Report No. PID7288
Project Name                     Cameroon-(Chad) Petroleum Development (@+) ...
and Pipeline Project
Region                           Africa
Borrowers                        Republics of Chad and Cameroon
Sector                           Energy
Project ID                       CMPE51059
Implementation Agencies          Field Facilities:  Subsidiaries of Exxon,
Shell and Elf
Export System: Joint-Venture Companies to
be established among subsidiaries of Exxon,
Shell and Elf, with Chad and Cameroon
Date the PID was prepared        June 23, 1999 (original:   April 4, 1995;
revised May 15, 1997 and November 30, 1998)
Proposed Appraisal Date          Summer 1999
Proposed Board Date              Fall 1999
Background:
Chad:
Chad, which has a population of about 7 million, is one of the poorest (US$240
GNP per capita) and least developed countries in the world; it ranks in the
lowest 10 percent on the UNDP"s Human Development Index. Currently in Chad,
agriculture generates about 40 percent of GDP and provides a livelihood for
over 80 percent of the population; livestock and cotton provide the main
source of cash income for the rural population, and are the main source of
exports. The country, however, is endowed with undeveloped petroleum
resources. The development and export of Chad's petroleum reserves in the
southwestern part of the country (Doba) could significantly improve its
development prospects and, in particular, provide an opportunity to generate
additional revenues to finance poverty alleviation expenditures.
In 1995, as Chad was just emerging from a prolonged period of political
and economic instability, the Government launched an ambitious macroeconomic
reform program supported by Structural Adjustment financing from multilateral
agencies (IMF, World Bank, AfDB) and bilateral donors (European Union, France,
Switzerland). The program aimed first at taking the country out of a fiscal
crisis that, by severely hampering the normal operation of Government, had
virtually paralyzed the country. Significant reforms in the tax regime and
tax administration were launched to broaden the fiscal base, enhance
compliance and reduce distortions. New fiscal resources and savings from
improved expenditure management were allocated towards priority developmental
objectives: education, health, transport and social affairs. At the same
time, far-reaching structural reform targets were set: (i) most of the
Government's public enterprise portfolio was to be privatized, including
banks, telecommunications companies, the electricity and water utility, and
the large agri-business companies; (ii) demobilization and ex-combatant
reintegration reduced further the size of the army, to 25,000 from 52,000 in



1992; (iii) social security, labor laws, trade policy, and other areas of
economic regulation were revised to create a market-friendly environment; and
(iv) deep reforms of public administration were initiated.
Four years into this program, its implementation has been substantial.
Many targets have been reached, even if weak management capacity has sometimes
resulted in delays relative to an ambitious calendar of reform. Notable
results include the following: (i) the fiscal crisis is by and large over: a
fiscal contraction of more than 6 percent of beginning-of-program GDP was
effected over the four year program period; (ii) most privatization has been
completed or is nearing completion, and regulatory frameworks in major sectors
have been reformed to enhance competition; (iii) the demobilization program
has been completed but the pilot reintegration project has not yet started;
and (iv) a participatory diagnosis process for public administration reform
has led to the adoption of a comprehensive long-term strategy whose first
recommendations are being implemented.
It is too early to expect that structural reforms would already pay off
in terms of growth and improvement in efficiency. However, the macroeconomic
stability that the country has enjoyed over the last four years has been an
important factor in the good macroeconomic outcomes in Chad, with an average 5
percent growth rate over the program period and a return to low inflation. In
addition, poverty indicators also show small but encouraging progress. In
particular, school enrollment rates have increased sharply, child mortality
rates are slowly decreasing and the Government's decision to increase farmer
cotton prices has resulted in a doubling of their real incomes over three
years. Though much remains to be done to reduce poverty significantly in
Chad, in particular by addressing the very poor level of infrastructure and
social services, the program years have shown that Chad has a potential to
catch up on 30 years of lost development.
Cameroon:
Neighboring Cameroon has a population of about 14 million and a GNP per capita
of about US$650. It is richly endowed with tropical forests, mineral
resources (petroleum, natural gas), fertile agricultural land and a favorable
climate. After averaging about 7 percent a year from 1960-1985, economic
growth turned negative owing to declining oil production, a collapse in the
terms of trade, unproductive public spending and a sharp appreciation of the
real exchange rate. GDP declined by 6 percent per annum on average during
1986-93 producing a 50 percent fall in per capita incomes. In 1988, the
Government launched an economic reform program supported by the IMF and World
Bank. The program was designed to enhance competitiveness through internal
adjustment and trade liberalization, restructuring of public enterprises and
financial sectors, reform of the civil service and increased expenditures on
key social sectors. In the absence of exchange rate adjustment and sustained
Government commitment to reform, however, the strategy failed to improve
competitiveness and correct fundamental imbalances.
In January 1994, Cameroon devalued its currency by 50 percent. Since the
devaluation, growth turned positive attaining 3.5 percent in 1994.
Cameroon has recently made significant progress with the assistance of the
World Bank and the IMF on a program of economic stabilization and structural
reforms and there is evidence of true determination to tackle some of the
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economy"s fundamental problems. Macroeconomic performance has been
satisfactory since the beginning of 1996 with growth rates rising to about 5
percent during the period 1996-1998. In particular, the country has made
impressive progress in key areas, namely macroeconomic management and private
sector development. Achievements include:
a considerable increase in Government revenues both in the oil and non-oil
sectors (tax revenues and transfers from the national Petroleum Company (SNH)
have been significantly increased); this higher revenue has contributed to
raising the primary surplus to nearly 6 percent of GDP which has allowed a
clearing of external debt arrears amounting to 5 percent of GDP;
a wide ranging privatization program covering major transport and agro-
business entities with the support of IDA;
a successful restructuring of the banking sector;
regulatory, institutional and management reforms adopted in the transport
sector to ensure that the sector contributes to growth and poverty reduction
through much lower transport costs and more widely available, higher-quality
services; and
on-going preparation of a multi-faceted strategy aiming at poverty reduction.
An ESAF was approved by the IMF board in August 1997. All performance
criteria of this ESAF were met and its second tranche disbursed in September
1998. The two remaining tranches of the IDA's Second SAC were also
successfully disbursed. The Paris Club granted relief to Cameroon on Naples
terms. IDA approved a third multi-tranche SAC in June 1998 focused on
encouraging private investment in Cameroon by means of reforming the transport
sector (ports, railways, roads), reducing transaction costs, deepening the
privatization program (telecoms, utilities, remaining agro-industries),
completing the financial sector reforms, and improving forestry resource
management. The first tranche of this project was disbursed in September 1998
immediately following credit effectiveness. Since then, considerable headway
has been made particularly on the privatization front and in reforming the
banking and transport sectors.
Project Objectives:
The objectives of the project are to increase Government expenditures in Chad
on poverty alleviation activities and to promote the economic growth of Chad
and Cameroon through the private sector-led development of Chad's petroleum
reserves and their export through Cameroon. The project, which is expected to
substantially increase public revenues for Chad, would provide additional
resources to alleviate poverty, specifically by financing additional
expenditures in health, education, rural development and infrastructure. The
project would also provide needed additional Government revenues to Cameroon
(as the transit country) to finance primary expenditures and to support macro-
economic stability.
