Bank implementation falls short on oil, gas and mining

20 January 2006

The release in December of the World Bank’s report Implementation of the management response to the Extractive Industries Review(EIR) represents the first serious attempt by the Bank to bring its extractive industry sector operations in line with its mandate to “alleviate poverty through sustainable development”. However, shortcomings identified by civil society remain similar to those that have been expressed since the Bank published its management response in September 2004 (see Update 46, 47).

The report concludes that the Bank “has moved actively to implement the specific recommendations of the management response to the EIR and its own evaluation reports” and that there have been improvements in its performance. It highlights successes in governance, achieving broad community support, revenue transparency, and tracking project impacts. However concerns expressed in a memo to several executive director offices from US NGO Bank Information Center (BIC) regarding the report do not support the Bank’s findings. Concerns include: lack of effective consideration of governance; the IFC’s failure to require investors to disclose project impacts; an over-reliance on investors’ self-assessment of poverty impacts; an apparent lack of “broad community support” for several EI projects; and a failure to accurately represent the revised policies of the (IFC) revised performance standards, sustainability policy and disclosure policy.

Grounded in Washington

A report by CEE Bankwatch and BIC assesses to what extent Bank projects in eastern Europe and central Asia comply with both EIR report recommendations and the commitments made by the World Bank Group management in their response to it. It assessed six projects using indicators covering both the EIR report recommendations and the management response commitments in Romania, Poland, Russia and Azerbaijan. Findings include:

there have been no qualitative shifts in the implementation of extractive projects
  • violations of the Bank’s own policies tend to be the rule rather than the exception. Violations were observed similar to those that were the source of public criticism leading former Bank president Wolfensohn to set up the EIR in the first place;
  • project performance was the worst on indicators of revenue and contract transparency, with 90 per cent and 100 per cent unsatisfactory scores respectively across projects;
  • there has been a clear improvement in linking projects with country assistance strategies and poverty reduction strategy papers; and
  • The Russkiy Mir case, which violates several IFC policies was highlighted for its poor performance and affect on the local population.

The report concludes that there have been no significant qualitative shifts in the implementation of extractive projects in the region and that the EIR recommendations and management response commitments have not yet been institutionalised.