The World Bank and the G-7:



Still Changing the Earth's Climate for Business,

1997-98



TABLE OF CONTENTS



I. Key Findings..................................................................................................................4

II. About the Authors, Acknowledgments.........................................................................6

III. Glossary of Common Terms.......................................................................................7

IV. Executive Summary....................................................................................................8

V. From Rio to Buenos Aires: World Bank Fossil Fuel Lending.....................................9

The Byrd Resolution...................................................................................................10

The Global Climate Coalition ....................................................................................11

The World Bank's Rebuttal .......................................................................................12

Conflict of Interest? ...................................................................................................15

World Bank Fossil Fuel Investments: 1997-98...........................................................17

Conclusion and Recommendations............................................................................21

VI.  Summary Tables.......................................................................................................23

a.  Recently Approved or Pending Fossil Fuel-oriented World Bank Projects..........23

b. Estimated Lifetime Emissions from World Bank-financed projects

since the Earth Summit.........................................................................................28

c. World Bank Financing of Fossil Fuel Extraction, Distribution and Power

Projects since the  Earth Summit....................................................................................29

VII. Case Studies (Recent and pending World Bank fossil fuel loans)...........................30

a. China Coal-Fired Power.........................................................................................30

b.  India Solar Thermal Power Plant..........................................................................34

c.  Nigeria to Ghana Gas Pipeline..............................................................................36

d. Thailand Power Plants............................................................................................40

VIII. Inventory of Recent and Pending World Bank Fossil Fuel Projects

(Sector overviews,  and project summaries and discussions).........................................46

a. Oil and Gas Production (includes detailed discussions of Caspian Sea

pipeline and Chad oil development)...............................................................................46

b. Coal Mines.............................................................................................................57

c. Fossil Fuel Power Plants........................................................................................60

d. Fossil Fueled Power Sector Reforms.....................................................................78



APPENDICES



A. Index of G-7 Corporations/Global Climate Coalition Members Involved in

Recent and Pending World Bank Fossil Fuel Projects...................................................91

B. Emissions estimates methodology.............................................................................94







I. Key Findings



1.  Since the 1992 Earth Summit, the World Bank has spent 25 times more on climate-changing fossil fuels
than on renewables. The fossil fuel projects the World Bank has financed will over the next 20 to 50 years
add carbon dioxide emissions to the Earth's atmosphere equivalent to 1.3 times the total amount emitted by
all the world's countries in 1995.

Since the Climate Convention, designed to limit greenhouse gas emissions, was signed by a majority of the
world's countries at the Rio Earth Summit in 1992, the World Bank Group has spent $13.6 billion on fossil
fuel projects which will, over their lifetimes, release 37.5 billion tons of CO2 into the Earth's atmosphere.
Another $3.9 billion in fossil fuel lending is pending, which will add another 3.8 billion tons of CO2 to the
Bank's climate change portfolio for the years 1992-98.  Total estimated carbon dioxide emissions for all of
the countries from fossil fuel combustion--the single greatest contributor to climate change--were
approximately 28 billion tons of CO2  in 1995.

2. World Bank President James Wolfensohn's 1997 Earth Summit II pledge to calculate greenhouse gas
emissions associated with World Bank projects has proven hollow: Less than 10 percent of all World Bank
projects are being calculated for their impact on the climate.

Wolfensohn pledged that the World Bank would begin calculating greenhouse gas emissions associated with
all of its energy projects at the Earth Summit II.  However, by its own admission, the World Bank will
exclude from its calculations all transportation lending, and all coal, oil or gas reserves which the Bank
helps open up for exploitation; these projects constitute roughly  90 percent of the future emissions
associated with World Bank energy lending.  Instead, the Bank only calculates emissions from power
projects it helps fund.  Furthermore, despite an operational directive to do so, an internal review found that
the World Bank makes these climate change calculations for power projects only 46 percent of  the time.
Little wonder, then, that the World Bank claims it was responsible for "only" 5.1 billion tons of CO2 for
Bank projects between 1992-97 rather than the 35 billion tons of CO2, as our 1997 study showed.

3. Since the 1992 Earth Summit, nearly one in five World Bank fossil fuel dollars promoted coal and
diesel-fired power plants in China; from 1997-98, one in three did.

China already burns more coal than any other country,  the dirtiest, most carbon-intensive of fossil fuels. 
The Bank is ensuring that much of China's future power will come from coal, and in some cases, the Bank is
violating its own environmental guidelines to do so.    In the last year, over $1.3 billion was spent on
coal-fired power in China for four massive coal burners --Tuoketuo, Waigaoqao, Hunan and Yancheng. These
four burners alone will eventually release more than 2 billion tons of CO2 into the Earth's atmosphere. From
May through September of 1998, the World Bank has backed more fossil fuel power capacity than it did in
the previous five years, with the largest share of those investments being in China.



4. The World Bank is becoming dangerously entangled in a web of conflicting economic and political
interests, the outcome of which may play a deleterious role in the stability of the Earth's climate while
making the poorest worse off.



The World Bank is home to and one of the three controlling institutions governing the multi-billion dollar
Global Environmental Facility (GEF), created in 1990 to fund developing country projects that have climate
benefits. Yet, although under the same roof, the World Bank has failed to "mainstream" lessons learned
from the GEF. Instead, the World Bank is increasing its investments in fossil fuels. Now, the World Bank is
playing a growing role in "joint implementation" (JI) projects a form of carbon trading on a project basis. 
In addition, the World Bank now proposes to help "jump-start" the market in carbon. This focus on trading
threatens to both distract the World Bank from its mandate of poverty alleviation and sustainable
development and to create a double perverse incentive for continued Bank support for fossil fuels.



5. Although earmarked for sustainable development and poverty relief, 9 out of 10 World Bank fossil fuel
projects benefit transnational corporations based in the wealthy G-7 countries, many of whom are
members of a U.S.-based lobbying group, the Global Climate Coalition, that actively opposes any action on
climate change.



In October 1997, speaking at the 15th World Petroleum Congress in Beijing, Exxon chairman Lee Raymond
urged China to use more, not less fossil fuels, and said nature was to blame for most global warming.
Raymond also heads up the American Petroleum Institute, which, together with lobbyists from other
industries dependent on fossil fuels, joined forces under the misleading banner, "The Global Climate
Coalition." Their goal: To get the U.S. to take no action on climate change until China and other key
developing countries take action. This perfect formula for stasis guarantees business as usual for the oil,
gas and coal industries while the Earth's climate grows warmer and dangerously out of balance. Meanwhile,
these same members of the GCC -- including Exxon, Amoco, Chevron, CMS Energy, and Mobil -- are being
awarded contracts for World Bank fossil fuel projects in developing countries, including China, and
economies in transition.



6. The World Bank is helping open up some of the world's richest untapped oil and gas fields in regions ruled
by dictators, while ignoring renewable energy opportunities that others are seeking out.



>From Burma, where a gas pipeline allegedly built with slave labor feeds into World Bank-backed power
projects across the border in Thailand, to Nigeria, where 9 Ogoni activists were hanged in 1995 for
opposition to oil drilling in their homeland, the World Bank is involved in controversial oil, gas, and coal
projects --in the name of "sustainable development" and "poverty alleviation."  Meanwhile, in many
countries, where others see gold in renewable energy, the Bank sees--and invests in--black gold. For
example, in West Africa, the Bank is promoting a gas pipeline from Chevron's fields in Nigeria to CMS
Energy's new power plant in Ghana, while the Economic Community of West African States is studying the
solar and wind energy potential in each of the region's 16 states. In Morocco a 50-megawatt wind farm is
being developed independently near a 696-megawatt coal-fired Power plant funded by the World Bank. The
Bank's prototype renewable energy project, the proposed Solar Thermal Power Plant in Rajasthan, India,
actually would generate roughly three times more energy from fossil fuels than from the sun.


II. About the Authors







The Sustainable Energy and Economy Network, a project of the Institute for Policy Studies (Washington) and
the Transnational Institute (Amsterdam), works in partnership with non-governmental organizations
globally on environment and development issues.   SEEN has produced three prior reports on the World Bank:
"The World Bank and the G-7: Changing the Earth's Climate for Business," (May 1997); "The World Bank's
Juggernaut: The Coal-Fired Industrial Colonization of the Indian State of Orissa" (September 1996); and
"Consultative Group to Assist the Poorest: Opportunity or Liability for the World's Poorest Women?"
(February 1997). Network coordinator Daphne Wysham is co-editor of a book of essays on the World Bank,
Beyond Bretton Woods: Alternatives to the Global Economic Order (Pluto, 1995). Program Associate Dafna
Laurie provided research for this report.  For more information, please contact: SEEN/IPS, 733-15th St.,
NW, Suite 1020, Washington, DC 20005. Phone:202-234-9382; 540-987-3182. Fax: 202-387-7915. Web
site: <http://www.seen.org>





The International Trade Information Service, a project of the non-profit Tides Center, was formed in 1995
to investigate and expose the social and environmental impacts of international trade.  Previous reports
involving ITIS research include three ground-breaking reports on the production and trade of
ozone-depleting chemicals (two in collaboration with Ozone Action, one with Greenpeace International); two
reports in collaboration with SEEN, "The World Bank and the G-7: Changing the Earth's Climate for
Business," (May 1997) and "The World Bank's Juggernaut: The Coal-Fired Industrial Colonization of the
Indian State of Orissa" (September 1996); and "A Day in the Life of U.S.-Indonesia Trade," an independent
report on the social and environmental repercussions of a typical day's commerce between the two
countries.  ITIS also provides background reports for numerous non-profit organizations on a wide variety
of subjects.  For more information, please contact: Jim Vallette, ITIS, P.O. Box 658, Southwest Harbor,
ME, 04609, USA.  Phone: 1-207-244-3106. Fax: 1-800-861-9611. E-mail: <itis@igc.apc.org>.





__________________________________________________________





Acknowledgments:



The authors would like to thank the following individuals and foundations  for their support and contributions
to this report: Peter Bahouth and the Turner Foundation, the C.S. Mott Foundation, John Cavanagh,
Francesco Martone, Antonio Tricario, Steve Kent, James Barnes, Christopher Moyles, Oronto Douglas,
Njoki Njehu, Soren Ambrose, Rhys Roth, Colin Rajah, Doug Norlen, Pad Green, Tony Juniper, Frances
Macguire,  Ian Willmore, Nick Rau, Cindy Baxter, Ophelia Cowell, Petr Hlobil, Gaby Bendall, Jon Coifman,
and Andrea Durbin.


III. Glossary of Common Terms





Annex 1 countries: Signatories to the Climate Convention, largely from the North, who will abide by binding
greenhouse gas emission reductions as agreed to under the Kyoto Protocol.

the Bank: The World Bank Group

carbon: A key element in fossil fuels, whose molecular weight is equivalent to less than one-third that of
carbon dioxide.

carbon dioxide: CO2, the number one greenhouse gas, whose molecular weight is 3.68 times greater than
carbon.

Earth Summit: The 1992 United Nations Convention on Environment and Development held in Rio de Janeiro,
Brazil.

Earth Summit II: The five-year assessment of progress made since the Earth Summit in 1992, held in New
York the week of June 23, 1997.

FCCC: The United Nations Framework Convention on Climate Change, or the Climate Convention.

G-7: The Group of Seven wealthiest industrialized countries. Includes the U.S., Germany, Japan, Italy,
France, the U.K., and Canada. Russia has achieved "observer" status at G-7 meetings, and hence the name
G-8 is often also used.

GDP: Gross domestic product

gigaton: One billion tons

IBRD: International Bank for Reconstruction and Development, often called "the World Bank."

IDA: International Development Association, the "soft loan," low interest loan window of the World Bank.

IFC: International Finance Corporation, the private sector arm of the World Bank.

IMF: International Monetary Fund, the sister institution of theWorld Bank, which makes the implementation
of structural adjustment policies, balance of payments, and exchange rate matters conditional for countries
to receive World Bank loans. The IMF is also considered the "lender of last resort."

IPCC: The Intergovernmental Panel on Climate Change

MIGA: Multilateral Investment Guarantee Agency, the World Bank's guarantor arm.

Non-Annex 1 countries--Signatories to the Climate Convention in developing countries who are given more
leeway in reducing their greenhouse gas emissions.

MOS: Monthly Operational Summary, a report issued monthly by the World Bank on project lending.

NGO: non-governmental organization, or non-profit organization.

The North or global North:  This refers, in shorthand, to those wealthier, industrialized countries of Europe
and North America (including all of the Group of Seven, or "G-7," countries), as well as other countries like
Australia which, although south of the equator, nevertheless are grouped with the "North" in terms of their
economic status.

PID: Project Information Document. A brief description for public distribution on World Bank financed
projects.

The South or global South:  This refers, in shorthand, to the less industrialized countries, many of
whom--but not all--are situated south of the richer, "Northern" countries of  Europe and northern America.

UN: The United Nations

World Bank Group: Formed in 1945 to provide loans to developing countries; now provides loans to private
industries as well. Traditional focus has been large infrastructure projects. Includes IBRD, IDA, IFC, and
MIGA.


Executive Summary



"Mr. Chairman, I stand before you today under very different circumstances from last year... [1998 was
a] year of turmoil and travail. East Asia, where estimates suggest that more than 20 million people fell
back into poverty last year, and where, at best, growth is expected to be halting and hesitant for several
years to come. Russia, beset by economic and political crisis. ...And all this compounded by the impact of El
Nino--the worst in history--with its full devastating force falling most heavily on the poor. In Bangladesh
floods that kept two-thirds of the nation under water for more than two months, setting back many of the
recent social and economic gains. In China, flooding of the Yangtze River region with an estimated 3,500
deaths, 5 million homes destroyed and 200 million lives dislocated."



