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Chad-Cameroon pipeline: unblurring the mirage of black gold
by Akong Charles Ndika

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On Friday, October 10, 2003, amid the flurry of foreign dignitaries and some African heads of state in Kome, Chad, President Idriss Deby symbolically turned the tap that opened the diurnal flow of 225,000 barrels of black gold. The $3.7 billion project, crown jewel of the World Bank, is the biggest foreign investment in sub-Saharan Africa. For the next 25 years, approximately 900 million barrels of oil will be pumped from 300 oil wells drilled in Doba, southern Chad, along a 1,070 km pipeline to the Atlantic coast of Kribi, Cameroon.

Although World Bank financing totalled just four percent of the cost, it was nevertheless essential to the project. The oil consortium, composed of ExxonMobil, Petronas and Chevron Texaco, considered the participation of the World Bank as necessary political risk insurance, which enabled them to raise more money on international capital markets that would not otherwise have been available.

Meanwhile, the World Bank embraced the project as an unparalleled opportunity for land-locked Chad to raise the lives of its 6.5 million population out of extreme poverty, and for ocean-bordered Cameroon to generate much needed revenue. In addition, the World Bank trumpeted its intention to ensure that policies were observed that would protect the environment and society. Little wonder then that the World Bank touted the Chad-Cameroon petroleum project, whose construction had started in 2000 as a prototype for the extractive industry, designed to carry oil wealth not to a few but to the mass of the poor.

Some two months after Chad, the world’s fifth poorest country, entered the list of Africa’s petro-states, it is worth while to take stock of the overall project impact now that the exploitation phase has started. Will the project break free from the traditional gap between expectations and dismal realities of oil exploitation? Better still, has the oil exploitation been a Weapon of Mass Poverty (WMP) or a Weapon of Mass Development (WMD) to Chad and Cameroon? In attempting an answer these questions, this paper will focus on the World Bank’s politics of engagement with the project and how it squares with its mission to alleviate poverty. This is even more important at the dawn of celebrations to mark the 60th anniversary of the World Bank’s and IMF’s special influence on global development outcomes. What preliminary lessons can be drawn from this unique experience in sub-Saharan Africa?


“Has the oil exploitation been a Weapon of Mass Poverty (WMP) or a Weapon of Mass Development (WMD) to Chad and Cameroon?”

Discounting corruption and belligerency

The background of any petroleum project is key to determining the development outcomes. In fact, the underlying development problems associated with oil extraction are not inherent in the resource. However, there is little contention about the ability of oil to ratchet up pre-existing conflicts in a society; oil can become the very rationale for starting wars. In this light, the socio-political environment in which the World Bank approved the project was a potent recipe for poor development outcomes.

There is an endemic mix of corruption and civil strife in Chad and Cameroon. For instance, since independence, Chad has been marred by a vicious cycle of conflict and war; pockets of rebel insurgence are ubiquitous in the country. Besides the absence of basic ingredients for the growth of civil society, elections are shamelessly rigged, fraud is rife, and regimes have shown their predilection for violent repression of dissenting voices. For example, villagers were coerced into giving their permission for the project in consultations prior to its approval. Tales in Kome of villagers being consulted in the presence of government forces and rebels are all too common. The village chief had been imprisoned and an oil company representative arrived accompanied by military police. In this situation, most people were too intimidated to speak out against the project. Some village chiefs later excluded those who expressed negative opinions. Furthermore, in Kome, authorities imprisoned a young man who voiced opposition against the project on the day the consultations were held.1 And for its part, Cameroon has repeatedly worn the crown in the league of the most corrupt countries in the world.

