Chad/Cameroon: World Bank OKs Pipeline

WASHINGTON, DC -- The construction of a 650 mile long buried pipeline to carry oil from landlocked Chad in central Africa to Cameroon's Atlantic coast is one step closer to reality over the objections of environmental and human rights groups.

The World Bank's Board of Executive Directors has approved management's response to a report by the bank's Inspection Panel on three projects in support of the Chad Petroleum Development and Pipeline Project totaling US$80 million.

The $3.7 billion project includes the development of 300 oil wells in the Doba Basin of southern Chad by a consortium of oil companies led by Exxon. Exxon and Shell are each financing 40 percent of the project and Elf is handling the remaining 20 percent. The governments of Chad and Cameroon would participate in joint ventures with the consortium to manage pipeline construction, but not the development of oil fields.

In June 2000 the World Bank agreed to provide more than $200 million to build the pipeline. Oil revenues are estimated to earn $2.5 billion over the next 30 years.

The governments of Chad and Cameroon have asked the World Bank for US$115 million in loans that would cover a share in two pipeline construction ventures.

The pipeline has been opposed by many environmental groups such as Friends of the Earth who says oil spills may contaminate the groundwater, and the upgrading of existing seasonal roads could lead to illegal poaching and logging in areas that would otherwise be inaccessible.

"The findings of the Panel will lead to improvements in the ongoing implementation of this challenging project, which has enormous potential to bring great benefits to the people of Chad and Cameroon," said World Bank president James Wolfensohn on Thursday after the Board meeting.

The report of the Inspection Panel, an independent internal auditing body, was prepared in response to a Request for Inspection submitted by Ngarlejy Yorongar, who was acting for himself and on behalf of more than 100 residents living in the vicinity of three oil fields of the Doba Petroleum Project. They claimed that their rights and interests had been, or were likely to be, directly harmed due to inadequacy of environmental assessment and compensation.

The panel agreed with Yorongar and the residents in finding that while many of the project's activities are in compliance with the Bank's policies and procedures, a number of them are not. These include a cumulative impacts assessment, and consideration of the environmental costs and benefits of alternatives to the proposed pipeline route.

The management action plan to address the panel's findings focused on four areas -- environmental and social compliance with the Bank's policies and procedures, economic issues, poverty reduction issues, and monitoring and supervision.

On issues of environmental and social compliance, the Bank will work with Chadian agencies to prepare a Regional Development Plan, an extension of the Environmental Assessment and Environmental Management Plans that were written as part of the project's preparation.

The Regional Development Plan will address the concerns about the project's cumulative regional impacts raised by the panel, the Bank said.

Chad is one of the world's poorest countries, with an estimated 80 percent of the population living on less than $1 a day. Oil revenues are eventually expected to more than double current government revenues.

The Bank report points out that by law, more than 80 percent of the oil revenues accruing to the government will directed to expenditures in the priority sectors of health, education, rural development, infrastructure, environment, and water, and 10 percent will be saved in a fund for future generations.

The oil producing region will receive five percent of these resources to be managed locally, in addition to what it will receive through the national budget. The action plan will accelerate efforts to strengthen the capacity of government to manage these expenditures and to effectively monitor oil quantities produced and revenues generated.

But Friends of the Earth says there is no evidence that profits from the pipeline will be invested in projects aimed at development or poverty alleviation. "In fact, experience in neighboring African countries, such as Nigeria and Congo, proves otherwise. A 1995 World Bank report questioned the willingness of the Government of Cameroon to address the issue of poverty and criticized its financial management," the group said, and it points to the "poor environmental record of Shell and Exxon in their overseas operations."

In addition, the New York based organization Environmental Defense has warned that a violent crackdown last June by the government of Chad President Idriss Deby is reason enough for the Bank to rethink its involvement in the oil development project.

"Government backed killings and torture show that that the World Bank must draw the line and recognize that the present Chadian government can only be expected to misuse loans," said Delphine Djiraibe, president of the Chadian Association for the Promotion and Defense of Human Rights. According to news reports, in 1991 Deby used money from the pipeline project to purchase $3 million in weapons."

The Bank says its action plan will intensify monitoring and supervision of the project. Since the June 2000 project approval, the Bank says "exceptional resources" have gone into monitoring and support of the project's implementation.

In addition, the project is under the independent scrutiny of the International Advisory Group and Environmental Monitoring Compliance Group, which has been regularly conducted since Board approval. depleting chemicals.

• 107 Energy
• 194 World Financial Institutions