Post Express (Lagos, Nigeria)

Chad; World Bank Approves Financing for Chad-Cameroon Pipeline

June 9, 2000

Lagos - The World Bank board of directors on Tuesday agreed to help finance a highly controversial oil pipeline project across parts of Chad and Cameroon.

Board backing for the project came despite sharp criticism from environmental and human rights activists in Chad and elsewhere, who warned that the project could cause serious harm to the local population.

In May 1999, non-governmental organisations in Chad asked the bank to declare a two-year moratorium on the project to allow time for the country to establish a legal framework assuring fair compensation for residents.

The bank said in a statement, it would lend 39.5 million dollars to Chad and 53.4 million dollars to Cameroon to help build a 1,070 kilometer (670 mile) pipeline to carry oil from the Doba field in Southern Chad to loading facilities off Cameroon's Atlantic coast.

In addition, the International Finance Corporation, the bank unit making loans to the private sector, will lend 100 million dollars to the joint venture pipeline and mobilise up to 300 million dollars from commercial banks.

Participating oil companies, banks and export credit agencies would provide the remaining 3.2 billion dollars.

The total cost of the project has been estimated at 3.7 billion dollars to develop the Doba fields and build the pipeline.

US firms, Exxon, Mobil and Chevron are participating with 40 and 25 per cent stakes respectively, as is Malaysia's Petronas, with 35 per cent.

The Bank estimates that the project would generate two billion dollars for Chad and 500 million dollars for Cameroon over a 25-year period.

The bank said that in addition to its pipeline investments, the board approved two credits worth 29.5 million dollars on confessional terms to help bolster Chad and Cameroon's environmental management and petroleum-sector monitoring capacities.

"While some may still have doubts, I believe that the hard work of specialists from t he Bank Group, the private companies and the two countries, combined with the strong participation of civil society within Chad and Cameroon and around the world, have made this a better, stronger project," said World Bank President, James Wolfensohn.

But according to San Francisco-based Rainforest Action Network, it will have "serious, irreversible environmental repercussions," destroying rainforest areas and threatening animal species and indigenous peoples such as the pygmies.

"It's a risky project," said Andrea Dubin of the environmental group Friends of the Earth in an interview on Monday.

"The pipeline traverses key water systems, key river systems in Chad and Cameroon and the potential for leakage is quite serious," she said.

Opponents argue that Chad and Cameroon have a well-documented history of human rights abuses and corruption, making it unlikely that any of the expected benefits will reach the population at large.

"Before the bank supports any new oil development, it should first support the establishment in Chad and Cameroon of democratic reforms to ensure that citizens benefit from this project and are not harmed by it," said Daphne Wysham of the Washington-based Institute for Policy Studies.

The bank points to a law approved by Chad in 1998 stipulating that 10 per cent of project revenues are to be held in trust for future generations.

Eighty per cent would go for education, health, social services and rural development with the remaining revenue earmarked for regional programs in the pipeline area.

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THE ARIZONA REPUBLIC

World Bank Project to Help Chad Develop Oil Fields Draws Fire

June 7, 2000
By Ken Moritsugu, Knight Ridder Newspapers

WASHINGTON, Buried beneath fields in the obscure African nation of Chad, one of the world's poorest nations, is black gold - 900 million barrels of oil.

To the World Bank, the oil reserves offer a chance to improve the lives of Chad's 7 million people, most of whom eke out a subsistence living. The bank's directors on Tuesday approved $193 million in loans to help Chad, Cameroon and a consortium of oil companies pay for developing the reserves.

But to environmental, human rights and religious activists, this project symbolizes everything that's wrong with the World Bank. The opponents say that the project exemplifies what all the ruckus was about in April, when thousands of protesters disrupted the bank's meeting in Washington.

Exxon Mobil Corp., which leads the consortium, wants to build a 650-mile pipeline to take oil from landlocked Chad through neighboring Cameroon to a marine terminal in the Atlantic Ocean.

The bulk of the funding for the $3.7 billion Chad-Cameroon project would come from the consortium, which includes Chevron and Petronas, a Malaysian oil company.

The project, which includes drilling 300 wells, would bring Chad an estimated $2 billion in revenues over 25 years, with $500 million to Cameroon. Per capita income in Chad is $230 a year.

Critics contend that similar projects in Africa have enriched oil companies, lined the pockets of corrupt dictators and done little to help the poor. But officials at the World Bank, a multinational lending organization set up after World War II to help poor nations finance such projects as ports and roads, say this project can help save lives.

