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(2004/C 88 E/0667)

WRITTEN QUESTION E-3467/03

by John Bowis (PPE-DE) to the Commission

(21 November 2003)

Subject:   Chad-Cameroon pipeline

Will the Commission give an update on the Chad-Cameroon pipeline project, including benefits that have come to local communities and protection that has been assured for the affected environment? What is the expected programme for oil revenues? What are the health and social impacts on the two countries of increased economic activity associated with the pipeline?

Answer given by Mr Nielson on behalf of the Commission

(19 December 2003)

Oil production in Chad began in June 2003 and oil started flowing through the new pipeline in July 2003. On 9 October 2003 the country's president, Idriss Deby formally inaugurated the 1 000 km. long Chad-Cameroon pipeline, in the presence of four other heads of state of the region.

The total cost of extracting the oil from Chad and piping it to Cameroon is estimated at USD 3,7 billion, one of the largest private sector investments in Africa. The European Investment Bank (EIB) participates in the financing with a sum of EUR 144 million, of which EUR 35,7 million for the Government of Cameroon and EUR 20,3 million for Chad from European Development Fund (EDF) risk capital. The project is expected to produce 225 000 barrels of oil a day, and project revenue as a whole will be USD 12 billion. Expected government revenues are USD 1,7 billion for Chad and USD 505 million for Cameroon over the 28-year operating period.

The development rationale for this project is that the project will generate revenue that will allow the governments to invest more in poverty reducing programmes, such as health, education and rural development.

According to the Revenue Management Law, 8 5 % of the revenues over the first ten years of production will be invested in priority social sectors, education, health, social services, and agriculture. These will not substitute the expenditure of the state in these areas, but represent additional resources.

What makes this project an entirely new kind of extractive industry project is in the detail and care with which the revenue management programme is formulated and set up. In fact, the World Bank involvement has supported the development of a sound revenue management programme, triggered the application of the group's strict environmental and social policies, and ensured broad consultations in the two countries and around the world.

As a result, the project will have a minor net effect on the natural and human environments. The pipeline was buried for most of the route, it follows existing infrastructure and complies with World Bank safeguard policies, including those on environmental assessments, natural habitats, indigenous peoples, cultural property, resettlement, and forests. Only a small area of tropical forest has been lost as a result of construction. To compensate for this, two large new national parks have been created in Cameroon. A general plan has been prepared by the oil consortium to deal with possible oil spills. The plan is consistent with international good practice.

An action plan for an intensified IEC (information, education and communication) campaign for local people in the oilfield area has been implemented. Moreover the two governments are implementing complementary programmes to strengthen the capacity of decentralised health services, which include acquired immunodeficiency syndrome (AIDS)-related interventions. Qualified non-governmental organisations (NGOs) have been contracted to assist communities along the pipeline route to prepare, submit, and implement community projects in the health and education sector.

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