--World Bank President James Wolfensohn, addressing the board of governors of the World Bank Group,
October 6, 1998



Energy, it has been said, is the engine of economic growth. For years, economists have considered a
nation's energy consumption a key indicator of its economic health.  It is no surprise, then, that the World
Bank's economists view energy provision and consumption as pivotal in their efforts to increase economic
growth in developing countries. What is surprising is that, despite acknowledging that the  consequences of
climate change will continue to be most devastating for the world's poorest, the World Bank is both doling
out billions of dollars a year in loans and guarantees to fossil fuel projects--the single greatest contributor
to climate change--and, at the same time, devoting additional significant resources, in house, hoping to
profit from "capturing carbon" emitted from these same projects.



Roughly one-fifth of all World Bank lending is devoted to increasing energy and power supply in developing
countries. The World Bank's energy lending portfolio is dominated by fossil fuels; more than three-fourths
of all its energy lending is spent on oil, gas and coal or power projects that use these fuels, making it the
largest multilateral financier of climate-changing fossil fuels in developing countries. Since 1992, the year
most of the world's countries signed the Climate Convention in Rio de Janeiro, the World Bank and its
subsidiary organizations have administered an aggressive $13.6 billion spending program to expand
international investment in and ownership of coal mines, oil and gas fields, and fossil-fueled power plants in
developing countries and economies in transition (EITs) of the former Soviet bloc. Another $3.9 billion in
loans and credits are pending.



Despite increasing private sector involvement in the power sector in developing countries and EITs, loans
and guarantees provided by the World Bank and other international financial insitutions (IFIs) and the
policies which guide them continue to have a major impact on power generation projects. Especially in the
current unstable economic climate, private sector investors are unwilling to put their money at risk
without at least some IFI involvement. Thus, each World Bank dollar paves the way for five or six dollars in
additional private investment in projects it supports.



These World Bank-financed fossil fuel projects will have a significant impact on the global climate: The total
projects approved by the World Bank since the 1992 Earth Summit will contribute a burden of carbon
dioxide to the Earth's atmosphere equivalent to 1.3 times the total amount emitted from fossil fuel burning
by all the world's countries in 1995.



While public moneys are doled out via the World Bank under the banner of "poverty alleviation," about nine
out of every ten energy and power projects financed by the World Bank benefits at least one corporation
headquartered in the wealthy Group of 7 (G-7) nations. The G-7's collective financial muscle is
extraordinary: In 1995, their collective gross domestic products were greater than 68 percent of the
global economy. These seven nations are also among the major contributors to the World Bank; as such they
hold close to 50 percent of the Bank's executive directors' voting power, thereby wielding significant clout
in approving or vetoing World Bank projects. The U.S. is the largest contributor, and thereby wields the
greatest influence over the Bank's loan portfolio.



A significant share of the corporations who receive World Bank procurement contracts are also members of
the "Global Climate Coalition," a U.S. lobbying group whose explicit strategy it is to prevent any action by
the U.S. in reducing its own significant share of greenhouse gas emissions, thereby preventing any
commitments from developing countries to reduce their own future emissions, and vice versa.



Procurement contracts from the World Bank in developing countries are big business. As then
undersecretary for international affairs in the U.S. Treasury Department, Larry Summers, told the U.S. 
Congress in 1995: For every dollar the U.S. government contributes to the World Bank's coffers each year
it gets $1.30 in procurement contracts for U.S.-based transnational corporations.



And so the money goes round and round: From corporations like Exxon to the campaign funds of politicians,
who oversee conditions around replenishment of World Bank funds, who then approves loans to developing
countries, who work with the World Bank in assigning procurement contracts for businesses, with a
disproportionate share going to G-7-based transnationals, who then funnel a share of their profits back into
the political process.  The final consequence of this money roundabout in the energy field is to lock
developing countries and EITs into a fossil fuel energy path. Rather than using development dollars to meet
the growing energy needs of the poorest, 2 billion of whom live in rural areas, where renewable energy is
most cost-effective, the World Bank's fossil fuel-focused energy strategy delivers energy services mainly
to heavy industry and urban dwellers. The final consequence is inevitable: rapid global climate change.



V. From Rio to Buenos Aires: World Bank Fossil Fuel Lending



In 1997, the Institute for Policy Studies and the International Trade Information Service, in association
with the Campagne per la Riforma della Banca Mondiale (Reform the World Bank Campaign, Italy), and the
Halifax Initiative (Canada) produced a 135-page, in-depth report documenting a little known and less
understood fact: The World Bank, home to the only institution created at the 1992 Rio Earth Summit to
mitigate the problem of climate change, and charged with the role of poverty alleviation and sustainable
development, was both seriously aggravating the problem of global climate change and overlooking the
needs of the 2 billion poorest in the global South by investing billions in fossil fuels.  Among our report's
findings:



Since the first Earth Summit in 1992 to mid-97, the World Bank Group funded $9.5 billion in oil, gas, and
coal projects in the South and East which will eventually add carbon emissions to the Earth's atmosphere
equivalent to one and a half times ALL current annual GLOBAL fossil fuel emissions.



The poorest one-third of the planet got less than one-tenth of the World Bank's energy investments while
absorbing most of the environmental and social costs of fossil fuels.

The World Bank was investing 100 times more money in fueling climate change than in averting it.



This report was posted on the worldwide web (http://www.seen.org), with executive summaries available
in Japanese, Italian, German, and English.



When our partner NGO, "Reform the World Bank Campaign" in Italy, released our report in the Italian
Parliament, they did so with the endorsement of the director of World Wildlife Fund Italy and the Club of
Rome. The press attention resulted in hearings being held on our report's findings in the Italian Senate (all
members of the Italian Senate were given copies of the report) with former Prime Minister Romano Prodi
and the Minister of the Environment, Edo Ronchi present.  The Prime Minister, in an unprecedented speech
to the Senate, stressed, among other things, that the World Bank should increase its support to renewable
energy sources.



Following these hearings, the Italian Senate passed a unanimous resolution "to advocate a review of World
Bank activities in the energy sector, with the adoption of a binding policy that envisages the progressive
reduction of funding for non-renewable energy sources to the advantage of renewables, as well as the
establishment of a department for energy efficiency." It went on to say, "The World Bank will have to
support developing countries in the implementation of sustainable energy strategies and adopt binding and
transparent guidelines and procedures aimed at evaluating the impact of its projects on the global climate."



The Dutch Greens raised a number of questions in the Dutch Parliament based on our report's findings, and
brought the report to the attention of their Prime Minister. Press attention began to gain momentum in
Europe and North America.



All of this pressure and political attention resulted in World Bank President James Wolfensohn making the
following remarks at the Earth Summit II in New York in June:



"...The World Bank will routinely calculate the potential impact of all its energy projects on climate change
and, where there is cause for concern, assist developing country clients to finance more climate-friendly
options..."



In response, IPS produced a global sign-on letter to Wolfensohn, requesting further clarification on this
pledge, first in June and then, when there was no response, again, in November.



Concerns raised in our report were echoed in the 1998 "Study of the GEF's Overall Performance" (March 2,
1998) commissioned by the GEF Secretariat. This report was unequivocal regarding the World Bank's
efforts on climate change:



"The Bank has not succeeded in systematically integrating global environmental objectives into economic and
sector work or into the CAS [Country Assistant Strategy] process; nor has it taken meaningful action to
reduce its traditional role as financier of fossil fuel power development...It has not yet undertaken any
programming based on global environmental objectives...Continued financing by the World Bank for such
projects (as conventional fossil fuel generation) is inconsistent with mainstreaming of the global
environment in the Bank's regular operations."





At the May 1998 Summit of the Eight in Birmingham, England, the following language appeared in the
Environment Ministers communiqu‚, and was endorsed by the G-8 countries in their final communique:



..."We must ensure that the policies and operations of the World Bank and other International Financial
Institutions take full account of climate change..."



Members of the House and Senate have also questioned the role of the World Bank in creating a
"self-fulfilling prophecy" of rising greenhouse gas emissions around the world. Congressmen Dennis
Kucinich (D-OH) and Henry Waxman (D-CA) wrote President Bill Clinton on June 19, 1998 drawing from our
research:



..."We are interested in your views on how the United States has been using its economic leadership at...the
World Bank...to address the challenge of global warming and provide incentives for developing nations to
increase their participation in this critical global effort. Since 1992, the World Bank has helped finance 87
fossil-fuel based projects. These  projects are expected to produce one and a half times more C02
emissions than today's annual global total. Has there been a comprehensive review of these projects
undertaken to determine whether renewable or clean energy technologies could be substituted as energy
sources?"



The Fly in the Ointment: The Byrd Resolution



Shortly after the Earth Summit II, a far less progressive response to the problem of climate change than
that emerging from European parliaments was issued by the U.S. Senate: On July 25, 1997, in what has
become known as "the Byrd Resolution" (after its chief sponsor, Democratic Senator Byrd, who represents
the coal mining state of West Virginia), the Senate resolved that the United States should not sign any
agreement for new binding restrictions on greenhouse gas emissions at the upcoming third Conference of the
Parties (COP-3) of the UN Framework Convention on Climate Change (UNFCCC)  in Kyoto, unless it included
"new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country
Parties within the same compliance period." Underlying this non-binding resolution were concerns that an
agreement at COP-3 would cause a loss of American jobs to China, India and other developing countries.



When the Clinton Administration negotiators went to Kyoto, they had to walk a fine line between the Byrd
Resolution, public opinion polls that showed a majority of the American public wanted strong action on
climate change, a Vice President who had written a book on the subject, and the global community who
expected the U.S., as the largest greenhouse gas emitter, to take serious action on the issue.  When the
Clinton team tried to advance the platform embodied in the Byrd Resolution in Kyoto before pledging to
reduce the U.S.'s own significant emissions, they were roundly criticized by the representatives of the
nations gathered there.



The Global Climate Coalition



What few realized until Kyoto was that a well-financed lobbying campaign, whose first success  was the
passage of the Byrd Resolution, was underway with the intent of scuttling any action by the U.S., and thus,
by the rest of the world on climate change.  The group, the "Global Climate Coalition," is the lobbying arm
of the American Petroleum Institute and other U.S.-based oil, gas and coal companies.  Since Kyoto, the GCC
has become increasingly visible as it is exposed using tactics such as spreading disinformation and trying to
buy off scientists to support their cause.



GCC members have also been actively promoting a strategy of exploiting and attempting to widen the divide
that exists between rich and poor countries.  In  October 1997, speaking at the 15th World Petroleum
Congress in Beijing, GCC supporter and Exxon chairman Lee Raymond urged China to use more, not less
fossil fuels, and said nature was to blame for most global warming. Raymond also heads up the American
Petroleum Institute. Simultaneously, the GCC was lobbying the U.S. Congress to take no action on climate
change until China and other key developing countries do. This perfect formula for stasis guarantees
business as usual for the oil, gas and coal industries while the Earth's climate grows warmer and more out
of balance.



While developing country participation in the Climate Convention is certainly a worthy goal, as this report
documents, it is hypocritical for the U.S. to call for such participation while, at the same time, investing
billions in taxpayer dollars via the World Bank each year in fossil fuel projects in developing countries. The
reason for the hypocrisy, as this report shows, is economic: World Bank and other taxpayer-financed
development loans are good for big business, especially in the U.S.  Much of the money flows into coal-fired
power plants and oil and gas fuel fields developed by U.S. and other G-7-based transnational companies,
including members of the GCC, such as Amoco, BHP, Chevron, CMS Energy, Exxon, Mobil and
Texaco. These investments line the pockets of the GCC as predictably as they line the pockets of politicians
in the G-7 countries and Third World bureaucrats.



According to a recent report by Greenpeace, oil and gas interests have donated $ 53.4 million since 1991 to
U.S. political candidates and their parties. This report found that $20.8 million  was donated in the 1995-96
period alone of which 77% went to the Republicans. Eight major oil companies, together with the Petroleum
Marketers Association, donated $12.5 million to Congressional candidates and the parties in the last 6
years; 75% of this donation went to Republicans.  Atlantic Richfield (ARCO), Chevron, Exxon, Enron and
Amoco (all members of the GCC) alone gave more than a million dollars each  during this period, with ARCO
topping the league table with $3.4 million in donations.



So it is no surprise the fossil fuel lobby is successfully urging politicians not to budge on restricting
greenhouse gas emissions until China and other key developing countries do, while convincing China to stay
the course. They know full well that developing countries won't budge as long as their lobbying dollars and
our development dollars continue to steer both us and them down a fossil fuel energy path.



The World Bank's Rebuttal



On December 2, 1997, Dr. Robert Watson, chair of the Intergovernmental Panel on Climate Change and then
director of the World Bank's Environment Department, responded to an IPS letters with signatures from
NGOs from North and South, asking for a response to the 1997 IPS report's findings. (For full copies of both
letters, see "Correspondence" on our website: www.seen.org.)  While attacking our report's findings, 
Watson used the Bank's own Carbon Back Casting Study to claim that the Bank was responsible for "only"
1.4 gigatons of carbon--not 9.5 gigatons, as our report had suggested--in the years 1992-97.



However, the Carbon Back Casting Study consistently underestimated emissions associated with projects it
helped finance. Among the omissions:



The World Bank study did not calculate greenhouse gas emissions associated with oil or gas fields or coal
mines it helped to finance but only included emissions from fossil-fueled power projects it helped finance;

The World Bank study chose to only take responsibility for one-third of the entire emissions associated with
power projects it helped to finance;

The World Bank study only included emissions associated with a project it helped finance over a period of
25 years.



Furthermore, the authors of the study, the Stockholm Environment Institute, claim their study was never
intended to estimate the carbon in the Bank's portfolio.



Watson's response did not dispute one of our key findings, namely that 9 out of 10 World Bank-financed
fossil fuel projects benefit wealthy multinational corporations based in the G-7. The Bank did dispute our
charge that the Bank is bypassing the energy needs of the rural poor. The fact sheet produced by the Bank
notes the numbers of projects financed over the past 15 years, millions of dollars spent on rural
electrification, and the standard-- yet unproven-- formula that equates greater energy efficiency with
greater benefits for the poor. Although, privately,  World Bank staffers admit that they cannot provide
energy for the 2 billion poorest, nevertheless, these desperate poor become the "poster children" for the
World Bank's energy portfolio: women cooking with cow dung, men cutting down trees for fuel.



Carbon Trading: Fanning the Flames?



