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Chad-Cameroon Pipeline Project - Outcome of the Inspection Panel's investigation

​Washington, September 12, 2002 - The World Bank Board of Executive Directors recorded their approval of the actions and next steps put forth by World Bank Management in response to the Inspection Panel's findings in its Investigation Report of three inter-related projects in Chad: The Chad-Cameroon Petroleum Development and Pipeline Project (Ln. 4558-CD); the Management of the Petroleum Economy Project (Cr. 3316-CD); and the Petroleum Sector Management Capacity Building Project (cr. 3373-CD).

The Panel concluded in its report that Management was in compliance with several aspects of the Bank's environmental and social policies such project categorization for environmental assessment purposes, Natural Habitats, Forests, Involuntary Resettlement and Pest Management. The Panel, however, found the Bank not in compliance with certain aspects the Bank's with OD 4.01 on Environmental Assessment, such as the Bank's approach to the Project's spatial context and the need for requiring a 'Regional Environmental Assessment', baseline data gathering and utilization in impact mitigation, consideration of environmental costs and benefits of alternatives and institutional capacity. The latter two aspects were also the basis for the Panel's finding of non-compliance with certain requirements under OP 10.04 on Economic Evaluation and OD 4.15 on Poverty Reduction.

In presenting the Investigation Report to the Board, Inspection Panel Chairman Edward Ayensu noted the exceptionally complex nature of the Project, and the efforts made by Management to improve the Project's performance on the ground. The Panel's Chairman also took the opportunity to highlight the Panel's concern over the continuing attention required by the Project on issues such as the overall relation of the human rights situation in Chad and Bank compliance with its own policies, consultation with local stakeholders, institutional capacity and monitoring and supervision. The full text of the Chairman's speech is available on this web site also.

The Management action plan, included in its 'Report and Recommendations' to address the Panel's investigation findings, focused on four areas: environmental and social compliance with the Bank's policies and procedures; economic issues; poverty reduction issues; and monitoring and supervision. Key elements of the Management response include:

· Environmental and social compliance. The Bank will work with the relevant Chadian agencies to prepare a Regional Development Plan (RDP) that will be developed as part of the Pipeline Project's Environmental Assessment (EA) and Environmental Management Plans (EMP). The EA and EMPs were developed as part of the project's preparation. The RDP is expected to address the concerns about the project's cumulative regional impacts raised by the Panel.

· Economic benefits. By law, more than 80 percent of the oil revenues accruing to the Government will directed to expenditures in the priority sectors of health, education, rural development, infrastructure, environment, and water (and 10 percent will be saved in a fund for future generations). The oil-producing region will receive 5 percent of these resources to be managed locally, in addition to what it will receive through the national budget. To address the Panel's concerns, the action plan will accelerate the efforts to strengthen the capacity of Government to manage these expenditures and to effectively monitor oil quantities produced and revenues generated.

· Poverty reduction impact. Oil revenues are eventually expected to more than double government revenues; therefore, the challenge of securing the maximum poverty reduction impact from these resources is substantial. Management stated that it places the highest priority on assisting Chad to achieve its poverty reduction objectives through this project and through the other elements of its assistance to Chad. The action plan, developed as a result of the Panel's investigation, provides for continuing and intensifying supervision of and assistance for the Government's capacity-building efforts to account for oil revenues and address environmental and social aspects over the life of the Project. It also prepares for Government spending in priority sectors and allocates and commits these revenues in a publicly-transparent manner.

· Monitoring and supervision. The action plan sets forth the Bank's commitment to intensify monitoring and supervision of the project and address the Panel's concerns in this area. In fact, the Panel was able to confirm that, since the June 2000 project approval, additional resources have been allocated by the Bank, and IFC in this instance, to monitor and support the project's implementation. The Bank Group's reinforced supervision and monitoring capacity will complement the independent monitoring and assessment conducted by the International Advisory Group (IAG) and Environmental Monitoring Compliance Group (ECMG), which have been regularly conducted since Board approval.

The Panel registered the Request on April 11, 2001 and the Board approved an investigation into the Projects on October 1, 2001. The Panel sent its Investigation Report to the Board on July 17, 2002.