Washington, DC — The House Subcommittee on Africa Thursday pondered the potential benefits and pitfalls of the Chad-Cameroon Oil Development Project. The project will develop several oil fields in Southern Chad and export the crude by a 30-inch underground pipeline some 650 miles to a marine terminal off the coast of Cameroon.
It is expected to produce approximately one billion barrels of oil over the 25-30 year life of the project. The partnership involved in the US$3.5bn effort "between energy companies, the World Bank, and the governments of Chad and Cameroon is unprecedented," said Subcommittee Chairman Ed Royce.
However, according to Peter Rosenblum, associate director of the Harvard Law School Human Rights Program, "The project still provides only a rough outline for protecting the interests of the population." He told the subcommittee: "Chad is not Sudan and it is not Nigeria, but there is much in common, including the risk that a militarized north will become dependent on oil from a disenfranchised South."
Other witnesses saw the project as pointing the way toward a new approach for managing investment and development. Donald R. Norland, a former U.S. Ambassador to Chad called it, "a new model for natural resource development." One of the persistent problems he says the project has solved, with assistance from the World Bank, is "the diversion of oil revenues into the private accounts of corrupt politicians."
The Bank, Norland told the subcommittee, has helped design a new and effective revenue management system. Chad's government has approved strict legislation designating how the revenue can be used. This legislation won't be put to the test until 2003 when oil is expected to start flowing through the pipeline, but Norland said he was optimistic. "Given the level of public and private scrutiny, this combination of oversight and monitoring looks promising."
For Ahmedou Ould-Abdallah, a former Ambassador to the United States from Mauritania, who is currently executive secretary of the Washington, D.C.-based Global Coalition for Africa, the pipeline plans signal that "now there is a new paradigm for oil development in Africa." In his view, "it could rightly be considered as one of the first concrete operation of Nepad [the New Partnership for Africa's Development]."
Not unexpectedly, the ExxonMobil Vice President for Development in Africa, Tom Waters, reassured the Subcommittee that his company had consulted with every constituency where there might be criticism of the project. "Tens of thousands of people in Chad and Cameroon have had an opportunity to express their views on the project in over 1,800 public meetings... This level of consultation is unprecedented in Africa and perhaps in the world," he claimed.
Surprisingly little testimony was devoted to environmental issues, although Watson said a 19-volume set of documents spells out the project's environmental and socio-economic plans. They include, he said, "establishment of an offsite Environmental Enhancement Program to protect biodiversity and an Indigenous Peoples Plan to benefit the Bakola people in coastal Cameroon."
Not at the witness table but handing out material in the hearing room were members of Friends of the Earth, an environmental advocacy group. A document written by Samuel Nguiffoi of the Center for Environment and Development in Cameroon asked "Profit at any cost?"
"Oil exploitation and production will result in a significant loss of fertile land for local food production," says Nguiffoi's group. Forests, fragile ecosystems, and fresh water supplies are at risk, they claim.
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In a memo to Subcommittee members on, Tuesday, Royce sounded generally favorable to the project but expressed some of the concerns that have reached his office.
Continuing political unrest in Chad topped his list. And in violation of the "spirit" of the agreement two years ago, he said, the government of Chad had used US$4.5m of a US$25m "signing bonus" for its defense budget.
Most analysts think the project will go ahead. Its success, says Royce, "will depend on the will and ability of the Chadian government to spend the oil revenue in the planned fashion, predominately on social services and infrastructure."
The World Bank and energy companies should be prepared "to pressure the Chadian government to honor its commitment should it resist," he warned.