At the Kyoto Third Conference of the Parties (COP-3) in December 1997, the U.S. proposed two
controversial ideas: "meaningful participation" by "key developing countries" (such as China and India) to
meet the terms of the Byrd Resolution; and "flexible" market-based mechanisms for carbon emissions
trading. With little support at COP-3 for the U.S. asking poorer countries to take action until it took action
at home, U.S. negotiators reluctantly admitted defeat on developing country participation; however, they
did manage to get their idea for carbon emissions trading, including "joint implementation" (JI) and
international emissions trading, accepted. This got absorbed into a proposal floated by developing countries
for a "Clean Development Fund" (later renamed, "Clean Development Mechanism" or CDM). The CDM, which
has yet to be fully defined, promised developing countries the potential for "enhanced sustainable
development, increased private capital investment in energy projects and accelerated acquisition of
advanced technology." It would also permit certified emission reductions from CDM projects in non-Annex 1
(developing country) Parties to be transferred to Annex 1 Parties, which would be deducted from Annex 1
Parties' commitments to reductions under the Kyoto Protocol.



Theoretically, with no ceilings on emissions trading yet proposed, the U.S. and other rich countries will be
able to meet all of their emissions reductions targets (an average for all Annex 1 countries of 5.2% below
1990 levels by 2008 to 2010) by doing so in another country which has either already met its targets
(such as Russia, which is already emitting fewer greenhouse gases than it did in 1990, and has begun
drafting plans for trading emissions with Japan) or a developing country, which has yet to define any
targets.



Market-based mechanisms such as emissions trading and JI, while they may serve the interests of large
industries in the North and South by allowing greater flexibility, may in fact only aggravate the problem of
poverty in the South--whose alleviation is the ostensible reason for a longer lead time in phasing out GHGs
in non-Annex 1 countries.  Early evidence from JI trials suggests that JI may be worse than ineffective
because it invites corruption, and adds little of value to projects.



Two pioneering market mechanisms for controlling pollution are being challenged domestically by
environmental justice groups. One mechanism, in Los Angeles, called RECLAIM, or the Regional Clean Air
Incentives Market, has resulted in no discernible emissions reductions in the five years between 1993,
when reductions were effectively suspended and 1997, according to an internal audit by the South Coast
Air Quality Management District.  Michael Belliveau writes the following scathing indictment of RECLAIM
for Corporate Watch:



"Under RECLAIM, an estimated 40,000 more tons of industrial NOx will be released into the air than would
have resulted from the regulations it replaced. This is the result of efforts by a corporate coalition,
dominated by oil and aerospace companies, which successfully lobbied to inflate the baseline of allowable 
emissions for the 500 companies.  When the Los Angeles RECLAIM program was set up, companies which
formerly underestimated their emissions in order to reduce their permit fees, suddenly reported elevated
rates of air pollution. Obviously,  the higher the pollution levels claimed, the greater their pollution
allowance".



A similar pollution trading scheme involving car-scrapping resulted in equally unjust exposure of poor
communities to toxins. Belliveau writes:



... "[The car-scrapping program] resulted in working class Latino communities located near oil company
terminals, which avoided pollution reductions by purchasing car scrapping credits, being exposed to much
higher levels of toxic emissions...Both RECLAIM and car scrapping--programs that despite their extensive
flaws are being rapidly replicated in urban areas around the United States--are supposedly aimed at solving
the regional pollution threat posed by soot and smog. Yet unjust local impacts result because sources of
smog pollution simultaneously emit toxic pollutants. This same defect, "the hot spot problem," will plague
global trading  programs in carbon dioxide, only on a larger scale."



The World Bank: Investing in Carbon



At the December Kyoto conference, the World Bank unveiled its own proposal for carbon trading, a
Prototype Carbon Fund (PCF). The World Bank explains the PCF as follows:



"This Fund would facilitate exchanges of emission reduction units under the provisions in the Kyoto protocol,
which provide for such exchanges between countries with emission reduction commitments (Joint
Implementation or JI) and between a country with an emission reductions commitment and one without (the
Clean Development Mechanism or CDM).  The PCF will pool funds from governments and companies in
countries with commitments and invest them in emission reductions in economies in transition (EITs) and
developing countries.  The PCF is developed in strict adherence to UNFCCC rules and decisions."



With binding emissions reduction targets agreed to at Kyoto, the World Bank estimates that industrialized
countries "in aggregate need to reduce their energy related carbon emissions by roughly 550 million tons
per annum in the first budget period through measures which have not yet been introduced."  In the absence
of carbon trading between industrialized countries and EITs, the Bank estimates the annual costs by 2020 to
the OECD will be $450 billion. With emissions trading, this figure would be a much reduced, but still a
daunting, $150 billion. The PCF would encourage bilateral project-based investments, such as the upgrading
of a low-efficiency coal-fired power plant by the transfer of more efficient technology, or replacing the
plant altogether with a cleaner gas-fired plant.



Conflict of Interest?



Some suggest the PCF is only the latest in an increasingly entangled web of conflicting interests for the
World Bank. In addition to its role as a leading multilateral financier of fossil fuels, it is also home to the
only institution created since the 1992 Rio Earth Summit to mitigate the problem of climate change, the
Global Environmental Facility. Robert Watson, who chairs the Intergovernmental Panel on Climate Change,
the global institution coordinating the international technical and scientific response to climate change, is
also employed part-time in the World Bank's environment department.



Internal documents on the PCF show their "win-win" strategy would have the World Bank profiting from
capturing carbon emissions that are "low-hanging fruit," (i.e., carbon emissions that are relatively
inexpensive to capture). (See World Bank graphic #1 and #2.) The Bank estimates it can generate roughly
$100 million per year in net revenue for itself from these "low-hanging fruits" by 2005. (See World Bank
graphic #2.) The global market in carbon trading is estimated to reach $10 to $20 billion a year, and the
World Bank foresees controlling $2 billion of that market by 2005.



NGOs and US Government officials have raised serious concerns that having the same institution capture the
carbon being released from the project it helped to finance would is both a conflict of interest and would
create perverse incentives to allow the lowest possible baseline for energy projects.  The PCF proposal
outlines potentially conflicting roles for the Bank, they argue: a development institution, a promoter of
greenhouse gas reduction, a carbon market regulator (or at least designer of regulations), and an offset
investor and trader. They also recognize that the World Bank  has a credibility problem, having failed to
implement successfully its own energy and environmental policies, downgrading them from mandatory
"operational policies" to advisory "good practices" in recent years. Others raise concerns that the PCF
would encourage World Bank task managers to spend even more of their scarce development dollars on
fossil fuels, diverting them from the far more critical task of "greening" their energy lending with
renewable energy.



The IPCC's and World Bank's Rob Watson has assured government officials that the Bank would not develop
regulations for carbon trading.  (Although the IPCC which, he chairs, will advise the


supreme body on the Climate Convention, the Conference of the Parties, on how to develop these
regulations.) On perverse incentives he admits there may be a problem, in response to concerns raised by
NGOs and government officials, but noted that "the potential for perverse incentives is not specific to the
PCF but is a general problem for any emission reduction deals that require additionality, as is required for
any JI or Clean Development Mechanism project under the Kyoto Protocol."



Privately, the World Bank is clearly worried about three risk factors in the emissions trading arena (see
World Bank graphic #3): Political risk, image risk and performance risk. As this World Bank graphic
outlines, the political risk the World Bank is worried about is that it may be perceived to be "getting ahead
of the Convention on emissions trading," as well as "undermining GEF replenishment."  The World Bank's
concerns about undermining the GEF replenishment suggests that it is fully aware that the boundaries
between the CDM, JI and the GEF are getting increasingly blurred--and that justifying a continued
replenishment for one institution while actively pursuing World Bank involvement in another may be rightly
perceived as trying to "corner the market" on emissions trading.



The World Bank's concern about its " image risk" is perhaps most telling. Although publicly Robert Watson
and others claim that developing countries must rely on coal for the indefinite future, the World Bank is
clearly uneasy about public exposure of  the disproportionate amount of public funds being spent by the Bank
on "coal sector operations."



Finally, the World Bank is admitting--albeit to itself--that there is a risk that these deals may "go sour."
While the Bank is worried about the ramifications in terms of its "credibility" if it fails at capturing carbon
emissions, NGOs are concerned that global action on climate change hinges on a market mechanism that is
unproven, and, in this case, an institution whose expertise is economic--not scientific--being entrusted with
such a sensitive and vitally important task.



In addition to being involved in the Annex 1 carbon market, it is clear that the Bank wants to play a leading
role in the emissions trading market globally. In the September 30, 1998 draft of their energy strategy
paper, "Fuel for Thought: A New Environmental Strategy for the Energy Sector," the authors write: "The
establishment of an international market for carbon emission offsets or credits should cut the cost of
dealing with climate change, and has been agreed in principle at the recent Kyoto conference on climate
change. The World Bank Group will help develop this market."



World Bank Fossil Fuel Investments: 1997-98



While the U.S.' insistence on developing country participation irked many signatories to the climate
convention, at home, it provided renewed interest in the role of U.S. investments in fossil fuels in
developing countries. Senator Joseph Lieberman (D-CT) wrote State Department Secretary Madeleine
Albright and Treasury Secretary Robert Rubin on June 3, 1998:



"...I encourage you to make every effort to ensure that publicly supported lending institutions, both within
the United States and in other developed countries, evaluate all projects in developing countries in terms of
greenhouse gas emissions. They should adopt policies to ensure that project proponents consider options
that will result in lower greenhouse gas emissions than would otherwise result... Developed nations,
through the quality of development they invest in, will largely determine the quality of the environment in
the developing world.



"This approach would be consistent with the Administration's view that developing countries must continue
to grow but in a more environmentally sound and sustainable way. Most importantly, the information
obtained from lending institutions would help demonstrate that developing countries are moving down the
path of meaningful participation. We can make real progress in this area before countries sign on to
commitments under the Kyoto protocol, which would be an important way to get around the impasse in our
country regarding developing world participation."

A similar call for accountability by the World Bank and other IFIs was issued by the G-8 Environment
Ministers and endorsed by the G-8 countries in their final communique at the May 1998 summit in
Birmingham, UK:



"...We must ensure that the policies and operations of the World Bank and other IFIs take full account of
climate change."



Despite calls for reform and accountability from the G-8, from the GEF Secretariat, and from members of
the U.S. Congress and from Prime Ministers, the World Bank is not listening. From late May 1997 to
September 1998, the World Bank approved 19 new loans and credits totaling $4.1 billion to coal and
diesel-fired power plants, gas and oil pipelines, coal mines, and fossil fuel-derived electricity transmission
systems.  These recent loans will eventually add at least 2 billion metric tons of CO2 emissions to the
Earth's atmosphere; this is in addition to the 36 billion tons of CO2 we have tabulated in the Bank's portfolio
of fossil fuel loans and credits since the Earth Summit in 1992. The Bank's contribution to climate change
since the Earth Summit now stands at 38 billion tons of lifetime CO2 emissions, at a cost of $13.6 billion to
taxpayers whose tax dollars underpin the Bank.  The World Bank is also considering an additional $3.8
billion in loans and credit for 29 fossil fuel projects. These projects, in their lifetimes, would add an
estimated 3.8 billion tons of CO2 to the Bank's climate change portfolio.



The China Syndrome



The bulk of the Bank's new emissions emanate from China.  Since  May of 1997, the Bank has approved over
$1.35 billion dollars in loans to four massive coal-fired power projects in China. China already burns more
coal than any other country.  These four new projects -- Tuoketuo, Waigaoqao, Hunan and Yancheng   will
have a combined capacity of 9,000 megawatts, more than half of the combined power of all power plants
financed by the Bank in the previous five years.   These plants will emit an estimated 2 billion tons of CO2
in their first 20 years of operation. From 1992-98, the World Bank has approved over $3 billion in
financing toward coal and diesel-fired power plants with a capacity over 12,090 megawatts in China alone.



According to sources inside the World Bank, the most recent Hunan Power Project was pushed through the
World Bank's Board of Directors in violation of US laws and the World Bank's own policies. The US Executive
Director Jan Piercy raised a number of concerns on this project, among them that the private sector was
complaining that the World Bank was "crowding them out," and that the Bank was lending for projects that
were independently viable.



Piercy raised concerns over the burners' use of anthracite coal. The US EPA allegedly advised Piercy the
ambient sulphur dioxide and nitrogen oxide emissions were to exceed the World Bank's own guidelines. In
response, the World Bank asked for--and was granted-- a waiver of its own guidelines, claiming that the
environmental guidelines were not designed for this type of coal, and that the use of local coal--rather than
transporting it from somewhere else--overrode the concern about noxious emissions.



Piercy also allegedly raised the issue of global environmental issues, saying this was a carbon-intensive
plant, and would increase greenhouse gas emissions. However, the World Bank responded that this would
result in a 100 percent increase in electricity in the region, with only an 8 percent increase in greenhouse
gas emissions. (Our figures show that this plant will release 208 million tons of CO2 over 20 years.) 
Furthermore, the Bank claims that the conditions on this loan are that the Chinese will be decommissioning
smaller, more polluting coal-fired power plants as they bring this one on-line.



Finally, Piercy raised concerns that, despite the significant environmental implications of the project,  the
environmental assessment had been released by the World Bank in late April--less than 120 days before
Board approval, in violation of the Pelosi Amendment. Despite these and other concerns, the Hunan Power
Project loan was passed by the Bank's other executive directors.



Foreign corporations are vying to own or supply equipment to each of the four China coal-fired power plant
projects.   National Power of the UK has been selected to build and own one of the Hunan power plants. 
Foster & Wheeler and Siemens are supplying the turbines and boilers for the Yancheng power Plant project,
in which AES Corp. is an investor.  Transnational corporate involvement in the two other major projects
(Tuoketuo and Waigaoqao) is still being negotiated.