Under this bellicose climate, information disclosure concerning the project was virtually absent. However, in 1997, when the World Bank Group (WBG) made clear its intention to engage in the project, civil society organisations in Chad and Cameroon argued for a delay to ensure the two countries upgraded their governance capacities to a point that would allow benefits to trickle down to the masses. Contrarily, the World Bank in June 2000 discounted the burgeoning corruption and civil strife in Cameroon and Chad to approve the project. Civil society was proved right when the Chadian government used the $25 million received from the consortium as a signature bonus for the purchase of arms to quell a rebel insurgence in the north.2 Furthermore, a couple of days after the project's official inauguration last October, the Chadian government closed the only independent radio station, FM liberté, which had close ties to the country's human rights organisations. Worse still, residents of the captial Njamena witnessed the first public executions in more than a decade, following court trials described as farcical by human rights groups. This was a warning signal to critical voices to stay quiet. Meanwhile, Cameroon continued to stay on top of Transparency International’s rankings of the most corrupt countries on earth. Chad has also not been spared from corruption scandals; the World Bank had been implicated in a couple of them.3

It is worth noting that the World Bank’s own Operations and Evaluation Department review commissioned in 2001 finds the Bank wanting on issues of governance. The review points out that while the WBG is aware of the underlying causes for the underperformance of resource-rich countries, it has yet to formulate and implement viable approaches to address them. Unfortunately, poverty alleviation is the casualty of the World Bank’s inability to proactively mainstream transparency, accountability, and participation in its engagement with Chad-Cameroon pipeline project. In fact, the recently released report of the World Bank sponsored Extractive Industry Review (EIR), emphasizes the role of governance in shaping development outcomes of oil projects. And unequivocally, it recommends the World Bank to stop supporting petroleum projects in areas of conflict.

Broken livelihoods and promises

Approximately, 880 km of the pipeline traverses Cameroon’s fragile ecological zones. This includes one of Africa’s unique coastal rainforests, home to several indigenous peoples. Before the commencement of the construction phase, thousands of affected peoples living in villages and communities along the route of the pipeline were identified for eventual compensation. One hundred and fifty families were singled out for resettlement. Much village lands was expropriated, crops and plants destroyed and water sources polluted. The compensation plan, that included individual and communal compensations, was very limited in scope and inadequate to restore or improve disrupted livelihoods. Only selected crops were entitled to compensation. In a region where the health of communities like those of the pygmies depends on ingenious use of herbs and medicinal plants, such plants were left out of compensation schemes. In fact, the assessment undervalued people’s property.

Meanwhile, a survey carried out by FOCARFE (Fondation Cameroonaise pour l’Action Rationalisé des Femmes) shows that despite compensations being paid to replace agricultural land, most of the funds did not go into agricultural production or reinvestment to make provision for the future. The affected communities have been left alone with little or no skills to face the long-term impacts: funds had no impact in terms of generating new livelihoods for villagers; prices have increased due to a shortage of labour and agricultural goods on the market; rural to urban exodus has increased as people used funds to buy cars and motor bikes; matrimonial disputes and tension increased as recipients married new wives; and finally conflicts between locals and migrants attracted by the new found wealth have also increased. Indeed, how can the World Bank with a mission to alleviate poverty expect villagers who have had little experience with a cash economy to manage “windfall’’ compensation? It is worth mentioning that NGOs had earlier advocated that the World Bank make available the necessary means to build the capacity of communities to manage such compensation.

On the other hand, the communal compensation plan, which had as its objective to compensate communities for lost natural resources or traditional land usage rights from the proximity of the pipeline, was inadequate. Communities that were supposed to identify projects themselves through consultations were instead forced to choose from a restrictive list of options proposed by the consortium. Strikingly, access to energy was not provided in a project that prided itself on alleviating poverty. Rural electrification never featured in the list despite the fact that some villages were prepared to top up the paltry financial compensation received to meet the cost of electrification. On several occasions, the consortium opposed the realisation of community-demanded rural electrification schemes simply because they do not figure on the catalogue of options on offer. Ironically, Chad and Cameroon are behind all sub-Saharan Africa in rural electrification.4

Similarly, the pipeline led to the destruction of habitats and pollution of village water sources, and villages and homes were cut off. For instance, the villages of Bendoh, Makeuri, and Ngalabe in Chad, have been completely encircled by oil wells. The villagers are very uncertain about their fate. And some, already feeling very precarious, have begun resettling elsewhere. Hence, this raises a serious question for the World Bank resettlement policy: when is resettlement involuntary? Unfortunately, villagers who are finding it intolerable to continue with their lives and are resettling elsewhere are not covered by the World Bank resettlement policy. Unequivocally, the EIR report recommends that the WBG should only support projects with voluntary resettlement, and that resettled groups must be substantially “better off.”