"We think it's an opportunity to be seized," said Robert Calderisi, the bank's spokesman for Africa. "This country is so poor that 60,000 children die each year under the age of 5. That's what it boils down to. Chad cannot save all these children."

Environmental activist Andrea Durbin calls the project "symbolic of the misdirection of the bank."

"It's not obvious or certain that the benefits will be accrued by the (Chadian) people," said Durbin, director of the international program at Friends of the Earth, which is based in Washington, D.C.

"Oil development in the region has a poor record."

The World Bank has loaned billions of dollars to poor nations for everything from roads and power plants to farm-irrigation projects. The guiding philosophy holds that such projects generate economic growth, and so should result in financial returns that improve people's lives and pay back the loans.

Results have been mixed.

Although parts of Asia have been able to reduce poverty, much of Africa remains in dire straits. The World Bank's loans turned out to be extra burdens for many African nations, which are unable to pay them back.

Critics argue that the bank placed blind faith in growth, assuming that alone would cure the ills of poverty.

"Trickle-down economics just doesn't amount to much in countries like Chad and Cameroon," said Daphne Wysham, who follows environment and human rights issues for the liberal Institute for Policy Studies in Washington.

"You can't apply this cookie-cutter model to all these countries and expect positive results."

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Philadelphia Inquirer

"African oil project's effect questioned.  The World Bank sees it aiding the people of Chad. Activists see it aiding only the wealthy."

June 7, 2000

By Ken Moritsugu
INQUIRER WASHINGTON BUREAU

WASHINGTON - Buried beneath fields in the obscure African country of Chad, one of the world's poorest nations, is black gold: 900 million barrels of oil.

The World Bank believes that the oil reserves offer a chance to improve the lot of Chad's seven million people, most of whom barely eke out a subsistence living. The bank's directors approved $193 million in loans yesterday to help Chad, Cameroon, and a consortium of oil companies pay for developing the reserves.

To environmental, human-rights and religious activists, the project symbolizes everything that is wrong with the World Bank. It exemplifies what all the ruckus was about in April when thousands of protesters tried to disrupt the bank's meeting in Washington.

Exxon Mobil Corp., which leads the consortium, wants to build a 650-mile pipeline to take oil from landlocked Chad through neighboring Cameroon to a marine terminal off the Atlantic coast. The project includes drilling 300 wells in Chad. The bulk of the funding for the $3.7 billion Chad-Cameroon project would come from the consortium, which includes Chevron Corp. and Petronas, the Malaysian national oil company.

The project would bring Chad an estimated $2 billion in revenues over 25 years and Cameroon $500 million. Per-capita income in Chad is $230 a year.

Critics contend that similar projects elsewhere in Africa have enriched oil companies and lined the pockets of corrupt dictators, but done little to help the poor. Officials at the World Bank say, however, that this project can help save lives.

"We think it's an opportunity to be seized," the bank's spokesman for Africa, Robert Calderisi, said. "This country is so poor that 60,000 children die each year under the age of 5. That's what it boils down to. Chad cannot save all these children."

An environmental activist, Andrea Durbin, called the project "symbolic of the misdirection of the bank."

"It's not obvious or certain that the benefits will be accrued by the people," said Durbin, international director at Friends of the Earth, which is based in Washington. "Oil development in the region has a poor record."

The World Bank is a multinational lending organization set up after World War II to help poor nations finance basic economic projects such as ports and roads. The bank has lent billions of dollars to poor countries for everything from roads and power plants to farm-irrigation projects.

The institution's guiding philosophy holds that such projects generate economic growth, and so should result in financial returns that improve people's lives and pay back the loans.

Results have been mixed.

While parts of Asia have made great strides in reducing poverty, much of Africa remains impoverished. The World Bank's loans turned out to be extra burdens for many African countries, which are unable to pay them back.

Critics argue that the bank placed too much faith in economic growth, assuming that that alone would cure the ills of poverty.

"Trickle-down economics just doesn't amount to much in countries like Chad and Cameroon," Daphne Wysham of the liberal Institute for Policy Studies in Washington said. "You can't apply this cookie-cutter model to all these countries and expect positive results."

The bank concedes that its track record in Africa has been poor but says it remains committed to the continent.

Bank officials say that, while Chad has a poor human-rights record, it is not in the same league as Nigeria, Sudan and the Congo, countries so corrupt that the bank has cut off all lending to them. They also point to reforms ordered for the Chad-Cameroon project.

