Cameroon & Chad
World Bank approves support for Chad-Cameroon Pipeline

afrol.com, 6 June - The Board of the World Bank Group today overwhelmingly agreed to support the Chad-Cameroon Petroleum Development and Pipeline Project - an unprecedented framework to transform oil wealth into direct benefits for the poor, the vulnerable and the environment. 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. 

The project, which is expected to cost $3.7 billion, will develop the oil fields at Doba in southern Chad and construct a 1,070 km pipeline to offshore oil-loading facilities on Cameroon's Atlantic coast. The sponsors are Exxon Mobil of the U.S. (the operator, with 40 percent of the private equity), Petronas of Malaysia (35 percent), and Chevron of the U.S. (25 percent). Depending on world oil prices, the project could yield up to $2 billion in revenues for Chad and $500 million for Cameroon over the 25-year production period.

Almost all the $3.7 billion investment will be private. The World Bank Group will provide $93 million on IBRD 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 (IFC) to the joint-venture pipeline companies. In addition, IFC will mobilize up to $300 million in syndicated loans from commercial banks. The remaining funding will be provided by the oil companies themselves, commercial bank loans supported by export credit agencies, and possibly project bonds.

James D. Wolfensohn, President of the World Bank Group, while acknowledging the international debate surrounding the project, expressed strong support for it:  

"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, combined with the strong participation of civil society within Chad and Cameroon and around the world, have made this a better, stronger project. The real challenge is about to begin. We intend to pursue it, with our partners, with the same openness and thoroughness we have brought to the process so far."

This project represents an unparalleled opportunity for creating a much brighter future for Chad. At present, the country cannot afford to provide the minimum public services necessary for ensuring a decent life for its people. In four years' time, the pipeline would increase annual Government revenues by 45-50 percent per year over current levels and allow it to use those resources for poverty-reducing investments in health, education, environment, infrastructure and rural development. 

In addition to the IBRD and IFC 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. These would be supported by US$23.7 million and US$5.8 million equivalent credits from the International Development Association (IDA), the World Bank's lending arm for the poorest countries.

An International Advisory Group consisting of independent international experts will monitor the projects, with particular attention to social and environmental safeguards, and will report to Mr. Wolfensohn. Their findings will be discussed by the Senior Management and Board of the Bank Group and then made public.

Source: World Bank

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