In addition, the compensation plan, which was pegged on land tenure rights, disfranchised many marginalised communities. For instance, the Mbororo community, whose peculiar nomadic pastoralist lifestyle and culture exposed them to marginalisation does not feature in the Indigenous People Development Plan (IPDP). Yet, these people, whose culture is threatened with extinction by other dominant groups, are covered under Convention 169 of the International Labour Organisation, protecting indigenous and tribal peoples in independent states.5 In fact, Article 14 stresses that attention should be paid to the situation of nomadic peoples. However, Mbororos displaced by the passage of the pipeline were not compensated due to their nomadic lifestyle, which prevents them from owning land.6 In this light, the EIR report recommends WBG should ensure that its policy on indigenous people is consistent with international law.

Progress at different speeds

The quantity of safeguards and monitoring mechanisms is the foundation on which the World Bank has sold the project as a model for developing countries. This uniqueness, according to the World Bank, enables the project to promote bold social and environmental initiatives. In this light, several safeguards such as the Cameroon Petroleum Environment Capacity Project (CAPECE), the Indigenous People Development Plan (IPDP), and the Environment and Development Fund (FEDEC), were all incorporated in the project design. However, the construction phase ended one year ahead of schedule with most of these social and environmental components still on paper. For example, at the end of construction, CAPECE, which aims at building the capacity of the government to ensure respect for health, compensation, and environmental management plans, has not been realised. Furthermore, IPDP, which aims at singling out the pygmies, whose territory was crossed by the pipeline, is still faltering. The piquant illustrations of the two-speed evolution of the project highlight a crucial issue: maintaining profits and ecological principles in petroleum exploitation. Driven by the ethos of cost minimisation, the consortium was motivated to fast-track its operations, while time-intensive social and environmental components such as capacity building lag behind. To what extent, therefore, can multinational corporations be made to synchronise the evolution of exploitation operations with that of social and environmental safeguards? In addition, job generation has been an obvious casualty of the two-speed evolution. Though majority of domestic jobs generated were temporary and unskilled, the faster pace of the construction phase adversely affected employment.


“Driven by the ethos of cost minimisation, the consortium was motivated to fast-track its operations, while time-intensive social and environmental components such as capacity building lag behind.”

Meanwhile, the seven levels of monitoring trumpeted by the World Bank as a blueprint for the extractive industry, are at their best ineffective and at worst have no power to make their recommendations binding on the World Bank and the consortium. This is the case of the International Advisory Group (IAG), whose reports have not always resulted in action being taken. Only the consortium is able to monitor the project on a daily basis; IAG statutes limit its field visits to just twice a year.

Sowing petroleum

Turning oil revenue into long-term benefits for the masses is the most contentious issue in resource-rich countries, particularly in Africa. Ultimately, this depends on the quality of public policy. Thanks to the quality of its public policy, Norway, an oil-rich country, has consistently ranked near the top in the United Nations Human Development report. In this connection, the World Bank prides the revenue oversight mechanism in the Chad-Cameroon pipeline as an innovation to the extractive industry and a model for the developing world.

Under pressure from World Bank, the Chadian government decreed a petroleum management law in 1998.7 The law provides for the following division of the $2 billion royalties and dividends that would accrue from the project in the next 25 years: 10 percent set aside in a future generation-fund to prepare Chad for a post-oil future; the remaining 90 percent would pass through an offshore petroleum revenue account; 80 percent of which would go to five priority sectors (health, rural development, education, infrastructure, and environmental and water resources); 5 percent would go to the Doba oil producing region; and the remaining would be used by the Chadian government to tackle pressing operational needs. To mainstream transparency, accountability, and participation, an oversight committee, comprising representatives from the civil society, government, administration, and judiciary has been created. This committee monitors the flows and approves the spending from the offshore account.

