World Bank, In Boost To Chad, May Back Exxon-Led Oil Venture
By Michael M. Phillips, Staff Reporter of The Wall Street Journal
WASHINGTON -- The World Bank is close to endorsing a $3.5 billion
oil-field and pipeline project linking wells in Chad to Cameroon's
Atlantic coast.
If its board gives the go-ahead, the bank would lend $190 million and assemble $300 million in commercial-bank loans for the central African project. The venture's lead private sponsor, Exxon Corp., said World Bank support is essential for its continued participation in the project, which is opposed by environmental and human-rights activists.
Exxon would operate the field and pipeline, and own about 40% of the
venture. Royal Dutch/Shell Group would own a similar share, with Elf
Aquitaine SA taking a smaller stake. The governments of Chad and
Cameroon would hold very small equity stakes, financed by $90 million in World Bank loans. The bank's private-sector financing arm, the
International Finance Corp., would provide $100 million and organize the larger syndicated commercial loan.
"This project could transform the economy of Chad, now one of the
world's poorest countries, provided public revenues are managed properly and the natural and human environments are protected," bank staff wrote in an internal document.
Senior bank staff have decided to back the project, and, in a private meeting recently, World Bank President James D. Wolfensohn told environmentalists that he is leaning toward the staff position. If he gives his approval, the loan could go to the board around mid-September.
The project presents a quandary for Mr. Wolfensohn, who wasn't
available for comment on Friday. On the one hand, it would generate
$80 million to $100 million in annual revenue for Chad, a desperately poor, landlocked country. Cameroon would earn some $20 million annually from the pipeline.
On the other hand, Mr. Wolfensohn has declared his intention to use
the World Bank to address often-ignored issues of human rights and
corruption. Chad and Cameroon have dubious reputations in both
departments. In fact, the government of Chad briefly jailed a member of parliament for charging corruption in the oil deal, a move that provoked protests from foreign governments and the bank itself.
The U.S., the largest single shareholder among the bank's 181 member
nations, hasn't decided whether to support the loan.
Bank officials acknowledge that the project is risky. But they and the oil companies argue that they have taken great pains to minimize the environmental damage and the dislocation of residents living along the path of the 600-mile-long pipeline. They have also pledged to ensure the revenue is spent on poverty-fighting programs.
"We think that the oil revenue will really help the government
alleviate poverty," says Aboulaye Beri, first counselor at the Chadian
Embassy in Washington. Raymond Epote, charge d'affaires at the Embassy
of Cameroon, declined to comment on the project. |
