The European Investment Bank's (EIB), the long-term financing institution of the European Union (EU), is lending EUR 144 million towards the construction of an oil pipeline linking the Doba oil fields in Southern Chad to an offshore terminal near Kribi in Cameroon.
The project, costing over EUR 4 billion, has been developed in close collaboration with the World Bank (WB) and is being financed by private oil companies, commercial bank loans supported by export credit agencies, IBRD and IFC (both part of the WB group) and the EIB.
The oil fields will be developed and operated under a 30-year concession by a consortium of ExxonMobil, Petronas and Chevron. Two special purpose companies, TOTCO and COTCO, joint ventures between the oil consortium and the Governments of Chad and Cameroon, have been established to build and operate the transport component of the project, that includes a 1070 km oil pipeline from the Doba oil fields to the Cameroon coast near Kribi, three pump stations, one pressure reduction station and an off-shore storage and loading facility.
Special efforts have been deployed to mitigate the environmental risks associated to the project. The WB has assisted in setting up a number of measures for resettlement of population, protection of forest areas along the pipeline's routing. International consultants have prepared comprehensive environmental studies, including an EIA, Environmental Management Plans, and Compensation and Resettlement plans, which have been released to the public. The WB has supported the establishment of an independent panel of experts to help the Chad and Cameroon Governments to monitor the project's environmental and social issues. EIB financing is conditional to the fulfilment of the social and environmental conditions established for the project.
The project will have a positive economic impact on Cameroon and will constitute a real breakthrough for Chad, one of the least developed countries in the world. The Chad Parliament has approved measures to ensure the project's revenues are used for poverty reduction and economic growth. The petroleum accounts will be audited and published on an annual basis and oversight on the allocation of funds will also be given to civil society.
On the occasion of this new loan, EIB's Vice-President, Michael Tutty, stated that "the project is an exceptional development challenge for Chad and a chance to lift its people out of extreme poverty. The EIB is aware of the difficulties the project will have to face, particularly in the environmental and social fields, and will continue to work closely with the World Bank to ensure this opportunity is properly developed and the relevant social and environmental-related conditions are met".
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects which further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union. At present, the Bank's financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the Fourth Lomé Convention, which was concluded in 1989 for a period of 10 years and is accompanied by two Financial Protocols, spanning 1991-1995 and 1996-2000. Under the second financial protocol, the total financial aid available amounts to EUR 14.6 billion, of which EUR 12 billion is grant aid from the EU member states, EUR 1 billion is managed by the EIB as risk capital finance, and up to EUR 1.6 billion is in the form of loans from the EIB's own resources. The EIB is currently working in close collaboration with the EU's Member States and the European Commission, in defining the criteria for management and operation of the newly created Investment Facility, set up by the New ACP-EU Partnership Agreement, recently signed in Cotonou, that will replace the Lomé Convention.