Cameroon – Lom Pangar Hydropower Project (LPHP)

March 27, 2012

U.S. Position

The United States welcomes the discussion on the proposed $132 million credit to the Republic 

of Cameroon for the Lom Pangar Hydropower Project (LPHP). This is a critical, high risk/high 

reward operation for both Cameroon and the Bank. It is central to the Bank’s mission – helping 

Africa develop its energy potential and expand access to electricity – and central to Cameroon’s 

development plan. However, a project of this complexity and risk needs strong safeguards, 

appropriate policies, and perhaps most importantly, adequate government capacity. The United 

States therefore commends the Bank and Government of the Republic of Cameroon (GRC) for 

their agreement on significant improvements in those aspects of the project since last November, 

when this operation was considered by the Africa Development Bank (AfDB). As currently 

proposed, this project is one that the United States can now support. However, strong 

implementation is critical. Therefore, the United States calls on the Bank to continue its high 

level engagement with Cameroon throughout implementation and to ensure strong oversight and 

supervision, sufficient strengthening of GRC capacity, and continued work on electricity reform 

so that this operation can be a success. The United States also calls on Management to provide 

reports to the Board and the public on project implementation, at least annually.

A project of this scale requires a comprehensive strategy that addresses critical policy reforms in 

Cameroon’s power sector as well as develops long-term risk mitigation frameworks to lessen the 

impact of this project on vulnerable populations. The United States hopes that the key reforms 

underlying the GRC’s new electricity law (NEL) are implemented as expected to enable an 

environment for continued private sector engagement in the sector. The United States is

disappointed by the government’s current embrace of sole source concessions for power

generation, but believe that the provisions requiring competitive bidding, optimization of plant 

size and power auto-producers’ contribution to the national power grid will help improve the 

situation. 

The United States supports NEL’s protecting the rights of all energy contractors and 

concessionaires within a one year period starting on the NEL’s promulgation date. The United 

States hopes that, in the meantime, all the concession contracts, especially that of AES, the main 

private company in the energy sector, will be equitably renegotiated without any risk to the 

generation of power in Cameroon. The Transmission Public Company (TPC), created by the 

NEL, is another important element of the reforms to the power sector. The United States hopes

that details about the TPC’s design and role in the power sector are available to Board members 

this year. The United States encourages both the GRC and the Bank to follow through on the 

reform agenda.

As the project moves into implementation, it is critical that the enhanced safeguards and 

environmental measures be put in place. The establishment of a water tariff, which pays for 

project costs and environmental management, provides a secure funding source to protect Deng 

Deng National Park. Strict controls on wood salvaging and controlled access to the forests to 

prevent illegal logging and poaching are essential, especially before the reservoir is filled. The 

establishment of a reservoir management plan to monitor and address water quality issues is a 
good idea. The United States strongly supports the establishment of a downstream monitoring 

plan, and hope that the requirement for mitigation measures if changes occur will have force. 

The United States appreciates that the overall compensation/development plan for affected 

communities goes beyond Bank requirements. 

The United States also commends the government for its commitment to implement a broadbased process for consultation on use of the Sanaga River's water resources. As the United 

States understands it, the purpose of this is to work out a balanced approach--basically one that 

harnesses power while respecting basic watershed functioning. The United States understands

and hopes that this process will be supported with appropriate technical expertise and that its 

work will be integrated into establishing operating regimes for existing and new hydropower 

infrastructure. The United States welcomes the provisions in the loan covenant on the operation 

of river basin management that will take into account equitable sharing by all users and 

environmental flow, and the parallel technical assistance by the Bank for river basin 

management. The United States recommends that the Expert Panel be asked to advise on the 

development of an operational plan. 

The United States appreciates Bank assurances that the salvage operation will be strictly limited 

to those areas that would be inundated by the reservoir, with clearly defined no go zones. The 

United States notes the Bank’s commitment to putting in place a strong monitoring and 

enforcement framework, with oversight by third party technical NGOs and an Independent 

Observer. Lastly, the United States supports the proposed closure of access to the site prior to 

filling the reservoir. It is imperative that the Bank actively supervise this critical phase of the 

operation to ensure that it does not result in expansion of logging beyond the limited areas 

allowed for salvage. The United States expects that failure to abide by the commitments on the 

salvage operation would be considered a serious breach of the loan covenants, and request that 

problems be reported immediately. 

Looking ahead to other large energy development projects in Africa, the United States would 

urge much closer MDB collaboration on project preparation.