Undoubtedly, the initiative is laudable; however, there are some flaws which prevent it from effectively sowing the benefits of petroleum. For instance, the committee lacks basic office facilities and has questionable capacity. Recently, President Deby also reshuffled his cabinet and appointed his brother-in-law Idriss Ahmed as the new president of the Chadian Central Bank, which automatically makes him the candidate for the presidency of the oversight committee.8 Regarding sectoral spending such as health, for example, the law does not define whether funds would be allocated to hospitals in towns or rural clinics, an issue which may have disenfranchised the rural populations who, disproportionately, have borne the brunt of the project. In addition, the 5 percent allocated to the Doba region is inadequate. This is especially true, when one looks at the umpteen skirmishes in the Niger delta region of Nigeria, which is allocated 13 percent of oil revenues. Worst of all, the allocations contained in the law can be changed by the government unilaterally after five years. That is, the government can relocate revenues to weaponry to quell dissidents without any consultations. In addition, the law covers only direct revenues generated from royalties, and dividends; indirect revenues such as taxes and customs duties are precluded. In fact, according to official analysis they could account for up to 45 percent of the total oil revenues expected over the lifetime of the project.


“Worst of all, the allocations contained in the law can be changed by the government unilaterally after five years.”

As well, the law only covers three oil fields in the Doba region; the other explorations allegedly going on in the region are not included. No provision has been made for a stabilisation fund to protect the country from the vicissitudes of the oil-price cycle, which are a regular occurrence.

Skewing development priorities

The infrastructure left behind after construction of the pipeline has recently been the source of debate in communities. According to the Environmental Management Plan of the project, temporary infrastructure such as any bridges used should be destroyed at the end of the construction phase. This, as the World Bank contends, would otherwise provide leeway for poachers to encroach into protected areas. However, some communities are employing these infrastructures as the only means of ending isolation and regard them as legitimate compensation for living with the pipeline. They have therefore sworn to resist the dismantling of the bridges. Nevertheless, the World Bank has sided with the consortium and ordered the unwilling Cameroonian government to dismantle the infrastructure. Meanwhile, the Cameroon government is determined to construct a large dam along the trajectory of the pipeline that would inevitably endanger Deng Deng Forest, an ecological preserve near the project. Indeed, Cameroon experiences frequent power shortages, and the World Bank is resolute in assisting the government to get out of this crisis. The question is: would the World Bank put environmental considerations ahead of what the government calls an ideal solution to the blackouts and order the Cameroon government to freeze the project as it has done with local communities? In fact, the World Bank has proven to be very biased in the setting of development priorities: big is always better.

Conclusion and way forward

Several conclusions about petroleum development in Africa emerge from the Chad- Cameroon pipeline project. Firstly, oil corporations cannot be transformed into development agencies even with the best intentions and monitoring mechanisms. Secondly, global levers of development outcomes like the World Bank cannot exercise sufficient clout on oil multinationals’ penchant for profits. Thirdly, the World Bank is incapable of respecting its own weakening safeguard policies, which are premised on controlling damage rather than avoiding harm. This is particularly significant as Africa banks on the increasing trend in Foreign Direct Investments (FDIs). Fourthly, the embryonic neo-liberal governance structures in Africa are incapable of forcing FDIs, which are principally attracted by ground mineral resources, to respect ecological and social principles. This cannot be over-stressed, especially as the World Bank prepares to engage in what it calls high risk/high reward projects in developing countries. The flawed contention of the World Bank is “you cannot eat omelettes without breaking some eggs.” As this paper has demonstrated, the eggs most often broken are those of the poor who are left with no alternative livelihood. Finally, Public Private Partnership, the buzz paradigm of sustainable development, is fundamentally incapable of addressing the unequal power relation between fattening multinationals, weakening states and the World Bank, in this era of globalisation.

