Climate institutions in “flux”, consolidation needed for Maldives Green Fund success: leaked Transparency report

The Environment Ministry claims climate mitigation and adaptation projects have not been affected by government instability, however leaked draft Transparency Maldives reports indicate that climate governance institutions are in a state of “flux” and suffer from a lack of accountability, including the proposed Maldives Green Fund.

Currently, the Ministry of Environment and Energy (MEE) is implementing MVR 3.1 billion (US$201,298,810) worth of climate projects, which does not include donor funded programs implemented by “other sectoral agencies” and NGOs, MEE Environment Analyst, and contributor to the MGF’s establishment, Aishath Aileen Niyaz told Minivan News.

In an effort to merge all the currently established trust funds in accordance with the government’s Biosphere Reserve sustainable development policy, President Mohamed Waheed Hassan Manik’s cabinet recently proposed the establishment of a Maldives Green Fund (MGF).

“The Maldives Green Fund is designed to work as a national entity that would comply with international fiduciary standards for enabling, appraising and financing projects,” explained Niyaz.

“The MGF will act as both a funder and guarantor of projects in the areas of renewable energy and energy efficiency, biodiversity conservation, water management, waste management and capacity building and research in these areas,” she continued.

The current US$9.5 million Climate Change Trust Fund (CCTF) and US$138 million the Sustainable Renewable Energy Project (SREP) have been designed to complement the MGF, with both projects allocating resources for MGF capacity building, according to Niyaz.

“It is envisaged that by the time these projects are concluded, the MGF will be in a strong enough position to take manage such funds and take on the lead responsibility for such projects and in the Maldives,” said Niyaz.

She further explained that to protect climate funds from fraudulent practices “checks and balances” are in place, such as government anti-corruption procedures derived from financial laws and regulations, as well as rules of the implementing international organisation.

Niyaz also claims that government instability has not affected climate finance in the Maldives.

“Since most of the [climate change related] projects were ongoing at the time of [the 2012 government] transition, there was no real impact on their implementation. Furthermore, the negotiations for pipeline projects continued on pace,” she stated.

Meanwhile, “It is a general concern from Transparency Maldives’ studies that institutions in the Maldives, including climate institutions, are in a state of flux and not consolidated. New ones are being created and existing ones inactive or ineffective. This results in confusion, waste, delays, and duplications,” states a Transparency Maldives (TM) MGF Policy Brief dated December 17, 2012.

TM estimates that approximately US$160.5 million is being spent on various climate adaptation and mitigation projects through externally funded grants and loans, while an additional US$ 279,480,275 is required for short-medium term (10 years) adaptation and a further US$ 161,500,000 will be needed for long-term (40 years) adaption, states a Transparency Maldives Climate Governance Integrity Mapping of Climate Finance draft report.

“The fact that the state is a transitional democracy, with only emergent institutions of horizontal and vertical accountability, has posed significant challenges to climate change governance. The lack of a legislative framework for the sector also exacerbates the situation,” said the report.

“Moreover, the country is grappling with corruption and lacks effective governance mechanisms to address the issue. In 2010, Maldives was placed at 143rd on Transparency International’s Corruption Perception Index, with an average score of 2.3, indicating that perceived levels of corruption in the country are very high,” it continued.

The Maldives lacks a comprehensible overall institutional framework and comprehensive policy for addressing climate change, which adds to the confusion of the existing climate change mandates, TM identified. Additionally, no comprehensive database of climate projects currently exists.

This has resulted in ad hoc monitoring and evaluation of climate projects and institutional rivalry between ministries, according to TM.

“Another major challenge in climate change governance is the lack of experts in this area. The key climate experts of the country have multiple responsibilities and a very demanding schedule to fulfill their obligations. They are on multiple governing bodies…,” noted the report.

TM also highlighted the challenges that exist for ordinary citizens to gain access to information, including climate change related projects, despite the existence of a regulation on the right to information.

“Given that most official institutions are based in the capital island of Male’, accessing these information is especially challenging for the majority of the population who reside in other islands,” the report stated.