Economic Reform Over Human Rights



A proposed Nigeria to Ghana gas pipeline project would be the Bank's first fossil fuel loan to Nigeria since
that country's government executed nine oil drilling opponents in 1995. The Bank, which is considering a
$260 million loan toward the project, has been waiting for Nigeria to adopt economic-- not
political--reforms.   Now that Nigeria is privatizing many of its oil and gas facilities, the Bank is reentering
the country's rich fossil fuel sector.  Chevron and Shell are jousting for control over owning and feeding the
new pipeline.  This pipeline would supply gas to the Bank-backed CMS Energy power plant in Takoradi,
Ghana.



The World Bank is also assisting the government of Thailand, who is contractually bound to consume natural
gas from Burma, build four power plants with guarantees  of $174 million with a combined capacity of
2400 MW, despite Thailand's over-supply of power. According to the Center for International
Environmental Law, local villagers claim the gas pipeline bringing gas to Bank-guaranteed power plants was
built using slave labor. The pipeline stretches through rainforests, mangrove swamps, and other
ecologically fragile regions on its way to the Thai consumers.



In Privatization We Trust



As always, the World Bank's primary strategy in Thailand, Nigeria and elsewhere is to spur transnational
corporate access to, and ultimately, control over, developing countries' fossil fuel and energy sectors. 
Many of the Bank's recent power plant loans have provided its transnational corporate partners with a base
for further investments in the host country.  For example, after the Bank helped CMS Energy secure the
largest independent power plant in Africa -- the Jorf Lasfar project in Morocco -- CMS said it would use
this as a launching pad for further power investments in Morocco.  "This is an important milestone for us. 
We're now a major player in Africa," boasted CMS chief executive William McCormick.   Thanks to power
plant parlays brokered by the World Bank in Morocco, Ghana, India, and Jamaica, CMS Energy has surged
from the brink of bankruptcy to the number one position among global power project developers over the
past decade



The Bank's primary mission -- opening fossil fuels to foreign investment -- is also apparent in recently
approved coal mining sector loans to India and Russia, and a pending loan to Ukraine's coal sector. Since the
1992 Earth Summit, the Bank has poured $2 billion into coal mining, with most of that financing coming in
the last year.  In September 1997, the Bank approved a $535 million loan to supply Western equipment to
24 coal mines in India, as part of a general restructuring of that country's coal industry.  In December
1997, it approved $800 million toward "commercialization and privatization" of Russia's coal industry. In
Ukraine, the Bank is considering a $100 million loan toward coal mining sector restructuring. The Bank's
strategies in Ukraine and Russia are similar to the process further along in India: first, the Bank finances
the closure of unprofitable mines, pushes the country toward privatization, then finances continued
operations and expansions at the most profitable mines.



In addition to projects that directly finance fossil fuel extraction or power production by transnational
corporations, it is also extending loans and credits toward privatizing nationalized electricity distributors,
and forcing corresponding reforms that will allow corporations to develop new independent power projects
in these countries.  In the past year, the Bank has financed two such projects totaling $100 million in India
and Russia.  In a typical electricity sector privatization plan, in January the Bank approved a conditional
$600 million loan for privatizing the Indian state of Haryana's power sector.  This program, said the Bank,
will open the state to "private sector participation in generation and transmission utilities."  Similarly, a
proposed $100 million loan to Algeria will "provide an enabling environment for private sector investment
through the introduction of independent power producers."  While CO2 emissions can not be tied to these
types of loans, in the long term, these projects will certainly contribute to the Bank's climate
change-enhancing portfolio.



New Exploration



The world's top scientists agree that to burn more than one-quarter of the existing reserves of petroleum
means to risk suffering the worst impacts of climate change.  Yet the World Bank is assisting the fossil fuel
industry in opening up new reserves, while destroying some of the last remaining pristine and ecologically
fragile regions of the planet, home to thousands of indigenous peoples..



In addition to the Nigeria gas project, the Bank recently approved $310 million towards a massive gas
pipeline project running from Bolivia to Brazil. The Bolivian gas fields are to be developed by many of the
world's largest fossil fuel companies, including Enron, Shell, British Gas, BHP Petroleum, and Exxon.



The Bank is also considering a $370 million-plus package for the development of oil fields in Chad controlled
by Exxon, Shell, and Elf-Aquitaine, and a $200 million pipeline and oil terminal project that would tap into
Bank-backed fields in Azerbaijan, in which Amoco, Exxon, and Unocal are major investors.  In all, the Bank
has approved over $5.3 billion in financing for coal, oil and gas extraction and distribution since the 1992
Earth Summit, with another $930 million under consideration.



Opting for Fossils While Others Look to the Sun



The World Bank is to be commended, together with the Global Environment Facility, for significantly upping
their investment in renewable energy and energy efficiency in the last year, up by over $350 million from
mid-1997 to mid-1998 from roughly $154 million total for the years 1992-97.  However, it is clearly not
exploiting this market to its full potential.



In many countries, the World Bank is backing fossil fuel projects instead of renewable energy projects being
developed by others.  In Morocco, for example, a 50-megawatt wind farm is being developed independently
near a 696-megawatt coal-fired power plant funded by the Bank. In West Africa, the Bank is promoting a
gas pipeline from Chevron's fields in Nigeria to CMS Energy's new power plant in Ghana while the Economic
Community of West African States is studying the solar and wind energy potential in each of the region's 16
states.



The Bank's prototype renewable energy project, the proposed Solar Thermal Power Plant in Rajasthan,
India, actually would generate roughly three times more energy from fossil fuels than from the sun.  The
Bank argues that the venture -- owned by Amoco and Enron -- would not be economic without the fossil fuel
component. The Bank sees this project as "the first step of a long term program for promoting solar
thermal power in India and around the world that would lead to a phased deployment of similar systems in
the country and in other developing nations."  The Bank's use of the term "solar thermal" is rather
deceptive.  Most of the capacity of the Bank-backed plant would be fossil fuel-based, with 100 to 105
megawatts of capacity for oil, coal, or gas-fired power, compared to just 35 to 40 megawatts of capacity
for solar.  The Bank claims that this fossil fuel power plant shaded by a green veneer of solar energy
represents a net decline in carbon emissions.   "The Project is expected to result in avoided emissions of
3.1 million tons of carbon over the operating life of the solar thermal plant relative to generation from a
similar-sized coal-fired power station," states the Bank in its PID.  This type of double-speak only
stretches the Bank's credibility and obfuscates its role in promoting "greenwash" by companies like Amoco
and Enron.  These companies have gained control over most of the world's most promising solar technology
but continue to pour more than 99% of their investments into fossil fuel-oriented projects.



Rajasthan is in the midst of a solar energy boom, with one company (Sun Source Ltd.) planning to build a 50
megawatt photovoltaic solar power plant and another (Energen) committed to building a 200 megawatt solar
chimney. But instead of these solar-only projects, the Bank is backing the smaller-scale fossil fuel/solar
hybrid plant.



Conclusion and Recommendations



As we have seen in the flooding in Bangladesh and the hurricanes in Central America, climate change is
affecting the poorest in the South most mercilessly, with homelessness, crop failure, a rise in disease,
hunger and starvation among the outcomes. What few in the North understand is that, even before the fossil
fuels are burned and greenhouse gases created, fossil fuel development projects already affect the poorest
in the South disproportionately.  World Bank energy development projects have resulted in resettlement,
environmental degradation, police harassment, and other indignities, as evidenced by several recent claims
filed with the World Bank's semi-autonomous Inspection Panel (Singrauli, Yacyreta, and Bio Bio).



With World Bank-encouraged privatization, energy is increasingly being consumed by energy- intensive and
polluting industries, migrating South and East from the North, thus displacing energy for human needs with
energy for export-oriented industrial consumption. The greatest irony is that, because energy delivery
targeted at the energy needs of the poorest is not an explicit goal of the World Bank's energy strategy, a
significant share of the largely fossil-fuel-based power production financed by the Bank is actually further
impoverishing the poorest, who most desperately need energy for their basic survival needs--most
poignantly illustrated in the gas explosion that killed 700 people, mostly women and children, in Nigeria in
October. Meanwhile, World Bank loans are lining the pockets of undemocratic regimes and the richest and
most powerful corporations, many of whom oppose any action on climate change.



As long as self-serving economic growth for G-7-based corporations is the de facto development assistance
policy of multilateral lending institutions such as the World Bank, the replication of a development model in
the global South which has been proven unsustainable in the North is inevitable. Inevitable, too, is rapid and
perhaps runaway climate change.



The Next Step



The Sustainable Energy and Economy Network (SEEN)--in coalition with a broad array of NGOs and religious
groups from around the world-- is calling on the World Bank to take the following steps:



Openly calculate greenhouse gas emissions which will be released as a consequence of  all World Bank
lending before project approval with transparent guidance for this methodology provided by the IPCC.

Set an immediate benchmark for reduction of greenhouse gas emissions associated with projects for which
the World Bank provides financing of 10 percent per year.

Institute a moratorium on lending or guarantees for any project that involves new exploration for fossil
fuels.

Phase out lending and guarantees for any projects that involve coal and oil extraction.

Beginning in 1999, devote 20 percent of its energy and power lending portfolio to renewable energy and
energy efficiency projects, increasing the amount of finance it provides for such projects by 10 percent
per year, and creating an energy efficiency unit to help bolster its energy efficiency work.

Include legally binding language to restore areas degraded by oil, gas and coal development by the
corporations or public entities that are responsible.

Make public, as part of the Country Assistant Strategy, an integrated energy strategy. Each CAS should
establish specific goals for improving the productivity of energy use targeted at the poorest and developing
renewables and energy efficiency projects.

In consultation with NGOs, conduct a formal and transparent evaluation of the success or failure of the
World Bank's energy lending in reaching the 2 billion rural poor who are without access to energy for human
needs--for cooking, heating and lighting--as well as the success or failure in providing for the
transportation needs of the poorest. This assessment should then be used to provide a roadmap to better
meet the energy needs of the rural poor.



Where decision-making regarding methodologies for calculating greenhouse gas emissions is concerned,  any
member of the World Bank who is also part of the Intergovernmental Panel on Climate Change should be
disqualified from voicing his or her opinion to avoid conflict of interest. Finally, SEEN believes the World
Bank can no longer function in its dual roles of energy financier and emissions trader; it must avoid this and
other implicit conflict of interests in an issue as critical to all of us as climate change. Instead, it must
focus on providing energy to meet the basic human needs of the world's poorest, sustainably and equitably.



VI. Summary Tables


A. Recently Approved or Pending Fossil Fuel-Oriented World Bank ProjectsA. Recently Approved or Pending
Fossil FuelOriented World Bank Projects

The following tables reflect World Bank loans, credits, and guarantees that were approved between May
27, 1997, to September 15, 1998, or that are being considered by the Bank as of October 1998.  For a full
inventory of similar World Bank lending toward the fossil fuel sector from July 1992 to May 1997, please
see the version of this report released in June 1997. POWER PLANTS
(megawatts)			(millions)	(metric tons) Country (project)	Fuel	MW	Primary
TNC involvement	   $Bank	          Est. Emissions CO2 APPROVED (May 27, 1997 to September 15,
1998) (new) Thailand (3 locations)	coal/gas  4100(j)	Unocal, Total, Mitsui,
GE		$300	462,707,200 (j) China
(Tuoketuo)	coal	3600	TBD				$400	575,884,800 China
(Yancheng)	coal	2100	FosterWheeler,Siemens,AES	$250	335,932,800 China
(Waigaoqao)	coal	2000 	TBD 				$400	319,936,000 China (2 Hunan
plants)	coal	1300	National Power, others TBD	$300	207,795,840 Morocco (Jorf
Lasfar) 	coal	696    	CMS Energy, ABB		$184	111,337,720 Hungary (Quick
Start) 	diesel	200	Gen. Electric, GEC Alsthom	$60	34,812,200 Kenya (First
Energy)	diesel	150	Mitsubishi, others TBD		$125	26,109,150 Senegal (2
plants)	oil	 87	General Electric, Hydro Quebec	$100	11,755,270 Yemen
(Sana'a)	diesel	 30	Ansaldo Energia	               	$54      5,221,830            	  
	    (rehabilitation) Bosnia (4 plants)	coal	 1977	To be
determined		$25	316,256,730 Yemen (Sana'a)	diesel	   20	Ansaldo Energia       
      	           see above	   3,481,220



PENDING (new)									              (proposed board date) Zimbabwe
(Sengwa)	coal	1400	National Power, Rio Tinto	$60	2,504,040,000 (I)	n/a
Vietnam (Phu My 2/2)	gas	700	GEC-Alsthom, ABB, Marubeni	$25	19,871,000 (k)
FY99 Egypt (Sidi Krir)	gas	650	Bechtel, Shell			$100	51,664,600          
6/98 Cote d'Ivoire (Azito)	gas	450     ABB, GI, United Meridien, Apache    
$30-35	35,767,795       FY99 India (Solar Thermal)	solar/oil  35/105   Amoco, Enron		 
              $49	14,187,390            n/a Bangladesh		oil/gas	 114	Wartsila, New
England Power            n/a	10,646,745 (h)       n/a

(rehabilitation) Poland (Dolna Odra)	coal	1600	possibly Saarberg
		$110	255,948,800         n/a Poland (Rybnik)	coal	1600	possibly
Westinghouse	               $140	255,948,800         n/a Bulgaria
(Varna)	coal	1200	TBD				$100	191,961,600         9/98 Bulgaria
(Sofia)	oil/gas	  n/a	TBD				$100	not available      12/98

FOSSIL FUEL FIELDS, MINES & PIPELINES

Project		               Fuel	Output/Reserves	                 TNCs	           	$Bank	   
Est. Emissions

APPROVED Bolivia to Brazil		Gas	127 billion cu. meters            Enron, Shell...                 $310
	          (d) India 		               Coal	1.4 billion tons	                    TBD		  
$535	          (d) Russia			Coal	>100 billion tons	                    TBD	            
	   $800	          (e) PENDING Azerbaijan to Georgia    	 Oil	2.74 billion tons     
	Amoco,Exxon...                     $200             (d)              4/98 Chad
(Doba&Sedigi)		Oil	144 million tons	           Exxon,Shell,Elf     >$370     446,400,000    
mid-98 Nigeria to Ghana		Gas (a) 10.3 billion cu.meters       CMS, Chevron     $260 (a)
37,342,992         n/a Ukraine			Coal 		   TBD		   $100	                         
   (f)                   n/a