Project Description:
The project will involve: (a) the development of Chad"s Doba oil fields; (b)
the construction of a buried pipeline (width: 30 inches, length: about 1,050
km) from Chad"s Doba fields to Cameroon"s Atlantic Coast, and related pumping
stations, ancillary facilities and infrastructure; and (c) the installation in
Cameroon of an offshore marine export terminal facility (a moored floating
storage and offloading vessel) and of associated marine pipelines and related
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facilities. The project will also involve the implementation of environmental
management plans in Chad and Cameroon, a resettlement plan in Chad and a
compensation plan in Cameroon. In addition, Chad has developed a revenue
management program designed to target petroleum revenues to the health,
education, rural development and infrastructure sectors in a transparent
manner; to this end, Chad adopted a revenue management law, which was
promulgated in January 1999 (see attachment 2). IDA is preparing parallel
capacity-building projects to assist Chad and Cameroon in managing the
environmental aspects of the project, and to strengthen Chad's capacity to
manage the project's revenues and the petroleum sector generally. These
operations will also be complemented by ongoing and planned adjustment and
capacity-building operations for the two countries.
Project Cost and Financing:
The cost of the project is estimated to be about US$3.5 billion, including
US$1.5 billion for development of the oil fields in Chad (the field
facilities), and US$2.0 billion for the pipeline and marine facilities (the
export system). The project's private sector sponsors (Exxon - the operator,
Shell and Elf) propose to finance about 60 percent of project costs from their
own resources, including 100 percent of the field facilities and about 25
percent of the export system. About $1.4 billion in debt financing for the
export system is also being sought by the private sector sponsors from export
credit agencies, commercial banks, IFC and international capital markets.
IBRD is appraising loans to the Governments totaling about US$90 million
(about 3 percent of project costs), which would finance Government minority
holdings in the pipeline companies (see below). The Governments would receive
revenues from these holdings and, more importantly, from royalties, transit
fees and taxes. IFC has been an active participant with the Bank in project
preparation.
Project Implementation:
The project is expected to be implemented over a five-year period.
Responsibility for implementation, operation, and maintenance of the field and
export facilities would rest with the oil company sponsors. Sponsor
subsidiaries would own the field facilities, and two sponsor-owned pipeline
companies with minority Government stakes would be set up to construct, own
and operate the export system. Responsibility for implementing the
environmental, resettlement and compensation plans will be shared between the
private sponsors and the respective Governments.
Project Sustainability:
The sustainability of the project and of the benefits for Chad and Cameroon
would be supported through the combination of the following factors: (a) the
Government of Chad's commitment to necessary capacity building, reforms and
other measures to support sound revenue management, as well as on-going
adjustment operations supporting strengthened public sector management and a
broadened participatory approach; (b) on-going Cameroon efforts to strengthen
macro-economic stability, including structural adjustment operations; (c)
accompanying capacity-building initiatives aimed at strengthening Chad and
Cameroon"s capacities to support environmentally sound management of natural
resource development activities, which would be supported by parallel IDA
credits; (d) the private sponsors" assumption of responsibility to operate the
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field facilities and the export system, coupled with the large financial
commitment of these sponsors (about US$2 billion); and (e) the benefits to
Chad and Cameroon, including the project's potential to catalyze further
private sector investment in Chad and Cameroon (e.g., in the petroleum
sector).
Lessons Learned from Previous Bank/IDA Involvement:
The Bank's experience in similarly complex and large-scale projects has
demonstrated the importance of private sector ownership and management, the
need for social impact mitigation and sound environmental management, and the
need to support sound management of revenues. These lessons are being
incorporated into the project's design and accompanying measures.
Poverty Category:
Due to the nature of the activities to be carried out under this project, it
does not qualify formally as a poverty-targeted operation according to the
Bank's definition of such operations. However, revenues derived from the
project are expected to considerably increase the Governments" financial
ability to undertake poverty reduction activities, particularly in Chad where
the project is expected to increase Government revenues substantially. In
this spirit, the Chadian Parliament approved a far-reaching petroleum revenue
management law in December 1998 (promulgated in January 1999). This law
stipulates that the great majority of revenues derived from oil exploitation
activities will be spent on health, education, transport and rural development
with the aim of alleviating poverty. The Bank and the Government of Chad are
in close discussion regarding the development of capacity at various levels in
Chad to ensure that the Government and other actors in the development process
can fulfill their respective roles in the management and channeling of these
revenues to meet the challenge of achieving the desired impacts. In Cameroon,
additional revenues -- though less substantial -- are expected to accrue to
the Government and contribute to freeing up resources for developmental
activities in a context where fiscal allocations are heavily constrained by
the considerable weight of Cameroon"s debt service.
Environment:
As a Category "A" project, a full environmental assessment is being carried
out. The length of the pipeline will be over 1,050 km and will traverse areas
of varying ecological sensitivity; the project will also include the
installation and operation of an offshore loading facility in the Atlantic
Ocean. The project is expected to involve some limited resettlement of
people. In addition, near the Atlantic Coast, the proposed pipeline route
passes through areas inhabited by forest-dwellers. Relevant World Bank Group
policies include those dealing with environmental assessments, natural
habitats, indigenous peoples and involuntary resettlement. Pertinent
information is summarized in Attachment 3 to this PID. Earlier versions of
the following documents were made available to the public, including in Chad
and Cameroon: (a) environmental assessment report, Chad portion; (b)
environmental assessment report, Cameroon portion, (c) environmental
management plan, Chad portion; (d) environmental management plan, Cameroon
portion; (e) resettlement plan for Chad; and (f) compensation plan for
Cameroon. In addition, as noted above, parallel capacity-building projects
with environmental management components are under preparation and a panel of
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environmental and social experts has provided assistance to both Governments.
Revised environmental assessment documentation has been filed in the Bank
Infoshop in late June 1999, following the submission by the Governments and
the private sponsors of these documents for filing in the Infoshop.
Additional documentation will also subsequently be submitted to the Bank for
review, including the general oil spill response plan, which builds on the
planning process set out in the revised documentation and which is expected to
be made available for filing in the InfoShop in the next several months.
Project Benefits:
Under existing agreements, Chad is entitled to (a) royalty payment; (b) an
upstream production tax; and (c) a corporate pipeline tax. In addition, Chad
would receive dividends from its equity participation in TOTCO and COTCO. It
is estimated that the direct (real) revenues to Chad would amount to about US$
1.5 billion over the 28 year operational period. The IRR to Chad would be
about 100t and the NPV about US$ 425 million.   In addition, the project would
generate other important benefits not included in the preceding NPV
calculations, specifically in terms of (i) improvements in infrastructure and
(ii) the spending generated in the local economy during the construction and
operation phases of the project. The jobs generated are estimated to be over
1,000 during the construction phase, and several hundred jobs during the
operations phase.
Under the project, Cameroon will be entitled to receive (a) a transit fee for
every barrel of oil shipped through the country; (b) a corporate income tax on
COTCO; and (c) dividends on its shares in the capital of COTCO. Cameroon is
projected to receive about US$ 380 million (real) in revenues from the project
over the 28 year operational period. The IRR to Cameroon would be about 42t
and the NPV about US$120 million. In addition Cameroon would benefit from (a)
substantial improvements to its infrastructure; about US$100 millions will be
spent by the project; (b) salaries and wages paid to workers during and after
construction; (c) freight payments to the railways and truckers, as well as
payment of port and storage charges; and (d) commissary procurement for
locally produced food and other provisions.
