36791

The Inspection Panel

Report and Recommendation Public Disclosure Authorized on Request for Inspection

Re: Request for Inspection GHANA: West African Gas Pipeline Project (IDA Guarantee No. B-006-0-GH)

1. On April 27, 2006, the Inspection Panel (the “Panel”) received a Request for Inspection (the “Request”), dated the same day, related to the Ghana: West

Public Disclosure Authorized African Gas Pipeline Project (the “Project”). The Request was submitted by the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project (the “Association”) through their representatives from the Olorunda Local Government Area of Lagos State, Nigeria. The Request was submitted on behalf of the members of the Association, which is composed of 12 communities that will be affected by the Project around the Badagry axis, in Lagos State, southwest Nigeria. These communities are Ajido, Imeke Agemowo, Araromi Ale, Idaghe Iyesi, Ilogbo Eremi and Igbesa, Okoomi, Itori, OloydAbiola, Arobieye, Igboliye and Egushi Benja. The Request includes four Annexes, including an Annex with signatures of 44 persons from different affected communities and two letters of consent from families who support the Request. (The Request for Inspection is attached to this Report as Annex I) Public Disclosure Authorized 2. During the Panel’s eligibility visit to Nigeria in early June, some Requesters raised a new concern with the Panel, namely that as of some weeks ago fishermen were no longer able to catch many fish in the area between Badagry and Tafi villages on the coast, allegedly because of severe pollution which interfered with the use of their fishing nets. They indicated that this was an especially serious concern, because many people in the area depended upon fisheries for a livelihood. They believed that it might be caused by the recent construction ofthe gas pipeline in the area.

3. On June 9, 2006, during the Panel’s visit to Ghana, the Panel received a letter, dated the same day, from Friends of the Earth Ghana (“FOE-GH’), signed by its Director The0 Anderson (Annex 111). In this letter, FOE-GH expressed its

Public Disclosure Authorized support for the Request submitted by the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project and asked to be added to the Request for Inspection (the “FOE-GHsubmission”).

1 4. On June 14, 2006, the Panel notified the Regional Vice-president of the new concerns about fishing activities raised with the Panel during the Panel’s visit to Nigeria and of the FOE-GH letter. The Panel has added both items to the processing ofthe existing Request.

A. The Project

Project Objectives

5. The Project aims to contribute to, inter alia, ”improving the competitiveness of the energy sectors in Ghana, Benin, and Togo by promoting the use of cheaper and environmentally cleaner gas from Nigeria in lieu of solid and liquid fuels for power generation and other industrial, commercial uses, and diversibing energy supply sources.’” In its response, Management specifies that “the project was designed to substitute inexpensive and environmentally friendly natural gas from Nigeria for expensive alternate fuels ...”2

6. Management expects that the Project will promote regional integration and bring economic benefits including “significant spillover implications for regional de~elopment.”~It also anticipates that the Project will diminish overall emissions of greenhouse gases and air pollutants.

Project Components

7. According to the PAD, the Project includes the following elements: (1) a new pipeline system, the West African Gas Pipeline (WAGP), which will transport . natural gas from Nigeria to Ghana, Togo and Benin; (2) spurs to provide gas to power generating units in Ghana, Benin, and Togo; (3) conversion of existing power generating units to gas; and (4) as needed, additional compression investments4

8. Under the Project, gas will be delivered from Nigeria via a 678 kilometer pipeline across southwestern Nigeria to a terminal point in Takoradi, Ghana. Fifty-eight kilometers of pipeline and other ancillary facilities are to be constructed by the West African Gas Pipeline Company (WAPCo) in southwestern Nigeria. In Nigeria, the pipeline will be constructed on the lands

’ Project Appraisal Document (PAD) on a Proposed IDA Partial Risk Guarantee in the Amount ofUS$50 Million for Ghana and a Proposed MIGA Guarantee in the Amount of US$75 Million for Sponsors Equity to the West African Gas Pipeline Project, November 2,2004, p. 10. Bank Management Response to Request for Inspection Panel of the Ghana: West African Gas Pipeline Project (IDA Guarantee No. B-006-0-GH) [hereinafter “Management Response”], p. 2,T 7. Management Response, T 15. PAD, p. 11-12.

2 of 23 communities with an overall population of 140,000, including the 12 communities making this Request.’

9. The development, financing, construction, ownership, operation and maintenance of the Project was agreed in an International Project Agreement dated May 22, 2003, between the Republic of Benin, the Federal Republic of Nigeria, the Republic of Togo, the Republic of Ghana, and WAPCo. The International Project Agreement was negotiated pursuant to Article VI1 of the Treaty on the West African Gas Pipeline Project between the Republic of Benin, the Republic of Ghana, the Federal Republic of Nigeria, and the Republic of Togo, signed on January 3 1, 2003.

10. The Project is implemented by the special purpose company WAPCo. Current shareholders of WAPCo include Shell, Chevron, Nigerian National Petroleum Corporation (NNPC). Volta River Authority (VRA) of Ghana, BenGaz of Benin, and SotoGaz ofTogo.6

11. The Project Appraisal Document (PAD) states that ‘(the World Bank Group participation (IDA and MIGA) will provide Jinancial risk mitigation to allow the proposed Project to proceed, support the implementation of regional and national frameworks and actions required to kick start the development of gas markets in Ghana, Benin, and Togo, and more broadly will provide comfort to all the stakeholders regarding Project preparation and implementation standard^."^ For these purposes IDA has entered into Project Agreements with WAPCo and N-Gas Limited, respectively, that contain several covenants, representations and warranties that both WAPCo and N-Gas “have acted and will continue to act in compliance with applicable World Bank Environmental and Social Safeguard Policies and anti-corruption policies.”

B. Financing

12. The entire Project is estimated to cost about US$ 590 milli~n.~The International Development Association (IDA)” has provided a guarantee, in the amount of US$ 50 million, for certain obligations of the Republic of Ghana related to the purchase of natural gas. The guarantee was approved on November 23, 2004, and the Guarantee Agreement became effective on December 3 1, 2004. Also, the Multilateral Investment Guarantee Agency

WAPCo’s participation in the project is provided in the WAPCo Shareholder Agreement ofMay 19, 2003, entered into by WAPCo, Chevron Texaco West Africa Gas Pipeline Company Ltd., Nigerian National Power Corporation, Shell Overseas Holdings Limited and Takoradi Power Company Limited. Collectively they are referred to as “the sponsors”. PAD, p. 6. PAD, p. 9. Both Project Agreements were signed on December 15,2004. PAD p. 13. Management Response (p. 4 T[ 13) states that the sponsors currently estimate the construction costs of the pipeline, excluding other WAPCo costs, to be about US$495 million. loIDA is also referred to as the “Bank”. (MIGA) has provided a US$ 75 million political risk guarantee to WAPCo in relation to the construction ofthe pipeline and associated facilities.”

C. The Request

I. Claims raised by the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project

13. The Requesters believe that the Project, as it now stands, will cause irreparable damage to their land and destroy the livelihoods of their communities. They state that the Bank did not comply with a number of its policies and procedures, including OP/BP 4.12 on Involuntary Resettlement, OP/BP 4.01 on Environmental Assessment, OP/BP 10.04 on Economic Evaluation of Investment Operations, and OPBP 13 -05 on Project Supervision.

EnvironmentalAssessment

14. According to the Requesters, the Bank failed to follow its policies and procedures in the preparation of the Environmental Impact Assessment (EIA). They state that, in contravention of Bank policies, “the overwhelming majority of our people were not consulted during the preparation of the Environmental

Impact Assessment ... lJf2 The Requesters state that although WAPCo holds periodic meetings with the landowners on the issue on compensation, many of the affected people in their communities are excluded because they are not considered landowners. In the Requester’s opinion, public consultation should have included non-land owners because “the pipeline would pass very close to our homes, through routes our children take to their schools, routes our womm take to their farms and to ourfishing grounds.”13 In the Requesters’ view, this makes the non-landowners “stakeholdersfy who should be included in consultations. They claim that they were not consulted until a Bank team visited Badagry on October 30,2004.

15. The Requesters also assert that they did not have access to the EIA. When they visited the Badagry and Olorunda local council secretariats in January 2004 to comment on the EIA, the EIA was not available. They understand that the EIA is now available on the internet, but assert that the EIA is still difficult to access and understand, given the volume of the document, the lack of internet access in their area and the low literacy level in their community. The Requesters add that “it would have been helpful ifrelevantportions of the large documents had been reproduced in Yoruba, the language commonly used in our communities,

‘I WAPCo is also the beneficiary of similar insurance structures from Zurich (with reinsurance from OPIC) to back the payment obligations of the Governments of Ghana, Togo and Benin. Management Response, fi 13. l2Request, p. 5. l3Request, p. 6.

4 and distributed to impacted c~mmunities.”‘~They claim that a translation of the Resettlement Action Plan (RAP) into Yoruba does not exist, although land acquisition has been completed.

16. The Requesters claim that the scope ofthe EIA was too narrow and should have included the existing Escravos-Lagos Pipeline (“ELPS”) to which the West Aii-ican Gas Pipeline will be linked. They consider the ELPS to be unsafe because of its history of poor maintenance and accidents, including fatal gas explosions and leaks that have occurred in other areas of Nigeria. They are worried that the ELPS “will source the WAGP ~ipeline.”~’Because of that link, the Requesters believe that an EIA for the ELPS is necessary to determine the Project’s environmental impacts. The Requesters fear that “the unsafe state of the Escravos-Lagos Pipeline implies a serious danger for the safety of the West African Gas Pipeline and all who live in itsproximity. ”I6In addition, they state that they “have been told that there is an emergency response and contingency plan to minimize impacts of disasters, but [they] ... are totally unaware of its content or adequacy. ”I7

Involuntary Resettlement and Poverty Reduction

17. The Requesters also claim that the Bank has not complied with its policy on involuntary resettlement (OPBP 4.12). They fear that the Project will negatively impact their livelihoods and provide inadequate compensation. They are convinced that the Project will not restore or improve their standards of living.

18. The Requesters are especially concerned about the amount of compensation they received for the plots of land acquired for the Project. According to the Requesters, members of their communities were assured that “ ‘adequate compensation ’ would be paid on the basis of rates established by the Nigerian government and that these rates would be further increased to reflect inflation adjustment and restoration of lost incomes.” They state that, in hindsight, they received too little information on the exact amount of Compensation they would receive for each plot of land acquired under the Project. They further claim that “[Uhere were am.uances from project sponsors that the rates for lease of land in our communities set by the Nigerian government would not be used in computing the quantum of compensation to be paid. But to our surprise, when the compensations were eventuallypaid, the rates were in most cases less than 4% of the market rate. ”

l4Request, p. 6. l5Request, p. 6. l6Request, p. 7. Request, p. 7. Request, p. 3. l9 Request, p. 4.

5 19. The Requesters indicate that there were no “binding contractual relations

between individual landowners and WAPCO ’J. 2o They assert that the payment of compensation was left to the discretion of the Project sponsors, resulting in payment of Compensation only for the actual crops on the affected land and not for the land or loss of future profits from their activities on the land.

20. The Requesters also fear that they will not only lose their lands, which are one of their means of livelihoods, but that they will also have no prospect of alternative long-term employment. As a result, they believe that the people of their communities will become fbrther impoverished. They claim that employment benefits would only be of a temporary nature during the construction of the pipeline. The Requesters assert that they are not aware of mechanisms that will ensure that qualified persons from their communities are trained to secure long-term employment, although they have submitted names of individuals from their communities qualified in various fields, such as engineering.

Consultation and Disclosure

21. The Requesters claim that many of the stakeholders did not have access to information about the Project and that the members of the communities could not understand the information that was provided. They state that at the time the compensation was paid, many of them were not aware of the criteria that were used for compensation. The Requesters believe that relevant information was withheld deliberately in order to garner community support for the Project.

22. Moreover, the Requesters state that the limited consultations that were held were “a recipe for crisis and violence in our communities. They claim that the “community members have yet to resolve the bitterness and bickering that was the hall mark of the selective consultations which tookplace with n few landowners, while other land users and impacted persons were ignored. ’) 22 Landowners and other stakeholders were unable to agree over who should be eligible to receive and keep compensation. The Requesters believe that the Project sponsors deliberately tried to incite tensions as part of a strategy to divide the community. The Requesters indicate that the Project and the insufficient information about the amount of compensation paid, has also caused serious social conflicts within families.

Economic Evaluation

23. The Requesters also question the economic evaluation of the Project and believe that it will not promote the “holistic development in our community and even in our country as it is premised on the false assumption that it will reduce

2o Request, p. 4. 21 Request, p. 5. 22 Request, p. 5.

6 the flaring of associated gas in Nigeria.”23 They cite Bank estimates that indicate that flaring gas instead of capturing it costs Nigeria about US$ 2.5 billion per year. Furthermore, they believe that flaring contributes to the destruction of the lands and rivers, to serious health problems, and to great environmental harm.

24. The Requesters assert that while the Project proponents claim that associated gas (which is normally being flared) will be the source for the pipeline, they have obtained information demonstrating that this assertion is false. They claim that the fields in the Western Niger Delta where the gas for the Project will be sourced “are generally non-associated gas fields. This means additional gas would be drilled instead.’y24The Requesters claim that the Project design does not compellingly demonstrate that any amount of associated gas would run through the pipeline. As a result, the Requesters deem it “inappropriate” for the Bank to support the Project, because it would allow the Project sponsors to “continue the unwarranted degradation of our environment and livelihoods.” 25

25. In this respect, the Requesters believe that the Bank failed to consider Nigeria’s plan to double oil output by 2010, which they believe will inevitably lead to the production ofmore associated gas. The Requesters claim that without assurance that the Project will only use associated (otherwise flared) gas rather than less- costly non-associated gas, the Bank will “set a precedent oj. looking solely at profit mar 4 ins, rather than the best development interest of the people of this country. ’j2

Supervision

26. Moreover, the Requesters claim that Management has failed to comply with the Bank’s policies on supervision. They state that they “consider the problems with the project sponsors ... a result of the World Bank’s ailure to adequately supervise the project s preparation and implementation.”2.f

27. The Requesters therefore request that the Panel recommend an investigation to the Board ofExecutive Directors.

28. In its Notice of Registration, the Panel noted that the above claims may constitute violations by the Bank of various provisions of the following operational Policies and Procedures:

OP/BP 4.01 Environmental Assessment OPBP 4.12 Involuntary Resettlement

23 Request, p. 7. 24 Request, p. 8. 25 Request, p. 8. 26 Request, p. 8. Request, p. 3.

7 OD 4.15 Poverty Reduction OP/ BP 10.04 Economic Evaluation of Investment Operations OD/OP/BP 13.05 Project Supervision World Bank Policy on Disclosure of Information

11. Claims Raised by Friends of the Earth Ghana

29, The FOE-GHSubmission not only supports the original Request for Inspection but raises concerns about consultation, safety and adverse livelihood consequences for fishermen in Ghana as a result of the construction and operation of the pipeline. While FOE-GHacknowledges the “contribution of energy development to poverty alleviation on the West Africa sub-region ’’,28 it raises a variety of issues that it considers critical to the implementation of the Project. One of its main concerns is the Project’s “lack of transparen~y.’’~~The Submission alleges that while the importance of consultation was recognized in the design of the Project, the issue of consultation was not handled adequately in practice.

30. The Submission states that Ghana’s Energy Commission has raised concerns about the Projects’ long term economic benefit to Ghana and that FOE-GH believes that these concerns have not been taken into account in the consultation process. The NGO is worried that these concerns will not be adequately addressed in the future and states that the Bank has already indicated its unwillingness to consider these concerns. According to the Submission, the economic and financial analysis of the Project was never disclosed, though this was initially promised.

31. Moreover, while the EIA identified the importance of an emergency response system, FOE-GH questions whether local people will be able to utilize and understand such a system in the case of an accident. FOE-GHcites several instances of oil and gas related accidents and doubts that Ghana has the capacity to respond to such accidents.

32. FOE-GHstresses that ‘Yshing is a critical source of livelihoodfor a signlJicant proportion of Ghana s pop~lation.”~~While it recognizes that the planned route of the pipeline does not pass sensitive fisheries ecosystems, it believes that the Project sponsors should assess the pipelines’ impacts on fisheries and livelihoods. The Submission states that the Bank should ensure that continued impact assessments are conducted to avoid any negative Project impacts on livelihoods and the fisheries ecosystem. Considering the migratory tendencies of fishermen, FOE-GH claims that local consultations should include all communities along the coastline.

28 Letter submitted by FOE-GH, dated June 9,2006, p. 1. 29 Letter submitted by FOE-GH, dated June 9,2006, p. 1. 30 Letter submitted by FOE-GH, dated June 9,2006, p. 2.

8 D. Management Response

33. On June 6,2006, Management submitted its Response to the Request3’ (Annex 11) At the time of its Response, the Panel had only received the initial Request, but was not aware of the additional environmental issue related to pollution and fisheries in Nigeria or of the letter from FOE-GH. Thus Management’s Response only addressed the issues raised by the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project.

34. The Response, which includes four annexes, provides background information on the Sector and the Project. In addition, the Response discusses a number of the Project’s so-called “special issues”, such as (1) Consultations, Disclosure and Supervision; (2) Poverty and Resettlement; (3) Project Economics; and (4) Environment. A Management Action Plan is also included in the Response. Detailed responses to each specific claim raised by the Requesters are provided in Annex 1 of Management Response.

35. Subsequent to its Response, Management provided the Panel with supplemental material in response to the Panel’s notification regarding the new fisheries claim by the Requesters and the letter from FOE-GH. Management supplemental response is attached in Annex IV, and forms an integral part of this report.

Response to the Requesters’ Claims

36. With respect to the Requesters’ allegations of non-compliance, Management believes that it has made significant efforts to apply its policies and procedures. Management acknowledges that the Project included both risks and opportunities, but asserts that it focused on maximizing opportunities and safeguarding against risk. Management believes that the Project is well- prepared and meets Bank’s safeguards requirements. Management recognizes, however, that further work will be needed on safeguards supervision. Management also notes that it will work with WAPCo, the Government of Nigeria and affected communities to ensure that “the Requesters’ rights or interests are not directly or adversely affected by the According to Management, there was strong continuity in senior Bank staff overseeing and supporting the safeguards work during Project preparation.

31 Bank Management Response to Request for Inspection Panel ofthe Ghana: West African Gas Pipeline Project (IDA Guarantee No, B-006-O-Gh), June 6, 2006, [hereinafter “Management Response”]. 32 Management Response, 7 60.

9 EnvironmentalAssessment

37. According to Management, the Environmental Assessment (EA)33concluded that the Project would not cause major impacts in Nigeria and that impacts would be limited to the Project’s immediate vicinity. Management supports this assertion by citing an Independent Monitoring Report prepared by WAPCo in December 2005. Management claims that the EA for the WAGP covers both pipeline safety issues and the upstream gas source.

38. Regarding safety issues, Management asserts that WAPCo conducted a community meeting in February 2006 attended by residents from at least three of the communities that submitted the Request. Additionally, Management claims that WAPCo issued a system-wide Emergency Response Plan on May 19,2006, and intends to prepare site-specific response plans.

39. As to the Requesters’ concerns regarding the scope of the EA, Management states that the Bank did not include the ELPS in the EA, because Management determined the ELPS was not a part of the Project’s area of influence, as defined in OP 4.01 Annex A. According to Management, the main reasons for this determination were that the ELPS, which has been in operation since the early 1990’s, would not be subject to any changes as a result of the implementation of WAGP and is neither owned by WAPCo nor dependent on the WAPG.

40. Management claims that an environmental audit would be a more appropriate instrument for an existing facility. It cites an audit which WAPCo conducted in the form of an ELPS Integrity Study, which concluded that the ELPS system would have adequate pipeline capacity for the WAPG and which described the ELPS pipeline as being in overall good condition. Management also claims that the communities the Bank consulted did not raise issues about the safety of the ELPS, ‘probabl because it is sufficiently distant from any communities listed in the Request”. E

Involuntary Resettlement and Poverty Reduction

4 1. Because of the Project’s provision for resettlement compensation, community development, and planned permanent employment, Management considers that the Project will benefit and not impoverish affected people.

42. Management notes that the repercussions ofthe Project’s acquisition ofland are limited in Nigeria: 1,557 private landowners and 928 tenants are losing small portions of the total holdings that they own or cultivate. It believes affected

33 The Request for Inspection refers to the Environmental Assessment as Environmental Impact Assessment (ETA). 34 Management Response, Annex 1, p. 25.

10 people have all been contacted both by the estate surveyors contracted by WAGP and responsible for the land and asset inventory, as well as by independent surveyors that the affected people themselves hired to represent them.

43. As to the Requesters’ concerns about the amount of compensation, Management indicates that the principle for compensation agreed upon and applied is the “replacement value” for land and assets. More specifically, Management states that, in accordance with Bank policies, the compensation rates for perennial crops and economic trees should consider all future production as required under Bank policies. Compensation rates for all immovable assets and improvements also must take into account future income streams; future profits should have been considered as part of future income. Management indicates that if the principle for compensation “has been applied inconsistently, the Bank will ensure that it is corrected.”35

44. With regard to the valuation methods used by WAPCo, Management states that during consultations held by the Bank in 2004, Management and WAPCo assured the participants that government rates would not be used as a basis to determine compensation amounts. Management indicates that for all assets, including land, WAPCo used “estate valuersyy36and that compensation payments had to also consider asset improvements., Management states that due to public concerns, WAPCo did not base compensation rates only on the 1998 Oil Procedures Trade Section (OPTS) compensation schedule rates, but instead, after negotiations with three communities, agreed to increase the rates by 75 percent for land, and 50 percent for crops and buildings. In January 2005 these rates were increased by an additional five percent due to delays in payment. However, Management notes that according to the RAP, “the OPTS rates were reported to bejrst increased by ten times and then, for inflation, an additional increase (+75% for land, and +50 %for other assets) was reported to be added.”37Management confirms that it is reviewing the actual payments ‘(to ensure that, regardless of OPTS rates or an mark-ups agreed, the principle ofreplacement valuefor lost assets was met.” Y

45. According to Management, the RAP instructs WAPCo to conduct both internal monitoring to ensure that valuations and payments are correctly made, as well as annual assessments of the effectiveness of compensation at restoring income. Management states that an independent audit of resettlement is scheduled for September 2006. It states that the Requesters should first bring their concerns about the level of compensation to the attention ofthe grievance mechanism.

35 Management Response, 7 44. 36 Management Response, Annex 1, p. 26. 37 Management Response, Annex 1, p. 26. 38 Management Response, Annex 1, p. 26.

11 46. As to the Requester’s concern about the alleged lack of a binding contractual relationship between individual landowners and WAPCo, Management claims that these agreements are documented in “Compensation and Indemnity Receipts for Direct Payment” forms. “[Ilfregistered as described in the RAP” Management believes, the receipts for property acquired meet Bank standard^.^'

47. Regarding the issue of employment of local labor force raised in the Request, Management claims that most landowners have lost only small parts of their land and thus do not need alternative employment. Management refers to several activities that are described in the EA, such as temporary employment of local residents in clearing, pipe installation and construction, local purchases and permanent employment for a much smaller group of residents. According to Management, WAPCo is operating a nine-month training program for long- term positions; 25 trainees are Nigerians and the number of positions to be filled in Nigeria is expected to be 16. Management also states that WAPCo has committed to at least 15 % local content during the construction phase and achieved 12.2 % through March 2006.

48. In its response, Management also emphasizes that WAPCo has instituted Community Development Programs. It expects that the new water systems, schools and health centers to be provided by WAPCo will improve the living conditions of the affected communities as a whole.

Consultations and Disclosure

49. Management does not agree with the Requesters’ claim that consultations about compensation were inadequate. It considers that the issue of compensation was adequately addressed in frequent and extensive consultations.

50. Management indicates that WAPCo and its consultants conducted twenty-five formal consultations in affected communities concerning the issues covered by the EA. Twenty additional consultations were organized exclusively for the RAP. According to Management, WAPCo held at least sixteen meetings in communities that signed the Request, open to both landowners and non- landowners. Management also states that the Federal Government of Nigeria held a public hearing on the EA on April 6,2004.