ENERGY SECTOR PRIVATIZATION/EXPANSION (general support) (g)

Country (Location)	Project			            $Bank (millions)

APPROVED Turkey		Transmission sector support	          $270 Ukraine		Heating
rehabilitation/privatization	          $200 India (Haryana) 	Electricity T&D privatization - stage I    
   $60 Russia	               Electricity sector privatization	           $40

PENDING						                   (proposed board date) Algeria  		Electricity
T&D privatization               $100		      7/99 Armenia 		Electricity T&D privatization
	    $51.7		      3/98 Bangladesh		Electricity T&D privatization	   
$200		      n/a Dominican Republic	Power Sector Reform		      $20		      n/a
India (national) 	Transmission upgrades        	     $400                      1/98 India (Andhara Pradesh)
 Power sector privatization                     $150                   11/98 India (Haryana)	Power sector
privatization - stage II     $150		      n/a India (Rajasthan)            Power sector restructuring     
	     $60		      n/a Mexico		Power sector restructuring		    $400		  
   n/a Moldova		Energy sector privatization	    $40     	      n/a Mongolia		Power
sector expansion		     $35		      n/a Pakistan		Power sector
privatization		    $300		      n/a Russia	               Heating privatization/rehabilitation
     $300		     7/98 Sri Lanka		Electricity T&D privatization	     $30		    
7/2000 Trinidad & Tobago	Natural gas sector reform		     $10		      n/a

NOTES

TBD = To be determined.  International procurement of major equipment and/or ownership are likely. n/a =
Data not available. T&D = Transmission and Distribution (electricity or heating). (Proposed board date) -
Note: The Bank's MOS and PIDs list tentative board dates for certain projects; however, in many cases,
board dates have passed without any decisions being made. (a) CO2 emissions from the Nigeria to Ghana
pipeline project assumes flow rate of 160 million cubic feet per day and consumption by Takoradi power
plant.  In our previous report (1997), we estimated Takoradi's emissions to be 23,832,000 metric tons,
which are deducted here from the pipeline project's estimated 61,188,192 metric tons of ultimate CO2
emissions at the predicted flow rate for 20 years. (b) - The Bank's pipeline project form key pieces of an
archipelago-circling pipeline complex which will tap into all of Indonesia's considerable gas fields.  The
national proved reserves are thus included in these calculations. (d) - This recently-financed or pending
project follows upon a previous World Bank loan or credit for related or same project.  Emissions were
tabulated in our previous report, and, to avoid duplication, are not repeated here. (e) - Given that the Bank
is facilitating the privatization of Russia's coal mines, it could be fair to attribute some share of Russia's
emissions from its reserves of over 100 billion metric tons of coal to the World Bank.  However, since the
Bank is not directly financing mining equipment acquisition or foreign direct investment in any particular
mines, as far as we can determine, we have chosen not to include the estimated 271 billion metric tons of
CO2 that will be released by the burning of Russia's reserves in these calculations. (f) - While the Bank is
proposing support for the management of "viable mines" in Ukraine, it has not specified which mines will be
involved, so future emissions can not be calculated at this time. (g) - Several Bank projects for general
support of energy and power sectors are omitted from this table.  The omitted projects do not have fossil
fuel power generation expansion or privatization within their scope, to our knowledge. (h) - Based upon five
years of burning oil and 15 years of burning gas. (i) - Rio Tinto, co-owner of the proposed Sengwa power
plant, plans to exhaust all of its reserves in the Sengwa coalfield (924 million tons) in this station.  Given
the stated plans of the plant's owners, we have opted to calculate CO-2 emissions from the company's
coalfield reserves, rather than limiting the projection  to 20 years of plant operation at initial planned
capacity. (j) - Based upon 1700 MW coal-fired power (Krabi 300MW, Ratchaburi 1400MW, which will
generate combined 20-year emissions of 271,945,600 tons) and 2400MW gas-fired power (Wang Noi
600MW and Ratchaburi 1800MW, leading to emissions of 190,761,600 tons).  Additional Bank-fueled
emissions are likely to flow from independent power producers, which will be linked to the national grid
with the assistance of Bank financing under this package, but exact connections are not clear from available
Bank documents. (k) - This pending loan to Vietnam follows upon a 1996 loan to the same power plant.  We
accounted for 450MW of gas-burning capacity in our 1997 report; the amount in this column accounts for
the 250MW balance.











B.Estimated Lifetime Emissions from World Bank-financed projects since the Earth Summit


CO2 emissions (million metric tons) (Funding cycle) Type of Project		FY1993 to
present		Pending	Total Power Plants Coal-fired			         
	3,883			 3,208  	            	  7,097 Gas-fired			                  427      
   	                   114	                    541 Oil-fired     	 		                  328			
     18		     446 Diesel-fired	                                                193	                                     
0	                    193 Total power plants 		              4,831			 3,340	           
	   8,171

Extraction/Distribution Oil			                           19,944			   446	              
20,390 Gas				              6,819  			     37		  6,856 Coal	           
                                5,941  			       0		  5,941 Total extraction/distribution              
32,704			   483		33,187

TOTAL ALL PROJECTS 	            37,535			3,823	     	41,358

Note: The above table estimates total emissions from World Bank financing for fossil fuel extraction,
distribution, and power plants from July 1992 to September 1998. In order to avoid double counting
emissions from power projects that probably are fueled by Bank-financed fields, mines or pipelines, the
following power plants are not included in the grand total tables: India coal-fired power plants (Balagargh,
Ib Valley, Tamil Nadu and Rain Calcining), Uch gas power plant in Pakistan, and Songo Songo gas power plant
in Tanzania. The estimated 306,545,000 metric tons of CO2 emissions (of which 71,083,000 is gas-based
and 235,462,000 is coal-based) to be produced by these plants over the next 20 years are a subset of the
Coal India, Sui gas field, and Songo Songo gas field estimated emissions. Potential double-countings between
field production and pipeline projects are avoided in previous tables in this and the initial report.

C. World Bank Financing of Fossil Fuel Extraction, Distribution and Power Projects since the Earth Summit

World Bank Financing 	      			($US million) Type of Project		FY1993 to
present		Pending    	Total Power Plants Coal-fired		        
	$3,976			$410		$4,376 Gas-fired	                    
	$1,597			$205		$1,802 Oil-fired		     
	$546			$99		$645 Diesel-fired		     
	$618			$0		$618 Other (a)		     
	$1,457			$2,247		$2,704 Total power plant
finance		$8,194			$2,961		$11,145

Extraction/Distribution Coal			      	$1,995			$100		$2,095 Oil and
gas		      	$3,391			$830		$4,221 Total extraction/distribution
finance	$5,386			$930		$6,316

TOTAL ALL PROJECTS	      	$13,580			$3,891		$17,471

(a)	This category includes financing for energy privatization and  capacity expansion schemes which
are dominated by fossil fuel-burning power plants not included in the carbon dioxide emission calculations.

VII. Case Studies (Recent and pending World Bank fossil fuel loans)

Case Study A: China Coal-Fired Power

(Megawatts) Recently-approved           Fuel 	MW	      TNC involvement              	$Bank
(millions) China (Tuoketuo)	coal    	3600 	     To be determined                  		$400
China (Yancheng)            coal       2100           FosterWheeler, Siemens, AES             	$250 China
(Waigaoqao)          coal 	2000           To be determined                                       $400 China (Hunan)  
	coal	1300	      National Power, others TBD                    $300

(for more project details, see the Inventory section, p. 46,  of this report)

In Context China needs to add 15 gigawatts of power plant capacity each year  -- enough to power two
cities the size of  Los Angeles  -- for the next two decades to sustain targeted 8% annual economic growth
rates.              	--World Bank

The bulk of the Bank's recently-approved new greenhouse gas emissions emanate from China.  From June
1997 to June 1998, the Bank approved over $1.3 billion in loans to four massive coal-fired power projects
in China, a country that already burns more coal than any other country. The four newly-funded projects --
Hunan, Tuoketuo, Waigaoqao, and Yancheng -- will have a combined capacity of 9,000  megawatts, almost
triple the combined power of all power plants financed by the Bank in the previous five years.   These
plants, we estimate, will emit 1.4 billion tons of CO2 in their first 20 years of operation. Since the Earth
Summit in 1992, the World Bank has approved over $2.57 billion in financing toward coal and diesel-fired
power plants with a capacity of over 13,390 megawatts in China.  Combined, these approved projects will
release an estimated 2.1 billion tons of CO2 in their initial 20 years of operation. Why Coal? Coal is China's
most abundant fossil fuel, and China is rapidly industrializing. According to the World Bank, China needs to
add 15 gigawatts of power plant capacity each year  -- enough to power two cities the size of Los Angeles 
-- for the next two decades to sustain targeted 8% annual economic growth rates.  The Bank's message to
China: grow, grow, even if it means pouring unprecedented amounts of coal into the economy's engines.
While the explosive growth of coal-fired power in China has clear climate change implications, it also will
exact on-the-ground consequences.  As the country's own Xinhua News Agency reported in March 1998,
"China is the biggest coal consumer in the world, using more than 1 billion tons [per] year. Estimates are
that it produces over 20 million tons of sulfur dioxide each year, and 30 percent of the country's land has
suffered from acid rain." Several Chinese cities are among the most polluted in the world, with coal-fired
power emissions the prime culprit.  The Inter Press Service writes in a recent article: "Bank staffers
themselves have complained that the agency overstates the benefits of fossil fuel projects by turning a
blind eye to the environmental and social damage involved.   Specifically, the Bank's estimates of project
costs do not factor in the costs of environmental clean-ups and treatment for the respiratory infections and
other ailments that increase where fossil fuels are burned, papers circulated among staff reveal."
However, Robert Watson, the new head of the Bank's environment department [and the Chair of the
Intergovernmental Panel on Climate Change], argues that the Bank is a relatively small player in the power
sector and is helping to promote advances that result in greater energy efficiency. "Should the Bank be
involved in this sector? Absolutely, so long as it can demonstrate that it is improving (the sector's)
performance," he says. (Inter Press Service, Nov. 4, 1997)

TNCs and the Power PlantsTNCs and the Power Plants The Bank's four coal-fired power plant loans are
hardly "relatively small," as Dr. Watson has contended. Tuoketuo, approved last May, likely will be Asia's
largest coal-fired power complex when it operates at its ultimate 3,600 megawatts of capacity.  Tuoketuo
will then likely be surpassed in capacity by Waigaoqao, another Bank-aided project, which has an ultimate
planned capacity of 5,200 megawatts of coal-fired power. These projects are large enough to attract the
keen interest of foreign corporations, and the Bank is smoothing their paths to own or equip the
mega-power plants: * The Tuoketuo mine-mouth power plant in Inner Mongolia will start supplying Beijing
with electricity in 2001.  No transnational corporations are yet involved, but China is accepting
international bids for power plant and related transmission equipment.  In addition, the regional government
of Inner Mongolia has announced that it is seeking foreign owners for the plant. * In July 1997, the Chinese
government agreed to purchase boilers and turbines from transnationals Foster & Wheeler (U.S.) and
Siemens (Germany). The $700 million deal was the country's biggest-ever power plant equipment purchase
from foreign corporations.  The two companies will supply equipment for the 2,100 megawatt (6x350MW)
Yancheng coal-fired power plant in Shanxi Province.  AES Corp. of the U.S. is a 25% investor in the power
project.  In March 1998, the Bank backed these deals to the tune of $250 million toward the development of
a transmission system between the mine-mouth power plant and the power-hungry province of Jiangsu. * 
National Power of the UK has been selected to build the 700 megawatt Changsha power plant, one of two
Hunan Province plants to which the World Bank's board loaned $300 million at its June 1998 meeting. This
loan targets transmission lines from the Changsha and the Leiyang power plants.  It includes funding for two
new 300 megawatt generators at Leiyang, and the privatization of the Changsha plant.   Changsha will be
the second power plant ever built and operated by a foreign corporation in China. * Transnational corporate
involvement in the other major project, Waigaoqaio, is still being negotiated.   The Chinese government has
opened international bidding for turbine generators and boilers.  Discussions between China and prospective
foreign owners reportedly fell apart last November. Construction was scheduled to start in May 1998. The
Bank's China energy agenda is as much about giving TNCs access to the lifeblood of a booming country as it
is about simply helping that country grow.   These four projects are at the vanguard of a power
privatization wave that the Bank is trying to generate in China.  They do not always succeed, as in the case
of Waigaoqao. "The Waigaoqao deal fell through despite being backed, to the tune of US$400 million,  by the
World Bank," reported EIU ViewWire in March 1998.  But the Bank remains undaunted by the Chinese
bureaucracy that stymied the Waigaoqiao deal, as evidenced by June loan toward private power plant
developments in Hunan province. Sources:  The Xinhua News Agency, March 27, 1998; The Atlanta Journal,
February 25, 1997; UPI, August 20, 1996; Asia Pulse, April 29, May 2 and May 12, 1997; World Bank
PID, Project ID CNPA3650, November 1996; China Business Information Network, June 13, 1997, July 4,
1997; EIU Viewswire, March 4, 1998; World Bank MOS, February 4, 1998; The Atlanta Journal, February
25, 1997, The Xinhua News Agency, March 27, 1998; China Daily, March 30, 1998; British Broadcasting
Corporation, December 31, 1997; Washington Times, June 19, 1997; Beijing Review, Nov. 3, 1997.



