World Bank Approves Loans for African Pipeline

Rejecting the concerns of environmentalists, the World Bank on Tuesday approved a $222-million loan package to help finance a controversial $3.5-billion oil pipeline between Chad and Cameroon in sub-Saharan Africa.

The loans are seen as the first step toward obtaining commercial financing to build the costly project, which will develop about 300 oil wells in the south of landlocked Chad and transport the oil 650 miles to Cameroon’s Atlantic coast port of Kribi for export.

The World Bank said the project could transform the economies of Chad and Cameroon, increasing those governments’ annual revenues by $80 million and $20 million, respectively, once the pipeline is completed.

Environmentalists say the project will pollute rivers providing drinking water to millions of people, threaten Cameroon’s fragile coastal rain forest and help prop up Chad’s government, which has been accused of numerous human rights abuses.

“The political climates of these countries means there is a great potential for ecological damage and for violence against those who would protect their environment,” said Alejandro Queral of the Sierra Club’s human rights and environmental program.

Of the 24 World Bank members who voted, 23 backed the plan and Italy abstained. The United States voted for the project.

A consortium led by Exxon Mobil Corp. and including Chevron Corp. and Malaysia’s Petronas would build the pipeline.

The pipeline is expected to produce 200,000 to 250,000 barrels of oil a day beginning in 2001, and roughly 1 billion barrels over the project’s 25- to 30-year life.

The World Bank’s private arm, the International Finance Corp., will contribute $100 million to the package for a loan to pipeline companies and stands ready to mobilize up to $300 million in syndicated loans from commercial banks.

The remaining $3 billion for the project would be provided by the consortium companies, commercial banks and export credit agencies.