Project Risks:    TABLE AVAILABLE IN THE INFOSHOP
Additional Information:
Attached are various documents providing additional details on the project,
namely: (a) a series of questions and answers relating to the project
(Attachment 1); (b) a translation of Chad's revenue management law (Attachment
2); (c) a summary description of environmental issues (Attachment 3); (d) a
project map (Attachment 4); and (e) a map indicating the international
waterways potentially affected by the project (Attachment 5). Project
information is also contained on a project website established by the Bank at
http://www.worldbank.org/html/extdr/ccproj/default.htm.
Contact Points:
Michael Layec
Task Manager
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(202) 473-3231
InfoShop
The World Bank
1818 H Street, NW
Washington, DC 20433
Telephone:   (202) 458-5454
Fax:   (202) 522-1500
Processed by the InfoShop week ending July 9, 1999.
Note: This is information on an evolving project. Certain components may not
be necessarily included in the final project.
Attachments:
Attachment 1: Questions and Answers
Attachment 2: Chad Petroleum Revenue Management Law
Attachment 3: Environmental Assessment Summary
Attachment 4: Project Map (Available in the InfoShop)
Attachment 5: Map of International Waterways (Available in the InfoShop)
Questions and Answers
1. Why is the World Bank considering providing funds for the proposed
project?
The World Bank's priority in Chad and Cameroon is to help reduce poverty and
build a basis for sustained growth. The proposed project provides a unique
opportunity to improve the development prospects of Chad by generating
substantial additional fiscal revenues and foreign exchange (currently
estimated at about $80 million per year and about $1.5-2.5 billion over the
25-year production life of the project, depending upon world prices for oil
and the volume of production from the fields). The Bank is considering
providing funding for the project to help generate additional revenues to
finance education, health and infrastructure expenditures and other growth and
poverty alleviation activities, and provide a more sustainable fiscal and
balance of payments outlook. As such, the project represents an important
element in the Bank's country assistance strategy for Chad. The project will
generate about $500 million for Cameroon over the production life of the
project which will help to finance public expenditures.
World Bank Group involvement would:
support the efforts of Chad and Cameroon to ensure that the project is
designed and carried out in a manner that serves and protects their national
interests;
ensure greater public consultation, local participation, and attention to
environmental and other socio-economic issues; and
help to attract $3 billion in private investment to the region that would
generate about $2.5-3 billion in additional revenues for Chad and Cameroon
over the 25-year period of operations.
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2. How close is the World Bank to approving loans for the Chad-Cameroon
Petroleum and Pipeline Project?
A series of steps will have to be taken before the project proposal is
presented to the World Bank's Board of Directors for consideration. There are
two essential conditions: first, the World Bank Group will need to ensure that
its environmental and social safeguard policies have been complied with; and,
second, Chad must produce a fully satisfactory program for the sound
management of the petroleum revenues. The latter has been fulfilled (see,
e.g., the revenue management law set out in Attachment 2 to the PID), and
environmental documentation reflecting the former is being submitted to the
Bank for filing in the Bank"s Infoshop.
3. What action is being taken to support the sound use of revenues in Chad?
The Government of Chad has developed and is refining a program to target oil
revenues to poverty alleviation and provide for transparency. The Chad
Parliament approved a law on managing petroleum revenues in December 1998,
which was promulgated in January 1999 (see Attachment 2). The program
contains the following key elements.   First, 90t of royalty and dividend
revenues (which represent the entirety of revenues during at least the first
five years of operations) would be segregated in a dedicated special account.
Second, the 10t balance would be invested in a "future generations" fund.
Third, 70t of the 90t deposited in the dedicated special account would be
allocated to expenditures in the specified priority sectors, namely health,
education, rural development, environment and water resources, and
infrastructure. Fourth, an oversight committee, that would include
Government, NGO, trade union, judiciary and parliamentary representation,
would monitor disbursements from the dedicated special account. Fifth, the
accounts would be audited and the audits published.
4. What does the project involve, and what are the estimated costs and
financing plan?
The project involves two sets of activities: the development of three oil
fields located at Doba in southern Chad, with reserves estimated between 800-
1,000 million barrels and the construction of a 1,050-1,100 km buried pipeline
to Cameroon's Atlantic Coast and offshore off-loading facilities. The project
will cost an estimated $3.5 billion, including about $1.5 billion for the
field system and $2 billion for the pipeline and marine facilities.
The field system would be wholly-owned by a consortium of oil companies
consisting of affiliates of Exxon (the operator), Shell and Elf. The export
system would be owned and operated by two joint-venture pipeline companies,
one for the portion located in Cameroon and the other for the portion located
in Chad. The pipeline companies would be majority-owned by the oil companies
(over 80 percent). Chad would hold minority interests in both pipeline
companies responsible for exporting its oil while Cameroon would hold a
minority interest in the Cameroon pipeline company.
The oil companies would provide in total about $2 billion or 60 percent of
total project cost. The Governments would provide about 3 percent, and the
balance would be raised through debt. The $1.5 billion for the field system
would be entirely financed by the oil companies. The $2 billion for the
export system would be financed as follows: about $500 million in equity from
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the oil companies; about $100 million in equity from the Governments; some $1
billion in debt from various financial sources, including commercial banks,
export credit agencies, and the International Finance Corporation (IFC); and
an additional $400 million from international capital markets.
5. What financing is the World Bank Group considering providing?
IBRD is evaluating whether to provide loans of about $35 million to Chad and
about $55 million to Cameroon (including interest during construction) to
finance investments in the joint-venture pipeline companies. This will only
cover about 3 percent of the costs. The use of IBRD loans for this project in
two IDA countries is consistent with the Bank's practice over the last several
decades to finance certain large-scale export-generating projects ("enclave"
operations) using IBRD loans rather than IDA credits (an example is the
Lesotho Highlands Water Project, approved by the Bank in 1991). The IFC is
considering providing loans to the pipeline companies from its own resources
of about $100 million and syndicating up to $300 million in loans from
commercial banks. The World Bank (through IDA) is also evaluating
complementary projects to strengthen the capacities of the two Governments in
environmental management and Chad's capacity to manage revenues.
6. How will the World Bank funds be used?
If approved by the World Bank's Board of Directors, the funds would be used to
finance the procurement of goods and services. The civil works contract for
the laying of the pipeline has been bid in accordance with the Bank's
International Competitive Bidding (ICB) procedures and targeted for Bank
financing. The project implementing agencies responsible for the export
system, the Chad Oil Transportation Company (TOTCO) and the Cameroon Oil
Transportation Company (COTCO), will contract the civil works. The
Governments will contribute about 33t of the financing required for the civil
works contract estimated at over $300 million.
7. What benefits does World Bank involvement bring to the countries?
There are several benefits:
i.      The project must comply with the Bank's environmental, resettlement,
natural habitat, indigenous peoples and other environmental and social
safeguard policies. Environmental assessment reports are available through
the Public Information Center/InfoShop.
ii.     The World Bank is supporting the Chadian Government in designing a
program to support the management of its petroleum and other fiscal revenues
(see question 3 above).
iii.    The World Bank is providing financial and technical assistance to the
Governments of Chad and Cameroon to help protect their environment and other
national interests.
iv.     The World Bank Group's involvement would provide political risk
mitigation for the $3 billion in foreign direct investment needed to generate
the $2.5-3 billion in petroleum revenues for Chad and Cameroon over the 28-
year production period.