Case Study B: India Solar Thermal Power Power Plant The World Bank's prototype renewable energy
project, the proposed Solar Thermal Power Plant in Rajasthan, India, would be its most expensive solar
energy project to date (see Inventory section, p. 28,  for further details).  But this plant, owned by fossil
fuel giants Amoco and Enron, would be primarily a fossil fuel burner, with 100 to 105 megawatts of
capacity for oil, coal, or gas-fired power, compared to just 35 to 40 megawatts of capacity for
solar-generated energy. The Bank argues that the venture -- owned by Amoco and Enron -- would not be
economic without the fossil fuel component. The Bank sees this project as "the first step of a long term
program for promoting solar thermal power in India and around the world that would lead to a phased
deployment of similar systems in the country and in other developing nations."    It will  "help expand the
use of solar-thermal technology worldwide over the long-term." The Bank's use of the term "solar
thermal" is rather deceptive.  This type of project is really a fossil fuel power plant shaded by a green
veneer of solar energy, but media reports to date have been blinded by the sun, and environmentalists have
generally embraced the plan. The type of fossil fuel to be burned in the Bank's prototypical alternative
energy plant remains to be determined by Amoco and Enron.  Liquefied natural gas (LNG) from Qatar is one
possibility.   Enron plans to ship 5 million tons of LNG per year from the Middle East, with pipelines running
to Gujarat, Delhi, Punjab, and Rajasthan.   Oil is another possible fuel. Shell is currently drilling for oil in
western Rajasthan, and Enron is a partner in a separate oil exploration venture in the state.  And coal, so
abundant in India, can not be ruled out. Rajasthan's Solar Revolution The Rajasthan state government has
declared 35,000 square kilometers (roughly the size of South Carolina) as a  "solar energy enterprise
zone." This area of the Thar desert receives as much solar radiation as any place on earth, and the
government is opening it up to investors, tax-free.

Rajasthan is now on the verge of a solar energy boom.  Sun Source Ltd. is planning to build a 50 megawatt
photovoltaic solar power plant.  Energen is committed to building a 200 megawatt solar chimney by the
year 2000.  This technology uses the sun to drive wind turbines. But while the solar revolution nears, its
economic viability is threatened by fossil fuel exploration already underway in Rajasthan.  Recent surveys
by Shell and other companies have found "the substantial presence of hydrocarbons in the region," reported
The Hindu in December 1997.  As so, even in the world's most sun-drenched desert, a push toward clean
energy could be forestalled by the discovery of black gold, and the World Bank's backing of a  power plant
mostly driven  by fossil fuels. The World Bank View Instead of the solar-only projects in Rajasthan, the
Bank is planning to finance the smaller-scale fossil fuel/solar hybrid plant.  Its reasoning: Amoco/Enron's
"solar parabolic trough" technology "lends itself to hybridization with conventional fossil-based
technologies." Incredibly, the Bank claims that its chosen project in the Thar desert represents a net
decline in carbon emissions.   "The Project is expected to result in avoided emissions of 3.1 million tonnes
of carbon over the operating life of the solar thermal plant relative to generation from a similar-sized
coal-fired power station," states the Bank in its PID, which does not calculate the emissions that would be
released from the burning of fossil fuels in the power station. This type of double-speak only stretches the
Bank's credibility and obfuscates its role in promoting "greenwash" by companies like Amoco and Enron. 
These companies have gained control over most of the world's most promising solar technology but continue
to pour more than 99% of their investments into fossil fuel-oriented projects. Sources: The Guardian
(London), November 27, 1997; World Bank MOS, February 4, 1998;  Greenwire, September 15, 1997;
Presswire, April 3, 1998; The Economist, September 6, 1997; GEF PID INGE43021; World Bank Press
Release, April 2, 1998; Middle East Digest, January 16, 1998; The Hindu, March 30, 1997, Dec. 2, 1997;
Global Private Power, Nov. 1, 1997

Case Study C: Nigeria to Ghana Gas Pipeline The Supplier Several years ago, the World Bank conducted a
feasibility study for a gas pipeline from Nigeria to Ghana.  In 1996, the Bank declared that "the project was
later taken up by the private sector without World Bank involvement." But the Nigeria to Ghana gas pipeline
project was back on the Bank's books, as of February 1998, with a potential $260 million financing scheme
in the works. Planners hope to run a natural gas pipeline between the Chevron-run Escravos field in Nigeria
and the World Bank-financed, CMS Energy-run power plant in Takarodi, Ghana.  Shell, which also holds
considerable gas reserves in Nigeria, and nearby Cote d'Ivoire, are battling Chevron for control over the
pipeline.  Some of the gas may also be used by Benin and Togo, countries through which the pipeline will
transit. The Bank's presence in Nigeria has run hot and cold in recent years. On November 10, 1995,  it
decided against taking a $300 million stake in a  liquified natural gas for export to Europe project, in which
Shell has a lead technical role. The announcement came within hours of the Nigerian government's execution
of Ogoni leader Ken Saro-Wiwa and eight others who were demanding compensation for Shell's
environmental and social destruction in their Ogoniland villages. The World Bank said its concerns revolved
around economics, not human rights. "We have consistently made it clear that we could only proceed if
there was sufficient progress in certain critical areas of macroeconomic reform," said IFC executive vice
president Jannik Lindbaek.  "While there has been progress on the fiscal and monetary side, key policy
decisions have yet to be implemented." World Bank President James Wolfensohn told a conference of oil
executives that the decision to withdraw from the LNG project in Nigeria was based on economics not human
rights. "It was a financial judgment, but it was based on an assessment of the political environment.  It was
a government that I didn't feel we could easily deal with." The Bank has been exhorting the petroleum-rich
Nigerian government to improve its economic environment -- if not its human rights dealings -- ever since. 
Foreign investment is their requirement. In a 1996 report on Nigeria, the Bank said, "leasing run-down [oil]
facilities requires prior rehabilitation investments whereas divestment can bring in the necessary capital
financing in exchange for  a lower sale price." The Nigerian government has responded with moves to allow
foreign corporate control over its oil and gas sector.   In October 1996, Nigerian Finance Minister Anthony
Ani told a symposium organized by the World Bank's MIGA that "privatization will open our economy up for
the foreign investment we very much need."  He announced that Nigeria would sell its 49% shares in  joint
ventures and privatize its refineries. In October 1997, now-deceased Nigerian strongman Gen. Sani Abacha
told a national television audience, "We introduced a policy of guarded deregulation of the economy, and
government is moving towards disengaging from economic activities that can be effectively undertaken by
the private sector... "The thrust of government policy in the oil industry has been the diversification of our
revenue base from crude oil exports by the implementation of several  gas-based projects. In the past four
years, significant progress has been made in the execution of the liquefied natural gas project, the
Escravos gas project, the West Africa gas pipeline project and the petrochemical projects. "The restoration
of order and security to the country together with government's commitment to ensuring future political
stability through its political transition programme has created a climate of confidence with the
international investment community in the oil sector," he asserted. Abacha noted, however, that the order
and security was being sabotaged, and warned of decisive action against "unpatriotic Nigerians":
"Government has also noted with concern the incessant sabotage of oil production facilities--pipelines  and
flowlines carrying crude oil to export terminals. Apart from the inherent risk to life and property, these
activities of some unpatriotic Nigerians can lead to great economic consequences. Government is therefore
developing fresh strategies to cope with these acts of  sabotage and decisive action will be taken against
those responsible."The Consumer The World Bank's reengagement with Nigeria apperently flowed from
satisfaction with Gen. Abacha's economic reforms.  A Bank-funded gas-fired power plant in Ghana, which
opened just last year, is a new and ready customer, and as such, provides the Bank with a relatively simple
project in which it can back these reforms with cash.  Its 1995 proposed engagement in the Nigerian LNG
export scheme faced considerably higher risks of public uproar, given Western Europe's outrage against
Gen. Abacha's executions of the Ogoniland activists.  Western Europe was not a captive market.  The
Bank-backed Takoradi power plant, now owned by CMS Energy of the U.S., is captive and receptive. In
February 1995, the World Bank sparked a wave of foreign investment in the Ghanaian village of Aboadze,
near the port of Takoradi, when it approved a $175.6 million IDA credit toward the construction of a 300
megawatt gas power plant.  The money purchased three 100 MW turbine generators built by General
Electric in the U.S. The next year, the U.S. energy firm CMS Energy became a 50% owner of the Takoradi
plant through a joint venture with the Volta River Authority, and announced plans to double its capacity to
600 megawatts. In early 1997, according to the Oil & Gas Journal, "Chevron signed a letter of intent to
supply Nigerian natural gas to Ghana via Benin and Togo."   The destination: the Takoradi power plant. While
Chevron has signed a letter of intent to export gas from its Escravos field in Nigeria to Takoradi in Ghana,
other companies and countries are jousting to acquire the contract. In September 1997, Inter Press Service
reported that Shell "has submitted a bid for a 51 percent stake in the newly incorporated West African Gas
Pipeline Company (Wapco)...  The submission is an attempt to upstage rival, Chevron Nigeria....  In addition,
Shell is expecting a positive response from Ghana's  power utility, Volta River Authority (VRA), in its bid
to again beat  Chevron in acquiring the rights to supply gas from the scheme to [the]... thermal plant in
Takoradi." One month later, the Oil and Gas Journal reported that the government of Cote d'Ivoire was
vying to supply Takoradi with gas from its offshore gas fields, which were operated by United Meridian
Corp.  Ironically, in 1995, the Bank's IFC approved $97 million in financing toward the production of oil and
gas in Cote d'Ivoire.In late 1997, Takoradi opened, pouring power primarily into Ghana's aluminum
export-oriented industry. On March 13, 1998, disaster struck.  An explosion occured in one of the two 100
MW General Electric generators at Takoradi.  "Engineers are still assessing the damage. We can't say yet
how long the turbine will be closed down," Ellen Essilfie of the VRA  said.  The VRA ordered the region's
mining companies to cut back their production to 2 days a week. No one was injured, but the malfunction
exacerbated Ghana's drought-induced power shortage, and occured just 10 days before President Bill
Clinton visited the country.  The incident hardly highlighted the quality of U.S. exports. Sources: IPS/ITIS,
Changing the Earth's Climate for Business, May 1997 ; Oil & Gas Journal, March 17, 1997, Sept. 1, 1997;
Power Generation Technology & Markets March 6, 1998; Inter Press Service, Aug. 8, 1997;  Xinhua News
Agency, March 5, 1997, March 25, 1998; AAP Newsfeed, March 20, 1998, Africa Energy & Mining,
March 25, 1998; Inter Press Service, April 9, 1998;  Reuters, Nov. 17, 1995, Apr. 10 and Oct. 8, 1996,
Feb. 13 and 18, 1997; Financial Times, March 13, 1997; Agence France Press, Nov. 10, 1995, March 6,
1997; Reuters European Business Report, Oct. 21, 1996; Calgary Herald, June 22, 1996; World Bank MOS,
February 1998; World Bank, "International Gas Trade Roundtable," 1996; NTA TV transcript, October 1,
1997.