“In principle establishing a ‘green fund’ to consolidate climate change mitigation and adaptation money is ‘ok’ as long as it adheres to international best practices and good governance standards,” Transparency Maldives Climate Governance Senior Project Manager Azim Zahir recently told Minivan News.

Transparency Maldives had not responded to enquiries at time of press.

MGF plan

“One of the aims of the Maldives Green Fund is to roll out the Baa Atoll Conservation Fund – the funding arm supporting the Baa Atoll Biosphere Reserve – model to the entire country,” said Niyaz.

“The MGF will provide access to funds in simpler procedures for the private sector,” she added.

Essentially the MGF will function “largely as a co-financier of projects, and will work diligently to engage the financial support of other sources”, states a December 2012 draft 2 of the MGF triennial spending strategy 2013-2015.

MGF financial support – in the form of direct grants, interest rate subsidies and soft loans – will be available to “public institutions (including schools, hospitals, etc), small and medium sized enterprises, NGOs, government institutions at all levels, and natural persons,” notes the document. However, it “should be additional to other available sources of finance and not a replacement for them”.

The Maldives government is to provide the initial capital for the MGF, totalling MVR 3 million (US$194,805).

“The Fund’s limited resources will not be used to finance projects or activities that should normally be undertaken by government institutions and financed by government budgets, e.g. compensation and salaries of government authorities, trips of governmental officials to conferences, development of laws and policies, etc.,” both the December draft spending strategy and October 2012 draft 1 operational manual specify.

Despite these proposed regulations for project funding, the December 2012 MGF draft 5 legislation, provides MGF board of directors members remuneration in the form of a “fee for their work” and “reimbursement of expenses” to attend board meetings.

“The level of fees for participation in the work of the Board of Directors shall be defined by the Board of Directors itself, taking into account compensation fees for Board of Directors members of similar government companies established in the Republic of Maldives and complying with the provisions of the President’s Decree as regards maximum permissible levels of administrative costs,” as stated in Fund Governence, section 2 article 12 of the MGF draft legislation.

Compensation for board of directors members is also included under administrative costs in the fund spending policy section four, article 12.

The MGF board of directors will be comprised of a chairperson from the MEE and representatives from the Environmental Protection Agency, Ministry of Finance and Treasury, Local Government Authority, Maldives National Chamber of Commerce and Industries, as well as Maldives Association of Tourism Industry and a non-governmental environmental organisation.

The 2013 budget will allocate US$166,320 for personnel compensation and US$7,000 for administrative expenditures.

However, the MGF education and research priority area will receive US$66,690.

As a supervisory mechanism, the MGF will establish an independent integrity unit and redress mechanism that will report to the board of directors, as specified in the draft legislation section 5 article 16.

“In line with the provisions of the President’s Decree, the Ministry of Environment and Energy [providing a chairperson for the MGF board] shall receive full and unrestricted cooperation from the Fund in order to exercise adequate administrative control and supervision of the Fund’s operations,” reads draft legislation section 2 article 43.

The draft legislation, operations manual, and triennial spending strategy documents were prepared by Æquilibrium Consulting for the MEE.

MGF recommendations

MGF documents, including the Operations Manual and Legislation were not provided to stakeholders like Transparency Maldives prior to the stakeholder conference on 11 December finalising MGF documents, TM claimed in their Maldives Green Fund Policy Brief.

Despite being given “insufficient time (a week)… to comment more specifically and comprehensively on documents of such a technical nature,” TM highlighted a number of MGF issues.

They recommend that the MGF be established through People’s Majlis (Parliament) legislation, notPresidential Decree, given that the “MGF is created to handle large sums of public money and projects and programme implemented for the public”, said the policy brief.

TM also identified the potential for MGF board members to have conflicts of interest which would “compromise independence of the directors” and recommended the government reconsider appointing an independent board.

They also “encourage that declarations of financial interests and disclosure of conflicts of interest be made public,” noted the policy brief.

Given that “minimal reference” is made to or incorporated from the Code of Corporate Governance, TM also recommended a code of conduct be established for all MGF employees which elaborates mechanisms, responsibilities, operations, and practices.

“Bringing forward” educational awareness and research activities is also emphasised, to ensure these activities “have the necessary impact during project cycles”.

