World Bank approves Chad-Cameroon oil pipeline
The World Bank has approved loans to enable construction of a 663-mile oil export pipeline from Chad to Cameroon. The action will enable a group of companies led by ExxonMobil Corp. to proceed with a $3.7 billion African development.
Washington, DC�The World Bank has approved loans to enable construction of a 663-mile oil export pipeline from Chad to Cameroon. The action will enable a group of companies led by ExxonMobil Corp. to proceed with a $3.7 billion African development.
ExxonMobil has a 40% stake in the consortium, Malaysia's Petronas 25%, and Chevron Corp. 25% (OGJ, Apr. 10, 2000, p. 40).
Beginning next year, the project would develop about 300 oil wells near Doba in southern Chad and move 225,000 b/d to an offshore terminal at the Cameroon port of Kribi.
Environmentalists say the pipeline would harm the coastal rainforest, animal species along the route, and Cameroon's Pygmy population. Social activists say corruption in Chad and Cameroon would prevent the project from helping the local population.
The bank said almost all the $3.7 billion investment will be private. The World Bank Group will provide $93 million on International Bank for Reconstruction & Development terms ($53.4 million for Cameroon and $39.5 million for Chad) to finance the governments' equity share in the project and a $100 million loan from International Finance Corporation to the joint-venture pipeline companies.
Also, IFC will mobilize up to $300 million in syndicated loans from commercial banks. The remaining funding will be provided by the oil companies, commercial bank loans supported by export credit agencies, and possibly project bonds.
The oil firms said the bank's support is necessary in the politically unstable nations as a hedge against instability.
The World Bank said the pipeline could increase the Chad government's revenues $80 million/year and Cameroon's $20 million/year. On Dec. 30, 1998, Chad's Parliament approved a law that allows it to spend 10% of the oil revenues, hold 10% for future generations, and spend the remaining 80% on social programs. In Cameroon, increased revenues from the project will be less significant: only 3% of the national budget, compared with 45-50% in Chad.
James Wolfensohn, World Bank president, said, "The Chad-Cameroon project reflects an unprecedented collaborative effort between the bank group, the consortium of private companies, and the two governments. �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...have made this a better, stronger project."
The bank said, "In addition to the financing, the package of support includes a first-of-its-kind program to direct new revenues to support economic and social development programs in Chad, which is one of the world's poorest countries.
In addition to investments in the pipeline project, the board approved two projects to help strengthen Chad's and Cameroon's capacities for environmental management and monitoring of the petroleum sectors. They would be supported by, respectively, $23.7 million and $5.8 million equivalent credits from the International Development Association, the World Bank's lending arm for the poorest countries.
The bank said a group of independent international experts will monitor the projects, with particular attention to social and environmental safeguards, and will report to Wolfensohn.