World Bank Pulls out of Chad Pipeline

It was meant to be the test-case that showed that oil could benefit the poor of Africa. It was one of the World Bank’s biggest ever investments on the continent.

But yesterday, the Bank pulled the plug on the infamous agreement with Chad over the Chad-Cameroon pipeline and repeated failed promises to spend the oil profits on programmes for the poor.

Even before the World Bank backed the $4 billion pipeline it had been warned by local and international development groups that it had little chance of reducing poverty. The Bank was also warned that Chad was marred by corruption, political instability and human rights abuses. But it did not listen and has learned the hard way.

According to the Bank, Chad failed to comply with agreements in which the government agreed to set aside a part of its oil revenues for local communities, health and education. Relations are said to have deteriorated as the Chad government has tapped more of the oil profits for military spending.

Finally in August World Bank President Robert Zoellick wrote that the bank could no longer support the project. “Regrettably, it became evident that the arrangements that had underpinned the bank’s involvement in the Chad/Cameroon pipeline project were not working. The bank therefore concluded that it could not continue to support this project under these circumstances.”

A government official in N’Djamena told the Reuters news agency that the bank’s decision would not affect the country’s oil output.

But it is a case of “told you so” for those who warned the Bank not to get involved. Ian Gary, senior policy advisor for extractive industries at Oxfam America, said “The project’s record of failure proves these warnings correct. Looking forward, the World Bank must absorb the lessons of failure from this and other oil and mining projects around the world and avoid financing such efforts in places not yet ready to manage the risks.”

Oil Change’s Steve Kretzmann noted that “This was supposed to be the test case that proved oil development could be done successfully by the Bank.  Instead, its been an utter failure.  Its past time that the Bank stop providing taxpayer’s money to the oil industry and end oil aid now”.

For more information on international taxpayer support for the oil industry, visit www.endoilaid.org.