Extractive Industries Review (EIR) Implementation Update
Monday, April 22, 2006 / 10:30 – 12:00 am MEETING NOTES
The purpose of this session was to promote an informal dialogue among the staff from the World Bank, IFC, and CSOs concerning the implementation of the EIR commitments. The session was co-sponsored by the International Finance Corporation (IFC) and Bank Information Center (BIC). Speakers included Rashad Kaldany (Director) and Clive Armstrong (Lead Economist) of the Oil, Gas, Mining and Chemicals Department. It was chaired by Heike Mainhardt-Gibbs of the Bank Information Center (BIC). There were some 35 CSO representatives in the meeting. The session began with the chair making introductory remarks in which she outlined six issues that CSOs will like the Bank to provide more information on during the session: Improving the monitoring of WBG-EIR implementation; EIR connections to the World Bank report “Clean Energy and Development: Towards An Investment Framework”; Loopholes in the categorization of Bank-financed projects; Governance indicators and transparency; Foreign investment contracts and extractives commitments (for future discussion); and Improving implementation of revenue and contract transparency (only if time permits).
Several CSO participants raised the concern that the lack of 'project by project' (disaggregate) data, made the monitoring of implementation outcomes nearly impossible. They argued that it would be better to have disaggregated data analysis to enable them to monitor specific project impact instead of the present reporting of aggregate data. They are concerned that aggregated data tends to hide possible negative environmental and poverty impacts of individual projects. CSOs would also like to know the Bank’s plans for project level reporting/monitoring of impacts on poverty and the nature of poverty indicators used in such analysis. They noted that on the environmental side, impact sometimes goes beyond the immediate environment, which requires a much more robust geographical scoping of the mining site. Several participants inquired as to whether IFC would update its poverty indicators on its website, and whether it could provide more information on the resettlement and compensation issues because the present experience indicates that compensation for land acquisition does not reflect the actual livelihood conditions of recipients. Mr. Kaldany stated that this was extremely important and that he shared the same objectives as NGOs. He said that the IFC is not yet where it should be on measuring poverty impacts. He would like projects to have clear poverty objectives. He used the Marlin mine in Guatemala as an example of good practice because Marlin is disclosing their monitoring reports. These new indicators will also measure public disclosure, poverty impact assessment, etc. However, the data will be aggregated for practical reasons since it is not easy to disaggregate it. IFC is encouraging client companies to do appropriate baseline studies that can be used as a base for their own reporting. Data from the field indicates that companies are gathering improved data on environmental impact, but are still weak on measuring the impact on communities. One particularly are of interest, for example, is what happens to workers and their families over time. When tc comes to specific issues such as resettlement, the WBG’s safeguard guidelines apply in respect of follow up and monitoring. Concerns were raised about lack of creating livelihood opportunities and negative impacts associated with involuntary resettlement. Mr. Kaldany stated that his objective was to make affected people better off than without the project (instead of simply doing no harm). Mr. Kaldany cited the Yanacocha mine in Peru as an example of success, stating that the nearby town had the highest rate of cell phone penetration in Peru. On the new clean energy framework, CSOs would like to know whether the report was based on the experience and findings of the EIR process, and what effects the new emphasis within the Bank on climate change might have on the financing of oil and coal projects. There were several other related questions: whether the Bank is becoming more interested in nuclear energy; whether it will begin costing the impact of carbon emission; and what the Bank is doing to reduce gas flaring in the West Africa Gas Pipeline Project? IFC responded that while the clean energy report was not authored by the Oil, Gas, Mining and Chemicals Department, it sees it as positive approach that and there is no contradiction between the report’s suggested approach and the Bank’s approach to renewable energy and energy efficiency. Mr. Kaldany replied that he saw no conflict with the Management’s response to the EIR, i.e., that the IFC will not be phasing out support for oil. On the issue of coal, while the Bank has not provided any new lending or investment in coal industry in recent years, the recent energy crisis may lead the Bank considering investments to support coal development. On the other hand, the Bank is also interested in exploring alternative energy sources such as bio-fuel in response to the energy crisis. Concerning nuclear energy, the Bank’s position of not working in this area has not changed and thus there are not plans for increased involvement. Overall, there are three key areas of the Extractive Industry Review that relate to carbon emission, which the Bank is interested in pursuing: i) gas flaring reduction, by providing policy advice to countries; ii) clean coal initiatives by supporting appropriate technology for application on downstream sectors of the industry; and iii) support to bio-fuel initiatives as an alternative to conventional fossil fuels by providing assistance to countries who want to invest in renewable sources of energy. On the West Africa Gas Pipeline Project, although it is not a gas flaring reduction project specifically, around 30% of the gas for the pipeline could come from gas that otherwise would be flared. On the categorization issue, a participant asked why the Russian oil transportation project (from Russia to the North Sea) is not categorized as an extractives project and thus not subject to EIR-commitments ongovernance and safeguard policies. Further, why does the Bank consider the Chad-Cameroon pipeline an extractive industry, but not this one? CSOs are concerned that since the oil will be transported via ships and trains through many Black Sea communities, natural resorts, and historical sites, this is a disaster waiting to happen. IFC representatives responded that it is difficult to categorize the Russian oil transportation project as an extractive industry, since its main activity is transporting and not extracting petroleum. On the other hand, the project has to follow IFC’s usual environmental and social requirements and an IFC team was in Russia at the time of the meeting. IFC, had met with local NGOs about the project with plans to do so again soon. Mr. Kaldany stated that even though the project was not categorized as extractive industry, he hoped that all IFC projects strived to meet the same commitments on governance and social & environmental safeguards as the EIR-commitments. Finally, a CSO representative asked how the IFC’s approach on governance has changed from lessons learned from the Chad-Cameroon pipeline and for an update on what the Bank is doing regarding the Chad-Cameroon Pipeline to ensure good governance and compliance with the revenue transparency agreement. Mr. Kaldany replied that he still hoped that there would be a positive outcome in Chad and that the IFC learned again how important the role of NGOs is to governance. The IFC staff clarified further that on the Chad-Cameroon, as well as with other extractive projects, the Bank is not the only player and is thus trying to leverage its influence by coordinating its efforts closely with governments, companies, and other donor agencies in order to encourage governments, to comply with the Bank’s safeguard and revenue transparency standards. The main challenge we face as we work with communities, investors, and governments is how to ensure that communities benefit, and the Bank is committed to working with communities and will continue to learn from global experience. The Bank has other instruments such as CPIA and transparency indicators which it uses in evaluating its engagement with its development partners, and will not proceed in project preparation without consultation with multiple stakeholders. The Bank is also supporting the Extractive Industries Transparency Initiative (EITI) to improve the impact that oil, gas, and mining industries have by facilitating the introduction of revenue transparency, good governance, and full disclosure/publication in the industry. Mr. Kaldany stated that CPIAs will be made public in the next few weeks and will be cited in the SPIs.
List of participants in the discussion (will be available soon) Photos More Information:
2006 Spring Meetings Civil Society Dialogues Program - main page
2006 Spring Meetings - general information for CSOs |
RSS