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8. Will Chad's performance on structural adjustment and revenue management be
a condition of the project?
Progress on structural adjustment and development of a sound revenue
management program are preconditions for the oil project and will be taken
explicitly into account before submitting the project to the World Bank's
Board.
9. Is the proposed World Bank involvement consistent with practice?
The project is consistent with the World Bank's private sector development
strategy which seeks to support public/private partnerships that promote
development. IBRD loans and IDA credits have financed such public/private
partnerships in energy, infrastructure and other projects that generate
substantial benefits to borrowing countries. Recognizing the increasing
importance of private capital relative to public financing, the World Bank has
been actively exploring ways to catalyze private investment to support
development. The $90 million in loans for this project would help to catalyze
$3 billion in private investment that will generate substantial benefits for
the two countries.
10. Will the project displace other education or health projects in Chad or
Cameroon?
The project will not divert resources from health or education projects in the
Bank's portfolio of assistance to Chad or Cameroon, but rather would support
national efforts in these areas by increasing Government allocations for
social services. Rather than displacing other social sector projects, the
proposed pipeline project is expected to support implementation of World Bank
and other donor projects in these sectors by generating additional revenues to
finance Government expenditures, such as teachers' salaries and other
recurrent expenditures that are critical counterparts to the successful
implementation of these projects. A parallel capacity-building project is
also under preparation that will promote the Chadian Government's capacity to
identify, prepare, and implement sound public expenditure management and
social sector investments. Indeed, the proposed project will be carried out
within a framework where the Bank will focus its support for the social
sectors in Chad.
11. What is the Bank's assessment of ongoing and future efforts by the Chadian
Government to reduce poverty?
Under the current three-year programs with the Bank and the IMF, the
Government of Chad has entered into specific commitments to increase
expenditures for health and education. The Bank is monitoring this closely,
and compliance will be one of the key triggers for determining the feasibility
of improved public expenditure management. Moreover, the thrust of medium-
term public expenditure programs will be poverty reduction, with expenditures
focused on rural development (including roads and water supply), health and
education. The Government's willingness and ability to make progress in this
area will be a key criterion for future Bank lending. The Bank will work with
Chad to improve the quality of Government services and management of public
resources. Ongoing and proposed Bank operations emphasize capacity building
both for macro-economic management and in key sectors, especially education
and health. The Bank and the Government are working to develop a
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comprehensive capacity-building program over the next three-four years in
preparation for the flow of oil revenues.
12. What actions are being taken to protect the environment and local
populations?
The project must comply with World Bank standards, including public
consultation and adoption of appropriate environmental and social mitigation
plans. The project's private sector sponsors would assume principal
responsibility for managing environmental and socioeconomic impacts. In
parallel, the Bank is working with the two Governments to increase their
capacity in environmental matters (e.g., above-mentioned expert panel and
proposed capacity-building projects). World Bank, NGO and public reviews are
a key input into this process during both the design and implementation
phases.
13. How was the current proposed route selected?
The private sponsors, the Government of Cameroon and the Government of Chad
have developed a proposed environmentally and socially acceptable route for
the pipeline that would comply with World Bank Group policies (e.g., on
natural habitats). Three alternative routes from the oil fields in southern
Chad to the coast of Cameroon were considered by the project sponsors. The
private sponsors and Governments have proposed Corridor B which ends near the
town of Kribi. This corridor was proposed by the consultants as preferable
from the point of view of the biological environment, the physical environment
and the socioeconomic environment to the other two alternatives. According to
the companies and their consultants, Corridor A, the "northern" route ending
at Limbe, would disturb more primary forest and would cross densely populated
areas. Corridor C, the "southern" route also ending at Kribi, would disturb
more wetlands and tropical rain forest. Within Corridor B, the pipeline
alignment is still under study in response to concerns raised by the Bank
Group"s internal review and by the ongoing public review process. Alternative
alignments were evaluated and recommendations prepared by the project sponsors
and Governments. Information on the final alignment proposal and the
associated impacts and mitigation plans are being made available to the public
as part of the documentation for filing in the InfoShop.
14. Has there been adequate consultation?
Discussions and consultations by the project's sponsors/Governments within the
two countries have been ongoing since 1993. An extensive public
information/consultation program began in the summer of 1997. Some of these
efforts are described in greater detail in the environmental reports filed in
the InfoShop. In parallel, the World Bank has been consulting periodically
with NGOs, including both local and international NGOs.
15. Will there be a lot of resettlement?
During the design phase of the project, the facilities and pipeline corridor
were sited to avoid populated areas. Some resettlement will take place at the
oil fields in Chad, but the sponsors have indicated that the pipeline itself
can be sited to avoid relocating families. Currently, the number of
households that will have to be resettled in the vicinity of the oil fields is
expected to be somewhere between 60 and 150; the precise number would depend
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in part on the siting of wells.
16. Is there a likelihood of oil leaks?
The pipeline will be equipped with sophisticated leak detection and prevention
technology. The pipeline will be buried to reduce the possibility of
accidental or intentional damage. Moreover, it will have cathodic protection
devices and protective coatings. An automated leak detection system will be
installed, that includes flow metering devises, and automatic shut-off valves
will be strategically located along the pipeline route. Other devices will be
used to clean pipe walls and to identify potential corrosion.
17. Is the project located on any international waterway?
The pipeline is expected to cross the Mbere river and several of its
tributaries. The Mbere river (which runs between Cameroon and CAR) flows into
the Logone river and then into the Chari river, and ultimately into Lake Chad
(bordered by Niger, Nigeria, Chad and Cameroon), several hundred kilometers to
the north. The project also passes other tributaries of Lake Chad in the
oilfield area. In both cases, the project is located over 500 km from Lake
Chad by river. These various rivers are indicated in the Map set out as
Attachment 5. The project is being designed to minimize the possibility of
leaks (e.g., sophisticated metering and strategic placement of shut-off
valves); in addition, an oil spill response plan is under preparation.
18. Is the Doba crude high in sulfur?
No, the Doba crude has a relatively low sulfur content.
19. Will Chad continue to require aid once the oil starts flowing?
Donors will remain important partners for Chad. Projected annual oil revenues
are lower than current donor financing.
20. Will the project have any impact on the endangered black rhinoceros?
No. The project is located far from the habitat of the black rhinoceros,
which are found in northern Cameroon.
21. What is the Sedigi/SEERAT project?
This project involves the development of smaller fields in the Lake Chad area.
The project would produce petroleum products for the domestic market and fuel
for domestic electricity generation. This project is separate from the Doba
basin development project, but it involves the same consortium of private
investors.
Act No. 001/PR/99 Concerning Oil Revenues Management
Having regard to the Constitution,
The National Assembly discussed and adopted the above-cited Act on
December 30, 1998;
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The President of the Republic hereby promulgates this Act, which
reads as follows:
CHAPTER I: GENERAL PROVISION
Article 1:       The objective of this Act is to establish the procedures for
managing oil revenues from the exploitation of three (3) fields,
namely Kome, Miandoum, and Bolobo.
Article 2:       Oil revenues shall consist of direct and indirect income.
Direct income shall consist of dividends and royalties;
Indirect income shall include taxes, charges, and customs duties
levied in connection with oil exports.
