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Swiss aid group keeps watchful eye on Chad pipeline

Chad will make $10 billion from the oil pipeline but how will its people fare? © Fastenopfer, Anette Homlicher

Swissaid is calling on the World Bank and oil firms to make sure that a $3.5 billion pipeline from Chad to the coast of Cameroon benefits local people.

This content was published on February 1, 2003 - 13:22

Chad stands to earn $10 billion from Africa's biggest development project, but human rights groups say it is already having a negative impact on ordinary people.

At a press conference in Bern this week, the aid group, Swissaid, called on those involved, along with the Swiss government's development agency, to keep a close eye on the impact of the project.

Human rights groups have criticised the project, saying it is damaging water supplies and depriving farmers of their land.

The project, led by a consortium consisting of the oil firms Exxon Mobil, Petronas and Chevron, involves a 1,070-kilometre pipeline to pump the oil from landlocked Chad through Cameroon.

Ron Royal, the general manager of Esso Chad, says the criticisms are unjustified and told swissinfo that the consortium was doing everything possible to ensure the project would cause as little damage as possible.

"In nine months we have spoken to 63,000 local people about what was concerning them on the project - we held 1,800 different meetings. So to say we are not seeking the advice of the local people and not building this advice into our plans is just not true," Royal told swissinfo.

The project in West Africa receives 97 per cent of its funding from the oil consortium and the rest from World Bank loans to Chad and Cameroon. It currently employs 11,000 people.

Poverty reduction

In December 1998, Chad's parliament approved a poverty reduction law that details arrangements for the use of the revenues of the Doba oil project.

Under the law, 80 per cent of the funds are supposed to be spent on education, health and social services, rural development, infrastructure, and environmental and water resource management.

However, in November 2000 the World Bank admitted that Chad's government had spent an estimated $4 million of oil-related money on arms to fight the civil war.

Although Chad did not violate the terms of the loan, the incident was an embarrassment to the World Bank because it had repeatedly defended the country against attacks by human rights groups.

Pietro Veglio, the Swiss representative at the World Bank, says that after this incident the Chad government is likely to be more careful in the future.

"The result of this incident is the pressure on the government to comply with the agreement has increased... The government has realised very well that if this happens again there will be major consequences," Veglio told swissinfo.

Pulling out

Shell and Elf, two of the members of the original pipeline consortium, pulled out of the project three years ago over fears that they would face problems to those experienced in Nigeria.

Shell suffered much negative publicity over its dealings with the former Abacha regime, which was accused of serious human rights abuses and siphoning off oil revenues for the personal enrichment of top government officials.

The problems in Nigeria prompted the World Bank to set up an international advisory group to monitor the project more closely.

The oversight body is made up of independent international experts, who are responsible for identifying potential abuses of oil revenues, the impact on the environment and civil society, and the extent of public participation in such projects.

However, despite such close monitoring, Veglio says there will always be loopholes.

"You can introduce a lot of external controls but they will never solve the problems. You need to have a domestic mechanism that will allow... transparency and accountability."

According to the consortium, Chad has enough oil to produce 225,000 barrels per day for the next 25 years. The oil should start flowing at the end of 2003.

swissinfo, Billi Bierling

Key facts

The 1,070-kilometre pipeline will pump the oil from landlocked Chad to Cameroon.
The project will cost $3.5 billion.
Chad is expected to pump out 225,000 barrels a day.
97 per cent of the funding comes from an oil consortium.
The project is expected to last 30 years.

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