Chad Reports

WB and African Oil Pipeline

Tuesday, May 9, 2000 in the Los Angeles Times

Will It Be Business As Usual At The World Bank?

by Delphine Djiraibe and Korinna Horta

In the wake of protests surrounding the World Bank and International Monetary Fund in Washington, D.C., the international financial institutions have renewed their pledge to alleviate poverty, protect the environment and fight corruption. But now that the streets of Washington have returned to normal, is it back to business as usual at the World Bank? We may have an answer soon. Within a month, the World Bank will decide whether to finance a controversial oil and pipeline project in Chad and Cameroon.

Three of the world's largest oil companies--ExxonMobil, Royal Dutch Shell and the French company ELF--formed the original consortium that planned to sink 300 oil wells in the land-locked African nation of Chad and run a pipeline through neighboring Cameroon to the Atlantic coast. Interna- tional concern about human rights abuses and environmental destruction and other problems, caused Shell and ELF to drop out. Now Chevron and the Malaysian company, Petronas, have joined ExxonMobil in the project.

The companies have said they won't invest in the project without World Bank support, which can provide a measure of security against the risks of investing in such a politically volatile area. According to the U.S. State Department, state security forces in Chad and Cameroon are responsible for grave human rights abuses, including extrajudicial killings, torture and rape. Cameroon last year was rated the most corrupt country in the world for the second year in a row by the respected watchdog organization, Transparency International. In Chad, violence in the project region linked to the prospect of massive oil revenues has left hundreds of unarmed civilians dead, according to Amnesty International. The one member of the Chadian parliament who represents the oil-producing region spent eight months in a disease-ridden jail when he dared point out project-related corruption.

These signs all indicate that few of the financial windfalls from such a project will filter through corrupt government officials to reach the local people who the World Bank says it intends to help. In addition to exacerbating human rights problems, the pipeline project will also put the environment of the two countries in deeper jeopardy. The pipeline will traverse a largely intact area of tropical rainforest, home to indigenous people popularly known as Pygmies. In Cameroon alone, the pipeline will make 17 major river crossings, and it will run close along the Sanaga, one of Africa's most important river systems. Pipeline leakage, groundwater contamination and fresh water and marine pollution are ever-present dangers. A leak would endanger communities all along the pipeline route that rely on surface water systems for most of their water needs.

In view of the current situation in these countries, the project likely will only exacerbate problems of corruption, environmental destruction and human rights abuses. A Republican-led congressional commission release d a report this year criticizing the World Bank for investing in just these kinds of projects. In the wake of this criticism and the public scrutiny brought by the recent protests in Washington, the World Bank should not risk its reputation on such a mammoth, risky venture. It needs to put in place mechanisms to resolve the human rights and environmental problems before funding the project. In the meantime, the World Bank should finance smaller-scale projects that directly target the priorities of the poor and support sustainable development. Unless this taxpayer-funded institu- tion proves it can meet its own sustainability mandates, public support for it only will continue to erode.

Delphine Djiraibe, a Lawyer for the Chadian Assn. for the Defense and Promotion of Human Rights, is an Attorney at the Center for International Environmental Law.

Korinna Horta Is a Senior Environmental Economist With Environmental Defense in Washington, DC

Copyright 2000 Los Angeles Times


Africans threatened with summary execution
Mon, 05 Jun 2000 15:36:55 -0400


Monday, June 5, 2000

CONTACT: Emilie Thenard, CIEL (202) 785-8700
Daphne Wysham, IPS (202) 234-9382, ext. 208
Alejandro Queral, Sierra Club (202) 547-1144

In Wake of Military Crackdown in Chad, World Bank Poised to Approve Funding for Controversial Oil Project

International Lawmakers, Human Rights and Environment Groups, and Religious Leaders Warn the Project "Gambles with the Lives of the Poorest"

Washington, DC As the directors of the World Bank prepare to vote tomorrow on whether to finance a controversial oil project in Chad and Cameroon, legislators, human rights and environmental groups, and religious leaders from around the world urged that the project not go forward at this time. The groups said the project in its current form threatens to exacerbate government corruption and repression against local citizens, harm the environment, and provide little if any economic benefits to the poorest in both nations.

The Bank's vote, which could provide $365 million in loans to the governments of Chad and Cameroon, and to oil companies including ExxonMobil and Chevron, comes in the wake of recent threats by Chadian military officials to execute any citizens who oppose the project.

"The World Bank says its vision is a world free of poverty, yet it is gambling with the very lives of the poorest in Chad and Cameroon," said Daphne Wysham of the Washington, D.C.-based Institute for Policy Studies. "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."

Both Chad and Cameroon have a well-documented history of human rights abuses and corruption, conditions that, according to a Harvard University study, make it unlikely that oil revenues from the project will be invested in development programs to help the poor. Concerns from local citizens and indigenous groups about fair compensation, and about the potential for rainforest destruction and oil spills have not adequately been addressed by Bank, and have at times been met with brutal suppression by the governments.