Likes(0)Dislikes(0)

Maldives Green Fund to merge “scattered” climate finance

Transparency Maldives has called for stronger anti-corruption climate finance safeguards, following the government’s declaration it would establish a ‘green fund’ that would merge all climate change, conservation, and sustainable development project trust-funds.

President Mohamed Waheed Hassan Manik’s cabinet proposed a Maldives “Green Fund” be established, which would merge all the currently established trust funds in accordance with the government’s Biosphere Reserve sustainable development policy.

The purpose for merging the funds would be to enable cost reductions and strengthen operational efficiency for foreign investments for waste management, water management and renewable energy projects.

Shortly following this April 30 announcement, Transparency Maldives called for “stronger anti-corruption safeguards in climate finance” as part of the civil society recommendations presented to the Minister of Environment and Energy Dr Mariyam Shakeela during the “NGO Forum on Environment and Sustainable Development 2013” held May 5.

During the NGO forum, Transparency Maldives Chairperson Mohamed Rasheed Bari called on the government to strengthen governance mechanisms by including stronger standards of transparency, accountability and integrity.

Currently, climate funds are “scattered” because there is no consolidated national governance mechanism with a proper internationally governed governance structure in the Maldives, Transparency Maldives Climate Governance Senior Project Manager Azim Zahir told Minivan News today (May 19).

“In principle establishing a ‘green fund’ to consolidate climate change mitigation and adaptation money is ‘ok’ as long as it adheres to international best practices and good governance standards,” said Zahir.

The Environment Ministry had not responded to inquiries at time of press.

No overarching climate policy

“The government lacks an overarching climate change policy,” a civil society source familiar with the challenges facing climate governance in the Maldives, told Minivan News. “There are no specific goals, which has resulted in project-based, ad hoc and climate change mitigation and adaptation initiatives.”

The source explained that conflicting ministerial mandates and unclear rules have created redundancies and left civil servants “confused”.

“The root cause of the problem is administrative – the lack of clear mandates between who is doing what,” the source said. “There are also ministerial rivalries regarding certain projects because clear mandates are lacking.”

“I find it strange the Ministry of Environment does not have a climate change department, considering they are the people in charge of the entire amount of funds,” the source added.

“One person is in charge of massive [amounts] of funds. There is a lack of human resources within the Environment Ministry. Only a couple of people have dominated [climate change projects] since the 1990’s,” claimed the source.

Some people within the ministry working on foreign aid projects write themselves in as project staff as well to in order supplement their “really low” monthly government salaries of MVR 6000 to MVR 8000 (US$ 389 to US$ 519), alleged the source.

“The same people work on each project, they don’t have new people,” the source claimed.

“These senior civil servants say the Environment Ministry lacks capacity and young people with knowledge and technical skills, however they are not providing training and opportunities [to the newer civil servants].

“They have a complete monopoly on knowledge” which is not being properly diffused, the source added.

Politics and bureaucracy

After the Foreign Ministry has signed a bilateral agreement the funds are transferred to the Finance Ministry, which then allocates the money to the applicable ministry or government agency, according to the source.

Most climate projects were handled under the Ministry of Housing and Environment during former President Mohamed Nasheed’s administration, the source explained. Additionally, the President’s Office also undertook many climate change initiatives and established the Presidential Advisory Council on Climate Change in 2009.

“The council still exists on paper and while some people within the President’s Office said the council members have been changed [following the controversial transfer of power February 7, 2012], no one has been informed if they have been fired. They have no idea what’s going on,” alleged the source.

Additionally, the National Planning Council (NPC) – chaired by the president and consisting of various ministers and civil society representatives – was formed in February 2009 to coordinate equitable sustainable development nationwide.

Currently the NPC website states: “Due to the change of the Government , the work of the National Planning Council is currently under reform. Therefore all proposals and issues submitted to Department of National Planning/ National Planning Council is on hold for the time being.”

Under President Waheed’s government the Ministry of Housing and Environment was split to form two new entities, the Ministry of Housing and Infrastructure as well as Energy and Environment.