Article 3:       The direct income referred to in the second paragraph
of Article 2 shall be deposited in an offshore escrow account opened
specifically for this purpose by the Government of Chad at an
international financial institution.
The funds shall be divided as follows:
- Ninety percent shall be deposited in special treasury accounts situated in one or two
local banks;
- The remaining ten percent shall be deposited in a savings account
opened in accordance with the provisions of Article 9 of this Act.
Article 4: Indirect income, namely taxes, charges, and customs duties,
shall be deposited directly with the Treasury.
Article 5: The various types of income referred to in Article 2 of
this Act shall be accounted for in their entirety in the general state
budget.
Article 6: Revenues shall be allocated in accordance with the
criteria set out in Chapter II of this Act.
CHAPTER II: ALLOCATION OF REVENUES
SECTION 1: PRIORITY SECTORS AND REGIONAL DISTRIBUTION:
Article 7: Direct income shall be allocated primarily to priority
sectors.
The following are considered priority sectors: public health and
social affairs, education, infrastructure, rural development (agriculture and livestock),
environment, and water resources.
Article 8: Indirect income comprising dividends and royalties
which have been deposited in the special accounts referred to in the
second paragraph of Article 3 above shall be allocated as follows:
(a) Eighty percent (80%) for expenditures in the priority sectors
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listed in the second paragraph of Article 7 above;
(b)  Fifteen percent (15%) for current Government operating and
investment expenses for a period of five years as from the date the
income was generated;
(c)     Five percent (5%) of dividends shall be allocated to
decentralized communities in the producing region in accordance with
the provisions of Article 212 of the Constitution;
This amount may be changed by decree at five-year intervals in the
light of available resources and the needs and absorptive capacity of the
region;
Procedures for management and monitoring of these funds shall be
developed in accordance with existing instruments regulating Government
accounting.
SECTION 2:      SAVINGS
Article 9:       Ten percent (10%) of the direct revenues, i.e., the royalties
and dividends referred to in Article 3 of the present Act, shall be
deposited in a savings account opened in an international financial
institution for the benefit of future generations, in accordance with the
regulations of the Bank of Central African States (BEAC).
CHAPTER III:    MECHANISMS FOR MANAGING SPECIAL ACCOUNTS
SECTION 1:      OPERATIONS
Article 10:      The mechanism for managing special accounts shall
conform to the conventional budget wisdom of the State, namely respect
for procedures relating to approval, disbursement, monitoring, and control
of the general state budget.
Article 11:      The special accounts shall be established in one or two
primary local commercial banks certified by COBAC, the regional bank
supervision agency. They shall be funded directly from the escrow
account referred to in the first paragraph of Article 3 of the present
Act.
SECTION 2:      DISBURSEMENT CRITERIA
Article 12:      Funds deposited in special accounts to defray
expenditures in priority sectors shall be earmarked in accordance with
the public expenditure program prepared annually by the Government.
The program is one element of a triennial development process and is
a reference point for the Finance Act. The Government shall review the
program annually.
In accordance with the principle of additionality,
expenditures from oil revenues paid in respect of priority sectors shall
be additional to items in the general budget for the fiscal year preceding
the initial oil receipts.
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Article 13:
Requests for disbursements from the approving officer of the general
state budget shall be made in accordance with the procedures set
out in the Finance Act and shall require the express authorization of
the Oil Revenues Control and Monitoring Board (CCSRP)..
CHAPTER IV:      SUPERVISORY INSTITUTIONS
Article 14:      The mobilization and use of oil revenues shall be monitored
separately or jointly by the Comptroller of the Ministry of Finance and Economy, CCSRP,
the Audit Office of the Supreme Court, and Parliament.
SECTION 1:      OIL REVENUES CONTROL AND MONITORING BOARD (CCSRP)
Article 15:      An Oil Revenues Control and Monitoring Board (CCSRP) is
hereby established.
Article 16:      CCSRP shall include the following members:
-       one magistrate serving on the
Supreme Court
-       one deputy
-       one senator
-       the national director of BEAC
-       the Central Treasurer
-       the Director of Issues Relating
to Oil Revenues
-       the Director of Planning and
Development
-       one representative of local
NGOs
-       one trade union representative.
Article 17:     Members of CCSRP representing Parliament, the Supreme
Court, national NGOs, and trade unions shall be designated and
appointed for a term of three (3) years which shall be renewable once.
Article 18:      It shall be the responsibility of CCSRP to:
(a)     ensure that commitments for funding from the special accounts
meet the requirements of the Finance Act;
(b)     authorize and monitor disbursements from the special
accounts and the appropriation of funds.
Article 19:      The operational and organizational procedures of CCSRP
and the conditions governing its control and supervisory functions
shall be set out by decree.
SECTION 2:      ADDITIONAL INSTITUTIONS EXERCISING CONTROL
Article 20:      Parliament shall control the allocation of oil revenues by
adopting and monitoring the implementation of the general state budget.
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Article 21:      The Audit Office of the Supreme Court shall monitor the
legality of state expenditures by reviewing official revenue accounts
and monitoring legislation concerning the allocation of resources between
the general state budget and the decentralized communities as well as
provisions governing the establishment of reserves or the placement of
surplus income overseas.
SECTION 3:      MONITORING PROCEDURES
Article 22:      The mobilization, allocation, and use of oil revenues
shall be monitored via periodic audits and reports prepared for the
Government, including:
annual audits of special accounts and the savings account for future
generations;
periodic management reports on the savings account for future
generations and savings accounts for possible surplus income;
periodic reports by CCSRP;
reports and audits by COBAC of primary banks responsible for managing
specific special accounts;
annual audits of general state budget performance prepared by the Audit
Office.
The Government shall publish these reports and audits annually.
CHAPTER V:       FINAL PROVISIONS
Article 23:      The present Act shall be duly recorded, published in the
Official Gazette of the Republic, and implemented as an Act of the State.
Done in N'Djamena on January 11, 1999.
SUMMARY OF ENVIRONMENTAL ASSESSMENTS AND MITIGATION PLANS
This summary is based on an initial review of the revised environmental
documentation being submitted by the project's private sponsors and the
Governments and being filed in the Bank"s InfoShop. The full environmental
assessment is contained in several volumes (Box 1) which are being made
available to the public through the Bank's Infoshop. This assessment is
backed by extensive reference documents, studies and reports which are
available on request from the project sponsors.
Box 1.   Contents of the Environmental Assessment
A. Chad and Cameroon
Executive Summary and Update
B. Chad Specific
1. Chad Environmental Management Plan
a. Base Document
b. Cultural Property
c. Handbook for Site Specific Mitigation Actions
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d. Environmental Monitoring Plan
2. Chad Technical Specifications
3. Chad Compensation and Resettlement Plan
4. Chad Regional Development Plan, Revenue Management and
Capacity Building
5. Waste Management Plan
6. Environmental Line List and Alignment Sheets
C. Cameroon Specific
1. Cameroon Environmental Management Plan
a. Base Document
b. Induced Access Management Plan
c. Cultural Property
d. Handbook for Site Specific Mitigation Actions
e. Environmental Monitoring Plan
2. Cameroon Technical Specifications
3. Cameroon Compensation Plan
4. Cameroon Environmental Foundation Plan
Indigenous Peoples Plan
Offsite Environmental Enhancement Program
5. Waste Management Plan
6. Environmental Line List and Alignment Sheets
D.  Common Supporting Documents
1. Project Description
a. Decommissioning Plan
b. List of Studies and Reports
c. List of Expert Consultants
2. Alternatives Analysis
3. Consultation Report
4. Oil Spill Response
5. Biological Studies
6. Public Health Studies
The project is expected to require the permanent acquisition of 742 ha of land
in Chad and 117 ha of land in Cameroon. An additional 1,382 ha in Chad and
3,373 ha in Cameroon will be temporarily occupied by construction activities.