51. In addition, Management asserts that a social safeguard specialist conducted field visits to all locations and that the Bank’s External Affairs department held consultations in all four countries during the preparation of the second draft of the EA and the RAP. Additionally, Bank environmental, social and community development specialists conducted field visits to assess whether consultations and disclosure had been adequate.

39 Management Response, Annex 1, p. 27.

12 52. In response to the Requester’s claim that insufficient consultation about compensation has incited tensions in communities and within families, Management states that any tension that may have developed were “normal parts of community dynamics.” 4Q

53. Regarding disclosure of information, Management asserts that the first draft of the EA for Nigeria was disclosed in local, state and national government offices in January 2004. It acknowledges initial difficulties accessing the document in Badagry, but claims that the situation was corrected immediately. The final drafts of the EA and the RAP were disclosed in July 2004 on the internet and at eleven locations in Nigeria, including the local administration in Badagry. Copies were also sent to several NGOs and displayed at the Bank Info Shop. Management also indicates that the Environmental and Social Management Plan (ESMP) for Nigeria which was prepared in 2005 is available on WAPCo’s website. Management acknowledges that this disclosure should have been supplemented with translations of summaries of RAPS and EMPs in the local language Yoruba. Despite the Bank’s request in October 2004, these translations are still not available.

Supervision

54. Management believes that the Project has been well prepared and supervised and that the issues raised in the Request had already been identified in supervision. Management states that it has conducted one supervision mission on safeguards in June 2005 before construction began, in which issues related to, inter alia, safety and compensation were raised. Management acknowledges that a “jeld mission for supervision is overdue and will be conducted in the first quarter of FY 200T’.41

Economic Analysis

55. Regarding the economic analysis, Management claims that it performed its own analysis and also engaged a consulting firm to perform an additional analysis. It believes that the economic analysis considered all feasible alternatives and adequately evaluated the sustainability of the Project adequately.

56. According to Management, the EA includes not only Project alternatives but also addresses a “no action or no “project” alternative. It believes, that the WAGP was by far the most attractive investment and expects that the Project will generate significant economic benefits to participating countries.

57. Management also believes that the economic analysis and the PAD draw a realistic picture of the Project’s contribution to the reduction of gas flaring.

40 Management Response, Annex 1, p. 28. 41 Management Response, Annex 1, p. 33. FY 2007 refers to the World Bank fiscal year 2007, which starts on July 1,2006

13 Management indicates that while flaring reductions are not explicitly mentioned as one of the objectives in the PAD, the Project does “make a modest contribution to flaring reduction. ” 42 According to Management, the annual volume of associated gas is even included as one of the Project’s monitoring indicators.

Action Plan

58. Management is aware that some of the issues raised in the Request, such as compensation rates, community development mechanisms, and some environmental and safety issues, still need to be addressed. To do so, Management Response introduces an Action Plan, proposing several actions to resolve the situation.

59. In a first step, Management identifies the risks still facing the Project: (1) Potential uncertainty regarding disclosure of information; (2) Potentially inadequate compensation; and (3) Potential lack of ~redibility.~~

60. To address these risks, Management proposes several actions, such as the facilitation of community development programs and measures to increase transparency and accountability through conducting two supervision missions per year until Project completion. Additionally, Management states that before September 30, 2006 WAPCo will disseminate non-technical translations of RAP and EMP summaries, including explanations of the grievance and monitoring mechanisms.

61. Moreover, Management expects the appointment of an expert panel by September 2006. According to Management, the expert panel’s mandate includes the review of social and environmental issues. The expert panel will also assess the effectiveness ofthe grievance procedures in September 2006.

62. Management also states that it will assess whether compensation rates were sufficient to replace acquired assets and whether the grievance redress process was effective in correcting problems. Additionally, Management claims that before September 30, 2006, WAPCo will conduct professional surveys based on actual field measurements and ratings to assess the current values of each type of lost asset, including communal lands, trees, crops, other structures, and public assets. Management confirms that this will be guided by the definition of “replacement value” as required by OP 4.12, and that the Bank will review the cases cited in the Request.

63. Management expects that system wide emergency response plans will be disclosed in June 2006 and that detailed site plans will be developed. Further, a

42 Management Response, 7 43. 43 Management Response, 7 55.

14 resettlement audit, planned for September 2006 will review the adequacy of compensation to replace lost assets and the status of income restoration.

Responses to Additional Items Raised

64. With regard to the problem of pollution and the loss of fisheries in the Badagry area, which has arisen only in recent weeks, Management provided the Panel with “Clarijications Regarding Marine Pollution,” in which it indicated that, upon receiving notice from the Inspection Panel, it “sought WAPCo’s cooperation in undertaking an urgent preliminary investigation into the matter.”44 WAPCo completed its work in the Lagos Beach shore approach on March 14,2006, and the Badagry Lagoon crossing on April 12,2006.

65. According to Management Clarifications, WAPCo visited the site on June 22, 2006 and met with the chief fishermen and other fishermen in Ajido. WAPCo purchased a sample used net from the fishermen to test the brownish-green substance that is interfering with the fishing and the nets. Management states that these tests showed that the brownish-green substance is plant material, a filamentous green alga. Management Clarifications indicate that "[biased on the above noted clarijkations and the methods employed in drilling and laying the pipeline in the lagoon and Badagry Creek, Management believes it is unlikely that the substance found on the nets is related to WAPCo’s operation^.'^^' Management also states that in July 2006, an environmental staff specialist from the Bank’s Abuja office “will visit the site to follow up on the matter with the Jishermen, local government (including its environmental unit) and WAPCoBeld staffto ensure that this matter is appropriately referred to the Nigerian environmental authorities.”

66. Management also responded to the FOE-GHletter, which raised concerns about the quality of consultations with affected communities, and about the adverse effects that the construction and installation of the pipeline may have on the fishermen of Ghana. In response to the claim that the Project’s long term economic benefits to Ghana were not taken into account in the consultation process, Management states that the results of the economic analysis were disclosed in an open forum in Accra in September 2004 to all interested parties, who were given the opportunity to provide their inputs. It also asserts that Bank staff “conducted a round of consultations in all four countries” to evaluate WAPCo’s public participation program, and meetings with the communities were held for the preparation of the environmental and social impact assessment. 46

44 West Africa Gas Pipeline Project - Clarifications Regarding Marine Pollution, [hereinafter “Management Clarifications”]. 45 Management Clarifications, p. 2. 46 Management Response to FOE-GHletter, p. 1.

15 67. With respect to the emergency response system, Management states that WAPCo held public meetings with all affected communities to discuss the response plans and to describe in a clear way the actions that all parties need to take in case of accidents. In Response to the FOE’Srequest that continued impact assessments be conducted to avoid negative impacts on livelihoods and fisheries, Management claims that the environmental monitoring plan includes the assessment of these impacts, carried out by independent consultants. In addition, consultations were held during Project appraisal with fishing communities’ representatives in all countries, and NGOs contracted to assist in project implementation together with WAPCo’s community liaison officers will “remain engaged with all Communities along the pipeline right-of-way in coastal areas surrounding pipeline landfalls for several years.” ‘’

E. Eligibility

68. The Panel must determine whether the Request satisfies the eligibility criteria for an Inspection, as set forth in the 1993 Resolution48establishing the Panel and the 1999 clarification^^^, and recommend whether the matter alleged in the Request should be investigated.

69. The Panel has reviewed the Request and Management first and supplemental Responses. The Panel Chairperson, Edith Brown Weiss, together with Executive Secretary Eduardo Abbott and Panel Operations Officer Serge Selwan, visited Nigeria and Ghana from June 4 - 10, 2006. During their visit, the Panel met with the signatories of the Request for Inspection and with other affected people in Ajido, Badagry and Lagos, with national government officials in Abuja, and with Bank Management in Abuja. In Accra, Ghana, the Panel met with officials from WAPCo, experts and Bank Management. While in Accra, the Panel received a letter from FOE-GHin support of Request of Inspection.

70. The Panel wishes to thank the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project, FOE-GH, Environmental Rights Actionl FOE Nigeria, and Government officials in Abuja. The Panel especially expresses its appreciation to the Requesters for showing the Panel the area of concern to them. The Panel also wishes to thank WAPCo staff for providing documents and discussing points of concern with the Panel. The Panel is grateful to Bank staff in Abuja for providing the Panel with information and for assisting with logistical arrangements.

41 Management Response to FOE-GHletter, p. 2. 48 Resolution No. IBRD 93-10 of September 22, 1993, hereinafter “the Resolution”. 49 The 1999 Clarifications to the Resolution (hereinafter “the 1999 Clarifications”) are contained in the “Conclusions of the Board’s Second Review ofthe Inspection Panel” dated April 20, 1999.

16 71. The Panel proposes to add the letter submitted by FOE-GH as part of the documentation for the Request, since the Project also takes place in Ghana and because at the request and with the agreement of the Republic of Ghana, IDA agreed to provide a guarantee for financial obligations regarding the development, financing, construction and operation ofthe Project.

72. During the visit, the Panel confirmed that the Requesters are legitimate parties under the Resolution to submit a Request for Inspection to the Inspection Panel. The Requesters have a common interest and common concerns as required in Paragraph 9(a).

73. The Request indicates that affected people have authorized the Ifesowapo Host Communities Forum of the West Afi-ican Gas Pipeline Project to represent their interests to the Inspection Panel.

74. The Panel notes that the Request “assert[s] in substance that a serious violation by the Bank of its operational policies and procedures has or is likely to have material adverse effect upon the requesters. ” (Paragraph 9(b)).

75. The Requesters assert that they have suffered serious harm or will suffer harm in the future, because the Project “ifexecuted as presently conceived, would do irreparable damage to the land and consequently, destroy the livelihoods of the

12 communities. lJ5O The Requesters claim that the Bank’s support for the Project would allow the Project sponsors to “continue the unwarranted degradation of our environment and livelihood^."^'

76. The Requesters allege that the World Bank actions constitute a violation of Bank policies and procedures on Project Supervision, Involuntary Resettlement, Environmental Assessment, and Economic Evaluation of Investment Operations and that these actions have had a significant adverse effect on the Requesters’ rights, as required by paragraph 9(b).

77. The Requesters claim that they have brought their concerns to Management’s attention at various occasions. They state that they have attempted to discuss their concerns with Management, inter alia, during visits of Bank missions to Nigeria in October 2004 and in June 2005. They believe that despite these repeated efforts the Bank has remained inactive and failed to address their concerns. Management Response acknowledges that it has been aware of many of the issues that the Requesters raise and that these issues were discussed in local consultations and during a Bank mission in 2004 to Badagry and discussed again in the safeguards supervision mission in 2005. The Panel is therefore satisfied that the Request “does assert that the subject matter has been brought to ManagementS attention and that, in the Requesters’ view, Management has failed to respond adequately demonstrating that it has

50 Request, p. 1. *’Request, p. 8.

17 followed or is taking steps to follow the Bank’s policies and procedures” as set forth in Paragraph 9(c).

78. The Panel notes that the subject matter of the Request is not related to procurement, as required by paragraph 9(d).

79. No fimds had been disbursed under the Guarantee as of the date the Request was filed. The Request therefore satisfies the requirement in paragraph 9(e) that the related loan has not been closed or substantially disbursed.52

80. Furthermore, the Panel has not previously made a recommendation on the subject matter ofthe Request. Therefore, the Request satisfies Paragraph 9(f).

81. The Panel notes, however, that this Request has special circumstances which affect the Panel’s consideration of whether an Investigation is merited at this time.

82. The Panel notes that Management’s Response contains an Action Plan to address issues raised in the complaint. The supplemental Response regarding pollution and fisheries indicates that Management is seeking to ensure that the problem is addressed.

83. The Panel did not find widespread discontent about the Project itself among affected people. However, people expressed their concern about the criteria for compensation and the failure to consider future earnings, and displayed documents which the Panel observed would merit review. People also raised a new concern relating to environmental contamination and fisheries.

84. Importantly, when consulted about the Management Action Plan, the Requesters with whom the Panel met during its eligibility visits, among them a Requester acting as a community liaison, indicated that that they do not want to press for an investigation at this time but rather await further developments and Bank actions regarding their concerns.

85. In light of Articles 4 and 5 of the 1999 Clarifications and consistent with prior similar recommendations approved by the Board, the Panel recommends to defer the decision on whether to recommend an investigation or not, until the review of compensation and other actions included in Management’s Action Plan have been initiated and to see whether the concerns of the Requesters have been met. This will also include that environmental monitoring is in place and that further adequate response to the above mentioned fishery issue is provided.

86. Given Requesters’ preference to await Bank’s commitment to undertake certain steps to ensure compliance and address their concerns as noted above, and

52 According to the Resolution, “this will be deemed to be the case when at least ninetyfmepercent of the loan proceeds have been disbursed.” Footnote to Paragraph 14 (c).

18 given the relative complacency of affected people about the Project at present, the Panel recommends that it defer a decision with regard to recommending an investigation in order to give Management time to implement its Action Plan. The Panel expects to be able to make a determination by the end of 2006 as to whether an investigation is merited.

F. Conclusions

87. In light of the foregoing observations and in fairness to all the parties concerned, the Panel, as it has done in a similar situation in the past with Board approval, does not take a position at this time on whether the Request merits an investigation.

88. Since the Panel is not making a recommendation on this issue, the Requesters may still have recourse to the Panel later if they consider there are serious violations of Bank policies and procedures causing material adverse effect, which are based on specific acts or omissions of the Bank relating to the Project.

89. The Panel, therefore, recommends to the Board of Executive Directors that it approve the Panel’s proposal to refrain fiom issuing a recommendation at this time on whether an investigation is warranted in this case, but rather await fk-ther developments on the matters raised in the Request for Inspection. The Panel expects to be able to make a determination by the end of 2006 as to whether to recommend an investigation.

19

ANNEX I

REQUEST FOR INSPECTION

' - 7--,. ':-,-- 1 i REQUEST FOR 1NSPECTION BY REPRESENTATWS Okm' COMMUNITIES IMPACTED BY THE WEST AFRICAN GAS PTBkIjYE -.t 14 :.J .. PROJECT IN LAGOS STATE, NIGERIA .">.. ' 8-'!i'c 1. DESCRIPTION OF COMPLAINANTS

This complaint is brought by the 1FESOWAPO HOST COMMUNITIES FORUM ON THE WEST AFRICAN GAS PIPELIJVE PROJECT, Lagos State through their representatives from Olorunda Local Government Area of Lagos State, Nigeria: High Chief Nuru Ashade, Mr. Toyin Hassan, Alhaji Alani Ajose and Ishola Hassan. (Please see annex I, including copies of letters authorizing the requestors to submit this complaint on behalf of the Association).

The Association is made up ofthe 12 communities to be impacted by the West African Gas Pipeline Project (WAGP) around the Badagry axis, in Lagos state, South- west Nigeria. These communities are Ajido, Imeke Agemowo, Araromi Ale, Idaghe Iyesi, Ilogbo Eremi and Igbesa communities; others are Okoomi, Itori, OIoydAbiola, Arobieye, Igboliye and Egushi Benja communities. High Chief Nuru Ashade and Mr. Toyin Hassan are both directly impacted by this project because their lands were acquired. Alhaji Alani Ajose and Alhaji Ishola Hassan are members of the communities and principal members of the Association.

We found that this project has violated the following World Bank policies: 1) OP 13.05 on Project Supervision; 2) OP/BP 4.12 on Resettlement; 3) OP/BP 4.0 1 on Environmental Assessment; 4) OPBP 10.04 on Economic Evaluation of Investment Options

We believe that the West African Gas Pipeline Project, if executed as presently conceived, would do irreparable damage to the land and consequently, destroy the livelihoods ofthe 12 communities. This is why we are filing this complaint with the Inspection Panel.

Efforts to raise concerns

We have made strenuous efforts lo make the views that we have canvassed here available to the proponents of the project and the Bank itself, including during visits of the West African Gas Pipeline Company (WAPCO) and the World Bank, the first of which took place on October 30,2004 at Whispering Palins at Badagry, Lagos and the second in June 2005

However, we are disappointed with the complete inaction taken to address our concerns. We also know that several organizations have raised these same concerns with the Bank at forums such as during the civil society consultation with the Bank's team to Nigeria on 29 October 2004. We have therefore decided to use the Inspection Panel to further reiterate that our concerns and fears have not been addressed neither by the Bank nor the proponents of the project.

1 2. PROJECT DESCRIPTION

The West African Gas Pipeline Project is a project which aims to deliver gas from .- Nigeria via an approximately 680 kilometre long pipeline which cuts across 23 communities in Ogun and Lagos states South Western Nigeria to a terminal point in Takoradi Ghana. The 58 kilometres of the pipeline and other ancillary facilities that would be constructed by the West African Gas Pipeline Company from Alagbado to Ajido in Lagos state south- western Nigeria would pass through and be placed on the lands of these 23 communities, totalling over one hundred and forty thousand people.

The WAGP will connect with the existing Escravos-Lagos Pipeline (ELP) at Alagbado “TEE” north of Lagos. The onshore pipeline (trunkline) will be buried at 1 meter depth on land and at 8 metres depth offshore (in sea). From Alagbado ‘TEE”, a 30 inch pipeline will extend 55 kilometres southwest to Badagry beach where the gas will be compressed at a station, yet to be built by the WAPCO. A map is available in the Executive Summary of the WAGP Project Document (figure ES-5 entitled Communities Map for Onshore Pipeline route, Nigeria).

The project is designed to substitute natural gas from Nigeria for alternate fuels used by power, industrial, mining and commercial sectors in Ghana, Togo and Benin Republic. It is touted as a regional integration project, supporting the World Bank’s Regional Integration Assistance Strategy (RIAS) and complementingthe proposed West African Power Pool (WAPP) project. The project is also said to be a cardinal part of the plans of the New Partnership for Africa’s Development (NEPAD).

According to the World Bank, the rationale for the Bank’s involvement in this project is that “the project would lead to the introduction of private sector financing and expertise into regulated sectors ofthe economies of the participating West African States.”’

The entire project is estimated to cost USD$600 million. The World Bank’s InternationalDevelopment Association (IDA) and Multilateral Investment Guarantee Agency (MIGA) are involved in the project by: providing financial and political risk guarantees for the project, aimed at safeguarding the investments ofoil transnationals, Chevron and Shell, by ensuring that the government of Ghana does not fail in its payment obligations under the contract and providing support for the implementation of national and regional legal and policy frameworks required to kick-start gas market development in Ghana, Benin and Togo. Specifically, in November 2004 the World Bank’s IDA approved a $50million guarantee to the government of Ghana while MIGA approved a $75million guarantee to WAPCO.

I Project Appraisal Docunient (Report No: 30335-AFR) page 6.

2 For some time now, our communities, supported by civil society groups, have been expressing concerns in relation to the project. These issues include: - payment of inadequate compensation to landowners; - the manner in which EnvironmentalImpact Assessment was carried out; - the inability ofthe communities and groups to pinpoint the location where the draft Environmental Impact Assessment document was displayed; - the project’s unconvincing approach to the issue of gas flaring; - the failure of the proponents ofthe project to carry out an Environmental Impact Assessment in areas along the existing Escravos-Lagos pipeline that will feed gas into the new pipeline.

3. BANK POLICIES VIOLATED BY THE PROJECT

3.1 Proiect Supervision

The World Bank’s OP 13.05 requires the Bank to ensure that the borrower implements the project with due diligence and to identifv and take steps to resolve problems in implementation. As will become clear from the elaboration below, we feel strongly that the World Bank has failed to comply with this policy.

Many of the problems caused by the WAGP project’s sponsors were not anticipated or resolved by the World Bank as required by this policy. We consider the problems with the project sponsors mentioned below a result of the World Bank’s failure to adequately supervise the project’s preparation and implementation.

3.2 Resettlement Policy

The project as presently being implemented violates the Bank’s Operational Policy/Bank Procedure 4.12 of January 2002 which in essence requires that people who are losing their lands or livelihood as a result of a Bank financed project should benefit from the project and should have their standard of living improved or at least restored. This policy stated here was not complied with in our communities.

We have complained various times to different stakeholders in the project, the government, the project owners (West African Gas pipeline Company), etc on our fears and concerns on inadequate compensation. We are convinced it will not restore or improve our standard of living.

Members of our communities were assured that ‘adequate compensation would be paid on the basis of rates established by the Nigerian government and that these rates would be further increased to reflect inflation adjustment and restoration of lost incomes’. With thc benefit of hindsight, we now believe that these statements provided precious little information on the exact amount of compensation that we were to receive for each plot of land acquired for the project.

3 The project sponsors kept us in the dark about this and other information relating to adequate compensation that should improve our standard of living. There were assurances from project sponsors that the rates for lease of land in our communities set by the Nigerian government would not be used in computing the quantum of compensation to be paid. But to our surprise, when the compensations were eventually paid, the rates were in most cases less than 4% of the market rate.

In a petition to the “Chief Executive Officer” of the West African Gas Pipeline Company by representatives ofthe OGABI/ORISAFUNMI families of Imeke town Olorunda Local Government Area, dated March 14, 20042, the families respectively stated “that upon commissioning our surveyor to measure out the portion of our family land that falls within the gas pipeline route, it was discovered that 2 acres of our family land falls within the route ...at the moment a plot of land measuring l00fi by 50A in Imeke community can be sold (leased) for at least N250,000 (two hundred and fifty thousand naira only) this is about $USD 2,000”. The petitioners continued “Two Acres of land at that rate will attract N3, 000,000 (three million naira only) or $23,100 .. . our family should be adequately compensated for the lost (sic) which will definitely be occasioned.” The petitioners further stated .. . “we duly acknowledge the receipt of N400,OOO (four hundred thousand naira only) or $3,600 already paid as compensation to the family”.3 It is important to state here that one of the signatories, Hon. A.O. OGABI, is the Chairman of Olorunda Local government, the highest ranked elected official in the local government area.

There were no binding contractual relations between individual landowners and WAPCO. The sponsors of the project merely paid at their own discretion. They provided compensation for the crops on the land only and did not pay anything for the land and future profits that are accruable from the activities that we would have undertaken on our lands.

Our request for cash compensation instead of relocation in many instances was informed by our fear of the unknown. These lands are our ancestral lands and we cannot leave it to total strangers while moving to some other location to reside. Ruling elites in the country in connivance with the oil multinationals have by their actions and inactions enhanced poverty in our communities. But this does not give them the right to take our lands or pay us next to nothing as compensation when we opted to stay on our land.

Public Consultations and Disclosure

Still under OPBP 4.12: Not all stakeholders had access to the project information, and the information provided was not understood by members of our communities. That is why the expectations of our community people were unnecessarily raised on

The letter was titled: ‘Re: Acquisition of part of Ogabi/Orisafunmi Family land at lmeke in Olorunda Area of Badagry Lagos State for the West-African Gas’ and the signatories were Honourable A.O.OGAR1 and Mr. SHlNA AKINOLA for the OGABl and ORISAFUNMI families. The value of the naira to the dollar at the official market at the time of this petiton hovered between 135-132 naira to the dollar.

4 the compensation we were to receive. Until the day some of us collected our compensations, we had no idea ofthe criteria used for computing the compensations to be paid for the acquisition of our lands. We believe that there was a deliberate policy not to disclose all relevant information in order to get our support for the project.

The manner the little consultation that took place was carried out is a recipe for crisis and violence in our communities. There are still tensions between the landowners and those of us whose lands were not acquired but whose livelihood would invariably be affected by the project. Some of us would lose our farmlands; others may be denied easy access to their farms and fishing grounds. We believe that the sponsors of the project employed the classic divide and rule strategy to their full advantage. Our community members have yet to resolve the bitterness and bickering that was the hallmark of the selective consultations which took place with a few landowners, while other land users and impacted persons were ignored.

In another example of conflicts that arose, families were against each other owing to what some members perceived as the small amount of compensation declared by their family heads who signed for and collected compensation cheques on behalf of their families. Family heads were suspected to have stashed part of the compensation for their private use. This perception was entirely false, but as there was hardly any information on the quantum of compensation to family heads, rumours of dishonesty on the part of family heads were rife and these led to bitter quarrels and even physical fights. It is pertinent to note that a family in the sense used here denotes the extended family system practiced widely in our communities.

There were also instances where the land owners and the land users (those who lease lands for farming) clashed over who should be paid compensation and how the compensation that has been paid should be shared.

