Management welcomes this Independent Evaluation Group report on the Chad-Cameroon
Petroleum Development and Pipeline Construction Program. Management broadly concurs with a number of IEG’s conclusions and on the lessons emerging from this report.
In engaging in the Chad Cameroon Pipeline Program, the World Bank Group was aware that this was a highly risky and complex project, in a difficult environment. The decision to engage reflected the view that our participation had the potential to help mitigate the environmental and social impact of the pipeline. In addition, our involvement in the design of the oil revenue management system was to ensure that revenues would be effectively used for the benefit of the country and its people, and thereby attempted to avert the resource curse that had plagued so many other countries.
We agree with the report’s conclusion that the petroleum and pipeline project was a physical, technical and financial success, and that the efforts to mitigate the social and environmental impacts were largely effective in both Chad and Cameroon.
The program also yielded some visible results. In Cameroon, benefits included transit fees, taxes and jobs. In Chad the growth in revenues resulted in increased spending on priority sectors, translating for example into construction of high schools, development of the roads network, urban infrastructure investments, and expanded access to obstetrical services and
Poverty impact was made harder to assess because of the failure to adequately monitor from the start the program’s impact on poverty, as noted by IEG. However, it is clear that the results in Chad were less than what could have been expected given the rapid increase in oil resources. We agree with IEG’s comment that greater attention should have been paid to capacity development. We concur with IEG’s conclusion that supervision of this project did not focus sufficiently on preparing Chad to absorb the influx of oil revenues. Greater effort would have been needed to help Chad prepare sound, well-costed, and Government-owned strategies in priority sectors. Medium Term Expenditure Frameworks linked to these strategies would have been more effective than ex post focus on Public Expenditure Reviews, as was done. When the oil revenues arrived, ahead of schedule and in larger volumes than anticipated, the sectors were unprepared to absorb them and the quality of expenditure was lacking. IEG observes that the program design was unusually detailed and complex. On this, it should be noted that the prescriptive nature of the agreements was an effort to ensure that oil revenues benefit the poor in the face of negative experiences in other commodity-rich countries and questionable Government capacity and commitment. During project preparation and execution, many stakeholders, including from civil society, argued that the program design should have been even more stringent to ensure that the oil producing region xx was benefitting, and that priority sectors were reaping most of the benefits. In the end, however, no design could ever compensate for the lack of government commitment.
In this respect, we agree with IEG findings that the lack of government commitment was the key obstacle to the success of the program. A project of this sort cannot succeed without
Government commitment and responsibility. No alternative design or supervision could have delivered substantially more favorable development impacts in the absence of real and sustained government ownership. Capacity could not be enhanced if the Government was not truly motivated to build institutions such as the College. Faced with increasing security concerns and increased oil prices which made aid flows much less important, the
Government of Chad reneged on the agreements that had framed the project. Efforts to build implementation capacity were stalled and systems improvements…