US Rep.Dennis Kucinich has written to World Bank President James Wolfensohn expressing concern "over the human rights and environmental implications of the project," and highlighted "apparent violations of several World Bank policies." In Italy, national legislators are calling on that nation's World Bank director to stop the project. In Germany, Protestant and Catholic organizations, as well as Amnesty International are making last minute appeals to the World Bank's German director.

Religious organizations in the US and Africa have also expressed concern about the project which they shared with US Treasury Department officials in a meeting last Friday.

"The Catholic Bishops of Cameroon expressed grave concerns about environmental risks, plans for compensation, and participation of civil society in the project's management, and we support their position," said Father Michael Perry, Foreign Policy Adviser for the US Catholic Bishops' Conference. "Should the World Bank move forward with this oil project, we will follow its implementation attentively."

Chadian and Cameroonian civil society groups have called for a two-year moratorium on the project, in order to allow both countries to develop a proper legal framework, establish environmental safeguards and human rights protections, and set up an independent panel of local citizens and indigenous peoples to ensure that citizens benefit from the oil extraction.

The project involves the drilling of 300 oil wells in Chad, extraction of 225,000 barrels of oil per day (peak production), and the construction of a 650-mile long pipeline through Chad and Cameroon. The pipeline route cuts through farmland and natural forests en route to an offshore terminal on the coast of Kribi in Cameroon, from which point the oil would be exported for sale to industrialized nations.


World Bank's pipeline to disaster

Green Left Weekly June 7 2000

World Bank's pipeline to disaster


Having given up on getting the World Bank to comply with even its own environmental and social development policies, 200 non-government organisations from 55 countries have called for the institution to withdraw altogether from financing oil, gas and mining projects.

The 200, including Friends of the Earth and many grassroots organisations in Third World countries directly affected by such projects, issued a joint platform during the April 16 Washington, D.C., protests against the World Bank and International Monetary Fund, arguing "Nowhere is the incompatability of environmental destruction and poverty alleviation more evident than in the World Bank Group's investments in the extractive industries: oil, gas and mining".

The World Bank's oil, gas and mining projects, the platform states, "enable wealthy multinational corporations to extract resources and profits from poor countries, leaving poverty in their wake. They fuel global climate change, pollute the environment and lead to deforestation. Even worse, extractive industries have further entrenched corrupt and dictatorial regimes, and exacerbated human rights abuses."

In 1999, the World Bank Group lent 3.8% of its total portfolio for oil, gas and mining projects. Its private-sector arms, the International Finance Corporate (IFC) and the Multilateral Investment Guarantee Agency, which work hand-in-glove with the big transnational corporations, lent 16% of their total portfolio for such projects.


At the top of the list of the NGOs' concerns is the Chad-Cameroon oil pipeline project, which involves drilling 300 oil wells in the southern Doba region of Chad, then pumping the oil along a purpose-built 1100-kilometre pipeline to Cameroon's Atlantic coast at Kribi. The project is anticipated to produce 225,000 barrels of oil each day.

The COTCO/TOTCO consortium, which will run the project, comprises ExxonMobil, the world's largest oil company, with a 40% share, the Malaysian oil company Petronas with 35% and US oil giant Chevron with 25%.

ExxonMobil and Chevron have appalling environmental and human rights records. Chevron is currently being sued in US Federal Court for violations of international human rights law over its complicity in Nigerian police killings at its oil facilities in the Niger River delta. Besides its long history of oil spills, ExxonMobil has been implicated in murders of local people at its sites in the Doba region.

The World Bank is yet to finalise its funding for the project — a decision was due on May 23 but was delayed — but staff are recommending that the board approves a US$115 million loan to the governments of Chad and Cameroon and a $250 million IFC loan to the COTCO/TOTCO consortium.

ExxonMobil has made it clear from the initial stages of the project that World Bank involvement is crucial to the project going ahead for two reasons: IFC involvement will allow the recruitment of other multilateral and private lenders and the World Bank is at the centre of the consortium's political risk management strategy.

Chad and Cameroon are deeply in debt and are dependent on World Bank goodwill for further aid and loans. The consortium hopes that such "leverage" will ensure that neither government interferes in its business.


NGOs in Chad and Cameroon say the project will be environmentally and socially devastating.

The Doba region is at the centre of escalating conflicts between the area's largely Christian and animist inhabitants and the Muslim government in the north, over demands for southern self-rule. The Chadian military has killed hundreds of civilians in the region, including massacres in November 1997 and March 1998 which the government has refused to investigate. The unrest means that adequate environmental impact surveys have not been able to be conducted along large sections of the Chadian pipeline.

In Cameroon, the pipeline traverses major rivers 17 times, passes through areas inhabited by the Baka and Bakola pygmy peoples and cuts into the country's Atlantic littoral forest. According to a report by the US-based Environmental Defense, the pipeline, and attendant roads and construction sites, will threaten loss of biodiversity and intensify deforestation; Cameroon already suffers one of the world's fastest rates of deforestation.