3.3 Yolicv on Environmental Assessment

We assert that the project violates the Bank’s Operational Policy/Bank procedure 4.0 1 ofMarch 1999, which requires a careful analysis and mitigation, and avoidance of the environmental and social impacts of a project. It is a key requirement of this policy that public consultation with all key stakeholders be undertaken and that relevant documents be disclosed.

Public Consultation

It is sad to note that the overwhelming majority ofour people were not consulted during the preparation of the Environmental Impact Assessment report on the project, nor after announcements in the national daily newspapers that draft copies of the Environmental Impact Assessment ofthe project were on display at different locations.

5 . In our presentation to the team of consultants fiom the World Bank that visited our community on October 30,2004 we stated thus “we shall appreciate a proof (sic) as regards venue, time and list of community people that attended the public hearing on -. the EIA besides the landowners with whom the company holds periodic meetings on the subject of compensations”.

Although the majority of our community people are not landowners, the pipeline would pass very close to our homes, through routes our children take to their schools, routes our women take to their farms and to our fishing grounds. This makes us significant stakeholders. And we feel aggrieved that we were not consulted until the visit of the team of consultants from the World Bank, which included Thomas Walton, Arbi Ben-Achour and Yasmin Tayyab on October 30,2004 in Badagry. During this visit, it was evident that there was a lack of adequate consultation with the people as no one fiom our communities in the Badagry axis of Lagos state was able to identify what was in the Resettlement Action Plan. We have had the opportunity of reading the Project Appraisal Document Report No 30335-AFR of November 2,2004 of the team of consultants referred to above. We are very worried that this important aspect of the meeting was not highlighted in their report. Moreover, our support for “a project that would utilize presently flared and harmful associated gas” was misconstrued as giving blanket support for this project.

Information Disclosure

We visited the Badagry and Olorunda local council secretariats in January 2004 in order to make informed comments on the EIA. However, this was impossible because the document was unavailable. We understand that it is now available on the Internet. But looking at the size of the document, the low literacy level in our communities and non-availability of internet service in our communities, it will take us forever to decipher what is in the document. It also means we would have to hire consultants to comb through the EIA documents seeking relevant data that we may need to respond to.

In addition, it would have been helpful if relevant portions of the large documents had been reproduced in Yoruba, the language commonly used in our communities, and distributed to impacted communities. This, no doubt, would have assisted us make the informed comments required by the sponsors and the World Bank. At this moment, all though land acquisition has been completed and clearing of the right of way is in progress, there is still no translation of the Resettlement Action Plan into Yoruba.

Scope of the EIA

The failure of the project proponents to carry out an Environmental Impact Assessment of the existing Escravos -Lagos Pipeline, to which the West African Gas Pipeline will be linked, is a major source of concern for us. In some cases, the route of the pipeline is only a few feet away fiom our homes and passes close to our schools, farms and fishing grounds. We are very worried that the Escravos-Lagos pipeline, which is shut down several times a year because of poor maintenance and accidents, will source the WAGP pipeline.

6 It is the generally known here in Nigeria that the Escravos-Lagos pipeline is not safe. We will not feel safe either until a proper EIA has been carried out on the Escravos - Lagos section of WAGP so that its potential impacts on the safety of WAGP are made clear and available for all to see. Such an EIA is essential to determine the West African Gas Pipeline Project’s environmental impacts.

We are convinced that the unsafe state of the Escravos-Lagos Pipeline implies a serious danger for the safety ofthe West African Gas Pipeline and all who live in its proximity. We do not wish to become victims of gas explosions and leaks like our brothers in one of the states in the Niger Delta where on September 12,2003, a gas pipeline owned by Shell (one of the sponsors ofthe WAGP project) that supplies gas to the aluminium smelter plant, exploded. This led to the death of community people and to their relocation away from their communities. Importantly, we know that emergency response mechanisms in this country is totally nonexistent. There were two major air mishaps late last year in Nigeria, one of them happened at Lisa village a few kilometres away from our communities and it took the search and rescue team of the National Emergency outfit two whole days to locate the site of the crash. We have been told that there is an emergency response and contingency plan to minimize impacts of disasters, but we are totally unaware of its content or adequacy because of the little information we have.

3.4 Policy on economic evaluation of investment oDtions

Another very important policy that was violated is the Operational/Policy and Bank Procedure 10.04 of September 1994, which requires that the Bank evaluate investment projects with the aim of ensuring that they promote the development goals of the county, to do a proper consideration of feasible alternatives including the “without project” situation (as also required by OP 4.01) and to evaluate the sustainability of the projects.

Development goals

We believe that this project would not promote the holistic development in our community and even in our country as it is premised on the false assumption that it will reduce the flaring of associated gas in Nigeria. From the facts in the documents available to us it is unquestionable that Nigeria is the biggest gas flaring country in the world. Flaring contributes to the destruction of the lands and rivers in our country, to serious health problems and to the global phenomenon of Climate Change. As such, gas flaring is doing great harm to the environment, health and livelihoods of Nigerians. In addition, flaring as opposed to capturing gas entails an economic loss. According to estimates of the World Bank itself, it costs Nigeria about US$2.5 billion annually.

7 The WAGP project’s proponents claim that associated gas (which is normally being flared) will be the source ofthe pipeline. We, in conjunction with Environmental Rights ActionRriends of the Earth Nigeria, have requested information that would show that this is the case. The question is important, since the fields in the Western Niger Delta where the gas for WAGP will be sourced, are generally non-associated gas fields. This means additional gas would be drilled instead.

Currently, the WAGP project design does not demonstrate in concrete terms that any amount of associated gas would be piped through the pipeline. As the World Bank itself has said, ’75% of gas flaring in Nigeria is a result of the failure of proponents of the West Africa Gas Pipeline Project to put in place the necessary infrastructure to enhance gas utilization in the country4. In this situation, it is inappropriate for the Bank to support WAGP, as it allows project sponsors to continue the unwarranted degradation of our environment and livelihoods.

In this respect, the Bank also failed to take into considerationNigeria’s plans to double oil output to 4 million barrels of crude oil per day (from the present 2.5 million barrels per day) by 2010 and the expected increase in new oil field development. This will inevitably lead to the production ofmore associated gas.

Without guarantees that WAGP use only associated (otherwise flared) gas, the World Bank’s support for WAGP will increase the use of non-associated gas, which is cheaper to produce than associated gas. WAGP would thus set a precedent of looking solely at profit margins, rather than the best development interest of the people of this country.

Even at the level of the supposed economic benefit of the project for us as a community, we think this claim is patently false, illusory and diversionary. Firstly employment opportunities would only include temporary manual labour during construction work. As far as we know, no mechanism has been put in place to ensure that qualified persons from the community with the relevant academic credentials are put through training to secure employment on a full term basis. This is despite the fact that we have compiled and submitted the names of graduates from our communities in different fields, especially in the area of engineering.

We therefore think that this project will further impoverish the people of our communities. We will lose our lands, which are our only means oflivelihood, without adequate compensation, while on the other hand we do not have the prospect of long term alternative employment. We have often made the point that we would not accept to be mere onlookers in this project, and that we want to be an important part of the project, but it seems that there is a deliberate move to push us aside with one excuse or the other.

Joint UNDP/World Bank Energy Sector Management Assistance Programme 2004

8 * Taking into consideration this situation, the violations of World Bank policies documented here which have adversely affected our rights and interests, and the lack of response to our concerns, we are requesting the Inspection Panel recommend to the World Bank’s Board of Executive Directors that the Panel undertake an investigation of the West African Gas Pipeline.

We hereby authorize the Panel to make this request public.

27 April 2006

IFESOWAPO HOST COMMUNITIES FORUM ON THE WEST AFRiCAN GAS PIPELINE PROJECT, Lagos State, represented by: High Chief Nuru Ashade Mr. Toyin Hassan Alhaji Alani Ajose Ishola Hassan

Contact Address:

Ifesowapo Host Communities Forum on the West African Gas Pipeline Project c/o Balogun Adinni Shopping Complex, Imeke, Olorunda Local Council Development Area. Badagry Local Government Area, Lagos State, Nigeria.

Or

c/o Environmental Rights ActiodFriends of the Earth-Nigeria 10 Ibaa Street, Off Okomoko Street, D-Line, Port Harcourt, Nigeria. Tel/fax: +234 84 236365 assumeaeraction.org

Annexure:

I. Community signatories to the request for inspection by the Ifesowapo Host Communities Forum on the West African Gas Pipeline Project 2. Letter of consent by Hassan lsikalu Family of Imeke. 3. Letter of consent by the Idomo-ipara Family of Ilogbo-Eremi 4. Open letter to the World Bank Concerning the West African Gas Pipeline, December 18,2000

9

Lagos State, Nigeria.

t.

ies ect,

e.

Monday. December 18,2000

James D. Wolfensohn President The World Bank I8 I8 H Streef, N. W. Washington DC. 20433 , USA

Dear President James Wotfensohn,

We, the undersigned organisations and individuals fiom around the world, wish to express our solidarity with the local communities of the Niger Delta area and Nigerian civil society organisations who have rejected the West African Gas Pipeline project and requested that The World Bank should discontinue any support for the project. We share the concerns of the communities that the project would aggravate environmenta! devastation, human rights violations, corntnunal conflicts and impoverishment of the communities in the gas fields and pipeline route. e We understand that the World Bank funded the initial feasibility study for the West African Gas Pipeline and continues to support the project, which will transpor: natural gas from gas fields in the Niger Delta of Nigeria to special consumers in Benin, Togo and Ghana. The project is being developed by a consortium of transnational oil corporations including Chevron and Shetl in partnership with the state owned Nigerian National Petroleum Corporation, Ghana National Petroleum Corporation, Societe Beninoise de Gaz and Societe Togotaise de Gaz. The partners signed agreement for the project in 1999 and construction ofthe pipeline is expected to be concluded by 2002. The World Bank has been working with the governments of Nigeria, Benin, Togo and Ghana to set a fiscal and regulatory structure to make the project profitable for the corporations.

By continuing to support this project, the World Bank is encouraging the corporations and the governments involved to ignore even the most basic processes to prorect the natural environment and the livelihood of local populations. Though the pipeline will have negative impacts on the natural enviranment and the local communities. the communities have not been informed about the nature of the project, as prior consultation with the communities is clearly not a consideration for the consortium. Also, a transparent and inciusise Environmentai Impact Assessment (EIA) process was not carried out in all the countries involved. It is unfortunate that months after representatives and indigenes of local communities in Nigeria’s Niger Delta, delegates fiom Ghana, Benin Republic and Togo as well as concerned NGOs and social movements met in Effurun, Delta State, Nigeria between 14 -1 5 March 2000 and protested the absence ofcormsuftation and EIA, Chevrou, the managing sponsor of the project and the Nigerian government have been caving on with total contempt for the objective fears of the communities.

Consubtion:

Although the project was conceived before 1993 and a Memorandum of Understanding was signed as far back as August 1999, ineinbers of the corninunities in the gas fields where Chevron’s gas gathering facilities are located and communities along the proposed pipeline route have been ignorant of the project. This is because Chevron has maintained a high level of secrecy, refUsing to infonn and consult with the coinmunities that will bear the impacts ofthe project. We, therefore, conclude that Chevron and her partners are not willing to address the fears of the cornmunities, which have arisen with the history of violations and destruction associated with Chevron and the other transnational oil corporations. Chevron, the managing sponsor of the W-est African Gas Pipeline, is currently being sued in US. courts for their rde in aiding and abetting the Nigerian military in killing and torturing unarmed civilians protesters on two separate occasions, on the Parabe platform and in of Opia and Ikenyan villages on May 28, 1998 and January 4, 1999, respectively.

Similarly, Shell, a member ofthe consortium is responsible for numerous killings and rights violations in the Niger Qelta area.

Chevron has failed to give adequate information ;n response to enquiries by civil society organisations in Nigeria, Ghana and Togo. The responses to organisations have been scanty and self-contradictory. In some of the responses, Chevron claim to be committed to consultation wirh host comnunities. However, with the project billed to coinmence by 2001 and construction expected to be concluded by 2002, there would not be enough time for adequate consultation considering the magnitude of the project and expected impacts.

For example, in March, 2000, Chevron failed to show-up in an information and consultation meeting to discuss the WAGP with local communities, civil society organisations, media, government agencies and experts fi-om Nigeria, Ghana and Togo, though the independent organisers had invited the company and officials ofthe company had announced that the company wouid be sending representatives.

Similarly, the Nigerian National Petroleum Corporation (NNPC) failed to turn up for the information and consultation meeting despite the prior indication of willingness to attend during meetings with the organisers.

The governments of Nigeria, Benin, Togo and Ghana also nave not demonstrated any real commitment to consultation with local communities and civil society organisations.

We must point out that a favourable condition for democratic participation in decision-making of local coinmunities does not exist in the Niger Delta area of Nigeria, due to continuing inilitarisation of the area and central government legislation that deprives the local communities of all rights to ownership and control of land. With the government having the power to arbitrarily expropriate communal land for oil and gas development, the people are quite powerless to engage in any meaningful participatory consultation with oil companies and the state.

Environment:

The West African Gas pipeline project, like similar projects in the Niger Delta area of Nigeria and other tropical countries, will surely affect the natural environment upon which the communities depend for survival. The wetiands and the mangroves that the pipeline will traverse are universally registered as fragile ecosjistems. We are all aware of the devastating impacts the reckless activities of Chevron, Shell and the other transnational oil companies invoived in the exploitation ofoil and gas have had on the natural environment aftlie Niger Delta area. tt is worrisome that despite the fact that there are a few iegisiative stipulations as to how projects should be organised, the oil companies and goY&iflil:e!lt agencies aitnosi aiways ignore sucti stipulations.

Though an Enviionmental Impact Assessment (EIA) is a statutory requirement. which sh~~ildprecede projects of this nature in Nigeria, Charon has not conducted any EIA for the West African Gas Pipeiine. However, gas ssles contracts have either been signed or are being negotiated. That Chevron and its partners will conclude agreements for gas sales and project construction before a consideration of the real cost ofthe project on the natural environment and the local co:ninunities is unacceptable to us. it should be unacceptable to the World Bank.

The West Africa Gas Pipeiine wiil not contribute towards tile truly sustainable developfnerit of any of the coininunities in the targeted countries. The fact is that the gas is not desrined to supply the rea! needs of the coininunities but those of unsustainable industries. In Ghana, the gas will be consumed mainiy by the gold mines. The resulr will be the expansion of unsustainable gold mining activities and the resultant exacerbation of environmental degradafion and dcstructioii of iht: iivtriihvod of iocai popuiations. Hence the project is totally contrary to the coinniitinent to sustainable developnaent.

Furthennore, a? a time when the world needs to decrease its reliance on fossil fuels because ofthe global threat of climate change, this project will further increase the world’s reliance on fossil fuels.

We are aware that the project is being promoted as one rhat would contribute to the reduction of gas flaring, a serious environmental problem that has been created by the oil companies and the Nigerian governineni. It is our position that oil companies and the government should be responsible for correcting the problem of gas flaring, which they have created. Reduction of gas flaring shoutd not be tied to profit considerations, as is the case with the West African Gas Pipeline and similar projects of its kind.

Despite the claiins ofthe consortim, there is no guarantee that the flaring of ASSOCIATED GAS wiii be reduced as a result of the West African Gas Pipeline. Ifthe West African Gas pipeline will collect natural gas from special non-associated gas fieids, as is the case with the Nigerian Liquefied Natural Gas Project, .then there will not be any reasonable reduction of gas flaring. The gas that is flared in the Niger Delta area is ASSOCIATED GAS. Any project that will lead to considerable reduction of gas flaring should be based on a programme aimed at collecting associated gas. The responses to the enquiries of civil society organisations on this matter indicate that Chevron and other members of the consortium do not have a clear programme for the reduction of flaring of ASSOCIATED GAS.

Gas flaring by oil companies operating in the Niger Delta area is not just a problem for the local communities. The planet earth is affected as the emission of major greenhouse gases swh as carbon dioxide and methane from this area contribute significantly to the problem of global ciirnate change. Chevron accepts the problem that it creates and is promoting the West African Gas Pipeline as a project that wi:i %.. contribule to mitigation of global climate change. Chevron is, therefore, asking for credit under the Clean Development Mechanism. However, what this amounts to is that Chevron is asking to be rewarded for attempting to solve a problem it created. Resides, without a clear pian for the reduction of the flaring of ASSOCIATED GAS, it would amount to a faulty decision by-_anyone that intends to grant Chevron an)’ carbon credi: for the West African Gas pipeline. Furthennore. we object to Chevron and other companies profiting from reducing gas flaring; M’e believe tk3ecoinmunities ha: surround these flares must be coinpensated for years of health and enviro,nrnentaiproblems associated with gas flaring before any company profits &on7 gas flare reduction

Human Rights:

Despite the recent hand-over of power ir? Nigeria froin military to civilian rule, gave violatiofis of iiumar! rights persist in the Niger Delta area of Nigeria, with increasing brutai repression of peaceful coinmlinliy prolests, extrajudicial executions. detentions without trial. violation of livelihood etc. Hopes that the current civilian goverrament would better dddress the Niger Delta discontent diinined with the massacre. in November 1999. of Odi residents and the total destruction of Odi town by Nigerian soldiers on the orders of the civilian President, General Olusegun Obasanjo.

Without prior consultation wirh communities and with a perbading climate of insecurity in the Niger Delta area, there is no guarantee that kiliings and other rights violations will not be a consequence of the West African Gas Pipeline Project.

Communal Chonnict:

The expropriation of communal land and degradation of communal farmland and wetlands by Chevron and the other oil companies in the Niger Delta area have resulted in scarcity of agricultural land and fishing ground. The result has been an increasing commodification and competition for land. Communal conflicts for land have been assuming an increasingly violent character with destruction of lives and property.

Also, with the impoverishment and political marginalisation of the minority peoples ofthe Niger Delta area, demands for self-determination and resource control is increasing among coininunities in the area. Some of the communities have openly called on oil companies to withdraw from their areds pending the resolution of these issues. With these crises still utlresolved 174 the Nigerian State, any ne& project of the magnitude of the West African Gas Pipeline will certainly contribute to worsening the condition fool violence and destruction.

Based on the foregoing, and in support of the local coininuiiities we demand that the World Bank discontinue support for the West Afiica Gas pipeline until:

I. The Nigerian state, which is a part of the West African Gas Pipeline consortium, addresses the issues of access to land, resource control, livelihoods and self-determination for communities and peoples of the Niger Delta area; 2. The Nigerian central government discontinues its programme of mititarisation of the oit- bearing Niger Delta area and create a condition for democratic participation; 3. Chevron and the Nigerian government address the fears ofthe local communities. These fears as articulated by the people themselves include: Tke absence of an all-inclusive Environmental Impact Assessment, the grave environmental devastation that will result froin the project including deforestation, explosions, the fragmentation of habitats and wildlife corridors and the blocking of water bodies, cultural dislocation as weii as economic impoverishment,

Thank you.

Isaac Osuoka Environmental Rights Action I Oilwatch Africa Network F.

cc:

The President, Federal Republic of Nigeria The President of Benin Republic The President of Togo The President of Ghana The President, Chevron Corporation The Director of PCF of the World Bank

Contact Information: Isaac Osuoka Oifwatch Africa Network Environtnental Rights Action 13 Agudaina Avenue, D-Line P. 0.Box 13708, Port Harcouat, Nigeria TellFak 234 84 236365 Ennai i : o i !watch(2 i 11 fdn eb. abs.nta

ENDORSING ORGAN~SA~I~~S:

Aurora Donoso Baltimore Emergency Centre for Participatory Aceion Ecologica and Response Network Rural & Urban Oilwatch Secretariat, Baltimore MD, USA ~e~r~~~~~~~t(CEPRU Quito, Ecuador Port Harcour-t, Nigeria fenneke Arens Frans Limpens Ba rr glades h G roIJ p Oronto Douglas Accion Pro Education en Netherlands Chikoko Movement Derechos Humans Amsterdam, The Netherlands Yenapoa, Nigeria (AP~EN~~R~~ Mexico Bonnie Ohia Jindrich Petrilik Bio Earth ~~t~rnati~n~i Children of the Earth (Deti Aart van den Hoek Port Harcourt, Nigeria ZWie) Action for Solidarity, Prague, Czech Republic Environment, Equality and Kushi Efunyerni Development (ASEED), BMS Movement Patrick Naagbanton Europe Nigeria Civil Liberties Organisation Amsterdam, The Netherlands (CW Hans Eriksson South Zone Osborn Methus Aiyenumelo Burkina Faso-Sweden Benin City, Nigeria Actual Consensional Eight- Friendship Association United, CORE, Ultimate Sweden Grace Akutnu, and Major Oil Climate Network Africa Producing Communities Barbara Larcoin Nairobi, Kenya (ACECUM) (Coordinator) Sapele, Delta State Casa BaltimordLimay Coalition Against Global Baltimore, USA Exploitation (CAGE) Rev. David Ugolor Baltimore, USA African Network for Beko Ransome-Kuti Environmental and Centre for Constitutional =%. Paul Wiliiains Economic Justice Governance Coalition for Peace & Benin City, Nigeria Lagos, Nigeria. Justice/unplug Salem USA Salih Booker Samuei Nguiffo Africa Policy Information Centre for Environment Chizor Wisdom Dike Center (APILC) and Development Community Rights Washington DC, USA (Friends of the Earth, Initiative (CORI) Cameroon) Port Harcourt, Nigeria Ann-Kio Opururn Briggs Yaounde, Cameroon Agape is B Birth Right Charity Gbaragbe Port Harcourt, Nigeria Emilia Cornu Thenard Compassionate Hearts Center for International POI? Harcourt, Nigeria Atossa Solrani Environmental Law AMAZON WATCH Washington DC, USA Vivian Stockman Topanga CA. USA Einem J. Okon Concerned Citizens' Environmental Rights Greenpeace International Coalition FOCUS Amsterdam. The Netherlands Spencer, USA Sapele, Delta State, Nigeria Martijn Lodewijk Bbebi Obene Leo Saldanha, Green Peace Netherlands Concirned Youths of Environment Support ogbogolo Group Greens Movement of Ahoada West, Rivers State, Bangalore, india Georgia t Friends of the Nigeria Earth, Georgia Eto Julius DipLlng. Zisula Ei-eke Community Dynasty Ameh LO. Cordaches, GrUner Ciirtel Igbokoda, ilaje LGA Group for Research & Siideuropa e.V. Ondo State, Nigeria Initiatives for Germany The Liberation of Africa Aiyemo Tunde (GRILA) Josh Salans Etikaw Central Association Montreal CTC so~u~~o~s Igbokoda, Ondo State. Sunnyvale, CA USA Nigeria Pameia Foster Halifax initiative Coalition DuIen H. Godwin Comfort Lenee Ottawa, Ontario, Canada Degema Youths Council Federation of Ogoni Degema, Rivers State, Women AsSQCiatiQn Ken Kinney, Nigeria Bori, Rivers State, Nigeria ICA-Ghana ,/ De la Oficina de Incidencia Agzokou Isisdore Moharnined Ali Ashrag Ambiental Centro Friends of the Earth Benin IEDS- Friends of the Earth Humboidt/ Coutounou, Benin Ba ngledesh Friends of the Earth - Dhaka, Bangladesh Nicaragua Risto Isamaki Friends of the Earth Patterson Ogon Jochen Ricken, Finland ijaw Council for Human Eirene, Internationa1 Turku, Finland Rights (ICHR) Christian Service for Peace, Port Harcourl, Nigeria Gennany Noble Wadzah Friends of the Earth Ghana Felix tuodolo Etuk Udo Sarnpson Accra, Ghana Ijaw Youth Council (WC) Eket Rights lnitiative (ERI) Port Harcourt, Nigeria Eket, Nigeria Gabriel Rivas-Ducca Friends of the Earth Dr. Rojis Malismi Maxwell Oko 'i. Internatisnal campaign Ilaje Central Working Eiimotu Movement On the Environmental & Committee Otuasega, Bayelsa State, Social Impacts of Minning lgbokade, Ilaje LGA, Bndo Nigeria State, Nigeria Paula Palmer Jude T. Adonne Global Response, Omotehinse Oluwole Environmental Research USA Ikumehinle Alliance (EMREAL) liaje/Obe Confederation Port Harcourt, Nigeria Manana Kachladze and ASICOPIC Green Alternative lGBOKODA Nrmimino Bassey Tbilisi, Georgia Ilaje, Ondo State, Nigeria Environmental Rights Action (Friends of the Earth, Jen Brock Malumi Abimbola (Mrs) Nigeria) Green Corps Ilaje Women Consultative Benin City, Nigeria Boston, USA Forum Igbokoda, Ondo State, Ajidibo Ola Judah Paul Horsman Nigeria New Hampshire Consumers Che 1. Ibe, Owura Mensah Franco Todzro Utility Cooperative CLAWPIE Le3 anis de la 'Terre- Togo New Hampshire, USA Ereina Town, Rivers State, (Friends of the Earth- Nigeria Togof Diana Bohn Lome- Togo Nicaragua Center for Francis Ohu Community Action International Centre for Prince Ukaine D. Asha San Francisco Bay Area Development & MAA~/~~~~P JubiIee 2000 Coalition Environmental Planning Ahoada, Rivers State, Nigeria USA (ICDEP) Port Harcouc-t, Nigeria Alfred0 Quarto Rita Clark Mangrove Action Project Nicaragua US 'Friendship Anyakwee Ns ir iinovu Port Angeles, WA Office institute of HumaB Rigjhts USA Washington DC, USA and ~u~a~~~ar~anLaw (IHRHL) Belema Senibo Chief Aifred Fubara Port Marcourt, Nigeria Mankind Survival Project Niger Delta Development (MSP) Project Dr. AJ. Akor Port Harcourt, Nigeria Port Harcourt, Nigeria lnstitute of Labour and Peopk Empowerment Floriana Pagano Kingsley Kpea Port; Harcouit, Nigeria MANUEL TESTI- Niger Delta Project For FERLAN"; Environment, Human Martha Hannang Trieste, Italy Rights and Development International Development Nchia Eleme, Rivers State, E xc hangefDEX Sister Joznette Nitz, OP Nigeria San Francisco CA, USA MCHR Southern Africa Committee Jennifer Pere Wale Adeoye Detroit. USA Niger Delta Women for Journalists for Democratic Justice (NDWJ) Rights (JODER) Paul de Clerck Port Harcourt, Nigeria Lagos, Nigeria ~ilieudefensie(Friends of the Earth, Netherlands) Orji Nkechi Jason Capeilg Amsterdam, The Netherlands Nigerian Business and JSC Activist Coalition Professionat Women Johnson VT, USA Nelson Aziboaianari Associa tion Movement for Reparation Port Harcourt, Rivers State, jia Ching Chen to Ogbiia Nigeria % Just Act: Youth Action for Ogbia Town, Bayelsa State Global Justice Chinedu Karl Uchegbu San Francisco, USA Barisuatam Deeyeh Nigerian Institute of Movemeha For the Survival Human Rights (NIHR) Steve Bradburn of the Ogoni People Port Harcouzt, Nigeria Kettle Range Conservation (MOSOP) Group Port Harcourt, Nigeria Mike Ajayi Spokane, USA Oodua for Nature Imikubi Lilybox Conservation (QNAC) Sarah Agbey (Mrs) Nature-Live Lagos, Nigeria KITE, .Accra, Ghaua Port Harcourt, Nigeria Kayode Ogundamisi Johan Bostnan Benedict Chuck Ezeagu Qodua Peoples Congress KWIA, Flemish Suppart Ndigbo Movement Lagos, Nigeria group for Enugu, Nigeria lngenous Peoples lsaac Qsuoka Belgium Roy Morrison Nengi Onyeagucha Watch the Niger Port Harcourt, Nigeria

