 300 steel pipelines o f 4 to 16 inch diameter (about 186 km) along with control valves and corrosion control facilities; (ii) construction o f class 150 pipelines o f 4 to 16 inch diameter (about 71.4 km) along with control valves and corrosion control facilities; (iii) installation o f five off-take and two pressure regulation stations; (iv) installation o f around 210 customer

Referred to as PGN thereafter. ... 111

DOMESTIC GAS MARKET DEVELOPMENT PROJECT Environmental & Social Assessment / Environmental Management Plan

metering and regulating stations; (v) installation o f SCADA system; (vi) provision o f radio/telecommunication equipment, IT support and emergency response equipment.

The proposed Bank-financed project i s linked to a JBIC financed transmission project. Project preparations are well underway with construction planned to commence in the second quarter o f 2005. The EIA Report for the transmission project was prepared and approved b y the AMDAL Commission in 1999. I t has been discussed and approved b y JBIC, and disclosed to the public following JBICs disclosure procedures. A social assessment report and a Resettlement Action Plan (RAP) was prepared in 1998 to comply with AMDAL procedures and JBICs requirements. The RAP was recently updated by PGN at JBICs request. And i t s implementation i s underway.

3. Indonesias Environmental Legal and Institutional System - the A M D A L System Indonesian EIA i s widely known b y i t s acronym, AMDAL - Analisis Mengenai Dampak Lingkungan Hidup (literally, Analysis o f Impacts on the Liv ing Environment). The Ministry o f Environment (Kementrian Lingkungan Hidup, KLH - or LH) i s responsible for national-level functions for environmental enforcement, including oversight o f the AMDAL process. Regional Environmental Impact Management Agency (BAPEDAL - Badan Pengendalian Dampak Lingkungan Hidup) offices, directly as offices o f local governments, have recently been given the principal role in AMDAL review and environmental management at the regional level.

The AMDAL Process

AMDAL requirements apply to most government and private sector projects. Carrying out an AMDAL study i s the responsibility o f the project developer or proponent, as are the mitigation and monitoring o f the projects impacts. The types o f activities subject to AMDAL are specified most recently in the Ministry o f Environment Decree Number 17/2001,Types of Business and/or Activity Plans that are Required to be Completed with the Environmental Impact Assessment.

A full AMDAL assessment involves a three-step process o f studies and reports:

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ANDAL (Analisis Dampak Lingkungan - Analysis o f Environmental Impacts); RKL (Rencana Pengelolaan Lingkungan -Environmental Management Plan), and

RPL (Rencana Pemantauan Lingkungan - Environmental Monitoring Plan).

From the perspective o f a project developer, the AMDAL process involves up to seven steps:

0 project Identification 0 screening 0 scoping, with Public Consultation

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0 implementation, monitoring, and reporting.

approval o f the KA (TOR)-ANDAL assessment, and preparation o f the mitigation and monitoring plans approval o f the assessment, management, and monitoring plans

2 Development activities that are unlikely to have significant or widespread enviro