Washington, D.C., June 21, 2001—The
International Finance Corporation, the private sector arm of the World
Bank Group, is lending US$100 million for its own account and an additional
$100 million for the account of commercial bank participants in IFC B-loan
financing to develop the Chad-Cameroon Petroleum Development and Pipeline
Project. The project represents a pioneering effort by the World
Bank Group to create an unprecedented framework to transform oil wealth
into direct benefits for the poor, the vulnerable, and the environment.
The World Bank Group's Board approval in June 2000 paved the way for launching
the $3.7 billion project which involves developing oil fields in the Doba
Basin in land-locked southern Chad and constructing a 1,070 km pipeline
through Cameroon to a floating storage and offloading facility, 11 km off
the Atlantic Coast for export. The project is expected to yield $2
billion in revenues for Chad and $500 million for Cameroon over the 25-year
The World Bank and European Investment Bank are jointly financing the equity
contributions of the Chad and Cameroon Governments. The World Bank
and IFC financing mobilizes over $3.5 billion in funding by private oil
companies, commercial banks, and export credit agencies.
The joint-venture companies which have committed significant equity to
the up-stream oil fields and transportation system development, are affiliates
of ExxonMobil of the U.S. (the operator, with 40 percent of the private
equity), Petronas of Malaysia (with 35 percent equity), and Chevron of
the U.S. (with 25 percent equity).
In addition to its $100 million loan, IFC will mobilize another $100 million
in syndicated loans from commercial banks. The remaining debt financing
of $400 million will be provided under the cover of the French export credit
agency, COFACE, and the US-Exim Bank which will each provide $200 million.
The arranging banks for the export credit agency facilities are ABN
AMRO Bank for US-Exim Bank and Crédit Agricole Indosuez for COFACE.
The project represents an unparalleled opportunity for creating a brighter
future for Chad –one of the poorest countries in the world. At present,
the country cannot afford to provide the minimum public services necessary
for ensuring a decent life for its people. By significantly increasing
government revenues and encouraging the country to use those revenues for
critical economic and social services such as health, education, infrastructure,
and rural development, the project provides a unique opportunity for Chad
to lift itself out of poverty. The Chad-Cameroon petroleum development
and pipeline also represents an unprecedented public-private collaboration
between members of the World Bank Group, the two governments of Chad and
Cameroon, a consortium of private companies, two major export credit agencies,
and a group of commercial banks. The World Bank and IFC's active
role in dealing with major facets of the financing, as well as in setting
high standards for environmental, social and governance matters, has been
instrumental in making this a better project with stronger safeguards.
The World Bank Group has also been instrumental in ensuring meaningful
consultation with the affected populations and in triggering compelling
and intense debates with concerned citizens.
The mission of IFC, part of the World Bank Group, is to promote sustainable
private sector investment in developing countries as a way to reduce poverty
and improve people's lives. IFC finances private sector investments
in emerging markets, mobilizes capital in the international financial markets,
and provides technical assistance and advice to governments and businesses.
CHAD-CAMEROON PETROLEUM DEVELOPMENT & PIPELINE PROJECT
Economic/Social Impact—In Chad, each year, one in five children die
before the age of five and it is expected that revenues from the proposed
pipeline—linked to improved basic health and education programs—will
save a large number of lives in the future. The Government has already
targeted most of the oil revenues to poverty reduction and to ensure public
oversight of the use of these resources. On December 30, 1998, Chad’s
Parliament approved a law that sets out the Government’s poverty reduction
objectives and details arrangements for the use of the revenues. Under
the law, 10 percent of royalties and revenues will be held in trust for
future generations, 80 percent of remaining funds will be devoted to education,
health and social services, rural development, infrastructure, and environmental
and water resource management, and 5 percent will be earmarked for regional
development in the oil-producing area. There will be annual published
audits of the petroleum accounts, regular public expenditure reviews by
the Government and the Bank, and special arrangements for channeling and
accounting for funds. The law also created an oversight committee—Including
representatives of the Government, Parliament, the judiciary, and civil
society—to monitor the use of oil revenues. A related IDA capacity-building
credit will support the work of the oversight committee, as well as strengthen
Chad's general accounting office and the dissemination of information about
In Cameroon, increased revenues from the project will be less significant—only
3 percent of the national budget, compared with 45-50 percent in Chad.
Public disclosure of the use of oil revenues is already part of the
Bank and the IMF’s economic reform program in Cameroon.
Environmental Impact—The environmental risks of this project are considered
to be significant but manageable and, although numerous issues have been
identified, adequate measures have been designed to deal with them. Much
work has been done in studying alternative routings and induced impacts.
National experts, IFC and Bank specialists, and consortium personnel
walked the entire pipeline route to double-check data from aerial surveys.
These analyses were summarized in a 19-volume Environmental Impact
Assessment and Management Plan, the first draft of which became available
in June 1998 and the final version in June 1999. Additional information
regarding the oil spill response plan was made public in October 1999.
These documents were the subject of regular exchanges of views with
local and international NGOs. Discussions were aimed at ensuring
that the project planners were studying the full range of potential risks
and applying the appropriate standards of environmental protection. Following
18 months of analysis, significant changes were made to the proposed right-of-way.
As a result, the project will have only a minor net effect on the
natural and human environments. The pipeline will be buried, rather
than above-ground. For most of the route, it follows existing infrastructure.
No one will need to be resettled along the 1,070 km route—although
a maximum of 150 families (probably fewer)—may be displaced where the
oil itself will be produced. Although construction may interrupt
farmers’ access to their land for a brief period, they will be compensated
for lost income and lost fruit trees.
The final route complies with World Bank Group safeguard policies, including
those on Environmental Assessments, Natural Habitats, Indigenous Peoples,
Cultural Property, Resettlement, and Forests. Only a small amount
of tropical forest (10-15 sq. km.) will be lost as a result of the construction.
To compensate for this, two large new national parks (approximately
5,000 sq. km.) have been created in Cameroon, and will be managed for better
biodiversity conservation in those areas.
Public Consultations/Debate—Public consultations on the project started
in 1993. The initial aims were to share project information with
the affected communities, determine project land needs, and establish a
framework for reducing adverse impacts. Consultations since 1998
have focused extensively on the draft Environmental Impact Assessments
studies and draft Environmental Management Plans. Information on
the project has been widely disseminated, and hundreds of public meetings
have been held in local languages. The World Bank and IFC country
offices and local staff have been actively involved in improving the quality
of the consultation process, and in helping to build the capacity for constructive
engagement of local NGOs. In addition, Washington-based staff have
participated in some of these consultations or facilitated discussions
between the parties. The consultation process continues during project
More information has been made available about this project than any other
activity in the country. Consultations with affected populations,
seminars, including those organized by NGOs over the last three years,
have allowed the affected populations, local NGOs, traditional village
authorities, and farmer organizations to speak out about the project. These
exchanges have improved the project and also contributed to strengthening
the voices of the affected populations.
NAMES OF BANKS INVOLVED IN SYNDICATE FOR
CHAD CHAMEROON PIPELINE PROJECT
Lender of Record for IFC Tranches
International Finance Corporation
Participating Banks in the IFC and Export Credit Agency Tranches
ABN AMRO Bank N.V.
Crédit Agricole Indosuez
Dexia Crédit Local
ING Bank N.V.
IntesaBCI S.p.A, London Branch
Natexis Banques Populaires
Standard Chartered Bank
Bank of Scotland
The Dai-Ichi Kangyo Bank, Limited