Appropriate compensation will be paid to land users in both cases and land
temporarily occupied will be returned to its former users. A pipeline land
easement of about 15 meters will be retained for purposes of inspection and
control. Agricultural activities will be allowed on the easement, but
buildings and trees will not be permitted. Vehicular access to the easement
will be controlled in environmentally sensitive areas.
Development of the oilfield will require the resettlement of a relatively
small number of families in Chad (currently estimated at between 60 and 150
households). The pipeline and fixed facilities in Cameroon are being sited in
such a way to avoid having to physically displace any families from their
homes; socio-economic studies are being finalized regarding the pump stations
which are expected to confirm that no relocation will be required.
Compensation entitlements will be determined on the basis of economic losses
sustained. In addition to compensation to individuals for individually owned
assets, community compensation will be provided for the loss of common
property resources. Compensation is to be made according to World Bank
principles.
The private sponsors will also create an Environmental Foundation to provide
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funds for the implementation of an Indigenous Peoples Plan in Cameroon and to
help support the creation of two new national parks in Cameroon to offset the
residual biodiversity impacts of pipeline construction through the semi-
deciduous and Atlantic coastal forest zones of the country.
The project area may be described in terms of five ecological zones. The
wooded savanna zone extends from the area of the oilfield in Chad to the
general vicinity of Mararaba on the pipeline route in Cameroon (about 485 km).
The semi-deciduous forest zone extends from Mararaba to Batchenga (about 310
km), the mixed forest zone from Batchenga to Ngoumou (about 80 km), the
Atlantic littoral zone from Ngoumou to the coast (about 195 km), and the
marine zone from the coast to the offshore loading facility (about 10 km).
The design effort for the present project began in 1993 with the consideration
of alternatives:
Siting and Design of Oilfield Facilities. Wells and other oilfield facilities
have been sited within the Doba Basin to maximize cost-effectiveness and to
limit impacts on households, fields, and populated areas; on cattle movement
corridors; and on water, wetland, and vegetation resources. The flowlines
between the wells and the processing plant will be buried to a depth that
allows continued agricultural activity on the surface. Wells can be clustered
to a certain extent, but sandy soils limit the potential use of this technique
to minimize surface impacts. For the treatment of produced water, two
alternatives were considered: surface discharge and reinjection into the
petroleum-bearing stratum. Surface discharge would be more expensive and
could also cause significant adverse impacts to the human, biological, and
physical environment. Consequently, the reinjection alternative has been
selected. The oilfields will also produce a small amount of natural gas,
which will be recovered and used in combination with crude oil as fuel for the
oil-field area facilities. No gas will be routinely flared.
Oil Transportation Alternatives. A range of alternatives for transporting the
crude oil to market has been evaluated, including road, rail, river and a
pipeline. The pipeline was the only alternative which provided adequate
capacity to handle the projected peak transport requirement of 225,000 barrels
per day. This alternative also offered the opportunity to maximize safety and
minimize environmental impacts.
Marine Terminal Location. The Cameroon coast was identified as the only coast
within the "zone of feasibility" for the project. A location west of Limbe
was eliminated as impractical due to the mountainous (and biologically
valuable) terrain which would have to be traversed to reach it. Locations in
the immediate vicinity of the Port of Douala were eliminated for safety and
construction feasibility reasons (shallow depth), as well as environmental
reasons (wetlands). South of Douala to the Nyong River was eliminated due to
the presence of the Douala-Edea Reserve and the Nyong wetlands/mangrove areas.
South of Grand Batanga, reaching the coast would require traversing relatively
pristine coastal forest and the Campo Reserve. This process led to the
selection of Limbe and Kribi as the only two possible sites for the offshore
loading facility.
Corridor Alternatives. Based on this definition of possible end points, three
30-km wide corridors were then defined, one of which (Corridor A) ended at
Limbe, and the other two at Kribi. Corridor B corresponds to the presently
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proposed pipeline location, while Corridor C would have passed further to the
south in eastern Cameroon, traversing wetlands and tropical forests and
possibly having a greater impact on indigenous peoples. A detailed, GIS-based
analysis of economic, social, and environmental suitability was carried out
for all three corridors, and Corridor B was selected as the most preferable
from all points of view.
Marine Terminal Design. The Corridor B selection determined the location of
the marine terminal to be at or near Kribi. Eight possible sites were
identified, and a location south of Kribi, but north of the Lobe Falls, was
chosen for both technical and environmental reasons. Both onshore and
offshore designs were considered, and the offshore facility (Floating Storage
and Offloading (FSO) Unit) was selected as less costly and having less
significant potential environmental impacts. The FSO will be anchored in a
fixed location.
Pipeline Route Optimization. The draft Environmental Assessments and
Environmental Mitigation Plans for this project were distributed for public
review and comment, based on the choices described above. At the same time,
the project sponsors undertook a centerline survey on the ground, together
with an intensive program of consultation with project affected people and
local authorities.    Based on field observations, local input, and feedback on
the draft EA documents, the proposed alignment was adjusted in many places to
avoid sensitive environmental, social, or cultural features. Principal
adjustments included: (a) relocating the pipeline on the escarpment above the
Mbere Rift Valley, rather than through the valley; (b) avoiding the Deng Deng
forest by relocating the pipeline along the railroad from Belabo to the Lom
River crossing, and thereafter through the savanna-forest mosaic to rejoin the
original route south of Mararaba; and (c) adjustments in the alignment
through the Atlantic littoral forest to minimize impacts on biodiversity,
cultural sites, and local, especially indigenous, people. This optimization
enabled the complete avoidance of any population displacement in Cameroon. In
the process of optimizing the route alignment, nine alternative routings were
considered in the Deng Deng area, and five alternative routes (including two
ending at Limbe) were considered to take the pipeline from Yaounde to the
coast.
The project will require limited resettlement in Chad (maximum of 150
households) and no resettlement in Cameroon. Land users will be compensated
for temporary disturbance during the construction period, on the limited
amount of land (2124 ha in Chad, 3500 ha in Cameroon) that will be acquired
for the construction activities, the oilfield and pipeline right-of-way, and
the fixed facilities. Loss of communal resources, including trees, bush, and
forest resources will be addressed through community compensation.
The pipeline has been sited to avoid or minimize impacts on cultural property.
An inventory of sacred sites was completed as part of the centerline survey,
and an archaeological reconnaissance is currently underway to identify surface
sites and areas which may be of particular interest during construction.
Chadian and Cameroonian social scientists have collaborated in the preparation
of the resettlement and compensation plans, the Indigenous Peoples plan in
Cameroon, and the plans for cultural heritage protection.
The project is not expected to interfere significantly with the movements of
pastoral groups in the wooded savanna zone. Construction activities will be
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of limited geographical extent at any point in time, and can easily be avoided
by pastoralists through a program of information and communication.
