Press Releases

IFC Signs Loans for Chad-Cameroon Pipeline Project

Ludwina Joseph
Phone:  (201) 473-7700

Fax:  (202) 974-4384


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 production period.

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.



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 government expenditures.

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 implementation.

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.


Lender of Record for IFC Tranches

International Finance Corporation

Participating Banks in the IFC and Export Credit Agency Tranches


Crédit Agricole Indosuez

Bayerische HypoVereinsbank

BNP Paribas

Dexia Crédit Local

Fortis Bank

ING Bank N.V.

IntesaBCI S.p.A, London Branch


Natexis Banques Populaires

Standard Chartered Bank


Bank of Scotland

Citibank, N.A.

Crédit Lyonnais

The Dai-Ichi Kangyo Bank, Limited

Erste Bank

Société Générale