Case Study D: Thailand Power Plants The Crisis Thailand, like many other so-called  "emerging markets" in
Asia, has been hit hard by the Asian currency crisis and deep recession.  The government's Electricity
Generating Authority of Thailand (EGAT) -- reacting to a decline in domestic demand for power combined
with the disappearance of funds -- announced in September  that it was postponing some new power plant
projects, and that it would reduce  power production by 10%. While electricity demand is in decline, EGAT
is contractually bound to consume natural gas from Burma (Myanmar).  A controversial pipeline from the
Yadana gas field off the Burmese coast to Thailand's massive new Ratchaburi power station was completed
in July 1998.  The pipeline stretches across mangrove swamps, river valleys and rainforests en route to
Ratchaburi.  Environmental and human rights activists in Thailand and abroad campaigned strongly against
this pipeline project, which is 41% owned by the Burmese military dictatorship, 31% by Total of France,
and 28% by Unocal of the U.S. "Local villagers say that the Burmese army has rounded up tens of thousands
of villagers to build this pipeline," charged the Center for International Environmental Law, which cited a
1996 U.S. Embassy report that said "The military continued to force ordinary Burmese on a massive scale
(including women and children) to contribute their labor, often under harsh working conditions, on
construction projects around the country." With the deep recession striking Thailand, mere economic
considerations also could have scuttled the Burmese pipeline project.   Financing difficulties and production
problems delayed the import of equipment from General Electric to the Ratchabui station, and the plant is
months away from completion.   It is now burning a small amount of Burmese gas in a 25 megawatt turbine
that EGAT moved from a Shell power plant in Kamphaeng Phet. Thailand now says the Ratchaburi plant will
be built and ready to accept the full quota of Yadana gas by April 1999, nine months after the original
target date of July 1998. "Burma is very unhappy with us because it had high expectations of steady,
sizable revenue from the sales and planned to use the money to turn its economy around," said an official
with the Petroleum Authority of Thailand (PTT), which is brokering the sale of the Burmese gas to the
power stations. "Had the PTT listened to the environmentalists, we would not have wasted a large amount
of money and would have saved fertile forest," charged Pibhob Dhongcahi of the Kanchanaburi Conservation
Group. "I'm sure it will be worked out because we invested $1 billion together to have this gas," said John
Imle, president of Unocal. The Role of the World Bank The World Bank jumped into this mess in June 1998,
when it began deliberating an emergency $300 million partial risk guarantee to back EGAT's planned
investments to expand power production through the year 2000, regardless of Thaliand's decline in power
demand. It explained, "The main objective of the Project is to help EGAT meet its heavy but essential
investment commitments during the country's financial crisis.  In doing so, the project would help it not
lose ground in accomplishing its privatization strategy which is considered to be sound.  The Project would
not only help EGAT keep on track the implementation of its own generation plants (which it has already
begun) but would, through the development of vital transmission infrastructure (which it has also already
begun), facilitate the implentation of a large IPP [Independent Power Producers] program for which EGAT
has recently finalized power purchase agreements."   As of June 1998, EGAT had 2,598MW of power
generating capacity contracts with TNC-controlled IPPs. The Bank's package included $174 million in
guarantees for financing the construction of  three power stations with a combined capacity of 4100
megawatts (1700MW of coal-fired power; 2400MW of Burmese gas-fired power), along with investments
in transmission facilities linking several new TNC-built power plants to the national grid.   World Bank
targeted its guarantees toward power plant construction to the tune of: * $74 million for 1400MW of
coal-fired power at Ratchaburi, * $62 million for 1800MW of Burmese gas-fired power at Ratchaburi, *
$20 million for 600MW of gas-fired power at Wang Noi, which is to be connected to the Burma gas field
through a new pipeline from Ratchaburi, and * $19 million for 300MW of coal-fired power at Krabi.
Reaction against Bank project In Sepember 1998, the Center for International Environmental Law and Earth
Rights International activists in Thailand urged the World Bank's board of directors not to fund the
Ratchaburi plant "because of the human rights and environmental implications of supporting the project....
The Yadana pipeline has been associated with documented human rights abuses, including forced labor, rape,
torture, extrajudicial killing and the forced reolocation of indigenous villages.  In fact, a lawsuit has been
filed in U.S. federal district court against the multinational corporations that are colluding with SLORC
[Burma's ruling junta] in the construction of the pipeline, for their complicity in the violations of
international human rights standards." The activists continued, "in addition to the human rights abuses, the
pipeline has also had serious adverse impacts on biodiversity and wildlife.  The Yadana pipeline cuts through
the Tenasserim rainforest, which prior to construction of the pipeline was the largest intacts rainforest in
Southeast Asia.  The pipeline route impacts the territory of numerous endangered species, including tigers,
elephants and the kitti hog-nosed bat, both in Burma and in Thailand.  The pipeline crosses the border into
Thailand in a national part, and then also cuts through a protected forest area that has been nominated for
national park status.... [T]he bank maintains that it is financing only the power plant, and not its fuel supply.
 This selective use of analytical blinders is disturbing.... [U]ntil the power plant is finalized, Thailand is
unable to accept Burma's gas." After the Bank's board approved the financial package on September 15, U.S.
executive director Jan Piercy thanked the two groups for "bringing the issue to our attention.  My office
had been unaware of the controversy over Ratchaburi and its link to the Yadana pipeline.  Your proactive
work to inform Bank staff and other NGOs about the issue may well have averted the inheritance of a major
environmental and political problem." Ms. Piercy's response left CIEL with the impression that the
guarantee was approved "under the condition that the power plant was excluded from the guarantee." But
recent press reports from Thailand indicate that construction of  the Ratchaburi power plant will continue
thanks to the Bank's package.  EGAT plans to leverage the Bank's guarantee into a $300 million, 10-year
bond issue, which it will use to continue its power generation and tranmission investments.  "The money
raised through the bond sale will be used to finance the construction of six power projects, including
Thailand's largest Ratchaburi Power Plant," reported Business Day of Thailand on October 15, 1998. On
October 8, 1998, the Bangkok Post reported that "Boonchoo Direksathaporn,  Egat's  deputy governor for
finance, said the authority was capable of completing the Ratchaburi plant with $300 million currently being
raised from an offshore bond issue." The Bank's guarantee was essential in EGAT's ability to find foreign
buyers of the $300 million issue, said Boonchoo Direkstaporn of EGAT.   ''Without the guarantee of the 
World Bank, Egat  would  not get an interest rate at 7.1 per cent amidst the economic crisis,'' Boonchoo told
the Nation (Oct. 8, 1998), which reported that the bond "is expected to finance six of EGAT's projects,
including the Ratchaburi power plant construction and transmission projects." Even if the Ratchaburi power
plant has been delinked from the Bank guarantee, contrary to domestic press reports, other components of
the guarantee are as linked to the Burmese gas as Ratchaburi.  The project-aided Wang Noi gas-fired power
plant is planning to consume the Yadana field's gas through a pipeline from Ratchaburi.   Piti Yimprasert,
president of PTT Gas, reported Oil & Gas Journal (June 22, 1998), "said there is an urgency to complete
the Ratchaburi-Wang Noi pipeline because it would provide an additional outlet for the Myanmar gas that
PTT has contracted to purchase." Further, the guarantee targets transmission facilities from IPPs, some of
which are planning to burn Burmese gas (see Bangkok Post, Aug. 1, 1998). The drive toward privatization
The Bank's quick approval of an emergency financial package to support Thailand's energy sector reveals
the extent to which it tries to push privatization of power in developing countries, regardless of the
environmental, social, and economic risks.  As the Bank itself states, the guarantee "would help [EGAT] not
lose ground in accomplishing its privatization strategy which is considered to be sound." The government's
privatization plans include selling off its thermal power plants and introducing independent power producers
to the national energy mix.     It is also boosting consumer rates by 12% "to placate the World Bank,"
reported the Nation (Sept. 19, 1998).    "It is a necessity for EGAT to adjust its financial position to meet
World Bank's requirements," said NEPO secretary-general Dr. Piyasisti Amranand, who said this month
that the country's privatization plans, despite the recession, "keep moving on.   We are committed to
urgently concluding the Ratchaburi deal at a speedy pace." Ratchaburi, slated to be the largest power plant
in Thailand, is at the vanguard of the country's plans to sell-off its power plants.   EGAT hopes to sell it for
$1 billion.  China Light and Power has formed a joint venture with the public Electricity Generating Company
of Thailand to bid for the plant.  Other potential bidders include Edision Mission Energy (U.S.), El Paso Int'l
(U.S.), Singapore Power Int'l, and YTL of Malaysia. As of June 1998, EGAT had contracts to purchase
2,598MW of power generating capacity with IPPs. This year, villagers in Prachuap Khiri Khan province
protested the contruction of an IPP plant by Edison Mission.  Edision Mission also is in a joint venture with
Texaco to build a separate 700MW gas-fired Tri Energy project in Ratchaburi Province, with backing by the
Overseas Private Investment Corp. (U.S.) and Japan's Ministry of International Trade and Industry.  It will
purchase gas from the PTT. Other IPPs under consideration include four large plants to be built in the
eastern province of Prachuap Khiri Khan, including a 700MW gas-fired power plant headed by Unocal and
Westinghouse; Union Energy's 1,400MW coal-fired power plant; and a 734MW coal-fired power plant to be
built by Gulf Power.   EGAT itself is planning to build a 2000MW coal-fired power plant in the province.
"Why do EGAT officials feel the need to produce so much power when the demand is falling?  And at what
cost to the environment?  For EGAT, the [Ratchaburi] power plant must continue.  But who will foot the bill
when there is no one to buy the electricity?,"   asked Supara Janchitfah in the Bangkok Post (Sept. 20,
1998). Additional Sources:   Center for International Environmental Law; Letter from Jan Piercy, U.S.
Executive Director of World Bank, to Dana Clarke, CIEL, Sept. 23, 1998; Nation, Oct. 3, 1996, Sept. 13,
Sept. 23, 1998; Asia Pulse, Sept. 21, 1998; The Economist, Sept. 26, 1998; Bangkok Post, July 11, Aug.
1, Sept. 16, Oct. 23, 1998; Business Day (Thailand), Oct. 8, Oct. 13, Oct. 19, 1998; Global Power Report,
Sept. 18, 1998; Platt's Oilgram News, Sept. 18, 1998; Power Generation Technology & Markets, Sept. 18,
1998; Oil & Gas Journal, Dec. 29, 1997, June 22, Oct. 19, 1998; Power Economics, June 30, Sept. 30,
1998; Oil & Gas Investor, Sept. 1998; Privatisation Int'l, Oct. 1, 1997; AsiaMoney, Nov. 1997; AP
Worldstream, Sept. 9, 1994; Independent Energy, April 1998.



VIII. INVENTORY OF RECENT AND PENDING WORLD BANK FOSSIL FUEL PROJECTSVIII. INVENTORY OF RECENT
AND PENDING WORLD BANK FOSSIL FUEL PROJECTS May 27, 1997 to September 30, 1998 (Sector
overviews, and project summaries and discussions) A. OIL AND GAS PRODUCTION The world's
most-recently discovered and lucrative oil and gas fields seem to be concentrated in many of the world's
most conflict-riddled regions.  Chad, Nigeria, the Amazon, and the Caspian Sea are places visited by
political havoc and ecological destruction.  As new drilling grounds, they represent flashpoints that will
determine the course of the oil and gas industry: Transnational corporations are eager to develop these
regions, but fear political risks, and seek -- even demand, in the case of Chad -- multilateral bank
partnerships.   The fates of these developments, often, rest with the World Bank's directors. When the
Bank's directors decide in favor of exploration and development of these hydrocarbon frontier regions, they
are helping to generate wealth for project owners, like Shell, Enron and the government of Chad  -- entities
whose human rights track records are not exactly spotless.  And, by aiding exploration of untapped
reserves, they are guaranteeing pollution in previously-unspoiled ecosystems, and gigantic new carbon
emissions. Since the Earth Summit, the World Bank has committed $3.4 billion toward oil and gas
exploration and distribution projects that we estimate will, over their lifetimes, help generate 26.8 billion
tons of CO2 emissions. Despite rising concern over this gas' contribution to climate change and the
significant impact climate change will have on the poorest in developing countries, the Bank remains
undaunted. A 3,100 kilometer pipeline to pour natural gas from Bolivia -- through the Amazon  -- into the
cities of Brazil was the only oil or gas development newly-funded by the Bank from June 1997 to
September 1998, to the tune of $310 million.  But plenty of projects are on the Bank's hotplate.  Pending oil
and gas commitments of $840 million could add a half-billion tons of future CO2 emissions to the Bank's
portfolio, and support billions of tons of emissions from projects already financed by the Bank. Africa is a
burgeoning focus, with the Bank poised to devote over $830 million toward grabbing gas from Nigeria's
vast hydrocarbon fields, inaugurating oil drilling in Chad, and developing a gas field in Tanzania.   Millions of
tons of black gold beneath the Caspian Sea will soon flow to Georgia and beyond via a new pipeline, if the
Bank's board affirms its tentative $200 million package. The World Bank's oil and gas portfoliio seems to
have taken a reprieve from Russia, after much of its earlier lending went unspent due in part to opposition
to Bank-mandated equipment imports  Since 1992, the Bank had earmarked $1 billion in financial aid to
Russia's oil and gas industry, nearly one-third of the Bank's oil and gas extraction and distribution funding
since the Earth Summit.

AZERBAIJAN to GEORGIAAZERBAIJAN to GEORGIA

TYPE OF INDUSTRY: (pending) Oil field development and pipeline SUBSIDIZED PROJECT: Azerbaijan-Early Oil
Development LOCATION:   Azerbaijan sector of Caspian Sea to Georgia (with ultimate continuation to
Turkey) OWNER: (project operator) Azerbaijan International Operating Co. (a consortium of Amoco, Exxon,
Lukoil, Turkish Petroleum Co., Unoco, BP, Statoil (Norway), the State Oil Company of Azerbaijan, Ramco
Hazar Energy (UK), and Delta Nimir Khazar Ltd. G-7 TNC INVOLVEMENT:  Amoco, Exxon, Unocal (all three
based in the U.S.), Lukoil (Russia), and the Turkish Petroleum Company are seeking financing for this
project.  Dozens of other TNCs are potential suppliers of oil from other Caspian Sea fields. WORLD BANK
AGENCY: IFC AMOUNT OF FINANCING: $200 million of at least $1.3 billion PROJECTED BOARD DATE: April
30, 1998 (reportedly delayed to mid-May 1998 or later) RESERVES/PRODUCTION: The pipeline would tap
into all Azeri oil fields, which hold an estimated 20 billion barrels of proved reserves. WORLD BANK
DESCRIPTION:    "The Project involves the: (i) refurbishment of an existing oil platform (Chirag-1), located
about 75 kilometers off the coast of Azerbaijan in the Caspian Sea, construction of new subsea pipelines,
and drilling of development/water injection wells, (ii) construction of an oil receiving terminal at Sangachal
on the Caspian Sea coast of Azerbaijan, (iii) construction of an oil export terminal at Supsa on the Black Sea
coast of Georgia, and (iv) completion of two oil export  pipelines (through rehabilitation of existing pipelines
and new construction): one North from Sangachal to the Russia/Azerbaijan border, and one West, from
Sangachal across Azerbaijan and Georgia, terminating at Supsa. The Early Oil Project involves the
development of part of the Chirag field, and is the first step in the full development of the group of three
fields known as Azeri, Chirag and deep-water Gunashli.  Production from the Early Oil Project is expected
to reach 105,000 barrels per day(bpd) by the year 2000.  Azerbaijan will also receive significant
quantities of associated natural gas from the Project, which will reduce the gas deficit in the
country...Georgia will receive the benefits of substantial investment in export pipeline and terminal
infrastructure, and will also obtain transit fee income from oil transported across its territory.  Russia has
signed a contract to export oil from Azerbaijan and will also receive tariff income from transport of oil
from the Project.  IFC's role in this Project is to:  (i) provide long term financing, which is not currently
available in Azerbaijan or Georgia, (ii) mobilize financing from international commercial banks, and (iii)
mitigate cross-border and other perceived political risks."  (IFC PID, Project No. 007271)
ENVIRONMENTAL/SOCIAL ASPECT:  Category A.   "Environmental areas of concern with respect to the
project include: existing hydrocarbon contamination to soil, surface water and ground water along existing
pipelines and at sites for new facilities; knowledge of terrestrial resources as well as cultural properties
and significant natural habitats; oil spills; the management of produced water and gas and worker health and
safety." (IFC PID, Project No. 007271)  Douglas Norlen of the Pacific Environment and Resources Center
has reviewed  the IFC's environmental assessment in depth, and writes: The Bank focuses primarily on the
Appraisal Drilling and Early Oil phases, which is a small subset of the much larger eventual project, much
less of additional projects in the area. Hence, the public and IFC board members are not provided with a true
evaluation of the overall impacts of drilling discharges and produced waters, of pipeline safety, of risks of
tanker accidents associated and other key aspects of the overall project.   Also, the EIAs indicate that the
oil spill risk assessment work is incomplete, and they state that the possible effects of oil spills on the
abundant sea bird population in Azerbaijan coastal waters will be studied further in something called the
"EIA for the Early Oil Scheme."   Regarding the potential impacts of drilling discharges, produced waters
and spills, the EIA rationalizes that 'it has often been stated and is a sound maxim that unless pollution
effects occur or are likely to ocur at the population level, it is arguable whether pollution effects can truly
be said to have occurred.' While this is true in the strict sense of population dynamics, it is absurd for the
authors to suggest that there is no environmental impact unless an overall species population is negatively
effected. To do so is to suggest, for example, that the Exxon Valdez did not have much environmental
impact to the pristine coastal environment in Alaska since no species were actually driven into extinction.
If extended to people, the authors' reasoning would seem to suggest that effects of industrial pollution have
not occurred unless it threatens the entire human race with extinction.18 Project Profile