Transhumant pastoralists will be able to continue migrating through the area
along their traditional routes after pipeline construction is completed.
The project is expected to produce significant secondary impacts in the
communities in and around the oilfield area. A temporary, spontaneous in-
migration of between 5,000 and 25,000 people is anticipated. This will put
pressure on limited local resources, especially water and woodfuel, and will
create a demand for food and housing that may generate local inflationary
pressures. There are likely to be major public health concerns that will need
to be addressed through improved health care facilities, sanitation, and local
market improvements. Chad is working, with Bank support, to address these
issues (see discussion below).
In Cameroon, spontaneous in-migration to the Atlantic coastal area is expected
to be limited by the low number of jobs available and the relatively
unattractive environment in terms of disease and low agricultural
productivity. Nevertheless, the resident population, including the vulnerable
Bakola people, will be affected by the arrival of construction workers and
their camp followers and by the loss of forest resources. Elsewhere in
Cameroon, significant social impacts are not expected as a result of pipeline
construction or operation.
Public health will be a concern both in the construction worker community and
in the project affected communities. The potential spread of HIV/AIDS is of
particular concern, as well as the spread of insect- and water-borne diseases
such as malaria, onchocerciasis, and schistosomiasis. Tuberculosis,
hepatitis, and diarrhea are also common problems in the forest zones. As
medical services are virtually unavailable, except in the vicinity of Yaounde,
the project sponsors will implement a program of health outreach to local
communities, in addition to taking responsibility for the health and safety of
workers.
There are potential physical impacts associated with construction activities,
such as soil erosion, loss of vegetative cover, and impacts on waterways.
These impacts will be avoided or mitigated to a non-significant level through
the technical specifications and contractor environmental management plans,
which will be monitored by the project sponsors and by the Governments.
Potential induced impacts on wildlife and biodiversity will be mitigated by
actions undertaken by the project sponsors (provision of food to project
workers, no bushmeat hunting or trading allowed) and by the implementation of
an Induced Access Management Plan. In addition, unavoidable residual impacts
on biodiversity in the semi-deciduous forest and in the Atlantic littoral
forest will be compensated by the establishment of two national parks as
"offsite environmental enhancement programs," financed through an
Environmental Foundation endowed by the project sponsors. The Cameroon
Government will also undertake obligations with respect to these new national
parks as part of the project.
There is a concern about the possibility of an oil spill, whether in the
oilfield, along the pipeline under land or water, or at the marine terminal.
The project design is in accordance with international standards and,
therefore, the risk of spills is low. The Private Sponsors have prepared a
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preliminary "Oil Spill Response", that serves as an interim report providing
information for input into a General Oil Spill Response Plan (expected in the
next several months) and Area Specific Oil Spill Response Plans, which will be
in place prior to the start-up of project operations. The Private Sponsors
have also prepared an outline Decommissioning Plan, recognizing that
decommissioning lies so far in the future (25 to 30 years) that it is not
appropriate to go into great detail at this time.
The project will be constructed and operated in accordance with
internationally accepted standards and guidelines, which specify a variety of
measures for safety and environmental protection. These standards include the
applicable environmental and social safeguard policies and guidelines of the
World Bank Group, as well as the applicable engineering standards and
specifications developed by the American National Standards Institute, the
American Society of Mechanical Engineers, the American Petroleum Institute,
and the American Society for Testing and Materials, and the Decommissioning,
Remediation and Reclamation Guidelines for Onshore Exploration and Production
Sites, Exploration and Production Forum report no. 2.70/242, October 1996.    In
sum, the project will comply with a rigorous set of internal environmental
management systems and standards which Exxon has developed, called the
Operations Integrity Management System (OIMS).
Waste Management. Few facilities exist in the project area for handling of
wastes and hazardous materials. Therefore, the project will be responsible
for constructing and operating many of the needed facilities. Landfills and
incinerators will be designed based on U.S. Environmental Protection Agency
standards and will be put in place early in the construction phase to
accommodate construction wastes. Landfills will be constructed using the
widely accepted cell technique for covering and isolating waste as it is
deposited. Incinerators will be used for the destruction of medical wastes,
oily debris, domestic waste, combustible chemicals, and oily process sludge.
During decommissioning, landfills will be capped and sealed according to
internationally accepted standards. Incinerators will either be turned over
for continuing local use or will be dismantled and scrapped with site
decontamination as needed.
At temporary construction sites, packaged sewage treatment plants or septic
systems will be used to process wastewater. At permanent project facilities,
wastewater will be processed through constructed facilities or, in some cases,
through septic systems. As construction is completed in each project area,
disturbed areas will be reclaimed using stockpiled topsoil, returned to
natural contours, and revegetated as needed with native seeds and seedlings.
Low level radioactive sources are commonly used by the petroleum industry to
test pipe integrity and for quality assurance purposes. This technology is a
primary tool to prevent future oil leaks. After use, these products will be
returned to their country of origin for disposal at a licensed facility
specializing in this type of waste.
Oil Spill Prevention and Response. The project has been designed to minimize
the possibility of an oil spill. The pipeline and field flowlines will be
buried a meter or more underground. The pipeline wall will be high quality
carbon steel of variable thickness, up to 5/8"at river crossings. To help
prevent leaks due to corrosion, the pipeline's outer surface will be protected
with a polyethylene coating and the system will also be covered by cathodic
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protection. Flowlines will be constructed of fiberglass, which is impervious
to corrosion.   Mainline valves will be installed in the pipeline
approximately every 35 km so that it can be shut down at any point, limiting
the amount of a spill, should one occur. In addition, mainline valves will be
installed near each side of all major river crossings. A control center,
manned around the clock, will be equipped with computer-supported leak
surveillance systems, covering both the oil field facilities and the pipeline.
In addition, frequent airborne and ground patrol inspections will monitor for
signs of possible pipeline leakage.
Preliminary oil spill response planning is described in the environmental
documentation. Before operations commence, a general and area-specific Oil
Spill Response Plan will be in place (the former in the next several months
and the latter before start-up). FSO operations will comply with relevant
international conventions such as those on the Safety of Life at Sea (SOLAS)
and the Prevention of Marine Pollution (MARPOL). Automated emergency shut-
down systems will be installed for the pipeline, the marine terminal, and the
oil field. Spill response equipment will be stockpiled at key locations,
including the marine terminal. If necessary, local, national, and regional
emergency response capacities will be also mobilized. Frequent training
exercises will be conducted.
The project oilfield operator and the two pipeline companies will carry
insurance covering liability for all onshore and offshore facilities and
operations. The conditions of the coverage will meet all regulatory,
Consortium, and lender requirements.
Worker Health and Safety. The project will provide health screening and
surveillance, health education (with a focus on HIV/AIDS and other sexually
transmitted diseases), and immunizations to workers, and will make condoms
available at subsidized prices. Construction specifications will be designed
to prevent the creation of vector habitat. The quality of food and water
provided to workers will be monitored. An Epidemiological Information System
will be established for workers and a Sentinel Surveillance System for
communities. Workers will also receive safety training and equipment.
Medical teams, including emergency medical technicians, will be on site during
construction to provide medical treatment when needed and to supervise health
and sanitation conditions in the construction camp.