Henry Clark West county Toxics Coalition USA

Grace Ebong Women in Health and Development ~i~A~) Port Harcourt, Nigeria

Tebepah, lbuoho R.

Women In Nigeria ~~~~~ Port Harcourt, Nigeria

Angela Onwaeze Women Political Action Committee (W-PAC) Port Harcourt, Nigeria.

Joe Inyang Youths Rights Action Network (YORAN) Port Warcourt, Nigeria

Soren Ambrose 58 Years Is Enough: U.S. Network for Global Economic Justice USA j.

Oilwatch Africa Network Ifeoma [heme Weri Digifa Port Harcourt, Nigeria Ihrai Health Initiative Supreme Egbesu Assembty (SEA) Yehudi van de Pol Port Harcoui-t, Nigeria Yenagoa, Bayelsa State, Qilwatch Europe office Nigeria Amsterdam. the Netherlands Dinitry V. Lisitsyn (Chairman) Lea Correa Pinto Ezekiel Amachree Sakhalin Environment Terrae Civil Society Okpolom Imo Engenni Watch Organisation for public Akinima, Rivers State Sakhalinsk, Russia Interest Brazil Etirn Asuquo Patrick Chiekwe Oron Environinentai Save Earth, Nigeria Chuck WYKOS~OC~ Watch Port Harcomrt, Nigeria The Coacerned Citiaens Oron, Akwa lbom State, Coalition of Roane, Nigeria John Bennett Calhoun &iGilmer Sierra Club of Caoada Counties Kemedi Von Dimiari Ottawa, Ontario, Canada West Virgina, USA Our Niger Delta Port Harcourt, Nigeria A menaghawon Idahosa Oyinbo Deie Josephg The Concerned Iiaje Chilos Godsent Social dk Economic rights Citizen (CIC) Pan African Youth Action Center (SERAC) Warri, Nigeria Movement (PAYM) Lagos, Nigeria Port Harcourt, Nigeria Han Shan Deacon Art Donail The Ruckus Society Ubaka Emeka Betram Social Justice Sr Peace Persoas with Disability Roman Catholic Parish Ophelia Cowell Network lowa, USA The Transnational lnst~~u~@ Benin City, Nigeria Amsterdam, The Netherlands Aloysius Nwuzi Carwil James Society for Awareness & Ole Fjord Larsen Project Underground Growth in Etche The United Peoples Berkeley, USA Port Hal-court Rivers State, Nigeria Addulai Darimani Laura Frame De Leon Third Wortd Network Proyecto Albatros Peter Young Africa Venezuela Society for Poverty Accra. Ghana Alleviation for Africa Rural Kofi Arthur Communities (SPAARC) Mike Prokosch Public Agenda Calabar, Nigeria Programme on Globalisation Accra, Ghana United for a fair Economy Quebec, Canada Anna Weekes Boston, USA South African Municipal Chinda 0. K Workers Union Susanne Breitkopf Public Interest Lawyers South Africa Urgewald Leagrre (PILL) Germany Port Harcourt, Nigeria Morten Nielsen Southern Africa Contact Urhobo Historical Society Lany Weiss Copenhagen, Denmark New York, USA Labour, Globa1isa:ion & Human Rights Project Renara Blurnberg Pau! Egbo Resource Center of the Students for Economic & Urhobo Progress Union, Americas Environmentaf Justice North America (UPUNA) Minneapolis MN, USA NY, USA Pontiac, USA

1818 H Street N.’&. f202) 477-1234 ‘ INTERNATIONAL BANK FOR RECONSTRUCTiONAND DEVELOPMENT VJashington, D.C. 20433 Cable Addrsss: iNTBAFRAD INTERNATIONAL DEVELOPMENT ASSOClAnON U.S.A. Cable Address: lNDEVAS

Mach 1,263101

Mr. Isaac Osuoka Environmental Rights ActiodOilwatch Africa Network 13 Agudma Avenue D-Line P.O. Box 13708 Port Harcourt Nigeria

Dear Mr. Bsuoka:

Ref: West dfiica Gas Pipeline Project

Thank you for your letter of December 18,2000, addressed to Mr. Wolfensoh regarding the West Afiica Gas Pipeline Project. Mr. W-olfensohn has asked me to respond on his behalf to the concerns raised by your organization and the organizations and individuals listed in the attachment to ydur letter. These concerns are based on the assessment and perceptions ofthe affected communities, and the listed organizations and individuals, that the project would aggravate environmental devastation, hwnm rights violations, communal conflicts, and impoverish the communities in the gas fields and along the pipeline routing.

This envisaged regional pipeline represents an investment of about US$5 10 million and is intended to transport gas from Nigeria to key import terminals in Benin, Togo md Ghana. The pipeline, as envisaged by the investors, would extend for. approximately 800 km, predominantly offshore, with the exception of a 57-km link to the Escravos Lagos Pipeline and spurs to Cotonou, Lome and Tema. Initially, the principal gas consumers would be Ghana’s thermal power generators.

The Bank provided technical assistance to the governments of Ghana, Togo and ‘r Benin during the early phases of the project (1995-1999) to help these governments examine the concept and assess its feasibility. The Bank hdingfor the technical assistance expired in mid-1999. Thus far, the Bank’s involvement has been to assist the concerned governments explore the project idea and the project’s potential contribution to the development of the West Africa region. Currently, the World Bank has no commitment to support the project beyond these initial phases and has not reflected the project in its lending program.

Because the project’s viability depends on a complex set oftechnical, economic, environmental and social factors, discussions are continuing among the sponsors and the four governments on the conditions under which the project would be feasible. The World Bank Group is maintaining contacts with the principal parties. For the Bank to be in a position to consider further this project, it would have to be satisfied that it is

RCA 248423. LQ Wl64145 &€IFAX (202) 477-6391 ,

, Mr. Isaac Bsuoka -2- March 1,200 1

technicallv, economically and ~n~c~a~~yviable and complies with the Bank’s safeguard policies aid fiduciary requirements. The responsibility for preparing ei-nvironmental assessments, resettlement plans, indigenous people’s plans and other documentation rests with the project developers. They are fully aware that any €om of World Bank Group support would depend, among other things, on compliance with Bank policies, including an analysis of alternatives; and environmental and social management plans to diminish adverse effects identified by the environmental and social analyses. These plans would also need to adhere to the Bank’s guidelines.

The Bank is committed to public consultation and disclosure of environmental and social information and would, should it consider supporting the project, engage with borrowers in a full and open consultation process in d31 four countries. The Bank’s procedures require public consultations with populations likely to be affected by the project and NGOs in the countries in which the project will be sited. The Bank will ensure full disclosure ofboth the consultation process and the outcomes. The procedures also require public disclosure ofthe environmental and social documentation in each of the four countries and through the World Bank‘s InfoShop prior to appraisal ofany project proposed for World Bank Group support.

With regard to concerns about humai rights violations and communal conflicts, it is our experience that poverty reduction and sustainable development will succeed only in the presence of open and responsive systems of governance. We are therefore committed to ensuring full and open public consultations during the preparation ofthe projects that we support so as to ensure that they do not undermine the welfare ofthe affected populations.

Thus, in the event the World Bank Group becomes involved, its decision would be based on, amongst other considerations, a full environmental and social impact assessment that would have to be carried out, and an environmental and social management plan that would have to be developed through a participatory process and in accordance with the Bd’s guidelines and procedures as explained above.

Sincerely,

Praful Pate1 Sector Director Finance, Private Sector & Infrastructure Afiica Region *

Letter of ~~~$~~~. e have received several complaints From various families and communities about the inadequacy of the compensation paid to them in respect of the land acquired by WAGPCO for the West Africa Gas Pipeline Projects.

Most of the aggrieved families felt cheated because they believe if the property were sold or leased to individuals around, they must have realized far and above what was paid by WAGPCO to them. The payments made fell short ofthe market value expected from the property.

Some of the fmdies have given us written consent to complain as evident in the attached letters, while many gave oral consent for us to complain on their behaE

We, at the last meeting held at PMC Hotel, Ota Ogun State, Nigeria resolved to give you this letter of authority to serve as consent to complain on behalf of the various famiiies to the World Bank in order to seek redress and obtain the market value of the property concerned.

Thank for your eo-aperation.

Chairman ' Secretary.

i .. . ,......

i

ANNEX I1

MANAGEMENT RESPONSE

TH E WORLD BAN WI FG/M. .G .A.

-_ DATE: f( . 1

TO: eiss, Chzirperson, IB A hspec~ionPanel

FROM: Graeme Wheeler: Managing Director,

EXTENSION: 33720

SUWECT:

~~ag~~~~~has reviewed &e Request for Inspection of the Ghana: Gas Pipeline Project A Guarantee No. B-006-WHJ received by the Bnspation Panel on April 27,2006 an gistsred on May 2,2006 (R 6/03) The attached response been prepared by ~~na~e~e~~to the claims raised in this Request.

Attachment

cVcc: Messrs.hbes. G. Gmddini, A. Peuker, A. FoIlrner (MDS); 6.Nznkani ' (rhFRW);H. Schafer (BVP); Y.Ornura (MIG!3X);D. Freestone (IIEGW); J. Underwood (OPCS); S. Lintner (ESDQC); @. Milvertsn (EXTCC); M, Womser (AFTPI);J. McIrrtire (I$r"TSD); H. Ghanem (AFC12); C. Perque Herlihy (AFRW)

cc: Messrs./i'lulmes. P. Wolfowitz (EXC); E. Abbott (PI?);S. Jorgensen (ESDW); C. Di Leva (LEGEN); A. Bezered (ESDQC); M. Karlsson (MC1Oj; W. Tcheyan (AFRVP); hl. Apb (AFRW); M. Tod'lnSon (AFC16); S. Iyer (.AFT?%); W. Waters (AFTSD): M. hyec (AFI32.G);S. Sinciaa'r (EF); P. Gupta (WJ;T. Walton (AFTEG); M. Mmtcvanelli (Ap;lREX); H. Van Veldhuizen <

BANKIMAN REQUEST FOR GHANA: WEST AFRICAN GAS PIPELINE PROJECT (IDA Guarantee No. B-006-0-GH)

Management has reviewed the Request for Inspection of the Ghana: West A.frcan Gas Pipeline Project (IDA Guarantee No. B-006-0-GH), received by the Inspection Panel on April 27,2006 and registered on May 2,2006 (RQ06/03). Management has prepared the following response.

CONTENTS Abbreviations and Acronyms ...... iv I. Ilatroduction...... 1 11. The Request ...... 1 In. Project B~ackgrollmd...... 2 IV. Special Issues ...... 8 ,{-iGsG- V. Management Action Plan ...... &I,,

VI. Management’s Response ...... *....a...... e ...... t. 20

Annex hex1. Claims and Responses Annex 2. Consultations during EA and RAP Preparation Annex 3. Chronology of Key Safeguard Events Annex 4. WAGP Community Development Program - List ofYear One Participants

Map Map 1. LBRD No. 34806, Request for Inspection: West African Gas Pipeline Project

... 111 ABBREVIATIQIVS AND ACRONYMS

AG Associated gas AgiP NigerianAgip Oil Company Limited, a subsidiary ofEni S.p.A. bbl Barrel CDP Community Development Program CW Chevron Nigeria Limited DFlD Department for InternationalDevelopment (United Kingdom) EA Environmental Assessment ECOWAS Economic Community ofWest African States EITI Extractive Industries Transparency Initiative Elf Elf Petroleum Nigeria Limited, a subsidiary of TOTAL §.A. ELPS Escravos-Lagos Pipeline System EMP Environmental Management Plan ERA Environmental ]Rights Action ERR Economic Rate ofReturn ESMP Environment and Social Management Plan EXT External Affairs Department FOE Friends of the Earth FGN Federal Government of Nigeria GDP Gross Domestic Product GGFR Global Gas Flarhg Reduction Public-Private Partnershp GTA Gas Transportation Agreement HSEMP Health, Safety, and Environment Management Plms IDA International Development Association m Internal Rate ofReturn MIGA Multilateral Investment Guarantee Agency mtu Million British thermal units MMscf Million standard cubic feet NAG Non-associated gas NEPAD New Partnership for Africa’s Development N-Gas N-Gas Limited NGC Nigerian Gas Company NGO Nongovernmental Organization NN-PC Nigerian National Petroleum Corporation NPV Net Present Value OPIC Overseas Private Investment Corporation OPTS Oil Producer Trade Section (of the Lagos Chamber ofCommerce and Industry) PAD Projcct Appraisal Document

iV Producers NNPC, CNL, SPDC, Elf, and Agip, organized in two joint ventures (NNPCICNL and NNPCISPDCIElEI Agip) WAP Resettlement Action Plan ROW Right ofway SoToGaz Societe Togolaise de Gaz SA (Togo Gas Company) SPDC Shell Petroleum Development Company ofNigeria Limited Sponsors CNL, NNPC, SPDC, VRA, [and, subject to the exercise of options,] BenGaz, and SoToGaz TOR Tmsof Reference Transporters NGC and WAPCo Valco Volta Aluminum Company VRA Volta River Authority WAGP West Afkican Gas Pipeline Project WAPCO West Afkican Gas Pipeline Company Limited WAPP West Africa Power Pool

I. INTRODUCTION

1. On May 2, 2006, the Inspection Panel registered a Request for Inspection, IPN Request RQ 06/03 (hereafter referred to as the “Request9’), concerning the Ghana: West Afrdcan Gas Pipeline Project (WAGB)-IDA Guarantee No. B-006-0-GH-a private sector investment project for which the International Development Association (the Bank) and the Multilateral Investment Guarantee Agency (MIGA) have provided guarantees.

2. Stpucture oftbe Text. The document contains the following sections: Section I1 outlines the Request for Inspection; Section 111 provides sector and project background; Section N discusses special issues, Section V presents Management’s Action Plan and Section VI contains the conclusion. Annex 1 presents the Requesters’ claims, together with Management’s detailed responses, in table format. Annex 2 contains the consultations held during preparation of the Environmental Assessment (EA) and Resettlement Action Plan w);Annex 3 is a chronology of key safeguard events; and Annex 4 provides infomation on the first year of the community development program QCDP).

11. THE REQUEST

3. The Request for Inspection was submitted by the Ifesowapo Host Communities Forum of the West African Gas Pipeline Project (the “Association”) through their representatives fiom the Olorunda Local Government Area of Lagos State, Nigeria (hereafter referred to as the “Requesters”). The Request was submitted on behalf of the members of the Association, which is composed of twelve communities that will be affected by the project in Lagos and in Ogun States in Southwestern Nigeria.

4. Attached to the Request are:

(a) Community signatories to the Request for Ins2ection by the Ifesowapo Host Communities Forum on the West Aj%can Gas Pipeline Project (b) Letter ofconsent (c) Letter ofconsent (d) Open letter to the World Bank Concerning the West African Gas Pipeline, December 18,2000.

5. No further materials were received by Management in support of the Request.

6. The Request contains claims that the Panel has indicated may constitute violations by the Bank ofvarious provisions ofits policies and procedures, including the following:

OP 4.01, Environmental Assessment, January 1999, revised August 2004 Management Response

0 OD 4.15, Poverty Reduction, December 1991

0 OP 4.12, Involuntary Resettlement, December 2001, revised April 2004

0 OP .10.04, Economic Evaluation ofInvestment Operations, September 1994

e OP/JBP 13.05, Project Supervision, July 2001

0 World Bank Policy on Disclosure of Information, 2002.

111. PROaCT BAGKG

7. The project was conceived by the Economic Community of West A€rican States (ECOWAS) in the early 1980s to help improve the economic competitiveness ofthe four participating countries, and to accelerate regional economic growth and integration in the West Afiica region. The project was designed to substitute inexpensive and environmentally fiendly natural gas &om Nigeria for expensive alternate fuels used by the power, industrial, mining, commercial sectors of Benin, Ghana, and Togo. In keeping with its goals, the project is expected to lower energy costs, thereby improving the competitiveness of goods and services. It also complements other regional efforts in the energy sector, such as the West Africa Power Pool (WAPP), which supports increased electricity trade. It is part of the action plan of the New Partnership for Afiica’s Development (NEPAD) and is actively supported by ECOWAS. It required strong private sector participation and a treaty among the four host countries to allow this investment by the private sector to go forward.

8. Project Objectives. WAGP will contribute to: (a) improving the competitiveness of the energy sectors in Benin, Ghana, and Togo by promoting the use of cheaper and environmentally cleaner gas from Nigeria in lieu of solid and liquid fuels for power generation and other industrial, commercial uses, and diversifying energy supply sources; and (b) fostering regional economic integration that would support economic growth, and in particular the development ofthe West Mcaelectricity market.

9. Economic indicators for tracking results are: (aj decrease in the average wholesale cost of electricity supply in Benin, Ghana, and Togo compared to the ‘kithout gas” scenario; and (b) increase in number of large, medium, and small gas customers in Benin, Ghana, and Togo. Physical indicators for monitoring relate to: (a) physical completion of regional gas pipeline and of spurs into Benin, Ghana, and Togo, including mab connections to target power plants; and (b) expanded volume of energy trade in the region, measured in terms of gas exports from Nigeria. Institutional and regulatory indicators relate to harmonization of the regional institutional, legal, and regulatory framework to increase private sector participation in the gas sector.

10. Project Description. The WAGP project includes: (a) a new pipeline system (678 km long) that will transport natural gas from Nigeria to Ghana, Togo, and Benin; (b) spurs to provide gas to power generating units in Ghana, Benin, and Togo; (c) conversion

2 West AJi.iccan Gas Pipeline Project of existing power generating units to gas; and (d) additional compression investments, as needed,

11. To meet the expected market potential ofabout 450 MRlscElday, the new pipeline is 20 inches in diameter. The main trunk of the offshore pipeline has been placed on the seabed in water depths ranging fkom 26 to 70 meters, at an approximate distance of 15 to 20 kilometers from the shore. At three locations, connections will be made from the main offshore trunk to lateral spurs (8-inch diameter or greater), which will transport gas to delivery points at or near Cotonou (Benin), Lome (Togo), and Tema (Ghana). The final terminal ofthe proposed pipeline system is at Takoradi (Ghana).

12. The WAGP project is a private sector project, Current shareholders of the West Afkican Gas Pipeline Company (WAPCo), the special purpose company established to implement the project, are Shell, Chevron, Nigerian National Petroleum Corporation NTC), Volta River Authority (VRA) of Ghana, BenGaz of Benin, and SotoGaz of Togo (collectively, the Sponsors). The project includes a number of contracts for the design, engineering, construction, ownership, operation and maintenance, oversight, and political risk mitigation of the new pipeline; contracts for the purchase of natural gas by N-Gas from the upstream producers, for the transportation of natural gas by the transporters, and for the sale of foundation amounts of natural gas to VRA and Communautk Electricit6 du Benin (senin Electricity Company); and contracts to prepare the EAs and RAPSin each of the four host countries. N-Gas Limited (a special purpose vehicle) Will contract for the purchases of natural gas at interface points on the Escravos- Lagos Pipeline System (ELPS) from the upstream producers. The Nigerian Gas Company (NGC) will transport the gas on the ELPS. WAPCo has the responsibility for transporting gas fiom the interface point with the ELPS pipeline (in western Nigeria) to Benin, Ghana, and Togo. This new pipeline project does not include the operation of the ELPS nor any investments for the extraction ofhydrocarbons (oil and/or gas) from the ground.

Value Chain for Foundation Customers I

Roduurs Joint Venture

Communautk Volta River I FoundaiionOfftakers Electrique du Bknin Authority I

3 Management Response

13. Pipeline Cost and Financing. The Sponsors currently estimate the construction costs*.of the pipeline to be about US$495 million (compared to about US$ 5 18 million at Board approval); additional compression-related costs (which would be needed if the capacity requirement grows fiom the initial 200,000 MMBtu/day to the 474,000 MMBtw'day target set by the Sponsors under the agreed demand forecast) are estimated to be about US$ 110 million over 20 years. As the Project Appraisal Document @'PAD) notes, the project has been financed by the Sponsors of the pipeline in proportion to their ownership of WAPCo2-through direct equity and shareholder loans to WAPCo. Subsequent compression-related capital expenditures are expected to be financed by cash flow fiom operations. WAPCo will recover its investments through gas transportation charges under its Gas Transportation Agreements (GTAs) with N-Gas (and other possible €Mure shippers). NGC will recover its investments and additional costs through transportation charges under its GTAs with N-Gas. Under these GTAs, NGC has agreed to make contracted capacities available for WAGP, the absence of which will result in penalties. Any costs that the upstream gas Broducers or NGC incur for operations and maintenance, upgrades, investments, etc., are not part ofproject costs and will be funded by such parties at the time. The upstream Producers will recover their investments and other costs through gas sales under their contracts with N-Gas or any other entity that ships gas through WAGP.

