EIR Update: highlights of civil society meeting with World Bank Group

21 April 2005 | Minutes

The meeting was attended by representatives from the IFC’s oil, gas, and mining department and corporate relations team, and approximately 18 NGOs representing eight different countries from the north and south.

In general, the meeting revealed that extractive industry review (EIR) commitments are being approached in a voluntary manner, i.e they have not been made mandatory for clients of the International Finance Corporation (IFC). EIR commitments that have been taken up are not being applied systemically across all operations. They tend to be on a “pilot case” basis or determined by client “capacity”.

The extractive industries advisory group

This is still being set up and will consist of government, industry, and civil society representatives (of which 3-4 each). All but one or two spots have already been filled for civil society, yet most cso representatives at the meeting had not been informed of the selection process. Advisory group members will not be named until the selection process has been finalised. CSOs questioned why the CSO self-selection process used during the EIR was not implemented, and why the WBG did not send out notice about this advisory group as an element of its follow-up on the EIR management response, at least to all those CSOs who had participated in the EIR process (e.g. regional consultations). Clive Armstrong claimed that the Bank consulted with various individuals in the selection process of the advisory group. He also clarified that there is no formal system to ensure that the advisory group members will obtain input from others. CSOs have approximately one week to send suggestions for consideration of the last one or two spots. Civil society requested that the Bank send a note to the selected CSOs asking if they would be willing to identify themselves to civil society. Armstrong stated that the Bank would consider this.

csos had not been informed of the selection process

EIR annual progress report to the Board

The Bank management-prepared progress report is planned to go to the Board December 2005/January 2006. There are no current plans for civil society input or to release the report before the board discussion. It will cover each general category of the MR. It is not scheduled to go to Committee on Development Effectiveness (CODE).

Country assistance strategies (CAS) and guidelines for resource rich countries

For resource rich countries, the CAS and related documents should clearly identify: 1) key EI areas/issues, 2) how the government is addressing the EI issues, 3) how the Bank will address the EI issues, and 4) if not, specifically why the Bank is not addressing the EI issues.

Many of the CASs for the year following the release of the WB EIR Management Response (MR) will not include guidance on EI issues because the preparation of the CAS started before the MR was issued. Application will therefore be patchy. EI issues for the resource rich countries for this year will be noted during the CAS final review.

On small scale mining in the new CASs: It is rising up the agenda. In Sierra Leone, there is strong Bank engagement on what the government can do to include benefits to small-scale miners. The Bank supports an NGO-led project in this area, which is noted in the CAS. The Bank acknowledges the need to engage with the government in the sector, the benefits flowing to them, and to engage with them on advice. But beyond that it is on a case-by-case. The Bank’s most ambitious small-scale mining project is in Nigeria. The $60-70 million project stemmed directly from the EIR consultation process (Africa regional consultation in Maputo, January 2003).

EIR management response commitment on the development and monitoring of poverty indicators

Civil society expressed concern that the draft indicators distributed at the meeting are designed to assess only potential positive social impacts of EI, not potential negative social impacts. It was pointed out that for health impacts, in addition to such items as new clinics, the incidence of alcoholism, AIDs, crime, etc. should also be considered. Poverty impacts should also consider alternative losses to the community experienced due to such things as no longer being able to use land for productive activities (these are losses typically not covered by project compensation). In general, the indicators are very vague and do not elaborate. Clive Armstrong agreed to discuss this with the IFC.

The selection of specific poverty impacts to track will be dependent upon the project type (& project size) and the client’s “capacity”. The IFC will ask clients to collect data at the beginning of the project (baseline establishment) and monitor indicators over time. Data will be used to help target community projects.

Civil society pointed out that independent data collection and monitoring are not required and that the company has no incentive to report negative impacts and the IFC is not a neutral party either. Armstrong responded that the IFC will not mandate independent reviews because of cost issues. The company has a strong business incentive to get independent reviews because they want to gain community trust. The IFC is not at the stage to force people to do it independently and will not make it a condition for lending.

CSOs emphasised the importance of independent monitoring, stating that the avoidance of mandatory requirements protects only companies not local populations. They asked how the IFC would ensure that the data is accurate and that the necessary measures are put in place to correct identified poverty/social issues, particularly in cases where EI exploration and construction start before Bank involvement and collection of “baseline” data is effectively impossible. Clive Armstrong agreed that baseline data collection needs to happen as soon as possible for projects and acknowledged that the IFC doesn’t generally get involved until exploration is done.

No-go zones

Clive Armstrong stated that this should be discussed during the IFC Performance Standards (because not EI-specific, but applicable to all projects)

Social and environmental cumulative impacts assessment

CSOs were informed that it would be better to discuss this matter with Rachel Kyte as part of the Performance Standards (& Disclosure Policy Review) since it is not just an EI specific issue.

Governance (disclosure of indicators considered and rationale for WB/IFC involvement)

In addition to the CAS which deals with governance significantly, the IFC will try to present and consider risks around specific EI projects in a given country by developing governance indicators towards systematically trying to review the risks and addressing how to mitigate them. This approach will mainly pertain specifically to large EI projects (ones that produce 10-15% of government revenues). Management response said for the very largest projects, where revenues would be 10% or more than government revenues measures to mitigate government risks would be put in place. We are systematically setting up internally a framework to review governance risks-looking at quality of governance. These indicators and results would be presented to the Board.

It is not expected that these indicators will be made public as they will be contained in Board documents

Revenue and contract transparency

Civil Society asked why transparency should vary with the magnitude of revenues. Shouldn’t transparency requirements apply, as a principle, to all projects? One would even think it would be easier to render a small project transparent than a large one. They gave the example of the West Africa Gas Pipeline (WAGP), as the first transnational EI project post EIR, which has no transparency measures.

Clive Armstrong from the IFC oil gas and mining department explained that after 2 years, any project the IFC finances has to make revenues transparent. He understood that in the case of the WAGP, all revenues that pertain to the pipeline and the project will be made public. Revenues that are earned upstream etc-payments from upstream part- may not be. IFC contract transparency requirements apply to big contracts, where there are issues which are clearly in the public domain. This does not necessarily apply to the whole contract.

Free, prior and informed “consultation” (FPIC)

FPIC is being addressed in the broader IFC performance standard discussions.