To reduce harm to the environment, the oil companies have rerouted the pipeline. Cameroon has agreed to create two national parks to replace lost forest. Chad has approved a plan to devote about three-quarters of its revenue from the project to health, education, rural roads and agriculture.

Under fire at an annual shareholder meeting last week, Exxon Mobil chairman Lee Raymond called such World Bank safeguards unprecedented.

"I truly question the moral position of people who enjoy a higher standard of living complaining about a project that will bring a higher standard of living to one of the world's poorest regions," he said, according to news reports.

But a Chadian human-rights activist, Dephine Djiraibe, questioned whether her government would abide by its agreements. She argued that the bank should ensure that a country has a strong rule of law and an independent judiciary before undertaking such a huge project.

"We think that even if this oil is extracted, it will never help the poor people unless some real safeguards are in place," Djiraibe said.

In response, World Bank spokesman Calderisi said: "There's no guarantee 100 percent of the money will be used as intended. But not doing it means 100 percent of this money will not be available, and we think the Chadian people deserve that chance."

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Agence France Presse

World Bank approves financing for Chad-Cameroon pipeline

June 6, 2000

WASHINGTON, June 6 - The World Bank board of directors on Tuesday agreed to help finance a highly controversial oil pipeline project across parts of Chad and Cameroon.

Board backing for the project came despite sharp criticism from environmental and human rights activists in Chad and elsewhere, who warned that the project could cause serious harm to the local population.

In May 1999, non-governmental organizations in Chad asked the bank to declare a two-year moratorium on the project to allow time for the country to establish a legal framework assuring fair compensation for residents.

The bank said in a statement it would lend 39.5 million dollars to Chad and 53.4 million dollars to Cameroon to help build a 1,070 kilometer (670 mile) pipeline to carry oil from the Doba field in southern Chad to loading facilities off Cameroon's Atlantic coast.

In addition, the International Finance Corporation, the bank unit making loans to the private sector, will lend 100 million dollars to the joint venture pipeline and mobilize up to 300 million dollars from commercial banks.

Participating oil companies, banks and export credit agencies would provide the remaining 3.2 billion dollars.

The total cost of the project has been estimated at 3.7 billion dollars to develop the Doba fields and build the pipeline.

US firms ExxonMobil and Chevron are participating with 40 and 25 percent stakes respectively, as is Malaysia's Petronas, with 35 percent.

The Bank estimates that the project would generate two billion dollars for Chad and 500 million dollars for Cameroon over a 25-year period.

The bank said that in addition to its pipeline investments, the board approved two credits worth 29.5 million dollars on concessional terms to help bolster Chad and Cameroon's environmental management and petroleum-sector monitoring capacities.

"While some may still have doubts, I believe that the hard work of specialists from the Bank Group, the private companies and the two countries, combined with the strong participation of civil society within Chad and Cameroon and around the world, have made this a better, stronger project," said World Bank president James Wolfensohn.

But according to San Francisco-based Rainforest Action Network, it will have "serious, irreversible environmental repercussions," destroying rainforest areas and threatening animal species and indigenous peoples such as the Pygmies.

"It's a risky project," said Andrea Dubin of the environmental group Friends of the Earth in an interview on Monday.

"The pipeline traverses key water systems, key river systems in Chad and Cameroon and the potential for leakage is quite serious," she said.

Opponents argue that Chad and Cameroon have a well-documented history of human rights abuses and corruption, making it unlikely that any of the expected benefits will reach the population at large.

"Before the bank supports any new oil development, it should first support the establishment in Chad and Cameroon of democratic reforms to ensure that citizens benefit from this project and are not harmed by it," said Daphne Wysham of the Washington-based Institute for Policy Studies.

The bank points to a law approved by Chad in 1998 stipulating that 10 percent of project revenues are to be held in trust for future generations.

Eighty percent would go for education, health, social services and rural development with the remaining revenue earmarked for regional programs in the pipeline area.

"As a result, (it) will have only a minor net effect on the natural and human environments," according to the bank.

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Houston Chronicle

OK for African oil project expected. But its impact on two impoverished nations debated

June 5, 2000

By DAVID IVANOVICH Copyright 2000 Houston Chronicle Washington Bureau

WASHINGTON -- The World Bank is expected today to agree to help fund a controversial energy project in West Africa, a huge, $3.7 billion oil-field and pipeline project in the impoverished nations of Chad and Cameroon.

Backers of the deal have long said how this investment will lift the economies of the desperately poor region. Opponents say it will lead to damage to the environment and enrich corrupt regimes with terrible human rights records.