14. Bank Group Participation. Early due diligence of the project carried out by the Bank Group concluded that the project was unlikely to go ahead without Bank Group participation because of the private sector's perceptions ofpolitical risks involved in the project, especially the payment risk by VRA and CEB (the foundation offtakers for gas purchases in Ghana, Togo and Benin). To meet the requirements of the project, IDA and MIGA have structured guarantees to backstop a portion of the payment due by Ghana to WAPCo in the event ofearly termination ofthe offtake agreements for failure to pay. All commercial risk is assumed by WAPCo under this structure. IDA has provided a guarantee ofup to US$50 million and MIGA has provided a guarantee ofup to US$75 million to WAPCo to back payment obligations ofthe Government of Ghana. WAPCo is also the beneficiary of similar insurance structures from Zurich (with reinsurance from OPIC) to back the payment obligations ofthe Governments of Ghana, Togo, and Benin.

15. Economic Benefits of WAGP. In addition to substantial savings and additional revenues from gas sales in Nigeria and tax and dividend revenues in all countries, gas availability is expected to improve access to less expensive and more reliable energy services in the three consuming countries. This should have significant spillover implications for regional economic development by: (a) improving the competitiveness of domestic industries, thereby facilitating GDP growth and increases in employment; and (b) providing opportunities for increased regional trade, and fostering regional stability

1 Excluding other WAPCo costs such as development expenses, charges, ikurance premiums and contingencies. 2 The development partners, IDA, MIGA and Overseas Private Investment Corporation (OPIC) have provided guarantees/insurance support to the project. IDA has not provided credits in support of the project.

4 West African Gas Pipeline Project

and cooperation. The WAGP project will help to reduce poverty through its impact on overall economic improvement and growth and lower energy prices.

16. The direct economic benefits from the project are expected to be significant. The analysis of various alternatives to the project has concluded that the transportation of Nigerian gas to Benin, Ghana, and Togo via the proposed pipeline is the most cost- effective means of meeting the anticipated growth in regional energy demand. Two gas demand scenarios were designed to assess the economic benefits arising out of the WAGP project. A low demand scenario assumed that Valco (an aluminum smelter in Ghana that, until recently, consumed about 30 percent of current power generation) operations will never restart; a high demand scenario assumed that Valco operations will restart before first gas with all four potlines operational.

17. In late 2004 (prior to Board approval), the WAGF project as a whole was found to be economically and commercially viable in both scenarios of gas demand-low demand and hgh demand.3 As a whole, the project showed a positive economic net present value o,at a real discount rate of 10 percent, of US$ 1.421 billion (excluding the environmental benefits) and an Economic Rate of Return (ERR) of 24.9 percent in the low demand scenario, and a positive NPV (at 10%) of US$2.021 billion and an ERR of 31.4 percent in the high demand scenario. The sensitivity analysis carried out indicated that the economic return of the project was fairly insensitive to changes in operating and cqpital expenditures but highly sensitive to significant dropsfincreases in the international price of crude oil. Since 2004, prices of crude oil have increased significantly (almost a threefold increase) and all indicators are that prices will continue to remain high.

18. For the purposes of comparison, the Bank has carried out a simple review of the economic benefits for the participating countries in the low demand scenario at a constant oil price of USD 50rOarrels (bbl) over the next 20 years. Compared to the estimated overall project economic benefits of about US$ 1.421 billion in NPV terms at Board approval in 2004, the project will yield about US$ 3.534 billion (in 2004 terms). The table provided below compares the direct economic benefits to project participants (in the low demand scenario) under the two different si! forecasts, highlighting the extremely positive direct economic and financial benefits of the project to all participants, and also highlighting the fairness and equitability of the sharing of these benefits, which accrue largely to the four participating countries. For all practical purposes, the WAGP project has little or marginal upside for WAPCo in a high crude oil price scenario, i.e., the private sector project sponsor, WAPCo, reaps little benefit from high oil prices.

Based on July 2004 World Bank oil price projections: nominal forecast starting with USD 24.00/barrel in 2007 to USD 25.25 in 2015, USD 25.75 in 2020 and USD 27.25 in 2026.

5 Management Response

Ghana Ddigerla Togo Benin Private Psojed Partleipants 888 who!% Low Demand Scenario - Economic Benefits to Project Parficipants fat Soard Approval in 2004) Total Net Economic 2,568 1,247 827 675 1,229 8,545 Benefits NPV Q 10% 549 292 I92 149 238 1,421 Economic IRR 35.8% 29.6% 66.6% 51.5% 19.5% 24.9% Low Demand Scenario - Economic Benefits to Project Participants (at constant OS$50h&l of crude prices.I4 Total Net Economic 6,510 2,367 2,247 1,503 $,293 4 3,920 Benefits NPV @ 10% 1,703 621 590 361 258 3,534 Economic 1RR 92.3% 45.2% 130.4% 94.4% 20.2% 40.0%

19. In addition, the project is expected to increase the diversification of export markets for Nigeria and increase energy security in Benin, Ghana, and Togo, and in the West Afiica region. Exports of gas to the other three countries will provide Nigeria with another export market. For Benin, Ghana, and Togo, in addition to hydroelectric power and imported petroleum products, the gas will provide smother energy source. Availability of WAGP natural gas should also allow the WAPP to make reliable electricity available to many more areas and customers in the region, allowing migration to cleaner gas-fired power generation to satisfy regional power demand, an3 to reduce power generation costs substantially.

20. Environmental Benefits. At the regional and local levels, overall emissions of greenhouse gases and air pollutants are expected to diminish as a result of WAGP, resulting in improved air quality at the global, regional, and local levels, and related improvements in public health and quality of life. The projected decline in overall emissions ofgreenhouse gases, according to the EAs, ranges between 86 million metric tons and 11 million metric tons COz equivalent over a 20-year period, depending on the assumptions made about &ture economic growth and associated energy consumption in the four countries. Overall regional emissions of other air pollutants will also decline under either scenario. WAGP will make a small but meaningful contribution to reduction ofgas flaring by transporting annually an estimated 1 billion cubic meters of associated gas (AG), some or all of which is currently flared (roughly 5 percent of the total amount of gas that is flared in Nigeria). Emissions ofparticulates, oxides of sulfur and nitrogen, and unburned hydrocarbons will decrease in Nigeria as currently flared gas is instead sent out of the country for cleaner combustion in Benin, Ghana and Togo. Ambient air quality should therefore improve in the gas production areas as routine flaring is reduced. Emissions of air pollutants in Benin, Ghana, and Togo will depend on the assumptions that are made regarding the levels of future development, but even if increases occur, they would be expected to be less than would be the case with oil-fired or coal-fired generation.

Current prices for Brent Crude oil are about US$70 per barrel.

6 West Afizcan Gas Pipeline Project

21. Regional Economic Integration. WAGP is the first project in the West Afiica region to develop regional exports ofnatural gas and will illustrate and promote regional econokic integration. Through the normalization of technical and other specifications and ofthe regulatory frameworks, it will also facilitate energy trade among the countries. These benefits are difficult to quantify as they include establishing a new level of regional cooperation and economic integration to enhance regional stability, and cultivating ECOWAS as a regional economic cooperative agency. By supplying gas to regional power providers, WAGP also supports the WAPP, another regional energy sector initiative that will also bring about substantial cooperation and integration.

22. Sources of Nattlrab Gas. Nigeria’s proven natural gas reserves (associated and non-associated) are conservatively estimated at about 125 trillion cubic feet. About 1,300 billion cubic feet of these reserves are produced annually, of which nearly 75 percent is AG and much of which is flared (2,500 hrlMscf7day). This gas could meet much of the power generation requirements of Sub-Saharan Afi-ica, outside South Africa. All of the gas purchased by N-Gas for delivery in the new pipeline for about the first 10 years ofthe project (Le., until the earlier of 10 years or reserved capacity reaches 200 MMscUday, and open access begins) will be purchased from the producers. It is expected that all of this gas will come from existing operations in the Escravos area on the western side of the Niger Delta and will be sold to N-Gas at the seven points of interface with the ELPS (Escravos Gas Plant, Escravos Beach, Jones Creek, Odidi, Oben, Utorugu, and the planned connection at Ughelli). This gas is expected to be about 60 percent A6 initially, declining to about 40 percent AG aRer 20 years, much of which would have been flared without the development ofproductive uses for gas, including WAGP.

23, Project Sttztus. The project has been under construction since January 2005. WAGP contractors for line pipe supply and for concrete weight coating have substantially completed their scope of work, while the offshore installation is still working toward a completion date later this calendar year. However, the onshore contractor is currently behind schedule on its contract due to slow equipment mobilization and procurement of compressors, and it is expected that final completion will be a few months later than originally planned. Free flowing gas may be available by the end of 2006 but a fully operational pipeline is not expected to be available until the third quarter of2007.

24. Although WAPCo has incurred several deviations in capital cost items versus its original budget, the construction cost of the project is expected to remain within budget. The delay in completion ofthe pipeline however, may cause some additional costs due to increased working capital needs. WABCo has begun its training program ofoperation and maintenance workers, which should result in certification ofWAPCo’s entire local O&M workforce in various aspects of gas transmission operations in advance of first gas deliveries.

25, Final preparations for major onshore construction activities in Nigeria are underway. These include right ofway (ROW) clearing and grading as well as the grading for access roads. The site ofthe Lagos Beach compressor station has been graded and test

7 Management Response

piles driven. The final shipment ofpipe for the Nigeria onshore section was scheduled to arrive in early May.

26. Given the high price of cmde oil, WAGP gas is very attractive to the consuming countries. WApCo is continuing to pursue opportunities aggressively and forecasts growth in excess of 100 MMscflday for 2008-2009. Interconnections with gas buyers (power plants) in Ghana are on track, while those in Togo and Benin are lagging. In addition, the Bank is also pursuing support for activities related to the development ofthe regulatory environment for local gas distribution agencies to enable the use ofWAGP gas for industrial and other uses, beyond the power sector.

IV. SPECIAL ISSUES

27. The Bank recognized that in working with a private-sector special pwpose company to execute a project of this size, there were both opportunities and risks. The opportunity lay in the substantial resources of its major investors--capital, technical capacity, swift decision-making, lessons learned from prior experience in Nigeria and elsewhere in the world, and corporate commitments to protect the natural and human environment faom the adverse impacts such development projects can cause. This combination of resources is rarely available to projects executed by public sector borrowers. The risk was that WAPCo, driven by a tight preparation schedule and the escalation in costs to investors that could arise fiom delay, would forge ahead according to its own procedures and the requirements imposed by the four host governments, paying insufficient attention to Bank Group safeguards procedures. In particular, with investments In components in each of four countries, the private sector investors were obliged to abide by the rules and regulations for EA, consultation, and disclosure as laid out by each host country, and prepare a separate EA for review, comment, and approval in each jurisdiction.

28. The Bank’s effort has focused on maximizing opportunities and safeguarding against risks. Therefore, the Bank has guided the project sponsors in preparing a regional EA, which integrates the findings of each country-specific EA that the sponsor was obliged to prepare. The regional EA also contributes supporting analyses which were not directly related to the specific project investment (and therefore not appropriate for the project sponsors to assess) but which helped to provide a broader understanding of the context for the project in the oil and gas and power sectors in the host countries. The outcome is a well-prepared project with safeguards that meet World Bank requirements, with implementation arrangements and funding for satisfactory implementation during construction and operation ofWAGP. Several factors were key to the achievement ofthis outcome.

29. Early and Continuous Engagement of Senior Bank Safeguard Stas Senior Bank safeguards staff from the Quality Assurance and Ccsmpliance Unit and the Environment unit of the Legal Department, along with the two regional safeguards coordinators that served in the region during preparation, worked directly with the Bank’s

8 West Apican Gas Pipeline Project

WAGP team, WAPCo and its consultants, and MEA’Ssafeguard specialists, in review and oversight of the safeguards work. These staff members were involved prior to prepGation ofthe Tmsof Reference (TORS) for the EA and RAP through negotiations of the key legal agreements and presentation of the project to the Board. Three senior members of this team comprised the first field mission for safeguard supervision in June 2005. The Bank team has followed up on all but two of the actions recommended by the mission: the analysis of the adequacy of compensation is still.underway and the expert panel has not yet been deployed to examine the compensation complaints.

30. Suficient Time to Undertake Sq5eguard.v Work. The Bank resisted pressure from the private investors and the client governments to take the project to the Board in an unreasonably short time that would have compromised the quality of the Bank’s review ofsafeguards compliance, including consultation and disclosure.

31. nor0 and Timely Guidance on Safeguards Policies. Senior Bank and MIGA staff participated in numerous meetings and teleconfepences, some initiated by the Bank and many requested by WAPCo, to ensure that safeguards work was consistent with relevant OPs and BPs.

32. Private Sector Capacity and Motivation to Maintain Due Diligence and Oversight Most of the consultations and field visits were conducted by WAPCo and its consultants. A social safeguards specialist from the Bank conducted field visits to all locations prior to the inception of work on the EA and RAP. MIGA environmental and social specialists made field visits and attended the public hearings that were held on the first draft of the EA. The Bank’s External Affairs Department (EXT) held consultations in all four countries while the second drafts of the EA and RAP were in preparation. Bank environmm-tal, social and community development specialists conducted field visits to all locations and visited communities involved in WAPCo‘s consultation processes to get a firsthand appreciation of the people’s concerrs and assess whether consultation and disclosure had been adequate. The arrangements for supervision rely on WAPCo to oversee contractor performance in implementing the Environmental Management Plan PMP) and to hire consultants to conduct independent monitoring and independent audits of its own performance. Superimposed on this structure are normal Bank supervision missions and a planned independent Environmental and Social Advisory Panel.

33. Engaging with Stakeholders. The Bank has been aware of many of the issues raised in the Request and these have been incorporated in World Bank Group due diligence, appraisal, and local consultations. Some of the issues raised in the Request were communicated to the Bank consultation appraisal mission in 2004 at Badagry and discussed there again in the safeguards supervision mission in 2005. The Bank provided directions to WAPCo on these concerns and is undertaking an analysis of the compensation concerns raised in the supervision mission. Many of the broader issues, including the project’s impact on gas flaring, the safety ofthe ELPS, the environment in the Niger Delta, and the alleged loss oflivelihood, were discussed with nongovernmental organizations (NGOs) during two EXT missions between February and April, 2004. They also were publicized in a press release from Friends of the Earth (FOE) and

9 Management Response

Environmental Rights Action (ERA) on April 19, 2004. The Bank discussed them at a meetiFg with FOE (US), ERA and the Bank Information Center @IC) in Washington, on April 19, 2004 and met with FOE Nigeria and EMduring the consultation appraisal mission in October, 2004 for further discussion. FOE Nigeria and ERA were invited but not available to meet with the Bank in Lagos in June 2005. These broad issues also were addressed in the EA, the economic and financial analysis, and other supporting studies and the results are presented in substantial detail in the PAD.

TRANSPARENCY:CONSULTATION, DISCLOSURE, BANK SUPERVISION AND PREPMUTION

34. Management considers that extensive consultations were held and concerns well documented and presented in a balanced manner. Management believes that compensation was adequately covered in consultations but agrees that Yoruba translations of summary RAPS and Ems were not disseminated, as requested by the Bank in its supervision mission ofJane 2005.

35. WAPCo and its consultants conducted twenty-five formal consultations in communities along the pipeline ROW in Nigeria concerning all matters covered in the EA. There were twenty additional consultations organized exclusively for the RAP. Safeguards anb’or EXT staff from the Bank and MIGA visited Nigeria four times during preparation and once during supervision, consulting with communities on each occasion and NGOs on most ofthem. Two ofthe Bank and MIGA meetings were organized by the Consortium of WAGP Project Host Cornmities (hereinafter the “Con~ortium’~)at Otta. The Consortium is an umbrella organization that apparently includes the Requesters as well as fora ofcommunities around Igbesa and Otta. Records show that at least sixteen of the WAPCo meetings were held in communities listed in the Request, and twelve more meetings for groups of communities were held at Badagry, Otta, or Igbesa. There were numerous informal contacts between WAPCo’s community relations representatives and various communities. The CDPs were prepared in a participatory manner, including an initial needs survey, a second survey by a consultant to update and refine the needs list, negotiations with community leaders based on a proposal fi-om WAPCo, and preparation of an MOUwith signatures ofthe community head and WAPCO’s managing director. In Nigeria, the MOU for the first year program was executed between the Consortium and WAPCo and is dated December 30,2005. NGOs are being contracted to assist WAPCo and the communities in implementing the CDPs. On safety, an issue ofparticular concern to communities, WAPCo held community meetings in February 2006, issued the system- wide Emergency Response Plan in May 2006, and will conduct awareness-raising meetings with communities when site-specific response plans (e.g., for the compressor station at Badagry) are prepared, beginning in the third quarter ofcalendar year 2006.

36. Drup EA. The first draft ofthe EA for Nigeria was disclosed at national, state and local government offices in January 2004, before the EA had been cleared by the Bank, in preparation for public hearings held by the Federal Government of Nigeria (FGN) in March 2004. It was regarding this disclosure that persons seeking access to the document at Badagry encountered difficulties, but these were swiftly corrected by WAPCo once it learned ofthem. After clearance by the Bd,the final drafts of the EA and RAP were

10 West Afflcan Gas Pipeline Project

disclosed at eleven locations in Nigeria, including Badagry local administration and on WAPCo’s and the Bank’s website, and copies were provided to various NGOs. WApCo verified the presence of the documents at the disclosure locations, and the Bank is not aware of any problems with public access to them. The detailed Environmental and Social Management Plan (ESW) for Nigeria prepared in May 2005 is also on WApCo’s website. The signed memorandum of understanding for the CDPs has been returned to the communities and will be disclosed on the WMCo website and at the Bank’s InfoShop.

37. There was also strong continuity in the senior Bank staff overseeing and supporting safeguards work during preparation. In all, there were twenty-five documented meetings and teleconferences between the Bank and WAPCo and its consultants, the first of which was in April 2001, nearly two years before detailed discussions on the TO& for the EA and RAP. The Bank was thus in a position to advise WAPCo on design and content ofbaseline environmental studies that were initiated prior to the preparation of the EA itself. Two years of baseline data were collected, which is desirable for a project of this type but usually resisted by investors on tight schedules. Although the Bank recognized the significant benefits of local disclosure and consultation on an early draft of the EA by WAPCo, it also understood-given the significant social and political sensitivity of World Bank. Group involvement with a private sector investment in the oil and gas sector in Nigeria-the importance of having an extremely high quality draft.

38. Disclosure. WAPCo disclosed its preliminary December 2003 draft in early 2004 for the Nigeria public hearings, but Bank clearance for disclosure at the Bank InfoShop was not given until June 2004. By that time, a second draft, with major revisions including the addition of inputs fiom local consultations and public hearings on the preliminary drafts, had been submitted, and the deficiencies identified in a second intensive Bank review were corrected in a final draft. In addition, a regional EA was prepared at the request ofthe Bank, which viewed it as a requirement for a project of this name. During this period, WAPCo investors were pressing for clearance and disclosure in order to meet their target date for a final investment decision and to avoid a reported escalation ofUS$25 million in the price ofsteel for the pipeline. The RAP went through similar review, with the first drafi reviewed and commented on extensively by Bank staff in April 2004, and the next draft substantially improved and expanded, including the compensation calculation methodology, prior to clearance by the Bank for disclosure in June 2004.

39. Supervision. WAPCo has implemented the multi-tiered supervision arrangements described in the EA and the PAD. The Bank has received eleven monthly reports from W-APCo that include progress on ESMP and RAP implementation. Three independent monitoring missions to assess safeguards implementation have been conducted by com~ltants.~WAPCo has submitted the reports on the first two to the Bank. The two

Conducted by ERM Houston office (September 2005) and Newfields Las Vegas office (December 2005 and March 2006): respectively; both under contract to WAPCo.

11 Management Response

monitoring reports submitted to date do not indicate any significant environmental problems. It is important to note, however, that no construction work had begun in Nigeria at the time of the site visits, and so while this finding is evidence of good environmental management performance on the part of WAPCo and its contractors, it is not specific to Nigeria. The report for the third mission, which was completed in March 2006 and is directly relevant to Nigeria, is currently being prepared. The monitoring reports also state that RAP implementation has proceeded smoothly, with few complaints, but their attention was mainly to the procedures and recordkeeping. They describe the methodology for determining compensation, for example, but do not assess its adequacy and apparently were unaware that there was dissatisfaction with amounts paid in Nigeria. These concerns must be addressed in the independent impact assessment and final audit of resettlement, compensation, and restoration of livelihoods required by QP 4.12 and described in the RAP, which is scheduled for September 2006. The consulting team for the first of the independent health, environment and safety audits to which WAPCo committed itself went into the field on May 6, 2006. Its report will be submitted to the Bank and publicly disclosed. The Bank reviews the TORSprior to these audits, and the reports are made public.

40. The Bank and MIGA have conducted one formal supervision mission on safeguards (June 2005), during which concerns about safety, CDPs, and compensation were raised. The mission stressed to WAPCo the urgent need to remedy the gap on awareness about emergency response and accelerate progress on community development planning, both of which WNCo is on schedule to do. The mission also requested and received data on compensation in Nigerian communities for analysis. Three of the communities listed in the Request were included among the fourteen for which the Bank obtained data; the fact that compensation was raised at a meeting in Otta and not at the meeting in Badagry suggested that the problem was more localized around Otta. Staff have followed up on these issues in three meetings with WAPCo’s health, safety and environment officers. Since receiving the Request, the Bank has asked WAPCo to provide the tabulation for the other nine communities in advance of the independent audit scheduled for September 2006.

PROJECT ECONOMICSAND NIGEW GAS/ OIL I~~WSTRY

41. Management believes that the economic analysis did consider all feasible alternatives and adequately evaluated the project’s sustainability. It also believes that the project’s contribution to reduced gas flaring is presented without overstatement in the economic analysis as well as the PAD and-in order to see actual results-the annual volume ofAG (normally flared) is included as one ofthe project’s monitoring indicators.

42. There were two layers of economic analysis in the preparation for WAGP in addition to that done by U’APCO. Bank staff performed its own analysis and also engaged a consulting firm for a more wide-ranging and in-depth analysis. Project alternatives were considered in the consuitant’s work as well as in the EA. WAPCo examined alternatives including generating power from gas in Nigeria and transmitting it to the other three countries and exporting the gas as liquefied natural gas in barges or tankers rather than by pipeline. It also compared a limited number of other energy sources to gas, but the focus

12 West Afiican Gas Pipeline Project

of the analysis undertaken for the project’s private sponsors was mostly on options that WAPCo’s investors could consider financing. The Bank instructed its consultant to analyze a set of alternatives corresponding to a broader objective-namely, providing Ghana as well as Togo and Benin with more plentiful, more reliable electricity. Economic costs and benefits of environmental impacts were taken into account to the extent feasible. There was cross-communication between WAPCo’s EA consultant and the Bank’s economic and financial consultant, so that the EA could take into account the findings ofboth. The EA also included the “no-action or no-project” alternative. WAGP was by far the most attractive investment in both analyses in 2004, and at today’s much higher prices for fuel oil (currently used in Ghana, Togo and Benin), the economic benefits of switching to gas are considerably greater (see paragraph 15 and Annex I: for more details). The WAGP project will yield significant economic benefits to each ofthe four participating countries, and such benefits are significant in both Low and High Demand scenarios. Overall, it can be concluded that the project has sigdkant economic benefits and the sharing of these benefits amongst project participant is fair and reasonable.

43. While the stated objectives in the PAD do not include flaring reduction, the project has been characterized by some as a “flaring reduction project.” Despite the fact that it was not part of the development objectives, the project does, in fact, make a modest contribution to flaring reduction; this can be noted when the aniounts of gas that WAGP would carry are looked at in the context of the large total volume flared in Nigeria. The modest amount offlaring reduction that WAGP aims to achieve is treated as an economic and environmental benefit to Nigeria, without overstatement in the economic analysis.