It is in this light, that the World Bank-sponsored EIR report recommends a portfolio change, which involves the phasing out support for oil by the year 2008. The report argued that the World Bank should use its limited resources to finance pro-poor projects like renewable energy development. It went further and said that the World Bank should increase support for renewable energy projects by 20 percent yearly. However, it is worth noting that these recommendations are not binding on the Bank, which has shown its predilection to shoot its messengers. For example, the Structural Adjustment Plan Review Initiative and the World Commission on Dams recommendations have all been rejected. At 60 years of age, it is time for the Bank to retire from sponsoring development disasters like the Chad-Cameroon pipeline, which are unblurring the mirage of black gold. The starting point of this struggle is to force the World Bank to incorporate all of the recommendations of the EIR. This is the first step in the long journey to sustainably manage Africa’s abundant natural resources. In sum, just like Iraq's Weapons of Mass Destruction, the Chad-Cameroon pipeline project turns out to be an illusive Weapon of Mass Development. Perhaps it is time now to send some United Nations development experts to Chad and Cameroon to uncover the World Bank's WMP.

Notes:

1. Testimonies Submitted during the Extractive Industry Review Consultations for the Africa Region, January 2003.
2. Evaluation de L’impact de LaBanque Modiale du projet d’exportation du pétrole Tchad-Cameroun GRAMP/ TC, janvier 2003.
3. Association Tchadien de Droit d’Homme, submissions to the EIR review consultation, January 2003, Maputo, Mozambique.
4. World Energy Outlook 2002
5. Convention concerning indigenous and tribal peoples in independent countries (ILO no. 169) 72, ILO Official Bulletin 59, entered into force September 5, 1991.
6. Survey, Fondation Cameroonaise pour l’Action Rationalisé des Femmes.
7. Extractive Industry Review Report, www.eireview.info.
8. 'The making of an African petrostate', New York Times, February 18, 2004, www.tchadforum.org.

Akong Charles Ndika is an energy policy analyst with Global Village Cameroon.


AfricaFiles links to related articles:

  1. ‘The Chad-Cameroon oil and pipeline project: A call for accountability’ by the Association Tchadienne pour la Promotion et la Defense des Droits de l'Homme (Chad), Centre pour l'Environnement et le Developpement (Cameroon), Environmental Defense (USA).
  2. ‘Chad-Cameroon pipeline represents new approach’ An interview with Chad Country Director Ali Khadr. (World Bank)
  3. ‘Report of mission to Cameroon and Chad, July 19 to August 3, 2001’ by International Advisory Group on the Chad-Cameroon Petroleum Development and Pipeline Project.
  4. ‘Report of mission to Cameroon and Chad, November 14 to 25, 2001’ by International Advisory Group on the Chad-Cameroon Petroleum Development and Pipeline Project.
  5. ‘Report of visit to Cameroon, April 7 to 18, 2002’ by International Advisory Group on the Chad-Cameroon Petroleum Development and Pipeline Project.
  6. ‘Report of visit to Chad, June 3 to 17, 2002’ by International Advisory Group on the Chad-Cameroon Petroleum Development and Pipeline Project.

Forum Discussion

       "I have studied the Chad/Cameroon Project, and it's impossible to think that locals will benefit from it. I've been in N'Djamena, working with journalists and activists, only to see how far this capital is from concerns about safety, respect for human rights, infrastructure development, etc. People are dying in N'Djamena because they talk or think too much, because they know too much.
       "With corrupt governments in place in Chad and Cameroon, it's difficult to see a bright future for this region. And let's not forget the Western countries' implication in this project (even if France pulled back from the consortium, French businessmen are still in charge of a lot of facilities surronding this project). Also, let's not forget that Chevron, which is in charge of 30% of the project consortium, was once led by Ms Condoleezza Rice ...US National Security Advisor. Frightening...
       "And how about American involvement in the Darfur crisis? Oil is still the centre of attention for America's decision makers."

Philippe Viel
Montréal

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Disclaimer: Opinions expressed in this article are those of the writer(s) and not do necessarily reflect the views of the AfricaFiles' editors and network members. They are included in our material as a reflection of a diversity of views and a variety of issues. Material written specifically for AfricaFiles may be edited for length, clarity or inaccuracies.

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