Exxon Mobil Corp., Chevron Corp. and the Malaysian oil company Petronas want to develop three oil fields in the Doba region of southern Chad, an area they believe could yield more than 900 million barrels of crude over 25 to 30 years.

Their plan also calls for construction of a 663-mile-long pipeline from Chad, through neighboring Cameroon, to the Atlantic coast.

Proponents say the project could transform the economy of Chad, a country of 7.6 million mostly subsistence farmers and herders with a per capita income of only about $230 a year.

World Bank officials say the project could boost government revenues by as much as 50 percent a year, and provide much needed cash for health care, education and rural development.

"Chad is among the poorest countries in the world," said Dave Dickson, spokesman for Exxon Mobil and the Houston-based operation overseeing the project, Esso Exploration & Production Chad. "The average Chadian lives on 50 cents a day, and one in five children die in infancy.

"We believe that the citizens of Chad deserve the right to benefit from responsible development of their resources," he said.

Chad will receive an estimated $61 million a year from the project, while Cameroon will collect about $18 million, according to the World Bank's economic analysis.

After years of debate, the 24-member executive board of the World Bank Group, the Washington-based international lending agency organized to help the world's poorest nations, is expected to vote to loan $39.5 million to Chad and $53.4 million to Cameroon to finance their participation in the project.

The partners expect to drill an estimated 300 wells and achieve peak production of 225,000 barrels a day.

The International Finance Corp., the private-sector arm of the World Bank, also will provide $100 million worth of loans to the pipeline partners and help orchestrate another $300 million worth of loans from commercial banks.

The United States, after some hand-wringing, is expected to endorse the project today, although administration officials plan to voice some concerns.

The Chad-Cameroon project has long faced vocal opposition from environmentalists, human rights activists, even the likes of Nobel Peace Prize recipient Desmond Tutu.

Critics have raised numerous concerns, from possible disruption of the lifestyle of local Pygmies to fears about the long-term survival of the black rhinoceros.

The governments of the two countries, with their long histories of corruption and human rights abuses, represent the chief concerns.

Cameroon ranked dead last in Transparency International's 1999 Corruption Perceptions Index, based on surveys asking international business people to rank countries based on the level of corruption. (Chad did not make the list).

Chad is still trying to shake off the effects of a devastating civil war, while the U.S. State Department has received reports of disappearances, torture and even slavery in Cameroon.

Company officials say they have consulted with locals from more than 125 villages and towns to explain the project.

Human rights groups, however, allege military and government officials visited the oil region in Chad last month and threatened the local population.

"They said they will kill even women and children, everyone who tried to say they are against the program," said Delphine Djiraibe, an activist with the Chadian Association for the Defense and Promotion of Human Rights in Washington.

Robert Calderisi, the World Bank's spokesman for Africa, said bank officials have been unable to corroborate those claims.

"That would be very, very strange at this late stage, to do that sort of thing," Calderisi said. "It doesn't stand to reason."

Critics argue the project should be delayed to give the two countries more time to put the institutions in place to ensure the revenues from the project are used appropriately.

World Bank officials insist they are going into the Chad-Cameroon project with their eyes wide open.

"Any project of this size will tempt any government, human nature being what it is," Calderisi said.

Because of the high political risk, the bank has insisted on special safeguards, including funneling the revenues into offshore accounts to ensure the funds are used as agreed.

Critics also argue that Chad and Cameroon will enjoy only a small share in the benefits of the pipeline project.

According to the bank's economic analysis, the project -- assuming oil prices of $15.25 a barrel for Brent crude -- will garner revenues of $12 billion, or about $9.2 billion after operating and maintenance costs, over the life of the project.

Chad will receive about $1.7 billion over the life of the project, while Cameroon will pick up $505 million, according to the report.

Critics argues that's not much money, considering the degree of poverty.

"This is poverty alleviation?" asked Daphne Wysham, a research fellow at the Institute for Policy Studies in Washington.

The project partners are more optimistic. They predict Chad will receive $5 billion in pipeline and oil-field revenues and another $3.5 billion in indirect economic activity, while Cameron will receive $500 million in pipeline and marine terminal revenues and another $400 million in indirect economic benefits.

The project, the partners say, will create 500 operational jobs and provide work for 4,600 construction workers. The partners will build four new schools, improve roads and other transportation links and dig new water wells.

Calderisi argued the terms of the agreement are not out of line with other projects in the region. "The two governments have negotiated this and apparently are satisfied with their share," he said.