POVERTYAND RESETTLEMENT

44. Management believes that the project will benefit, not impoverish affected people, through resettlement compensation, as well as community development, construction and planned permanent employment. Further, replacement valuation is the approach agreed with WAPCo and Management believes that this principle must be applied. If it has been applied inconsistently, the Bank will ensure this is corrected. Based on this, Management believes that affected people will be able to improve, or at least restore their standards of living as a result of the project. If any concerns of inadequate compensation have not been properly addressed, as reqaired by the project’s legal agreements, the Bank will ensure that those standards are met.

45. The intent ofthe Bank, in rejecting the initial draft of the RAP, making extensive comments on the second draft, and meeting with WAPCo’s consultants to assist in improving the RAP, was to assist WAPCo in its efforts to avoid negative impacts on anyone’s livelihood. WAPCo’s consultants had surveyed the affected communities and both the consultants and WAPCo had consulted directly with affected families. At the consultations held by the Bank in October 2004, concerns were raised about the possibility that government rates would be used in determining compensation amounts, and WAPCo and the Bank assured the audience that this would not be the case. The RAPS also call for an independent audit of resettlement, which is scheduled for

13 Management Response

September 2006. In June 2005, the communities that gathered at Badagry did not express any dissatisfaction with compensation. Those that gathered at Otta did, but at the same time, ithey expressed their appreciation for the process, particularly the fact that the funds were paid directly to the intended recipients. The RAPSinclude grievance procedures, which should be the first means of dealing with the Requesters’ concern about the level of compensation. The Bank had already requested and received information on amounts paid to the group of communities around Otta that met with the June 2005 mission. The tabulation covers only three of the Requesters, and the Bank has now asked WAPCo fir the corresponding information for all of the other communities, in advance of the scheduled September 2006 independent audit. A resettlement specialist is analyzing the Otta area data and will submit findings and recommendations by May 3 1,2006.

46. For the affected communities as a whole, WAGP brings direct benefits that will contribute to improvements in living conditions. The CDP has been designed in consultation with citizens and documented in April 2006 in an MOU between the Consortium and WAPCo. WAPCo will, in its first year, support construction of boreholes, water systems, schools and health centers in 14 communities, at an estimated total cost of US$950,000. Some of the projects will be used by neighboring villages. WAPCo’s intention is to formulate a comprehensive, five-year CDP. Additional communities will receive community development support in the second year and subsequent years of the program. Seven of the 12 communities listed in the Request are direct beneficiaries ofthe first year program.

47. Purchases of goods and services and temporary employment during construction are expected to benefit some community members and businesses, and a limited nuniber of permanent positions exist in pipeline operation and maintenance. During operation, WAGP will need services and supplies, some of which should be sourced from the local communities. WAPCo has committed to 15 percent local content in its contracting and hiring for the project as a whole, and the primary onshore construction contractor in Nigeria has exceeded 6 percent and expects the percentage to increase substantially. The Bank has requested more details on the make-up of the local content in order to determine what benefits the local communities are deriving from WAPCo’s employment and procurement policy. Nigerians make up approximately one-third of the contingent recruited into WAPCo’s training program in the four cooperating countries to prepare national citizens for permanent employment.

48. More broadly, the revenues that will accrue to Nigeria from the sale and transport of hitherto flared gas and non-associated gas (NAG) should contribute to development and poverty alleviation. The FGN is a participant in the Extractive Indastxies Transparency Initiative (EITI). NNPC, Chevron, Shell, and Elf are all participants. Nigerian Agip Oil Company Limited, a subsidiary of Eni S.p.A. (Agip), also is expected to become a participant before WAGP begins gas deliveries. Furthermore, under its contractual arrangements, N-Gas has covenanted to: (a) require its shareholders to be participants in EITI; (b) purchase natural gas only from EITI participants; and (c) publicly disclose payments by N-Gas to FGN (together with any state or local governmental jurisdictions in Nigeria or their state-owned or state-controlled enterprises).

14 West African Gas Pipeliiae Project

For its part, WAPCo has covenanted not to accept or contract with any future shipper who is not a participant in EITI in Nigeria.

ENVIRONMENT,ELBS, AND THE DELTA

49. Management believes that systems for environmental and social. management are adequate to mitigate negative impacts and that the project will not cause irreparable damage to land or livelihoods. Management believes that the EA covers both the upstream gas source and pipeline safety issues. An ELPS Integrity Study was also conducted (see below), showing that the existing pipeline needed no major repairs in the next ten years as a result of its connection to WAGP. The systemwide Emergency Response Plan for the new pipeline was issued on May 19, 2006. Detailed site-specific response plans will be developed as final designs are confirmed for facilities such as the compressor station at Badagry. WAPCo held public awareness meetings on emergency response on February 21, and 22,2006 for communities in Nigeria. Ninety-eight citizens attended, including officers of the Consortium and residents of at least three of the communities listed in the Request.

50. The potential adverse impacts of WAGP are few and relatively limited, and, according to the first two independent monitoring reports, no significant impacts have materialized. WAGP has not caused any degradation in the Requesters’ immediate environment to date. The Requesters’ communities are 250 kilometers from the nearest part of the Delta, where Nigeria’s oil and gas resources are located. The Bank held discussions with WAPCo and its main investors and assured itself that WAGP would not result in any new development of gas or oil in the Delta in the near future. The only impact to be anticipated there between now and the time that throughput in the pipeline would exceed 250 MMscflday is the positive effect of any reductions in flaring that occur. Thereafter, there could be new construction of gas-gathering infrastructure and possibly construction of new gas wells. Under the agreements to purchase gas i? the Niger Delta, the original upstream producers have covenanted, inter alia, to comply with all applicable environmental and social laws in any new oil and gas developments. After a specified threshold has been met (10 years or 200 MMscflday under contract, whichever comes first), the pipeline will be opened to other fkture shippers under an Access Code. To qualify for access, kture shippers must, inter alia, be in compliance with environmental and social laws in Nigeria. The WAGP Authority is charged with monitoring compliance with the Access Code. In the years prior to the time of open access, the WAGP Authority will need to develop capacity to carry out its environmental oversight responsibilities for the pipeline, and the Bank is exploring ways in which it can assist.

51. The Bank spent considerable time in discussions on the ELPS in order to decide whether it was a part ofthe project’s area ofinfluence and thus should be included in the scope of the EA. OP 4.01 Annex A paragraph 5 defines area ofinfluence as: “The area likely to be aficted by the project, including all its ancillary aspects, such as power transmission corridors, pipeliaes, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the project (e.g., spontaneous settlement, logging, or shifting agriculture along access

15 Management Response roads). The area of influence may include, for example, (a) the wztershed within which the project is located; (b) any affected estuary and coastal zone; (c) off-site areas required for resettlement or compensatory tracts; (d) the airshed (e.g., where airborne pollution such as smoke or dust may enter or leave the area of influence; (e) migratory routes of humans, wildlife, or fish, particularly where they relate to public health, economic activities, or environmental conservation; and (0 areas used for livelihood activities (hunting, fishing, grazing, gathering, agriculture, etc.) or religious or ceremonial purposes of a customary nature.” ELPS has been in operation since the early 1990s. It would not be subject to any changes as a result of the implementation of WAGP. It has substantial customers other than WAGP and does not depend on WAGP for its continued operation, The Bank therefore concluded that, based on (a), (b) and (c) of the definition, ELPS was not a part ofthe project’s area ofinfluence.

52. Moreover, an environmental audit is the appropriate instrument to apply to an existing facility rather than EA, and WAPCo on its own had commissioned a two-phased study of ELPS, focusing on present condition, safety and security, which are the main topics an acidit would consider. The study concluded that ELPS could carry the gas for supply to WAGP in its present con&tion, but it also recommended a number of safety and security improvements that the pipeline operator should undertake. The consultants reported that ELPS has from time to time experienced small leaks and incidents of vandalism, but no major gas releases OF other serious problems that have harmed the environment or inhabitants of nearby settlements. As a result of the two-phased study, improvements in safety and security will be made at ELPS, and so WAGP’s impact on its condition has been positive rather than negative. WAPCo is continuing to pursue the repairs that are required to be made by NGC to the ELPS at Escravos prior to first gas. In addition, Management notes that the Requesters’ communities are not close enough to ELPS to be affected by its operation.

53. The Bank also conducted additional due diligence by hiring consultants as part of the broader economic assessment ofthe project. The consultants examined the design and cost ofthe pipeline and confirmed that: (a) the demand analysis conducted by the private sponsors was thorough and robust; (b) the pipeline sizing had been optimized; (c) the Pipeline Development Plan cost elements, which were the outcome of an international competitive tendering process, represented good value for money in the international market; and (d) the compression requirements for expanding WAGP were reasonable in phasing and cost.

V. MANAGEMENT ACTION PLAN

54. Management believes that the project has been well prepared, and supervision includes multiple layers ofoversight, which has already identified the issues raised in the Request.

55. Despite the project achievements described above, a few important challenges noted in the Request have not been completely resolved: compensation rates, community

16 West African Gas Pipeline Project development mechanisms, and some environmental and safety issues are not yet widely understood, contributing to some uncertainty and apprehension about future livelihood and safety. These issues were also identified by the Bank mission of June 2005 but, as the steps recomended at that time have not yet been fully implemented, the Task Team is implementing additional actions, as described below. In summary, reducing uncertainty requires clear, direct and informed consultation by the project with those affected, on asset valuation, community development and safety measures. The expert panel will assess these risks and the effectiveness of mitigation, and WAPCo will be required to correct any non-compliance with its contractual obligations to the World Bank Group.

56. Risks still facing the project include:

a Potential uncertainty regarding disclosure of infomation: Although the Task Team understood the areas affected by the pipeline to have a high proportion of fluent English speakers, during the June 2005 mission it became clear that the existing English documents were too long and technical for wide community understanding of entitlements or risks, and this contributed to apprehension and undermined project credibility. Non-technical Yoruba translations ofthe summaries of the EMP and RA9 documents have yet to be completed and disseminated, as agreed by WApCo during the June 2005 mission. The findings of the technical study on the existing ELPS Integrity Study were not disseminated or publicly reviewed; in addition, WAPCo’s own project safety plans are drafted but will be made public only in the next few weeks;

0 Potentially inadequate compensation: The Bank and WAPCo are committed to compensation at full replacement costs. The Bank has begun reviewing compensation rates for the northern part of the Nigerian ROW (the June 2005 mission undertook to review those rates but this has not yet been completed) but the Bank has not yet received compensation data fiom the southern portion of the Nigerian ROW. The Otta section report on individual compensation payments to affected persons does not match the valuation methodology described in the RAP (the spreadsheet sent by WApCo only shows inflation adjustments of 75 percent for land and 50 percent for other assets, but not after fist increasing Oil Producers Trade Section (OPTS) rates by ten times as explained in the RAP). Since no payment receipts were included, the spreadsheet alone only shows the amounts people were eligible for, not a record of what they were paid. The Bank is seeking further information fiom WAPCo on its valuation methods and a full review of the adequacy of compensation is required in advance of the scheduled September 2006 independent audit;

Potential lack of credibility: Although numerous specialized field visits have occurred, no Bank supervision has taken place in Nigeria since June 2005 and the required expert panel has not yet visited the field. The evidence that the

17 Management Response

grievance process is working and fair comes from independent monitoring by WAPCo consultants.6 The Nigerian petroleum industry has a poor reputation, both among people in Nigeria as well as internationally, and this lack of credibility could deter investment and slow restoration of incomes. While this project may not be directly linked to many problems cited in the Request, the Bark recognizes the scope of the issues in the Niger Delta and will ensure an adequate presence during project implementation.

MANAGEMENTACTIONS

57. To address these risks, the following actions are now underway.

Q Transparency and accountability. The June 2005 Bank mission recognized the translation issue and WAPCo committed to remedy it. The Bank will conduct two supervision missions a year until the project is complete. The next mission is scheduled for the first quarter of fiscal year 2007, and will include financial and economic staff specialists, social and environmental staff specialists to start planning for the resettlement audit, and to assess staff capacity and institutional arrangements of agencies required to delliver planned emergency response, community development and resettlement grievance redress services.

Before September 30, 2006, WAPCo will disseminate non-technical translations of RAP and EMP summaries, including clear explanation of grievance redress and monitoring mechanisms; advertise the availability of these documents on all work sites by posters-including where and how any complaints or grievances can be registered; and maintain grievance logs for inspection by local communities.

Q Expert panel. Appointment of the expert panel that was required under the project was unreasonably delayed because of issues related to approvals for contracting consultants. These procedural problems are being resolved and the panel is expected to be appointed and make its first field visit before the end of September 2006. The TORS for the expert panel mandate it to review and provide recommendations to address social and environmental issues encountered during project implementation such as those raised by the Request.

Community development programs. WAPCo has contracted with a Nigerian NGO, Enterprise for Development International, to facilitate implementation ofthe CDP projects that will be supported in accordance with the MOU that

6 The RAP describes three types of monitoring: quarterly internal perfonmince monitoring by the WMCo land acquisition team and community relations representatives; annual impact monitoring by the land acquisition team to be reviewed by the expert panel; and, a final RAP completion audit contracted to external evaluation auditors, under the expert panel.

18 West African Gus PipeIine Project

was negotiated between the Consortium and WAPCo. The Bank will review progress in the program through the required annual reports from WAPCo and will make site visits on its next supervision mission. The expert panel will also be asked to evaluate the program’s effectiveness.

0 Poverty and resettlement. Before the first quarter of fiscal year 2007, the Bank will assess whether compensation rates were insufficient to replace acquired assets or the grievance redress process was ineffective for any affected people. Information available now is inconclusive but if either assessed rates paid are below replacement cost or the grievance process is functioning poorly, WMCo and the Bank will correct the problems. The next supervision mission, scheduled for the first quarter of FY07, will assess the facts on the ground and, ifneeded, agree on any necessary retrofit measures with WAPCo. The mission will discuss findings with the affected communities.

Before September 30, 2006, WAFCo will conduct professional surveys to assess, across the length of the pipeline, the current values of each type of asset lost to the project, including communal lands, trces, crops, other structures, and public assets. These surveys will be based on actual field measurement and ratings, not on State, local, or OPTS rates. The definition of replacement value in QP 4.12 will be the guideline used. Before the first quarter of fiscal year 2007, the Bank will review the specific cases cited in the Request to ensure replacement value compensation was paid.

0 Environment. System wide emergency response plans were completed in May 2006 and will be disclosed in June; detailed site plans will be developed when equipment designs are finalized. Technical safety issues require careful communications, as well as an ability to listen to community concerns. WAPCo held meetings €or groups of communities at Badagry and 0th in February 2006 and will hold open meetings with all communities affected by the project to discuss drafi site-specific safety plans, document and advertise the results of public consultations (including any amendnents resulting from community suggestions), and set clear results for community understanding of risk mitigation and emergency plans. This will help to ensure misinformation does not reduce the effectiveness of necessary risk management, and allow communities to monitor the promises made in the safety plans. The expert panel will review the plans during its initial mission.

In September 2006, the expert panel will assess effectiveness of the grievance redress process and ensure oversight and monitoring process are credible.

The resettlement audit planned for September 2006 will review the adequacy of compensation to replace lost assets and progress in income restoration to date, and will document the effectiveness of systems to detect and correct misuse of funds. The Bank’s resettlement specialists will approve the TORS for the audit. The benchark definition of adequacy will be from OP 4.12 and

19 Management Response

the field surveys. Further, adequacy will be defined in terms of the payments actually made to affected people.

58. Management believes that the WAGP project is a considerable achievement for the four client countries. WAGP will be the first project in the West Afkican region to develop regional exports ofnatural gas. It has provided a much needed signaling effect to the region to attract private capital and has potential to promote regional economic integration. The project has been deemed as an economically viable project with significant and fairly-shared economic benefits, especially in the current situation ofhigh crude oil prices. Management believes that project preparation was cautious and highly satisfactory. On balance, to date, the implementation of the environmental and social safeguards has been positive, as observed in two reports from independent monitoring consultants. As noted earlier, a few important challenges have not been completely resolved. Such issues will be supervised by staff under a rigorous supervision plan for the project, which will be adequately funded. Further, the expert panel will assess these risks and the effectiveness of mitigation, and if any instances of non-adherence to Bank’s safeguard policies are found by either the Bank or the expert panel, WMCo will be required to address them in a timely fashion.

VI. MANAGEMENT’S RESPONSE

59. The Requesters’ claims, accompanied by Management’s detailed responses, are provided in Annex 1.

60. Management believes that the Bank has made significant efforts to apply its policies and procedures and to pursue concretely its mission statement in the context of the project. In Management’s view, the Bank has endeavored to ensure that WAPCo follows the guidelines, policies and procedures applicable to the matters raised by the Request but acknowledges that further work will need to be done on safeguards supervision, as explained above. Management will work with WAJ?Co, the Government, and affected communities to ensure that the Requesters’ rights or interests are not directly or adversely affected by the project.

20 West AfLican Gas Pipeline Project

Annex 1. CLAIMS AND RESPONSES

051 vo Cl~l~S~ Response OPI BP B

_I_ Environmental Impact Assessment 1. We believe that the West African Gas Management believes that systems for environmental and sociai Pipeline Project, if executed as presently management are adequate to mitigate negative impacts and that conceived, would do irreparabie damage to the project will not cause irreparable damage to land or livelihoods. the land and consequently, destroy the The West Africa Gas Pipeline is a private sector project that is livelihoods of the 12 communities. designed to substitute abundant and inexpensive natural gas from Nigeria for expensive alternate fuels used by the power, industrial, mining, and commercial sectors of Benin, Ghana, and Togo. The IDA partial risk guarantee and the MlGA guarantee are providing risk mitigation support for Ghana's obligation to the project. Project preparation included not only consideration of the socioeconomic impact of the project, but environmental impact, and examined ways to minimize negative impacts, while promoting sound economic development in the pipeline areas. The EA and RAP were prepared by independent consultants retained by the company, WAPCo, with BanWMIGA oversight. Project preparation included not only consideration of the socioeconomic impact of the project, but environmental impact, and examined ways to minimize negative impacts, while promoting sound economic development in the pipeline areas. The EA, prepared in June 2004, thoroughty discussed potential and likely impacts upon the land on which the pipeline is being built. For the land-based component in Nigeria, these included impacts on land use, habitat and biological resources, topography and soils, water resources, and air quality. The EA considered that the impacts in Nigeria would be minor and limited to the immediate vicinity of the project. The impact of most significant concern, and therefore the subject of extensive baseline studies, consultations, and community meetings, was the conversion of current land use within the pipeline's RGW and facility footprints. The EA concluded that these impacts as well as more modest or localized impacts on the land, water, air, and transportation infrastructure would be mitigated with the planned measures and commitments in the project so that the residual impact would be low, with the exception of the conversion of land use, which would be moderate. In December 2005, the Independent Monitoring Report, prepared for WAPCo, examined the project's impact on the environment, and the various measures to mitigate this impact. At the time the Report was written, construction activities with respect to the various parts of the pipeline in Nigeria (Alagbado Tee, Mainline, Lagos Beach Compressor Station, Horizontal Directional Drilling (HDD) and Badagry CreeWBarrier Island Crossing, and the Offshore Pipeline) had not yet commenced, and thus the report focused on systems for implementation and monitoring, as well as potential issues arising from pipeline construction, including worker housing, wastewater disposal, roadway widening, and saltwater intrusion. The Report also looked at social issues for project-affected persons, including land acquisition, resettiement, compensation, encroachment, traffic, migration, health, cuitural resources, and impacts on livelihoods and subsistence. The Report concluded that: 'WAPCo has established an effective environmental and sociai management system and has appropriately implemented its environmental safeguard

21 Management Response

Response

commitments. No violations of environmental safeguard commitments that have resulted in an adverse impact on sensitive resources or local communities were identified during the third-party review, though some improvements to specific safeguard programs is recommended to reduce the potential for future issues" (Independent Monitoring Report, Newfields, December 2005). Suggested improvements include: ensuring contractor compliance with all commitments; addressing environmental impact issues arising from changes in the project; and enforcing requirements for contractor Health, 'Safety, and Environmental Management Plans (HSEMP) that address all environmental and social safeguard commitments. The Report considered that WAPCo has "effectively implemented its socioeconomic safeguard policies in Nigeria" and recommended some additional improvements (e.g. data collection, guidelines for land acquisition and compensation, employment opportunities for local communities, e&.). Additional information on the environmental impact of the WAGP and the pipeline to which it will be connected (Escravos-Lagos Pipeline) is included in Item 2. Item 9 provides more information on the socioeconomic benefits of the project, and, in Item 11, there is additional information on the project's contribution to reduced gas flaring. As for the other countries, construction had not commenced in Benin when the Independent Monitoring Report was written. The independent monitoring team examined the concrete coating facility and port facilities near Tema, Ghana and the HDD site and offshore pipelaying barge, DLB Brazos Horizon, in Togo. While there were some violations (and potential violations) of the HSEMP requirements, the monitoring team noted that the sites were generally compliant with the requirements and they provided recommendations on ways to resolve outstanding or potential problems (e.g., more frequent monitoring and review, more documentation, preventive measures tc deal with contamination, more detailed planning for site management).

It is sad to note that the overwhelming 4.01 Management considers that extensive consultations were held majority of our people were not consulted 4.12 2nd concerns well documented and presented in a balanced during the preparation of the Environmental manner. Impact Assessment report on the project, From early discussions in 2002 through May 24,2004, there were nor after announcements in the national twenty-five formal meetings held with individual communities on daily newspapers that draft copies of the environmental impacts, among them three at Badagry, three at Environmental Impact Assessment of the Igbesa, three at Ob,and two at Ajido, all with communities along project were on display at different the ROW, whsre various of the Requesters would have been locations. represented. One large meeting was held to which all communities In our presentation to the team of along the pipeline ROW were invited, and there was another consultants from the World Bank that meeting with the Ado-Odo local government. Community meetings visited our community on October 30,2004, were annGUnCed and open to landowners and non-landowners we stated that "we shall appreciate a prcof alike. Questions on land acquisition and compensation, (sic) as regards venue, time and list of environmental, social and other issues were discussed. The community people that attended the public meetings are summarized in Chapter 5 and Appendix 5-D of the hearing on the EIA besides the landowners EA. with whom the company holds.periodic The Federal Ministry of Environment conducted a public hearing meetings on the subject of compensations." on the EA on April 6,2004, the results of which are also Although the majority of our community documented in EA Appendix 5-D. people are not landowners, the pipeline Bank staff visited Nigeria for consultation during February, March

22 West African Gas Pipeline Project

would pass very close to our homes, and April, 2004, and MlGA attended the public hearing and made through routes our children take to their site visits. Bank staff' conducted consultations at three locations in schools, routes our women take to their Nigeria (Lagos, Badagry and Otta) in October 2004 in connection farms and to our fishing grounds. This with project appraisal. The ET0 for that mission clearly shows that makes us significant stakeholders. And we issues such as safety and community development were discussed feel aggrieved that we were not consulted at Badagry, while at 0th the questions almost exclusively until the visit of the team of consultants concerned compensation. Bank and MlGA staff visited Badagry and from the World Bank, [ ] on October 30, Otta during the supervision mission of June 2005 and consuited 2004 in Badagry. During this visit, it was again with local communities and community leaders. On both evident that there was a lack of adequate occasions, community leaders and virtually all other speakers consultation with the people as no one from stated clearly that, despite whatever concerns they wished to bring our communities in the Badagry axis of to the mission's attention, they supported the WAGP project and Lagos state was able to identrfy what was in were looking forward to its implementation. On the consultation the Resettlement Action Plan. We have had section of PAD Annex 13, all of these issues were discussed In the opportunity of reading the Project detail. It is Management's view that support for the project was not Appraisal Document Report No. 30334- misrepresented. See Annex 2 of this response for a complete list of AFR on November 2,2004 of the team of consultations. consultants referred to above. We are very worried that this important aspect of the meeting was not highlighted in their report. Moreover, our support for "a project that would utilize presently flared and harmful associated gas" was misconstrued as giving blanket support for this project.