Due to the these changes and ongoing government instability “There has been a significant change in the process of how the project [cycle] works,” explained the source.

“For various political reasons – and the delicate nature of politics since February 2012 – climate change funds have not been consolidated,” the source continued. “It takes a lot of work to channel climate funds. Even under Nasheed’s previous administration there were the same problems.”

An additional reason Waheed’s administration “differs” from Nasheed’s is the current government “has not been ‘very keen’ on cooperating with civil society,” alleged the source.

“Previously they behaved really unprofessionally toward certain NGOs, however since the latter half of 2012, the government has started to try and engage NGOs and civil society – maybe to increase the administration’s legitimacy,” the source continued.

“A positive is the Environment Ministry under Waheed’s administration has been very active. They actually try to do things,” the source noted.

“However, the government consults civil society stakeholders after they’ve already decided everything. They invite NGOs to listen to their opinions, but do not seek their input during the project planning phase,” the source added.

“Ultimately, most [climate finance] problems apply to both administrations, under Nasheed and Waheed,” the source added.

Existing trust funds

“There are three umbrellas – the Maldives Environmental Management Project (MEMP), the Climate Change Trust Fund (CCTF), the Sustainable Renewable Energy Project (SREP) – under each there are different components,” Environmental Protection Agency (EPA) Environment and Social Safeguards Coordinator Ibrahim Mohamed told Minivan News earlier this month.

“The idea is that these projects be developed in such a way that the entire nation becomes a biosphere reserve, that’s the overall goal,” he added.

The MEMP umbrella is a US$ 13.88 million World Bank loan, approved in 2008 and set to close in 2014.

“The MEMP is a soft loan in the sense the interest is very less, and this project also has several components,” said Mohamed.

“Only one component is solid waste management, focused in Ari Atoll. Other areas include environmental monitoring, training and capacity building, and a bachelor of environmental science was established at the Maldives National University (MNU),” he continued.

“There is also a renewable energy component to install solar roofing of public buildings on Thinadhoo [Island in Huvadhoo Atoll], so at least 25 percent of their energy will come from solar. That component also has awareness and training on energy efficiency and conservation of energy.

The US$ 9.5 million CCTF picks up where MEMP left off, according to Mohamed.

“Under the CCTF umbrella we have three components: clean energy for climate mitigation, wetland conservation and coral reef monitoring, as well as solid waste management,” Mohamed explained.

“The World Bank is managing the donor money from the CCTF. They don’t finance directly to the government, because they want it to be managed by a reliable, transparent, international fiduciary system.

“The CCTF idea is that the project(s) we develop becomes an exemplary example for other small island states,” he added.

The CCTF was established in 2010 after the signing of an MOU between the Maldives government, the World Bank Group and the European Union with the aim of targeting solid waste management, capacity building for environmental management, and technical assistance for monitoring and managing key natural assets.

The US$138 million SREP was established in 2012 to generate 16 megawatts of renewable energy on 50 islands in the next five years.

The SREP scheme was directly related to the Scaling-up Renewable Energy Program (SREP) originally planned to be submitted to the World Bank in February 2012, but was not due to the political upheaval that resulted from Nasheed’s controversial resignation February 7, 2012.

Additionally, the Maldives has received Global Environment Facility (GEF) grants totaling US$14,443,426 – that leveraged US$35,176,820 in co-financing resources – for 10 national projects, four regional projects, and eight small grants. The project areas focus on climate change, biodiversity, international waters, land degradation, persistent organic pollutants, and the ozone layer.

The GEF is an independently operating financial organisation that supports national sustainable development initiatives and addresses global environmental issues by working in partnership with the United Nations, United Nations Development Programme (UNDP), and Asian Development Bank (ADB) as well as civil society organisations and the private sector.

The GEF “unites” 183 countries with these actors and claims to be the largest public funder of projects to improve the global environment.

“The EU has suggested that the Maldives’ government look at one atoll with the potential for populations to move and to live and do more projects there – such as waste management, clean energy, protection, preservation, adaptation – all things in one big area, so that these things will be more visible,” said Mohamed.

“If all the components go into one atoll they will become more climate resilient,” he added.

Likes(0)Dislikes(0)