The project will also implement a Community Health Outreach Program, targeting
selected health issues in communities potentially affected by project
personnel and activities. The program will be coordinated with local public
and private programs and will focus on information, education, and selected
preventive or curative interventions. The two participating Governments will
also address health issues in the project affected areas.
Social Impact Mitigation. The project will address, in collaboration with the
Governments concerned and with the possible participation of NGOs, the direct
social consequences of the project. These include land acquisition (temporary
or permanent), giving rise to compensation and resettlement; impacts on
cultural property; and impacts on indigenous peoples. Impacts on sacred
sites and cultural property have been largely avoided by adjustments made to
the pipeline alignment during the centerline survey. A literature review and
surface archaeological reconnaissance of the oilfield and the pipeline route
have been carried out, and procedures developed for the monitoring of
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construction activities, the handling of chance finds, and storage,
documentation, and reporting requirements. Impacts on nomadic pastoralists
will be minimal and can be managed through local communication and conflict
resolution mechanisms. Impacts on forest dwellers (Bakola pygmies) have been
minimized through intensive consultation and careful siting of the pipeline in
the Atlantic littoral forest; nevertheless, project impacts may
disproportionately affect these vulnerable people, and so an Indigenous
Peoples Plan has been prepared. Funds will be made available through an
Environmental Foundation to undertake programs selected and, to the extent
feasible, designed by the Bakola themselves, with the assistance of a
community facilitator.
In addition to those social impacts directly caused by and addressed by the
project, there will be indirect impacts on communities due to the economic
activity which the project is expected to generate, particularly in
southwestern Chad. To address these impacts, the Government of Chad has
prepared a Regional Development Plan, including both short-term measures to
address impacts expected during the construction period, and a longer term
planning process to build capacity to utilize the portion of project revenues
which will be earmarked for the project area starting in project year 5. The
short-term measures envisaged include a program of information, education and
communication to minimize spontaneous migration to the project area from other
parts of Chad; a health education campaign and reinforcement of health care
facilities in the project area;   construction of water supply, sanitation, and
market facilities; mobilization of local authorities, NGOs, and entrepreneurs
to meet identified needs for housing, food, and fuel; and eventually,
strengthened land use planning, agricultural, and forest management services
based on community participation in the project area.
Biodiversity impact mitigation. Measures have been and will be taken at
several levels to avoid, mitigate or compensate potential project impacts on
biodiversity, which could be particularly significant in Cameroon. One of the
criteria for locating the pipeline route was the avoidance of all protected
areas and/or minimizing impacts on sensitive natural habitats, by routing
through degraded areas wherever possible or along existing infrastructure.
There has been a concern that induced access resulting from pipeline
construction and associated infrastructure improvements could open up new
areas for hunting, farming, and logging activities. This possibility has been
addressed through an Induced Access Management Plan to reduce or prevent
vehicular access to three sensitive areas: (a) the Mbere River valley and
plateau;   (b) the area between the Lom and Pangar rivers in the northern
sector of the semi-deciduous forest zone; and (c) the area between Nanga
Eboko and Belabo in the southern sector of this zone. The plan includes the
restoration or creation of natural obstructions; construction of barriers such
as locked gates; and educational programs for workers and people in the
surrounding communities. The plan also addresses the control of bushmeat
hunting by workers and transport by project vehicles.
Despite these measures to minimize and mitigate potential project impacts on
biodiversity in Cameroon, there will remain residual impacts from unavoidable
bush clearing and project induced activity along the pipeline construction
route. To compensate for these residual impacts, the project will assist the
Government of Cameroon to create two new national parks. One will cover
approximately 300,000 ha in the Mbam Djerem area west of the Deng Deng forest;
this park, which has been reconnoitered by WWF staff and recommended for
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protection, will compensate for unavoidable biodiversity losses in the semi-
deciduous forest zone. The second, also covering approximately 300,000 ha,
will be created in the Campo-Ma"an area in southwestern Cameroon. It is an
area of global significance for biodiversity (a Pleistocene refugium) and its
effective protection will compensate for unavoidable biodiversity losses in
the Atlantic littoral forest zone. The studies needed to define the
boundaries of this park are nearly completed. These areas have already been
declared exclusion zones by the Ministry of Environment and Forests, and a
dossier for their gazettement as national parks is in preparation.
The consultation process for this project began in 1993 and has been gradually
extended and intensified as the contours of the project have become clearer
and capacity has grown for meaningful debate. The consultation process is an
integral part of the project's adaptive design process. Thus, many changes
have been made to project design in response to comments received through the
consultation process.
Initial consultations with a limited number of agencies and NGOs on the ground
concerned the evaluation of corridor alternatives and the selection of
Corridor B, with its terminus at Kribi, as the most economically and
environmentally sound alternative. In 1994 the work on environmental
assessment started, and consultations were held with a somewhat wider group of
agencies and NGOs on the scope of work for the studies.
In late 1997 and 1998 the draft environmental documents, including the
Environmental Assessments, the Environmental Management Plans, and the
Compensation and Resettlement Plans, were released for public review and
comment in Chad and Cameroon. The draft documents were also made available to
the public through the Bank's Public Information Center. During this period
the project sponsors also conducted the centerline survey, which involved
visiting all the affected communities and recording land uses and entitlements
that would be affected by pipeline construction. Many minor adjustments were
made to the pipeline alignment as a result of information received during
these visits. A particular effort was made to contact and explain the project
to the Bakola, and to minimize direct impacts on their villages. Local
Community Contacts were hired to maintain continuous contact with affected
communities and to provide local language interpretation during meetings. In
Cameroon, meetings were organized by the provincial Verification and Valuation
Commissions to follow up on compensation proposals. In Chad, extensive house-
to-house consultation has been carried out with families likely to be affected
by developments in the oilfield area, especially those who may be entitled to
resettlement assistance.
As described above, the consultation process on the draft EA documents
resulted in several important modifications to the project design, notably to
the pipeline routing through sensitive ecological areas. Numerous
alternatives were identified and evaluated, while efforts continued to collect
the necessary baseline data for future impact monitoring and evaluation. The
alternatives analysis and the proposed revisions in the project description,
new sections in the environmental management plans, such as cultural heritage,
oil spill response, decommissioning, indigenous peoples, and biodiversity
offsets, and revised versions of the Compensation and Resettlement plans were
prepared in response to comments received. These were circulated for
additional public review, before the preparation of the final EA package.
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Project personnel have also met formally and informally with groups of NGOs in
both Chad and Cameroon, together with Bank Group staff in some cases. A major
NGO meeting was held in Donia, in southern Chad, in January 1998. In August
1998 a group of Cameroonian NGOs organized a similar meeting in Yaounde. Both
meetings provided useful feedback and suggestions for improving the project.
Another such meeting was held recently, in April 1999, in Bebedjia, Chad.
A content analysis of the comments received through this public consultation
process indicates several concerns, including job opportunities/hiring
procedures/training; compensation and resettlement; potential environmental
impacts, mainly oil pollution, leaks and spills; consultation process; project
technical aspects and scheduling; project revenues and their management; and
the extent of infrastructure improvements and socioeconomic impacts. Other
concerns included pipeline safety, health, project funding and Bank role,
human rights and civil unrest. Details of how these concerns have been
addressed through the adaptive project design process may be found in the
environmental reports being made available at the Bank's InfoShop.
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