The failure of the project proponents to Management believes that the EA covers both the upstream gas carry out an Environmental Impact source and pipeline safety issues and that an EA of ELPS was Assessment of the existing Escravos-Lagos neither necessary nor appropriate. An ELPS Integrity Study was Pipeline, to which the West African Gas conducted (see below), showing that the existing pipeline needed Pipeline will be linked, is a major source of no major repairs in the next ten years as a result of its connection to concern for us. In some cases, the route of WAGP. The system-wide Emergency Response Plan for the new the pipeline is only a few feet away from our pipeline has been issued and the community awareness program homes and passes close to our schools, on emergency response began in February 2006. farms and fishing grounds. We are very WAGP is not expected to generate any additional burden or worried that the Escravos-Lagos pipeline, impact on the ELPS since no capacity upgrade or major which is shut down several times a year intervention is required to meet both WAGP and growing Nigerian because of poor maintenance and market demands. accidents, will source the WAGP pipeline. ELPS was collstructed between 1988 and 1992 by It is generally known here in Nigeria that SaipamEnamprogettito international standards. It originates in the the Escravos-Lagos pipeline is not safe. We western Niger Delta, The pipeline is owned by NNPC, and operated will not feel safe either untii a proper EIA by its subsidiary NGC. WAGP will connect to ELPS at the AIagbado has been carried out on the Escravos- Tee" near ltoki in Ogun State. It is capable of delivering 900 Lagos section of WAGP so that its potential MMscf/day of gas without compression. The demand at the moment impacts on the safety of WAGP are made is of the order of 365 MMscflday, or about 40 % capacity. The clear and available for all to see. Such an pipeline system will not need to be upgraded or modified to meet EIA is essential to determine the West the WAGP gas demand of up to 200 MMscfiday forecast within the African Gas Pipeline Project's next 510 years; in fact, even with WAGP operating at that volume, environmental impacts. capacity utilization on the main ELPS trunkline would increase to We are convinced that the unsafe state of about 63%, which still provides a significant margin for growth in the Escravos-Lagos Pipeline implies a domestic demand before the addition of compression facilities is serious danger for the safety of the West needed. African Gas Pipeline and all who live in its No EA was prepared for ELPS because it was constructed before proximity. We do not Ash to become Nigeria's EIA law came into force in 1992. It was determined not to victims of gas explosions and leaks like our be a part of the project's area of influence as defined in OP 4.01 brothers in one of the states in the Niger

' Not a "team of consultants" as stated in the Request.

23 Management Response

Ciaidissue Response

Delta where on September 12,2003, a gas Annex A, para. 5 because, inter alia, ELPS is not owned by pipeline owned by Shell (one of the WAPCO, has been in operation for some time, is not dependent on sponsors of the WAGP project) that WAGP, and would not be significantly modified by or for the project. supplies gas to the aluminum smelter plant, It was therefore not included in the scope of the EA for WAGP. exploded. This led to the death of Moreover, an environmental audit is the appropriate instrument to community people and to their relocation apply to an existing facility rather than EA. away from their communities. Importantly, In fact, WAPCo carried out an audit, in the form of the ELPS we know that emergency response Integrity Study undertaken by an independent engineering firm, to mechanism in this country is totally non- determine the pipeline's integrity for future use as a supply pipeline existent. There were two major air mishaps to the WAGP. Phase Iof that study was completed in 2001, and late last year in Nigeria, one of them examined the system design, operational history, and future happened at Lisa village a few kilometers expected usage for both Nigerian domestic and WAGP markets away form our communities, and it took the over a forecast 20-year period. The Phase 1 report did make some search and rescue team of the National recommendations for repair of certain facilities and identified Emergency outfit two whole days to locate operating practices to be changed by NGC. Since 2001, NGC has the site of the crash. We have been told largely completed the recommended repairs, which included repair that there is an emergency response and of leaky valves, reinstatement of an active ROW maintenance contingency plan to minimize impacts of program, refurbishment of cathodic protection systems for external disasters, but we are totally unaware of its corrosion protection, as well as modifications necessary for content or adequacy because of the little intelligent pigging2of the pipeline. information we have. Phase 1 also analyzed the system capacity for both WAGP and increasing Nigerian market demand relative to the existing pipeline systam. The system was found to have adequate pipeline capacity without the need for any compression until after 2020, some 15 years after startup of the WAGP. The firm also reported that "there have been no reports of major foss of gas incidents in the ELP system", although there have been pinhole leaks caused by vandalism, several minor valve leaks, and one reported gas leak due to hardware failure. The most likely form of failure, according to the consultant, is through corrosion. Corrosion results in easy-to- repair leaks, and good maintenance should keep the frequency of such failures below one every three years. Phase 2 of the Integrity Study was intelligent pigging to inspect inside the length of the majority of ELPS segments important for gas delivery to WAGP. From this, the consultant concluded that the ELPS pipeline is overall in good condition for continued future deliveries, and that no major line section repairs will be needed in the next 10 years if it is maintained, operated and inspected in line with Integrity Study recommendations. The study thus contradicts

'A "pig" (pipe inspection gauge) is a device that is inserted into and run through a pipeline to perform a specific function. Pigs can be separated into two classes; non intelligent pigs and intelligent pigs. Non intelligent pigs perform a basic operational function such as swabbing, batching, and cleaning. Intelligent pigs collect data as to the integrity or performance of the pipeline such as diameter measurementlgeometry, corrosion detection, crack detection and leak detection. The issue of an EIA for Escravos-Lagos Pipeline System (ELPS) was raised by NGOs that met with Bank staff in Washington during preparation and in a lawsuit filed against WAPCo and the Nigerian Government in February 2004 by a group of communities from the Niger Delta (remote from the Requesters' locations and WAGP), and from Badagry. In a letter dated February 2,2006, and copied to WApCo, a member of the plaintiff group who is also one of the four named representatives of the Requesters informed the group's attorneys: "... that after a very wide consultation with members of the communities and the royal fathers along the West African Gas Pipeline Project's right of way, and recent developments wherein the communities affected by the project have been properfy sensitizedabout the non-adverse health effect of the gas project and other sundry issues, I hwe deckled to discontinue the suit instituted against the executors of the Project."

24 West Afiican Gas Pipeline Project

Clainnns!4ue Response

the Requesters' contention that ELPS is unsafe. Safety of the ELPS in particular was not an issue raised by any of the communities that met with the Bank, probably because it is sufficiently distant from any of the communities listed in the Request to pose no hazard to their safety? However, the Bank and WAPCo heard clearly their concern about safety of WAGP and the need for them to be familiar with the emergency response plans at the October 2004 consultation at Badagry in June 2005. The Bank advised WAPCo to respond, and WAPCo committed to having emergency response plans in place and discussed with communities prior to any transmission of gas through the pipeline. The system-wide Emergency Response plan was issued on May 19, 2006 and will be followed by detailed plans for specific sites when final design is confirmed. WAPCo anticipates that the detailed plans will be ready in the 3rdquarter of 2006 and will conduct workshops on them at the community level when they are finished. In February, WAPCo held two community meetings on emergency response and safety for the communities along the ROW in Nigeria. Members of the Consortium of WAGP Project Host Communities Forum (an umbrella group that apparently includes the Requesters) attended both meetings WAPCo's response plan has been prepared taking into account the existing emergency response capacity in Nigeria. The WAGP pipeline itself will undergo extensive inspection and hydraulic pressure test during, and as part of, the standard final commissioning procedures by the contractor, before handing it over to the operator.

involuntary ResetUement 4. The project as presently being Management believes that affected people will be able to implemented violated the Bank's OP/BP improve, or at least restore their standards of living as a result of 4.12 of January 2002, which in essence the project. If any concerns of inadequate compensation have not requires that people who are losing their been properly addressed, as required by the project's legal lands or livelihood as a result of a Bank agreements, the Bank will ensure that those standards are met. financed projecf should Denefif from the RAPS for the project contain measures to improve or restore project and should have their standard of livelihoods and standards of living, minimize land acquisition, living improved or at least resfored. This guarantee that all affected households have an option to choose policy stated here was not complied with in between land-for-land or cash compensation based on negotiated our communities. replacement costs, ensure that no construction starts prior to full We have complained various times to payment of compensation, ensure that impacts on water different stakeholders in the project, the resources and transport infrastructure are minimal and temporary, government, the project owners (West with no adverse income and livelihood impacts, and most African Gas Pipeline Company), etc. on our importantly, to provide full replacement value for assets lost. fears and concerns on inadequate Annex 3 lists Bank actions during preparation to confirm these compensation. We are convinced it will not requirements were met. restore or improve our standard of living. The RAPS also contain grievance redress and monitoring mechanisms to correct any deficiencies. Measures include: (i) a complaint register and grievance redresddispute resolution process ; (ii) internal monitoring by WAPCo teams to ensure that the valuation and payments are made correctly; that the grievance process is functioning and any problems are being resolved (however, as this internal monitoring by WAPCo has not occurred as planned in the R4P, the task team is reviewing the adequacy of compensation to replace iost assets and progress in income restoration to date; (iii) annual impact monitoring to assess the effectiveness of compensation in improving or at least restoring incomes; (the first of these impact monitoring reports is scheduled

25 Management Response

Claidlssue Rwponhle

for September 2006, coinciding with the first field visit of the expert panel) (iv) external monitoring by an expert panel to verify that results comply with resettlement standards, (scheduled for September 2006); and (v) after completion of all planned actins under the RAP, an independent completion audit to ensure the resettlement objectives have been achieved and mitigation measures have had their intended effects io improve or at least restore livelihoods. In addition, regular Bank safeguards supervision missions oversee compliance. However, if the assessments should reveal that these objectives have not been realized, the sponsor will propose follow-up measures that could require continued World Bank supervision. Members of our communities were Replacement value compensation is the approach agreed with assured that "adequate compensation WAPCo and the Management believes that this principle must be would be paid on the basis of rates applied. if it has been applied inconsistemtty, the Bank will ensure established by the Nigerian government this is corrected. and that these rates would be further In Nigeria, the construction of the gas pipeline, compressor increased to reflect inflation adjustment and station, and construction camps required acquisition of about 144 restoration of lost incomes." With the hectares (ha) of land. Due to the linear nature of the project, this benefit of hindsight, we now believe that relatively small amount of land is spread among 23 communities of these statements provided precious little two western states of Nigeria. A total of 1,557 private landowners information on the exact amount of and 928 tenants are losing a smail portion of the total holdings they compensation that we were to receive for own and/or cultivate. They all have been contacted both by the each plot of land acquired for the project. Estate Surveyors contracted by WAGP and responsible for the land The project sponsors kept us in tho dark and asset inventory as well as by independent surveyors that the about this and other information relating to affected people themselves hired to represent them. The estimated adequate compensation that should number of people in the affected families of owners and tenants is improve our standard of living. There were 8,647. About 143 residential piots are affected; on 37 of these there assurances from project sponsors that the are fully constructed homes. rates for lease of land in our communities WAPCo's valuation methods are described in the WP, which was set by the Nigerian government would not disclosed in-country on June 9,2004. For all assets, including land, be used in computing the quantum of WAPCo used estate valuers and any asset improvements made compensation to be paid. But to our were expected to be incorporated in compensation payments. surprise, when the compensations were WAPCo, like other operators in the oil and gas sector, began with eventually paid, the rates were in most rates based on the 1998 Qil Producers Trade Section (OPTS) cases less than 4% of the market rate. compensation schedule rates, although these are largely grounded In a petition to the "Chief Executive in conditions in the Niger Delta where production takes place. Wtcet' of the West African Gas Pipeline Therefore, due to public concerns in the project area about the Company by representatives of [one of ]the inadequacy of these OPTS rates, in May 2004 WAPCo's vatuation families of imeke town Olorunda Local team (Fola Alonge and Partners) negotiated with three community Government Area, dated March 14,2004, appointed estate surveyors {Adefiia and Company, George Nzei the families respectively stated '%at upon and Company. and Shola Enitan and Company) and agreed to commissioning our surveyor to measure out increase the rates by 75% for land, and 50% for crops and the portion of our famiiy land that falls within buildings. In January 2005, due to delays in payment, an additional the gas pipeline route, it was discavered increase of 5% was agreed. In the RAP however, the OPTS rates that 2 acres of our family land falls within were reported to be first increased by ten times and then, for the route... at the moment a plot of land inflation, an additional increase (+75% for land, and +50% for other measuring 100 ft by 50 ft in lmeke assets) was reported to be added. The Bank is now reviewing the community can be sold (leased} for at least actual payments to ensure that, regardless of OPTS rates or any N250,OOO (two hundred fm ihousand naira mark-ups agreed, the principle of replacement value for lost assets only) this is about USD 2,000." The was met.

The value of the naiia to the dollar at the official market at the time of the survey commissioned by the family was 132-135 naira to the dollar.

26 West Affican Gas Pipeline Project

Response petitioners continued Two Acres of land at During preparation the Bank insisted that WAPCo demonstrate that rate will attract N3,000,000 (three that it was assessing actual market values in the project area. In the million naira only) or $23,1 @I....Our family RAP, WAPCo reported that it had assessed actual income stream should be adequately compensated for the values on a sample basis to ensure that adjustments to the OPTS lost (sic) which will definitely be rates correspond to or exceed replacement values. To reassess the occasioned.” The petitioners further adequacy of compensation to replace last assets, before stated.. . ”we duly acknowledge the receipt September 30,2006 WAPCo will conduct a professional survey of of N400,OOO (four hundred thousand naira the current values of each type of asset lost to the project, including only) or $3,600 already paidAas communal lands, trees, crops, other structures, and public assets. compensation to the family. It is important These surveys will be based on actual field measurement and to state here that one of the signatories is ratings, not on State, local or OPTS rates. The definition of the highest ranked elected official in the replacement value in OP 4.12 will be the guideline used. local government area. The specific case cited in the Request is being investigated. Any affected person receiving less than replacement value would have grounds to appeal and make use of the grievance process. The Bank will also review outstanding grievance cases during supewision missions to ensure WAPCo fulfills its commitment that compensation amounts meet or exceed asset replacement value. Annex 2 lists the consultations held by WAPCo, which informed communities about the valuation principles and process for compensation. There was no binding contractual relation 4.1 2 Management believes that, if registered as described in the RAP, between individual landowners and the receipts for property acquisition meet Bank requirements. This WAPCo. The sponsors of the project will also be confirmed during supervision. merely paid at their own discretion. They Compensation was for both land and crops. All agreements provided compensation for the crops on the reached with landowners have been documented in “Compensation land only and did not pay anything for the and Indemnity Receipts for Direct Paymenr forms, with photos and land and future profits that are accruable signatures of affected people and witnesses. from the activities that we would have Compensation rates for perennial crops and economic trees undertaken on our lands. should take account of all future production (see the OP, Annex A, Our request for cash compensation footnote on definition of replacement value). If these were not paid, instead of relocation in many instances was then affected people may have recourse to the grievance informed by our fear of the unknown. These mechanism. lands are our ancestral lands and we Compensation rates for all immovable assets and improvements cannot leave it to total strangers while include consideration of future income streams (RAP page 5-23). moving to some other location reside. to Ftiture profits should have been considered as part of future income Ruling elites in the country in connivances but if they have not been adequately estimated, those affected have with the oil multinationals have by their recourse to grievance redress processes. actions and inactions enhanced poverty in our communities. But this does not give them the right to take our lands or pay us next to nothing as compensation when we opted to stay on our land. Not all stakeholders had access to the 4.12 Management believes that compensation was adequately project information, and the information Discl. covered in consultations; tensions that may have developed are not provided was not understood by members Polic a result of the project. of our communities. That is why the Y As pointed out in response to Item 2, WAPCo and its consultants expectations of our community people were responded to questions on compensation and land acquisition that unnecessarily raised on the compensation were asked by participants at consultations on the EA. In addition, we were to receive. Until the day some of 20 community meetings on RAP issues were held between us collected our compensations, we had no November 2002 and September 2003. Further RAP workshops idea of the criteria used for computing the were conducted in August 2003, at ljoko and ttoki villages, and at compensations to be paid for the Anuko-ljoko village. In February 2004, there was another series of acquisition of our lands. We believe that meetings on land acquisition and the RAP, one each at Otta, there was a deliberate policy not to disclose Igbesa, and Badagry. WAPCo staff made presentations at the all relevant information in order to get our workshotx on the compensation principles and process and, during

27 Management Response

Bzpl UB Chi mib OPI BP Respan- support for the project. early 2004, made informal visits to affected villages in an effort to The manner the little consultation that ensure there was clear understanding. Lists of assets to be took place was carried out is a recipe for acquired were posted in public places in March 2004, after which crisis and violence in our communities. the inventory of assets was completed with full participation of There are still tensions between the owners and users. WAPCo normally included Yoruba speakers in landowners and those of us whose lands the teams that conducted these and all other consultations. were not acquired by whose livelihood The tensions that may have developed between landowners and would invariably be affected by the project. others, between landowners and users, and within families are Some of us would lose our farmlands; normal parts of community dynamics. The October 2004 Bank others may be denied easy access to their mission witnessed an example at its consultation meeting in farms and fishing grounds. We believe that Badagry - a group of landowners confronted another group of the sponsors of the project employed the citizens who had met with NGOs and discussed environmental classic divide and ruse strategy to their full issues within 48 hours preceding the meeting. The landowners advantage. Our community members have believed that the other group was working to biock WAGP. The yet to resolve the bitterness and bickering Bank mission together with the High Chief facilitated a discussion in that was the hallmark of the selective which the differences were resolved. The non-landowners made consultations which took place with a few clear that they were not opposing the project in any way but merely landowners, while other land users and trying to ensure that the issues that concerned them were also put impacted persons were ignored. on the table. In another example of conflicts that arose, WAPCo expended considerable effort to identify the actual families were against each other owing to owners of the parcels acquired or paitly acquired, Neither the BAP what some members perceived as the nor OP 4.12 obliges WAPCo to become involved in how small amount of compensation declared by compensation is divided among members of a famitv when the land their family heads who signed for and collected compensation cheques on behalf of their families. Family heads were suspected to have stashed part of the compensation for their private use. This perception was entirely false, but as there was hardly any information on the quantum of compensation to family heads, rumors of dishonesty on the part of family heads were rife and these led to bitter quarrels and even physical fights. It is pertinent to note that a family in the sense used here denotes the extended family system practiced widely in our communities. There were also instances where the landowners and the land users (those who lease lands for fanning) clashed over who should be paid compensation and how the compensation that has been paid should be shared. At this moment, although land acquisition 4,12 Management agrees that Yoruba translations of summary RAPS has been completed and clearing of the Disci. and EMPs were not disseminated, as requested by the Bank in its right-of-way is in progress, there is still no supervision mission of June 2005. WAPCo considered that, as most translation of the Resettlement Action Plan Polk literate residents in the affected communities read English, it was into Yoruba. Y not necessary to undertake translations. However, these are now being undertaken and will be completed and disseminated in September 2006.

I Poverty Reductkm Even at the level of the supposed 4.15 Management believes that the project will benefit, not impoverish economic benefit of the project for us as a affected people, both through resettlement compensation, as well

28 West African Cas Pipeline Project

Reisponse community, we think this claim is patently 4.1 2 as community development, construction and the planned false, illusory and diversionary. Firstly 4.01 permanent employment. employment opportunities would only The EA identifies the economic benefits that are likely to accrue to include temporary manual labor during communities along the pipeline. These include: temporary construction work. As far as we know, no employment for local residents in ROW clearing, pipe installation mechanism has been put in place to ensure and construction; local purchases of materials and supplies during that quaiified persons from the community construction; local subcontracting for construction and maintenance with the relevant academic credentials are services; and permanent employment for a much smaller group of put through training to secure employment residents (46) of the four participating countries in operating and on a full term basis. This is despite the fact maintaining the pipeline. Willbros, the contractor for onshore that we have compiled and submitted the facilities, is behind schedule and not working at full strength, and so names of graduates from our communities the total number drawn from the local labor pool is not yet known. in dierent fields, especially in the area of WAGP does not require a large labor force. WAPCo is operating a engineering. nine-month training program in which 73 nationals recruited from We therefore think that this project will the four countries are being prepared for long-term employment. further impoverish the people of our The recruitment was conducted by a nationally-known recruitment communities. We will lose our lands, which firm, and the opportunities were publicly advertised. Nigerians are our only means of livelihood, without number 25 in the group of trainees, and the number of positions adequate compensation, while on the other likely to be filled in Nigeria is 16. hand we do not have the prospect of long WAPCo has committed to at least 15% “local contenr during the term alternative employment. We have construction phase of the project and has achieved 12.2% through often made the point that we would not March, c;p from 11.5% in January. The company expects to exceed accept to be mere onlookers in this project, 15%; the delay in reaching the target is mainly caused by delay in and that we want to be an important part of mobilization by Willbros, which is the main source of demand for the project, but it seems that there is a labor, materials and services in Nigeria. To date, Willbros has deliberate move to push aside with one expended $2.8 million for purchases in Nigeria through 16 different excuse or the other. contracts, or 6.4% of its total billing, up from 9% in January. The HDD subcontractor of Horizon Marine, the offshore pipeline contractor, also employed local labor at Badagty. Most landowners have lost only small amounts of land and do not have to move. For them, alternative employment is not an issue. Of those whose houses or house plots were acquired, only two opted for resettlement. Cash compensation was the nearly unanimous choice of all affected landowners or land users. Moreover, the land in the ROW can still be used for grazing and foot traffic. Community development is a covenant in the Project Agreement, Section 7fn). In addition to compensation for directly affected people, WAPCO has developed voluntary CDPs with full participation of the members of the affected communities, under which WAPCo is financing local development projects identified by the citizens as high priority. The program began in 2003 with the self-assessments of needs and priorities summarized in the EAs. Annual work programs are agreed with the communities. During 2004, the needs lists were verified and refined with assistance of a social development consultant. WAPCo’s intent is to formulate a comprehensive, five-year CDP for all four countries in WAGP. As an interim step, the final agreement between WAPCo and the communities for the first year of the program was negotiated in late 2004 and early 2005. In Nigeria, the MOU that documents the content of the CDP for each participating community was signed by the Consortium on behalf of the 14 communities participating in the first year of the program. Seven of them are communities listed among the Requesters: Ajido, lmeke Agemowo, Araromi Ale, llogbo Eremi, fgbesa, Okoomi, and Itori. Annex 4 lists the first year projects to be supported in each community. WAPCo has signed and returned the MOU to the community leaders and will disclose it on its website and provide IDA with annual reports on the status of

29 Management Response

CIaidosue

I implementation as required in the Project Agreement. Esonornk Evaluation of investment Opemtions Another very important policy that was 10.04 Management believes that the economic analysis did consider violated is the OperationaVPolicy and Bank feasible alternatives and adequately evaluated the project's Procedure 10.04 of September 1994, which sustainability . requires that the Bank evaluate investmenf In addition to the ecoriomic analysis carried out by Bank staff, a projects with the aim of ensuring that they complete economic assessment was conducted by an economic promode the development of goals of the consulting firm. The results of the latter were presented in an open country, to do a proper consideration of public forum in September 2004, in Accra, Ghana, attended by feasible alternatives including the Wthouf representatives of the four WAGP countries, as well as in the PAD. project" situafion (as also requiredby OP The results show substantial economic benefits for ail four countries 4.0t) and to evaluate the sustainability ,of as well as for the investors. the projecfs. Alternatives to WAGP were considered in Nigeria's Gas Master Plan and Gas Strategy. The alternatives for meeting the energy needs of Ghana, Benin, and Togo that were considered both in the economic and environmental anatyses included: 1. The no-WAGP project scenario; 2. Development of small gas reserves in offshore Ghana waters; 3. Gas and power imports from Cote dlvoire; 4. Conversion of gas to electric power In Nigeria and transmission to the three consuming countries; and 5. Transport of natural gas through onshore routing of the pipeline. The World Bank Group carried out an extensive assessment of the project, including detailed technical, fiduciary, financial, economic, social, environment, political and reputational risk assessment (included in the PAD). The project met all of the requirements under the Bank's policies. The assessment concluded that the project is a fair and reasonable transaction for all parties. This sharing of benefits is the lynchpin of the projest's sustainability over the long term. Additionally, this project was assessed at low oil price scenarios, and given current high oil price projections, much larger absolute benefits to all participating countries are anticipated. We believe that this project would not Management believes that the project's contribution to reduced promote the holistic development in our gas flaring is presented without overstatement in the economic community and even in our country as it is analysis and-in order to see actual results-the annual volume of premised on the false assumption that it will AG (nomally flared) is included as one of the project's monitoring reduce the flaring Df associated gas in indicators. Nigeria. From the facts in the documents Nigeria and all major operators in Nigeria are Partners in the available to us it is unquestionable that Bank-led Global Gas Flaring Reduction Partnership (GGFR). The Nigeria is the biggest gas flaring country in GGFR is a forum of governments of oil-producing countries, the world. Flaring contributes to the national oil companies, international oil companies, as well as other destruction of the lands and rivers in our key stakeholders, including the World Rank Group, whose key country, to serious health problems and to objective is to support the efforts of the petroleum sector worldwide the global phenomenon of Climate Change. to reduce the flaring and venting of gas associated with the As such, gas flaring is doing great ham to

Joint UNDPNVorld Rank Energy Sector Management Assistance Programme 2004.