Early in this century, Azerbaijan produced more than half of the oil in the world from the shore of the
Caspian Sea. After the onshore deposits ran empty, the oil search moved out to sea, and now, the region is
one of the world's oil exploration hot spots. The World Bank is deeply involved in promoting the sale,
development and export of Azerbaijan's oil fields, most of which lie within a badly polluted part of the
Caspian Sea.   In 1995, the Bank's IDA extended $21 million in credit toward the development of the
Guneshli oil field by BP (17% Owner), Amoco (17%), Unocal (10%), Pennzoil (5%), Itochu (4%), and
Ramco (UK, 2%). In recent years, the Bank has lent $7 million for preparation of a massive pipeline from
Baku, Azerbaijan, to Turkey via Georgia, and, now, it is considering extending another $800 million in
credit toward the same pipeline. In April 1998, as the Board prepared to consider approving the pipeline
project, the prospects of swift approval faded as the Caspian Sea countries (Russia, Kazakhstan,
Azerbaijan, and Turkmenistan) continued territorial disputes over oil field Ownership. Russia also voiced
opposition to Turkmenistan's plans to run an underwater pipeline, feeding into Azerbaijan's pipeline to
Georgia, on ecological grounds.  The grounds: earthquakes of magnitude 8 on the Richter scale have been
recorded on the pipeline's proposed route. At the same time, the IFC has raised concerns about the need to
replace badly leaking lengths of an existing  pipeline from Baku  before the rest of the project proceeds. 
And, there is some dispute between project Owners over financial arrangements.  All of this, according to
Douglas Norlen of the Pacific Environment and Resources Center, has caused a delay in the IFC board vote
until mid-May and could delay the project for two more years. Oil Production in the Caspian Sea From the
production points to the pipeline routes, the quest for Azeri oil is marked by fierce turf battles between
corporations and governments.  The prize is up to 20 billion barrels of oil reserves in and around the
Caspian Sea.   In addition, Russia, Kazakhstan, Iran and Turkmenistan also hold considerable reserves in the
Caspian. G-7 corporations have fond regard for the Azeri government.  "You've got a government, from the
president down, that understands what it takes to do business with the West," said Robert Ebel, an analyst
at the Center for Strategic and International Studies (Washington D.C.) in March 1997. "Nearly everyone in
the oil business around the world knows their way to Baku (capital of Azerbaijan)," said T. Don Stacy of
Amoco. According to the Dallas Morning News, "the Clinton administration's energy policy-makers have
worked feverishly behind the scenes to support the efforts of Western companies seeking to unlock the
Caspian's oil riches - even though the administration is prevented by law from providing Azerbaijan with a
penny of aid because of its simmering conflict with Armenia." President Clinton's work has helped to ensure
that G-7 corporations control the majority of the oil that lies within Azerbaijan.  G-7 companies own
two-thirds of the oil in the Azeri-Chirag-Guneshli field, one of the world's largest oil reserves.  They also
own majority shares in at least three other major joint ventures. * AIOC (Azeri, Chirag and Guneshli
fields) Called "the contract of the century," this first oil exploitation joint venture in Azerbaijan was
formed in 1994, when 11 companies created the Azerbaijan International Operating Co. (AIOC).  The AIOC
will develop the Azeri, Chirag and Guneshli fields in the Caspian Sea at an estimated cost of $7.4 billion. 
The three fields hold an estimated 4.1 billion barrels of oil, rivalling some of the world's largest reserves.
This venture is 64.6% controlled by G-7 corporations.   Investors include:  British Petroleum (U.K.,
17.1%), Amoco Corp. (U.S., 17%), State Oil Co. Of Azerbaijan Republic (SOCOR, 10%), Lukoil (Russia,
10%), Unocal (U.S., 10%), Statoil (Norway, 8.6%),  Exxon (U.S., 8%; purchased 5% from Socar in 1995,
3% from Pennzoil in 1996), TPAO (Turkey, 6.8%), Pennzoil (U.S., 4.8%), Itochu (Japan, 3.9%), Ramco
(U.K., 2.1%), and Delta-Nimr (Saudi Arabia, 1.7%). G-7 equipment and service suppliers include East-West
Helicopters, an Azerbaijan-Canada joint venture; McDock and McShelf, Azeri-US joint ventures for supply
bases; and Itochu, which has conducted seismic surveys on the shelf.  In addition, Azerbaijan has agreed to
have Conoco (U.S.) rehabilitate wells and further develop the Guneshli field. "Our participation in the
Azerbaijan project is a key element in our growth strategy," said Marty Miller, a Unocal vice president, in
1996. In January 1997, the government of Turkmenistan claimed sovereignty over two of AIOC's three
Caspian oil fields.  Conoco is also interested in the Guneshli field: it is hoping to develop concessions that
are not controlled by the AIOC. * Karabakh field (CIPCO) In November 1995, four companies agreed to
develop the Karabakh field, which holds between 550 million and 1.1 billion barrels of oil, under a joint
venture called the Caspian International Petroleum Company (CIPCO).   The $1.7 billion project's investors
include:  Lukoil (Russia, 32.5%), Agip (Italy, 30%), Pennzoil (U.S., 30%), and SOCAR (7.5%).  Ramco
(U.K.) claims it has the right to 5.25% of the field. * Dan-Ulduzu and Ashrafi fields In 1996, four foreign
companies made a deal with SOCAR to explore and develop the Ulduzu and Ashrafi fields, next to the
Karabakh field.  The corporations in the $1.5 billion deal include: Amoco (U.S., 30% stake), Unocal (U.S.,
25.5%), Itochu (Japan, 20%), and Delta-Nimir (S.Arabia, 4.5%). * Shakh Deniz In June 1996, British
Petroleum, Statoil and Elf (France) signed a production sharing contract for the Shakh Deniz offshore field,
which may contain up to 5 billion barrels of liquids. The Pipeline The initial two pipelines from Azerbaijan's
oil fields were planned to run to the Black Sea ports of  Novorossiysk, Russia (via Grozny, Chechnya), and
to Supsa, Georgia, beginning in August and Decmber 1998, respectively.  The first oil will flow from the
Bank-financed Guneshli field.  In December 1996, the AIOC chose seven final candidates for the Supsa
pipeline, including Saipem of Italy, which already won the contract for building a pipeline from the AIOC
fields (including Guneshli) to the mainland.  The pipes are to be supplied by Itochu (Japan). These smaller
pipelines will be supplanted by one or two larger pipelines, for which Russia (via Chechnya) and Turkey (via
Georgia) are vying for consideration.   The pipeline will handle up to 100 million metric tons of crude
annually, and may eventually extend across the Caspian to the Kazakhstan oil fields. It appears that the
World Bank favors the Georgia-Turkey route.  In September 1996, the World Bank (IBRD) approved a $5
million loan for technical assistance in support of the proposed Baku to Ceyhan, Turkey, pipeline.  G-7
transnationals Shell and Chevron have formed a tentative joint venture to build the pipeline to Ceyhan.
Turkey argues for its proposed Mediterranean port destination as a means of avoiding the crowded and
dangerous passage of oil tankers through the Bosporus Strait.  "Not a drop of oil will pass through the
Bosporus" if the pipeline project goes to Russia, warned Turkey Prime Minister Tansu Ciller in 1995.
Sources: Dallas Morning News, March 10, 1997; Journal of Commerce, Feb. 15, Dec. 12, 1996, Jan. 21,
29, and Feb. 5, 1997;   United Press International, Oct. 2, 1995, Oct. 22, 24, and Nov. 4, 1996; Inter
Press Service, July 30, 1996; PR Newswire, July 30, 1996; World Bank PID, PID GEPE44830, April 30,
1997;   World Bank News, Sept. 19, 1996; Houston Chronicle, Nov. 11, 1995; Offshore, Feb. 1997.; Oil
and Gas Journal, Dec. 9, 1996; World Oil, August 1996; Radio Free Europe/Radio Liberty, April 20, 1998;
IFC PID, Project No. 007271.

BOLIVIA/BRAZILBOLIVIA/BRAZIL

TYPE OF INDUSTRY: Gas Pipeline (3,110 km) SUBSIDIZED PROJECT:  Brazil-Gas Sector Development
Project LOCATION: Rio Grande, Bolivia, to Sao Paulo, Brazil OWNER: (borrower) Brazilian Gas Transport
Company (TBG), (implementing agency) TBG (Rio de Janeiro, Brazil) G-7 TNC INVOLVEMENT: "The private
sector is directly involved in the project through British Gas, BHP Petroleum, and El Paso which own 25
percent of the equity of the Brazilian Company that was created to transport the gas. The Bolivian
transport company is privately owned with Shell and ENRON as major stockholders..." (World Bank Press
Release December 18, 1997) Many of these same companies operate oil and gas fields in Bolivia.  Brown &
Root-Murphy (U.S.) is part of a consortium of four companies building the 1,259-kilometer leg of the
pipeline from northern Brazil to a refinery in Sao Paulo state.  Bechtel (U.S.) is also heavily involved in the
overall project. WORLD BANK AGENCY:  IBRD AMOUNT OF FINANCING (estimated total cost): $130 million
(IBRD),   $180 million (IBRD partial credit guarantee) of $2 billion financing requirement (20% Bolivian,
80% Brazilian).  In December 1997, the Inter American Development Bank approved a $220 million loan
toward this project.  Other funding is expected from AFC ($130 million), Corporacion Andina de Fomento
($50 million),  BNDES ($177 million), European Investment Bank ($60 million) and the Japan Export Import
Bank ($234 million).  In FY1996, the IDA provided a $10.6 million credit toward the restructuring of
Bolivia's hydrocarbons sector. DATE APPROVED:  December 17, 1997 RESERVES/PRODUCTION: The
"capacity of the pipeline will be 30 MMcm/d, which compares with a gas supply ceiling of 16 MMcm/d
specified in the gas import agreement with Bolivia." (World Bank PID BRPA6549, May 7, 1997)  Bolivia has
4.5 trillion cubic feet of natural gas proved reserves.  "Given that current Bolivian reserves will not meet
the export demands generated by the project, it is expected that the project will create a significant
incentive for  gas  exploration in  Bolivia," declared the World Bank.  An energy consultant said that Bolivia
would need to discover 2.3 trillion cubic feet in new gas reserves to fully supply Brazil in the 20 year
contract.  If that does not work,  Wood Mackenzie analyst Matt Shaw told the Oil Daily, gas may be piped
from northwest Argentina via Bolivia to Brazil. WORLD BANK DESCRIPTION:  "The loan will (a) finance the
construction of a gas pipeline from Bolivia to south-east/south Brazil; and (b) support the reform of the gas
sector in Brazil to allow an increase in private participation." (World Bank MOS, February 4, 1998)
ENVIRONMENTAL/SOCIAL ASPECT:  In December 1997, just before the Bank approved its part of the
pipeline financial package, its representatives and other pipeline proponents signed an agreement with Indian
leaders in Bolivia to support social and environmental programs in affected communities.  The Bank has said
that "[w]hile the majority of the pipeline route in Bolivia and Brazil is in an area of low environmental
sensitivity and thus the probability of significant adverse environmental impacts are expected to be
minimal, the pipeline will cross sensitive environmental ecosystems such as the Pantanal, the Gran Chaco
and Santa Cruz La Vieja National Parks (Bolivia) and Mata Atlantica Biosphere reserve and Aparados da
Serra National Park in Brazil." NOTE :   This project is the largest ever investment in Bolivia. SOURCES: 
World Bank MOS, February 4, 1998; World Bank PID BRPA6549, May 7, 1997; IPS/ITIS, Changing the
Earth's Climate for Business; LatinFinance, March 1996; Platt's Oilgram News, Sept. 15, 1992;  Pipe Line
& Gas Industry, January 1997; Inter Press Service, May 20, 1997; PR Newswire, December 5 and 6,
1996, May 19, 1997; Facts on File World News Digest, Dec. 19, 1996; Houston Chronicle, Dec. 6, 1996;
Oil & Gas Journal, April 6, 1998; The Oil Daily, Dec. 9, 1997, Dec. 23, 1997;  World Bank PID BRPA6549,
May 7, 1997.

CHAD/CAMEROONCHAD/CAMEROON

TYPE OF INDUSTRY: two oil field developments (Chad), 1,100 km buried pipeline, mini-refinery, diesel
power plant, export terminal facilities (Cameroon) SUBSIDIZED PROJECT: Doba and Sedigi oil fields, pipeline
to Cameroon LOCATION: Sedigi oil field, Doba basin oil fields (Chad) to port of Kribi, Cameroon OWNER: 
(borrowers) Republics of Chad and Cameroon; (implementing agencies)  subsidiaries of Exxon, Shell, Elf.
G-7 TNC INVOLVEMENT: Pipeline and Doba, Sedigi production consortium owned by Exxon (40%), Shell
(40%) and Elf (20%, France).  Exxon will operate the pipelin, and has contracted a consortium led by
Willbros Co. (U.S.) and SPIE-Capag (France) to carry out the pipeline construction.   Wackenhut (U.S.) to
provide security for the pipeline.    Saur (France) interested in acquiring 51% of state electricity network. 
Mitsubishi (Japan) is interested in investing in the diesel power plant. WORLD BANK AGENCY: IDA, IFC
AMOUNT OF FINANCING (estimated total cost): at least $370 million of $3.5 billion. According to Africa
Energy & Mining,  the "Bank group is still ready to put up $1 billion in loans towards the $1.8 billion
Doba-Kribi pipeline project."  In mid-1998, the IDA will consider a $120 million credit to, and the IFC will
consider a $250 million investment in the pipeline project.  The estimated total for the project is $3.5
billion; $1.6 billion fo