IEG evaluated the World Bank Group supported Chad Cameroon Pipeline Program. The evaluation assessed the performance of a program of five World Bank financed projects, two IFC loans and three IFC advisory services operations in a cluster. In doing so, the evaluation combined an assessment of the development effectiveness of the program as a whole, with an assessment of each individual operation. This is the first program based performance assessment jointly undertaken by IEG-World Bank and IEG-IFC.
The main project was technically well implemented and a financial success, but the objectives of capacity building to manage the petroleum sector and helping Chad reduce poverty and improve governance were not met. Despite the surge in government revenues generated by the pipeline project, there is little evidence of human development progress amidst conclusive evidence of a sharp deterioration in governance. While the program suffered from some design flaws and supervision shortcomings, the principal reason for its overall disappointing outcome was the lack of government ownership.
The detailed agreements for Chad’s use of oil revenues underlying the WBG involvement were too rigid and failed when oil revenues started accruing sooner and in higher amounts than anticipated. Slow efforts at capacity building were undercut by the rapid inflow of oil revenues. The latter also reduced the originally expected leverage of the WBG support program.
World Bank Group involvement resulted in stronger environmental and social protection and in higher expenditure allocations to priority sectors than would have been the case otherwise. With the rapid increase in oil prices, the oil would most likely have been extracted and the pipeline constructed even without WBG involvement. This weakens the criticism by some NGOs that the WBG should have waited until capacity was in place and governance improved.
KEY LESSONS AND CONCLUSIONS
Projects and programs designed to operate in uncertain environments, such as extractive industries, ought not to be overly detailed and rigid. Clarity is needed on objectives and principles, but design and implementation modalities need to allow for flexibility.
Program and project designs need to be in tune with institutional and administrative capacities on the ground. In countries with weak capacity, focusing on basic problems of procurement and weak compliance with financial management rules ought to take precedence over introducing sophisticated budgeting practices.
The disappointing outcome of the Chad Cameroon program ought not to lead the WBG to avoid future involvement in extractive industries, however risky it may be. Instead, in designing potential future involvement in this area, the WBG would need to be mindful of the important lessons from this experience.