The pipeline's terminal, in Kribi, is a single-hulled floating refinery located in front of the Lobe waterfalls, one of the rare waterfalls that flow directly into the ocean. Kribi is nestled between two nature reserves and is presently dependent on eco-tourism.

The environmental studies have come in for prolonged criticism from environmental groups and local communities. The first report was deemed inadequate by the World Bank but the second, despite its length (19 volumes), fails to fix many of the earlier report's problems. For example, the plan still does not include an adequate oil spill response plan, despite great dangers of spills.

Further, according to the Bank Information Center, the project's plans do not address the lack of legal recognition for Cameroon's indigenous people, the lack of local participation and consultation, or the lack of a budget for involving indigenous communities.

The centre lists five World Bank policies that the project violates: the indigenous peoples, environmental assessment, involuntary resettlement, economic evaluation of investment operations and information disclosure policies.


The World Bank claims that its involvement is due to the "the crucial importance of the project in fighting poverty". It claims that Chadian oil export revenues from the project will be approximately US$1.7 billion, 50% of the country's total current revenue, and that Cameroon will earn US$505 million from royalties over the 28-year life of the project.

However, a study by Harvard Law School's human rights centre found that only 4.5% of direct revenue will be spent on development in the affected communities; Baka and Bakola communities will receive only US$600,000. The management structure for dispersing the funds is stacked with local elite figures.

The remainder will be absorbed by general government expenditure. Cameroon has indicated that most of its revenue will be channelled into repayments on its crippling foreign debt, much of it held by the World Bank.

NGOs in Chad and Cameroon also point out that their governments have little or no commitment to development and will use the funds to strengthen their capacity for repression.

Cameroon has been listed by Transparency International for two consecutive years as the most corrupt country in the world and both countries have been condemned by the US State Department for repeated human rights violations. Both governments have closed, or threatened to close, organisations that have criticised the governments' handling of the project, and Chad has imprisoned a member of parliament who criticised the original project agreement.

A leaked 1995 World Bank report even recognises the low government willingness to tackle poverty and expresses concern at financial mismanagement.

"Once the money is flowing", far from enriching the two countries, speeding up development and weakening the hold of the elite, as the World Bank claims, "the unholy trinity of oil, power and corruption will make corrective action difficult", Environmental Defense economist Korinna Horta notes.

A leaked copy of the Project Appraisal Document, which forms the basis of the project, puts net revenues at US$9 billion over the 28 years. Of that sum, US$6.5 billion will be retained by the consortium operators.

ExxonMobil already earns four times the total annual revenue of Cameroon and 40 times that of Chad; the Chad-Cameroon oil pipeline will increase the ratio in ExxonMobil's favour.


While perhaps the most flagrant, the Chad-Cameroon pipeline is not the only example provided by the platform of 200 NGOs. Other World Bank-funded or -guaranteed oil, gas and mining projects named as environmentally and socially devastating include:

  • The Bolivia-Brazil pipeline, operated by Petrobras, Enron and Shell, which crosses three fragile ecosystems from Santa Cruz in Bolivia to Porto Alegre in Brazil, and will open up sections of the Amazon Basin to further deforestation and adversely affect indigenous communities;
  • Basic Resources International Limited's oil development in the middle of northern Guatemala's Peten region, which includes valuable rainforests and wetlands, and which expands the existing Xan oilfield, located in the middle of the Laguna del Tigre National Park;
  • Cameco's Kumtor goldmine in Kyrgyzstan, central Asia, one of the world's largest gold deposits, which has suffered three chemical spills in two years, including one in which 1.54 tonnes of highly toxic sodium cyanide were spilled into the Barskaun River;
  • the Lihir goldmine in Papua New Guinea, operated by one of the world's largest mining company, Rio Tinto, which will dump 362 million tonnes of waste rock and tailings directly into the ocean, a practice that is generally banned around the world; and
  • the Omai goldmine in Guyana, one of South America's two largest goldmines, whose tailings dam burst in 1995 releasing 3 million cubic metres of cyanide-laced waste into the Omai River.

In all cases the pattern is the same: the projects have been disasters for local peoples and ecosystems, World Bank involvement has been critical to whether or not the projects have been carried out and the prime (frequently the sole) beneficiaries have been among the largest, wealthiest and most powerful corporations in the world.

According to a report published in April by the Sustainable Energy and Economy Network and the International Trade Information Service, despite its public commitment to tackling climate change, the World Bank has put 25 times more funding into programs involving fossil fuels, which contribute to global warming, than into renewable energies.

Of its fossil fuel programs, nine out of 10 favour Western transnational corporations, several of which belong to the Global Climate Coalition, an industry lobby group devoted to stalling action on climate change.

No wonder one of the cries from protesters in Washington, D.C., was "More world, less Bank!".

"States of Unrest" | IMF/ WB Struggles | PGA