Cover Image
close this bookThe Courier N 184 - Jan - Feb 2001 - Dossier: Press and Democracy - Country Reports: St Kitts and Nevis (EC Courier, 2001, 96 p.)
close this folderFocus on development
View the documentAborigines - Healing the wounds of the past
View the documentJapan’s development aid - Goliath goes on a diet
View the documentGM foods - The answer or the enemy?
View the documentChad/Cameroon oil pipeline
View the documentSupporting the private sector - EU, CDE and ACP enterprises: A growing role for a changing institution
View the documentNGO henna project in Somalia - Somali women at heart of henna business
View the documentThe Cariforum Meeting
Open this folder and view contentsCountry Report: St Kitts and Nevis
Open this folder and view contentsDossier: Press and Democracy
View the documentRound Table on communicable diseases - Disease and poverty: breaking the vicious circle
View the documentAIDS in Uganda
View the documentBiodiversity conservation in Kenya - can it succeed?
View the documentSolomon Islands - EU cooperation: Against all odds - EDF project implementation in Malaita
View the documentCOMESA - Africa's first Free Trade Area

Chad/Cameroon oil pipeline

by John Bowis MEP

Work has started on a Cameroon-Chad oil project, marking a new era for development aid

After years of commercial wrangling, environmental doubts and political uncertainty, the Cameroon-Chad oil pipeline finally seems set to flow. The huge project, worth over US $3.7 billion, was endorsed by the World Bank back in June. But it represents a big, risky test for the World Bank and for our own African development policies.

It will undoubtedly help Chad, which is one of the world's poorest countries and ranks 167th on the 174-nation UN table of human development. The poverty is all too obvious, as I saw first-hand when visiting Chad and Cameroon earlier this year as part of the European Parliament's team assessing the oil pipeline's potential impact.

But two major questions remain. Will the pipeline damage the beautiful and fragile environment of west Africa? Do the innovative financial safeguards put in place by the World Bank mark the start of a new era for all our development policies?

For these reasons, Europe's politicians - be they in Brussels, Berlin, Lisbon or London - should watch the developments closely.

The pipeline - disaster or opportunity?

The underground pipeline starts in southern Chad and will end its 1050 km (665 mile) journey in Kribi, on the coast of Cameroon. Oil will flow under some of the world's most beautiful landscapes, from the Sahel in Chad to the savanna and mountains of northeastern Cameroon, to the virgin rainforests in the south - where the canopy of trees is already pock-marked by slash and burn subsistence farming, alongside the loggers' quest for profit.

In Brussels, our twin concerns have been environmental and social. Nigeria's above-ground web of pipes have proved to be a tempting but dangerous target for local people desperate to siphon off liquid black gold. Likewise, the plight of the 100,000 Pygmies - the indigenous rainforest dwellers of Cameroon - raises fears of lost habitats and displaced peoples in the Amazon basin. But understandable misgivings based on past tragedies must not be replaced by obstinate intransigence based on dogma. There are differences between the Cameroon-Chad pipeline and the twin spectres of the Niger Delta and the Amazon Basin.

Discussions with pygmies along the road between Lolodorf and Kribi

Firstly, environmentalists have been involved right from the start. During meetings in Chad and Cameroon, one swiftly realised that extensive consultations have been conducted, but this does not always mean that everyone understood what was going on. Therefore, civil society in Chad and Cameroon must continue to be involved at all stages during the construction and life-time of the oil pipeline project. It is encouraging to see multinational oil giants appear to learn from past mistakes. Yes, there were complaints and disagreements, but these were partly due to different economic and social developments in Cameroon - one of Africa's potential successes, allbeit with human rights challenges still to overcome - and Chad, a country trapped by 30 years of civil war and political instability.

There are also other fundamental differences between the Chad-Cameroon pipeline and those in the Niger Delta. The Chad-Cameroon pipeline will be buried underground and carry heavy crude oil - not the lighter version produced in Nigeria. These two factors alone should reduce the risk of local people tampering with, or sabotaging, the pipeline. And whilst there will inevitably be some environmental damage as the pipeline is laid, there is an extensive, complicated compensation scheme in place, reinforced by a replanting scheme.

Economic expectations and safeguards

The second dilemma stems from involving local people, as their expectations grow and frustrations rise as the project suffers delay after delay. An unavoidable consequence of consulting local communities along the pipeline's route is that people are banking on the promised compensation. The “economics of expectation” have for example arrived amongst the Pygmies, who are now spending on the basis of future promises. Here Europe's environmentalists and politicians can play a valuable role by monitoring the project to ensure that the oil giants Exxon-Mobil, Chevron and Petronas deliver on environmental and compensation promises. In this way the pipeline could become a benchmark for coping with the environmental impact of future development projects.

Another area where the Chad-Cameroon project breaks new ground is the innovative package of financial safeguards and incentives on offer: particularly the earmarking of oil revenue to benefit ordinary people in Chad. Under an agreement with the Bank, Chad has agreed to a rigorous spending plan for its oil revenues, with 80% percent allocated for education, health, social services, rural development and infrastructure; 10% in a trust for the future; and five per cent earmarked for development in the oil-producing region of Doba. This last five per cent will be discretionary.

One of the beautiful beaches at Kribi, Cameroon, where the pipeline will end

In Chad - where 80% of the seven million inhabitants live on less than US $1 a day and 60,000 children die each year before reaching the age of five - the oil revenues could add up to as much as half the national budget. And that calculation is based on a relatively low oil barrel price.

With oil-generated income widely expected to start flowing by 2004 and set to last for 25 years, the total economic impact will amount to at least US$ 2 billion. To distribute earnings, a Control and Management board will be set up for the first time and will involve local NGOs. A further innovation is the establishment of an International Advisory Group to check all projects to ensure social and environmental safeguards are respected. Underpinning this, the World Bank has approved a US $222 million loan to help Chad and Cameroon buy a stake in the oil project.

The poverty of villages such as these will be alleviated by the benefits from the pipeline

Optimism and the EU's role

In such a project it is easy simply to highlight potential pitfalls: political instability, pervasive corruption, environmental damage - all of which could rupture the pipeline's prospects. But to many observers the Chad-Cameroon project reflects an unprecedented collaborative effort between the World Bank Group, the consortium of US and Malaysian oil companies, and the two governments of Chad and Cameroon.

An increase in economic optimism throughout the region was already noticeable this summer as the Cameroon economy picked up. Infrastructure investments are on the increase as major efforts are made to improve the rail network - which also serves Chad and will transport raw materials for the new pipeline.

The European Union is also investing over € 220 million in upgrading and building a 627 km road network to link Cameroon, Chad and the Central African Republic. Further plans are under discussion to extend this transport artery into Gabon and Equatorial Guinea.

So as Chad and Cameroon see cuts in interest payments to the governments of rich countries start to take effect later this year, one can sense a new energy and dynamism in West Africa. Over the past few weeks the six countries in the Economic and Monetary Community of Central Africa (CEMAC) - Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Equatorial Guinea and Gabon - have been moving toward closer cooperation. This bodes well for an economic region of 30 million people.

The jury is still out as to whether the Chad-Cameroon oil pipeline project and the EU's investment in the region's infrastructure will work. But the starting point is a considerable improvement on past projects. Cooperation between donors in the developed world and recipients in the developing world, matched by the watchful eye of NGOs and politicians, show the way forward.

Multinational companies and international bodies cannot afford to ignore the opinions of pressure groups. But everyone must balance western beliefs against the interests and desires of millions living on less than US $1 per day. Let us not deny them the opportunity of future economic success, but work together above all to ensure that past mistakes and tragedies are not repeated.