Fueling strife in Chad and Cameroon

Exxon, Shell and the French oil company ELF have teamed up to launch Africa’s largest oil development project ever.

The consortium plans to invest $3.5 billion to develop oil fields in southern Chad that are estimated to contain approximately 900 million barrels of recoverable oil reserves. The companies intend to pipe the oil through neighboring Cameroon to the Atlantic coast-a 600-mile journey that traverses biodiverse forests and politically volatile lands. At the coast, the companies will load the crude on to tankers bound for Europe.

World Bank funding through both the International Development Association (IDA), the lending window for the poorest countries, and the International Finance Corporation (IFC), which lends directly to the private sector, will represent the foundation of the project’s financial structure, according to a leaked Exxon document. Although the Bank’s $370 million represents little more than 10 percent of over all project costs, Philippe Benoit, the World Bank official who leads project preparation, and his colleagues at the Bank say the oil consortium will not go forward without World Bank support. World Bank participation greatly reduces the political risks for the consortium; because maintaining good standing with the World Bank is a pre-condition for receiving aid and credit from many sources, Chad and Cameroon would be unlikely to interfere with the operations of a World Bank-backed project. The consortium also hopes that the World Bank’s imprimatur will attract additional low-cost funding from export-credit agencies and commercial banks. The IFC plans to help the consortium raise about $1 billion in limited recourse debt (debt for which the liability of the parent company is limited).

While World Bank officials are heavily involved in project preparation, the Bank’s Board of Directors has not yet approved funding of the controversial project. Critics say project approval would mock the Bank’s stated mission of poverty alleviation, and signal that the Bank’s new emphasis on cooperation with the private sector will amount to little more than a new corporate welfare program.

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Fueling strife in Chad and Cameroon
The Exxon-Shell-ELF-World Bank Plans for Central Africa
by Korinna Horta

Multinational Monitor, May 1997

http://multinationalmonitor.org/hyper/mm0597.05.html

 

Pipelines to Power

In Africa, Latin America and Central Asia - where many governments are desperate for a stable source of income - oil is being extracted and land is being ‘rented’ for pipeline corridors on terms that are far more favourable to oil companies than to the oil-producing countries. Taxes are waived. Environmental and corporate laws are flouted, changed or avoided. ‘Profit-sharing’ agreements are struck so that countries don’t get to share in the profit until after corporate investors recoup both their costs and a ‘fair’ return on their investment which can be one, even two decades after the oil starts flowing.

Consequently, as the oil flows away down the pipeline and out of the country, so do the profits. In 2002, five oil corporations made the list of the top fifteen largest companies in the world, with Shell and ExxonMobil the globe’s third and fifth most profitable companies. In the same year, 4 of the 5 top oil-exporting countries failed to rate a place amongst the top 60 in the UN Human Development Index (which ranks nations according to their people’s life expectancy, education and real income).’While BP’s chief executive Sir John Browne is looking forward to an annual pension of $1.97 million, the majority of people in one of the world’s largest oil-exporting nations, Nigeria, are getting less than a dollar a day. And the proportion of Nigerian households living below the dollar-a-day poverty line has actually grown, from 27 per cent in 1980 to 66 per cent in 1996.

In Middle Eastern countries like Saudi Arabia, health, education and benefits available to the people smooth discontent about the unfair distribution of oil wealth. But in poor countries with unstable democracies, too little oil money comes back to benefit the people and is instead being spent on maintaining political and personal power of the ruling elite.

A good example is provided by Africa’s Chad-Cameroon pipeline - through which oil started flowing three months ago. The World Bank Group justified its $93-million commitment to the project by trumpeting its poverty-reducing potential - so desperately needed for Chad. In an embarrassing turn-around in November 2000 the World Bank admitted that Chad’s Government had spent an estimated $4.5 million of oil-related money on arms to fight its civil war.

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Pipelines to Power
by Chris Richards

New Internationalist magazine, October 2003

http://www.newint.org/