While the World Bank will provide only a fraction of the financing, its involvement in the project was considering crucial because indebted nations such as Chad and Cameroon aren't likely to anger the bank by failing to adhere to the terms of the deal.

Exxon Mobil will be the operator of the project with a 40 percent stake. Petronas will have a 35 percent interest, while Chevron will hold a 25 percent share. Petronas and Chevron joined the project last year after Anglo/Dutch oil giant Royal Dutch/Shell Group and France's Elf dropped out.

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The Washington Post

World Bank to Vote on Disputed African Pipeline

Friday , June 2, 2000
By Nora Boustany

A controversial $3.7 billion oil and pipeline project in Chad and Cameroon will finally be put to a vote by the World Bank's board of directors on June 6.

The project, the largest construction venture in sub-Saharan Africa, involves the drilling of 300 oil wells in Chad and the construction of a 650-mile pipeline from southern Chad through Cameroon to the Atlantic Ocean. Exxon Mobil Corp. is leading a consortium, which includes Chevron, in charge of the enterprise.

The World Bank's share of the financing--a $365 million loan--has met with stiff resistance from environmental groups concerned about ecology and human rights violations by the government of Chad. These nongovernmental organizations say the project will cut through rain forests in Cameroon and lead to the forced eviction of inhabitants in the area. Board members of the bank have raised concerns about corruption and the fate of the displaced.

Daphne Wysham, a research fellow at the Washington-based Institute for Policy Studies, an environmental advocacy group, said the World Bank is "gambling with the lives of the poorest." Supporters of the project at the bank say it is taking a gamble in the interest of those people.

Two weeks ago, Wysham said, military and administrative officials loyal to Chadian leader Idriss Deby "threatened to kill men, women and children supporting the rebellion in Chad and those who oppose the oil extraction project. We have this from reliable sources and human rights groups in Chad we unfortunately cannot name." Chad has experienced ethnic, regional and political upheaval.

Wysham, citing the example of oil company and government collusion in the Niger Delta at the expense of the local population, said she feared another "nightmare" in which "the poor are made poorer by corrupt officials, constant oil spills and deadly joint military and oil company responses to protests." Human Rights Watch has said Chevron was responsible for a number of serious environmental hazards, including the pollution of the water supply in the Niger Delta. The late Nigerian military leader Sani Abacha misused the country's oil wealth and dealt harshly with his opponents. Now torture victims and their families are suing Chevron in U.S. courts for complicity in human rights abuses by the Nigerian military against unarmed protesters. The protesters, some of whom were killed, were seeking to draw attention to oil spills and and their own neglected economic needs.

Other groups based here, such as the Chadian Association for the Defense and Promotion of Human Rights and the Center for International Environmental Law, issued a news release yesterday discussing the threats against the Chadian opponents of the project. "Under the constant threat of brutal government repression, it is highly unlikely that the citizens of Chad will reap any benefits from the World Bank's proposed oil pipeline if it goes forward now and, clearly, they stand to be harmed if they try to voice their concerns," said Delphine Djiraibe, a spokeswoman for the association.

The nongovernmental organizations involved in the issue have called for a two-year moratorium to allow Chad to develop a proper legal framework, and establish environmental safeguards and human rights protections. The Exxon Mobil-led consortium will not go ahead without the World Bank because of the volatility of the region and the need for adequate management, which they want the World Bank to provide. The project is projected to bring $28 billion to the consortium in the next 20 years and $1 billion to the government of Chad. Affected communities will receive $600,000 in an endowment plan for resettlement.

"This oil will not be developed without private investment. Chad has been waiting since 1969, when oil was discovered there. We think the deal is within international norms, a fair deal," said Robert Calderisi, the World Bank spokesman for Africa.

The bank has created a revenue management plan that has been severely criticized as leaving loopholes for Chad in a study prepared by Peter Rosenblum, a professor at Harvard University involved with human rights work. "Our view is not only is this [plan] adequate, but it sets a precedent and a model for oil revenue management," Calderisi said. The plan calls for setting aside 80 percent of revenue to invest in rural health and needs, 10 percent to be invested overseas for future generations and 5 percent for development of oil production capacity, he said.

"We know we are taking a risk. It is the result of seasoned judgment that likely benefits far outweigh the risks," Calderisi said. Once the project is operational it will add between 45 and 50 percent to Chad's annual revenue and a much smaller 3 percent to Cameroon's public revenue, he added.

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