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IFI governance

News

Chad-Cameroon pipeline: Corruption and double standards

15 November 2004

The Bank’s claim that the Chad-Cameroon oil pipeline project proves that petro-dollars can benefit the poor is undermined by the claims of local communities and NGOs. They cite numerous examples of violations of social and environmental safeguards as a result of pipeline construction. The Bank has also come under fierce criticism for allowing Cameroon’s government to remain opaque and unaccountable, whilst setting up measures for the careful management of Chad’s revenues.

A recent report by NGOs from Chad, Cameroon and the US on the project illustrates the need for reforms in the functioning and mandate of the Inspection Panel. It also reveals in detail how safeguards were violated during project construction. In 2001 Chadian groups submitted a claim to the Inspection Panel, focussing on the policies of environmental assessment, involuntary resettlement, natural habitats and poverty reduction. In 2002, groups from Cameroon filed a claim addressing the situation of the indigenous Bakola people; degradation of water sources; the denial of worker’s rights; and lack of compliance with the compensation plan.

The pipeline, which runs from Chad’s southern oil fields in Doba to the Cameroonian Atlantic port of Kribi is financed by a consortium of ExxonMobil, Chevron Texaco and Petronas. The Bank contributes a mere 4 per cent, essential as political risk insurance. Oil production began in June 2003 and Chad received its first revenues in July 2004. An ‘oversight committee’, was set up by the Bank in response to NGO pressure to ensure that revenues gained from the project are being spent on poverty alleviation. The IFC recently announced that it would deploy a permanent staff of up to six people to Chad, to ensure that: “the money which will flow back to the government is going to be used in the most efficient way”.

Yet the beneficial effects of Chad’s new revenues have yet to be felt. The International Advisory Group (IAG), which monitors implementation of the social and environmental safeguard policies of the World Bank in Chad and Cameroon, concluded during a visit in May 2004 that the country’s capacity to manage its oil revenue was inadequate. “The World Bank must share responsibility with the government for having allowed funds for the capacity-building projects to be used for often unproductive studies and construction projects, with serious consequences in terms of Chad’s lack of training and preparedness.”

Comparable checks on revenue investment and safeguards have not been imposed on Cameroon, despite its low poverty ranking and poor human rights record. The Bank states that it did not impose conditions on Cameroon because Cameroon’s income from the project is smaller – “it’s a Chad project…they are Chad oil revenues”, said Emmanuel Noubissie Ngankam, Bank operations officer in Cameroon. The IAG reported that the regulatory framework to guarantee safe implementation of oil activities while providing environmental protection, as well as health services for the populations adjacent to the pipelines were still behind schedule in Cameroon.

Rashad Kaldany, director of the bank’s oil, gas, mining and chemicals department recently announced that the Bank will increase its investment in mining projects in developing countries, with plans to get involved in projects at an earlier stage to ensure better practices and less corruption. He claimed he would use increased investments – expected to rise from about $107 million in 2004 to $150 million a year – to exert greater influence over environmental safeguards and more transparent book-keeping.