30 West African Gas Pipeline Project

Ctaidtssue Response the environment, health and livelihoods of extraction of crude oil. Nigerians. In addition, flaring as opposed to The FGN has put in place a "Zero Gas Flaring Policg and routine capturing gas entails an economic loss. gas flaring and venting is set to end in 2008;6 this will be formalized According to estimates of the World Bank in a Gas Act this year. Since 2003, the FGN has not allowed any itself, it costs Nigeria about US$2.5 billion new oil field development if it entailed flaring. This policy is strictly annually. implemented and monitored. The WAGP project's proponents claim Nigeria has a number of policy initiatives to meet its flare-out that associated gas (which is normally target for 2008, of which WAGP is a small part. WAGP will transport being flared) will be the source of the approximately 5 percent of the AG that is produced in Nigeria over pipeline. We, in conjunction with the life of the project (about 1 billion cubic meters). Environmental Rights ActionlFriends of the WAGP will use a mixture of NAG and AG. "Initially, the gas sold to Earth Nigeria, have requested infomzdion the WAGP will be about 60% AG (reducing to about 40% over 20 that would show that this is the case. The years as associated, hitherto flared gas, decreases), a large portion question is important, since the fields in the of which would have been otherwise flared in the absence of Westem Niger Delta where the gas for productive uses of gas, including the (ELPS and the) WAGP." (PAD WAGP will be sourced, are generally non- associated gas fields. This means page 6.) additional gas wells would be drilled No single project could capture all AG and operate soiely on it, instead. since its availability is ciosely tied to and thus fluctuates with oil production. Gas pipelines to deliver the gas volumes contracted for Currently, the WAGP project design does by customers at the receiving end must be under the same not demonstrate in concrete terms that any pressure most of the time, which AG alone cannot provide, thus the amount of associated gas would be piped necessity to mix AG and NAG in any pipeline system. (See EA through the pipeline. As the World Bank Appendix 2A for more details.) itself has said, 75% of gas flaring in Nigeria is a result of the failure of proponents of the It is the Bank's understanding that 311 significant volumes of AG West Africa Gas Pipeline Project to put in have been allocated to gas flaring reduction projects, either planned place the necessary infrastructure to or under implementation, and to domestic market uses. Therefore, enhance gas utilization in the country.5 In additional AG would not be available to WAGP. this situation, it is inappropriate for the Bank As stated in the PAD (paragraph 7); "To support the initial to support WAGP, as it allows project demand for gas from WAGP, as well as some of the projected sponsors to continue the unwarranted increase in demand over the first five to ten years of WAGP degradation of our environment and operation, production capability of 200 MMsd/day has been livelihoods. identified from existing oil and gas operations in the Niger Delta... In this respect, the Bank also failed to Consequently, construction and operation of WAGP do not entail take into consideration Nigeria's plans to any new environmental or social impacts upstream for at least fie double oil output to 4 million barrels of to ten years. Thereafter, the combined effects of deciining volume crude oil per day (from the present 2.5 of AG available for WAGP and possible increases in demand up to million barrels per day) by 2010 and the WAGP's maximum capacity would necessitate new wells and gas expected increase in new oil field gathering systems, with attendant impacts. The timing of the need development. This will inevitably lead to the for additional gas and the specific well locations, gathering system production of more associated gas. capacities, etc. cannot be identified and therefore were not addressed in the regionai EA or the EA for Nigeria." Without guarantees that WAGP use only associated (otherwise flared) gas, the The original upstream producers (and their affiliates) have the World Bank's support for WAGP will exclusive right to transport natural gas on the new pipeline until a increase the use of non-associzted gas, threshotd has been met - that threshold is the earlier of contracted which is cheaper to produce than capacities reaching 200 MMscf/day or 10 years. The original associatsd gas. WAGP would thus set a upstream producers are: (i) NNPC; (ii) Chevron Nigeria Limited precedent of tooking solely at profit (CNL); (iii) The Shell Petroleum Development Company of Nigeria margins, rather than the best development Limited (SPDC); (iv) Elf Petroleum Nigeria Limited (a subsidiary of interest of the people of this counby. TOTAL SA.); and (v) Agip, organized in two joint ventures (NNPCICNL and NNPC/SPDC/Elf/Agip). Under the agreements to purchase gas in the Niger Delta, the original upstream producers

It is a possibility that the 2008 flaring deadline may not be reached; the largest producer, Shell, has announced that progress has been slower than it had hoped. It now expects to stop flaring at some point during 2009.

31 Management Response

Claimilssue Respanse

have covenanted, inter alia, to comply with all applicable environmental and social laws. After the threshold has been met, the pipeline will be opened to other future shippers under the Access Code. To qualify for access, future shippers must, inter alia, be in compliance with environmental and social laws in Nigeria. The WAGP Authority is charged with monitoring compliance with the Access Code. Nigerian regulations require completion of an approved EA prior to issuance of permits for new wells and related facilities, and the permits require implementation of environmental management and monitoring measures identified in the uI\. W& regard to profit margins, as noted earlier, the Bank's detailed assessment of the project shows that the commercial structure allows for a fair and reasonable sharing of benefits to all participants. As a fuel switiching project, WAGP allows the consuming countries to switch to cheaper and climate friendly gas. As a producer, the project allows Nigeria to monetize its natural resource at reasonable prices. On the whole, the project is expected to result in significant net economic benefits to each of the four participating countries. The amount of gas carried by WAGP is a function of demand in the receiving countries rather than of oil output. supervision The World Bank's OP 13.05 requires the Management believes that the project has been well prepared, Bank to ensure that the borrower and supervision includes multiple layers of oversight, which had implements the prvject with due diligence already identified the issues raised in the request. The effectiveness and to identify and fake steps to resolve of monitoring and follow-up will be reviewed by the independent problems in implementation. As will become expert panel. clear from the elaboration below, we feel Project Preparation. The Bank and MlGA engaged with WAPCo strongly that the World Bank has failed to and its consultants on environmental and social safeguards eariy comply with this policy. and often during project preparation. The full chronology of Many of the problems caused by the interactins and key events is shown in Annex 3. Altogether, senior WAGP project's sponsors were not Bank and MICA safeguards staff conducted or participated in 25 anticipated or resolved by the World Bank meetings or teleconferences with WAPCo and its consultants and as required by this policy. We consider the provided written comments on all key safeguards documents during problems with the project sponsors project preparation. mentioned below a result of the World From August 2002 to June 2003, the Bank and MIGA worked Bank's failure to adequately supervise the closely with WAPCo on the scope and TORS of the EL4 and RAP. A project's preparation and implementation. resefflement expert from the Bank visited all WAGP sites in June 2003 and provided additional advice on RAP preparation. The first draft of the EA was commented on extensively in writing by the Bank Group in February 2004, and numerous meetings and telephone discussions took place before the second draft was delivered in May 2004. MlGA safeguards staff made site visits on March 30,2004, and attended the public hearing held by FGN on March 31. After further revisions, Bank clearance of the EA for disclosure was issued on June IO, 2004. The first draf4 of the RAP was received and reviewed by the Bank Group on June 3,2004, and it aiso required extensive revisions. The revised RAP was cleared for disclosure on Jum 23,2004. Bank environmental, social, and communications staff conducted consultations at three locations in Nigeria in October 2004, to follow up on the consultations held during EA and RAP preparation. The overall assessment of participants was that WAPCo's consultations had been adequate.

32 West African Gas Pipeline Project

ClaJdIssue Resgansa,

Project lm~~eme~~ti~~.The institutional arrangements for the project provide for multiple layers of supervision of EA and RAP implementation during construction of the pipeline by WAPCo, cooperating governments and the Bank and MIGA, as well an independent expert panel. Since the project is being implemented by the private sector, the arrangements reflect the private enterprise's responsibilities, legal obligations, and corporate policies for planning, construction, and operation of its investment. The WAGP project team under contract to WAPCo has overall responsibility for project supervision for the developer, including for implementation of the Environment and Social Management Pian (ESMP) developed in conjunction with the EA. RAP implementation is also overseen by this group. The WAGP team k staffed by experts on assignment from the project sponsors (Chevron, Shell, Nigeria National Petroleum Corp., and VRA (the main consumer of the gas, in Ghana). The ESMP is made up of elements that address health, environment and safety. Each contractor is obligated to prepare a detailed health, environment and safety (HES) plan and have it reviewed and accepted by WAGP prior to initiation of construction. Each contractor must establish an HES management organization and provide training in accordance with the ESMP. The project calls for three levels of "audit" to supplement normal oversight of ESMP implementation. Level 3 consists of audits of contractor performance conducted by the WAGP team. Level 2 audits are conducted monthly during construction, by WAGP managers who are not members of the construction supervision team. Level 1 monitoring and audits are carried out by third parties under contract to WAPCo. To date there have been three independent monitoring missions, and a full, independent audit of ESMP implementation began on May 8,2006. Supervision by the Bank and MIGA, plus planned oversight by an independent expert panel, is in addition to what is described above. The Bank and MlGA supervised the project specifically for ESMP and RAP implementation in June 2005, holding consultation meetings at Badagry and 0th. At that time, no construction work had begun in Nigeria, and so the mission focused on consultation, RAP implementation, and the status of activities such as design of the CPDs and preparation of emergency response plans. The issues raised during the mission were: inadequate compensation, need for emergency response plan, implementation of CQPs, and employment of local labor and contractors. Bank staff followed up on these issues (See items 9 and 13). In addition to the June 2005 mission, Bank safeguards staff have met with WAPCo health, safety and environment staff or WAPCo management on four occasions (1 1/4/05,2/9/06,3/22/06, and 5/12/06) for briefings on progress and follow-up on open issues. Other members of the Bank team have met with the WAGP Authority (June and October, 2005) and WAPCO management (January, April and May, 2006) for discussions on the project. A field mission for supervision is overdue and will be conducted in the first quarier of FY 2007. We have made strenuous efforts to make Many of the Requesters' concerns were raised during preparation the views that we have canvassed here and are addressed in the PAD in detail. The remaining issues are available to the proponents of the project related to implementation, and so only arose during supervision. and the Bank itself, including during visits of These are now being addressed by the team. the West African Gas Pipeline Company The Bank and MIGA met with Nigerian communities-including (WAPCo) and the World Bank, the first of many of those that comprise the Requesters-duringconsultations

33 Management Response

CtairrPnssue Response which took place on October 30,2004 at at the time of appraisal in Badagry and Otla in October 2004, and Whispering Palms at Badagry, Lagos and again at the same locations during the safeguards supervision the second in June 2005. mission of June 2005. At the Badagry meetings, the following However, we are disappointed with the issues covered in the Request were presented to the Bank: complete inaction taken to address our Non-landowners as stakeholders concerns. We also know that several 0 Need for emergency response plan awareness organizations have raised these same concerns with the Bank at forums such as 0 Delivery of promised compensation during the civil society consultation with the 0 Access to information Bank's team to Nigeria on 29 October 2004. a Need for local language summaries We have therefore decided to use the Inspection Panel to further reiterate that our Employment of local people concerns and fears have not been Access to the EA. addressed neither by the Bank nor the The Bank's initial follow-up regarding compensation was based proponents of the project. on concerns raised at Otta in June 2005; the payment records that For some time now, our communities, the Bank analyzed wers for 14 communities in the Otta area. This supported by civil society groups, have group included three of the Requesters: Egushi Benja, Igboloye, been expressing concerns in relation to the and Arobieye. The records are being reviewed by a resettlement project. These issues include: specialist, whose findings and recommendations are anticipated by payment of inadequate compensation to May 31,2006. Since receiving the Request, the Bank has asked landowners; WAPCo to provide the corresponding information for the nine other communities included among the Requesters. the manner in which Environmental Impact Assessment was carried out; On emergency response, the Bank received assurances from WAPCo that response plans would completed in early 2006 and the inability of the communities and be discussed all affected communities prior to any transmission of groups to pinpoint the location where the with gas. The system-wide plan was issued in May 2006. WAPCo held draft Environmental Impact Assessment community meetings on emergency response in February 2006 and document was displayed; will hold additional meetings in the third quarter of 2006 after the project's unconvincing approach to detailed, site-specific response plans are prepared. the issue of gas flaring: The Bank has no records of the other issues noted in the Request the failure of the proponents of the project - that is, gas flaring, EA of the ELPS, environmental degradation, to cany out an Environmental Impact economic anatysis, and poverty alleviation -as having been raised Assessment in areas along the existing to the Bank or MIGA by the Requesters, although most of them Escravos-Lagos pipeline that will feed gas have been discussed on several occasions between NGOs- into the new pipeline. Friends of the Earth (FOE) and Environmental Rights Action (Emband the Bank, for example at a meeting in Washington on April 19,2004. In a letter from FOE dated November 18,2004, on the eve of Board presentation, NGOs urged the Executive Directors to delay action on the project until conditions requiring attention to the same issues couid be included. These issues are addressed in the PAD in detail and were known to the Executive Directors when they approved the project.

Dkclasure of Information We visited the Badagry and Olorunda Management notes that the early 2004 drafts were disclosed for local council secretariats in January 2004 in Nigerian Public Hearing and Permit Review, but then revised as a order to make informed comments on the result of the hearings and disclosed, as required for Bank EIA. However, this was impossible because standards, in July 2004. the document was unavaila4)e. We WAPCo disclosed the first draft of the Nigeria EA in early 2004 in understand that it is now available on the order to meet disclosure requirements for Public Hearing and internet. But looking at the size of the Permit Review by the FGN. The disclosure was announced in "town document, the low literacy level in our hall" meetings, radio spots, and newspaper advertisements. Within communities and non-availability of internet a week after disclosure, a national NGO informed WAPCo and the service in our communities, it will take us Bank that it had not been able to gain access to the report in Lagos forever to decipher what is in the document. and at the local government administration of Badagry. The Bank It also means we would have to hire expressed concern to WAPCo, and WAPCo staff visited all mnsuttants to comb through the EIA

34 West Afiican Gas Pipeline Project

ClaitWkssoe Response documents seeking relevant data that we locations and corrected the problems within a matter of days. may need to respond to. The EA and RAP as cleared for disclosure by the Bank (the third In addition, it would have been helpful if and second drafts, respectively) had been disclosed at 11 locations relevant portions of the large documents in Nigeria by July 7,2004, including at Badagry, Ado-Qdo, Otta, and had been reproduced in Yoruba, the Ifo. WAPCo staff verified that they were indeed accessible, and the language commonly used in our Bank has not received any information to the contrary. They were communities, and distributed to impacted also placed on WAPCo’s website and that of the Bank’s Infoshop, communities. This, no doubt, would have but the Bank did not rely solely on internet for disclosure in the assisted us to make the informed project-affected areas because of limited accessibility. comments required by the sponsors and The Bank mission’s advice to WAPCo for translatins of the the World Bank. Exeeutive Summaries to be distributed to communities is recorded in the October 2004 BTOR. WAPCo had not made the translations at the time of the request, because of its opinion that literacy in English is rektively high in Nigeria, but it is now doing so, with completion scheduled for September 2006.

35 Management Response

Annex 2. S DURING EA AND P PREPARATION

MPCONSULTATlONS

1. Meetings to discuss land acquisition and resettlement began in 2002. Twenty individual community meetings were held. The meetings at Igbesa, Badagry and Otta in July 2003 were open fora for groups of communities, and estate surveyors were present to explain the proposed WAGP ROW acquisition and the process of land acquisition and cornpensation. Minutes of those three meetings show that at least six of the Requester communities were represented: Ajido, Araromi-Ale, Igbesa, Igboloye, llogbo Eremi, and lyesi, plus people who listed themselves as being from Badagry or Otta. Issues discussed besides land acquisition and compensation were safety, employment of locals, the EA process, and community development benefits.

Nigeria: Community Meetings Involving RAP Discussions Date Location I Date Location I1/7/2002 Badanw I 12/18/2002 lgbesa 11/7/2002 lgbe& - 12/20/2002 Badagry 11/7/2002 lgbesa 5/29/2003 Ajido 11/7/2002 imeke 711 012003 lgbesa 11 /7/2002 lmeke 711 ll2003 Badagry 1 1/7/2002 lmeke 711 212083 Otta 11/20/2002 Lemode 7/28/2003 Otta 11/2012002 Otta 9/26/2003 ljokolltoki 11/20/2002 Owode 8/3/2003 ljoko Erinko 11/25/2002 Ewupe 8/3/2003 itoki 11/25/2002 Ewupe Source: Nigeria WP, Chapter 7

2. Starting in early 2004, WAPCo carried out a series of RAP activities implemented as part of RAP disclosure. These included:

0 Disclosure of the compensation process and principles at pubsic workshops and in affected villages with opportunities for affected people to provide feedback;

e Completion of the inventory of affected assets with full participation of the Dandowners and users as a follow up to the posting of these assets in public places in March 2004; and

Verification and update of the census crf land owners.

ENVIRONMENTAL IMPACT ASSESSMENT CONSULTATIONS

3. Through May 2004, WAPCo or its EA consultants had conducted 35 formal consultations with stakeholders in Nigeria, 25 of which were with cornmunities or local government that are documented in Chapter 5 and Appendix 5-D of the EA. There were also numerous informal consultations that were not documented.

36 West Africa?? GQSPipeline Project

WAGP Consultation Summary by Country and individual Stakeholder* I Stakeholder I Stakeholder Name I No. of 1

Source: Nigeria EIA, Chapter 5 4. The EA consultations were opportunities for stakeholders to raise any issues or concerns pertinent to the human and natural environment. However, the questions most frequently raised by the participants were about land acquisition and compensation. Public awareness and the EA process were the next most frequent, followed in importance by safety. WAGP Stakeholder Consultation Summary - Nigeria* tssue Category No. of Consultations Where tssue is Raised EIA Related Issues AwarenesslEducation 12 Land Acquisition - Compensation 23 EIA 12 Community Devetopment 4 Safety 9 Community Reaction 6 Implementation - Contractors 1 Implementation - Employment 3 Mon-EiA Related Issues Advocacy Gas Market IPA /TREATY - Ratification IPNRegulatory Other PemittindFEED (Technical) 2 Source: Nigeria EIA, Chapter 5

37 Management Response

Annex 3.

April 5,2001 Discussion of EA and RAP requirements and scoping WAPCO, MlGA August 21,2002 Meeting to discuss EA process, scoping and timing WAGP investors, MIGA, IDA October 7,2002 Discussions of EA and RAP Terms of Reference WAPCO, ICF (EA and RAP consultants), IDA, MlGA

~~~ - February 21, 2003 Detailed discussions on EA scoping and baseline studies ICF, IDA, MlGA March 12,2003 Written comments on EA baseline study proposals IDA to WAPCO March 19,2003 Written comments on RAP TOR, stressing need for IDA to WAPCO comDensation at market value 1 ADril. 3.2003 I Meetina to discuss tmaress on EA baseline studies I WAPCO, ICF, MIGA, IDA I ~ April 9,2003 M1GA receives “Definitive Application” from WAGP investors MlGA and begins formal due diligence on WAGP ADril29.2003 Written comments on household survey protocol IDA to ICF I 1 A~ril30.2003 I Meetina to discuss household survey protocol I

September 3, 2003 Meeting to discuss environmental and social issues IDA, WAPCO October 31,2003 Teleconference discussing organization and membership of IDA, WAPCO I I FSAP I I WAPCO and IDA

I December 21,2003 I First drafts of EAs delivered I WAPCO to IDA, MlGA

I ICF February 5,2004 I Written comments from Bank on draft EAs for Togo and Benin, IDA to WAPCO, cc OPIC, MIGA,

38 West AjEcan Gas Pipeline Project

rrtten notes provi February 18,2004 comments on social aspects of the four country EAs, by to WAPCO, cc OPIC, MIGA,

ChevronTexaco, Shell, IDA, MIGA

WAPCO to IDA, MIGA IDA to WAPCO

IDA: EXTCD Manager, Abuja Office Communications Officer - March 29-Apri(O7,2004 Due diligence mission, with field visits and attendance at MIGA: Senior Social Sector national public hearings on EAs in all four WAGP countries Specialist, Senior Environmental Soecialist; OPlC environmental staff April 7,2004 e-mail explaining the RAP revision is underway WAPCO to IDA April 15,2004 Telephone conversation on what is necessary to complete EAs WAPCO, IDA and RAPS April 19,2004 Meeting on issues raised by NGOs: documents not accessible, IDA, Friends of the Earth, EA ignores ELPS, flaring reduction insufficient and not Environmental Rights Action/Oil guaranteed, environmentallsocial problems in Niger Delta, Watch, Bank InformationCenter problems with consultations April 22,2004 Meeting on EA issues including downstream conditionalities, IDA, WAPCO, ICF economic analysis, condition of UPS, progress on archeology surveys; also land acquisition, urgency of Bank approvai of the Droiect, rewrite of rwional EA will be delivered 5/7,2004 Mav 17.2004 1 Bank receives revised draft of Niaeria EA WAPCo to IDA

June 10.2004 I Clearance to disclose the Niaeria final draft EA ! IDAtoWAPCo

39 Management Response

IDA to WAPCo WAPCO, IDA

IDA

IDA, WAPCo IDA. WAPCo September 3, 2004 Internal meeting on WAGP and Extractive Industries Review IDA September 9,2004 Meeting on stakeholder comments on EAs; WAPCO WAPCO, IDA environmental staff traveling to the region to address any that have been received - September 23,2004 Economic and Financial Analysis Workshop -- Accra, Ghana IDA, Governments, NGOs, WAPCO. other stakeholders September 24,2004 Discussion on EA review, status of environmental permit in Ghana EPA, IDA Ghana, needs to build capacity to monitor large projects - Accra September 24,2C04 Meeting on comments received, status of public hearing WAPCO, IDA reports and decisions on environmental permits in all four coun~es- Accra September 29,2004 Teleconference on what is needed to finalize Regional EA WAPCO. IDA October 6.2004 Meeting to discuss fulfillment of Board conditions (preparation WAPCO, ICF: IDA of free-standing EMPs) and finalization of Regional EA October 9-17,2004 Mission to appraise and validate consultations by WAPCO in IDA, FOE Ghana, FOE Togo, Third Benin, Ghana and Togo World Network, other NGOs, local officials, communities October27-31,2004 Mission to appraise and validate consultations by WAPCO in IDA: AFR Safeguards Coordinator, Nigeria, with NGO meeting in Lagos, field visits and community Senior Partnership and Civil Society meetings in Badagry and Otta Specialist, Senior Social Scientist, Operations Analyst; WAPCO community relations staff as observers November 19,2004 Friends of the Earth and other NGOs write to EDs asking them FOE (various chapters), ERA, to delay vote on WAGP until a variety of conditions are added African Network for Economic and Environmental Justice (Nigeria) November 22,2004 Friends of the Earth Ghana issues press release critical of FOE Ghana Bank and WAGP November 23.2004 I Board amroval of WAGP IDA, MIGA

May 3,2005 Update on lawsuit status as of 3/30/05 received, including text WAPCo to IDA of the court filing June 2,2005 Detailed ESMP for Nigeria submitted WAPCo to IDA June 12-17/05 Joint IDA-MIGA Supervision Mission to Benin, Ghana, Togo IDA: AFR Safeguards Coordinator; and Nigeria: focus on safeguards implementation, included site MIGA: Senior Social Sector visits to Badagry and Otta; FOE, ERA and other NGOs invited Specialist, Senior Environmental to meeting in Lagos but did not attend Specialist, MIGA, WAPCO community relations staff as observers August 23,2005 WAPCo noties IDA in writing of change in amount of land to WAPCo to IDA be acquired in Tema industrial zone for pipe storage August 31,2005 First independent monitoring report on MPand HSEMP ERM Consulting implementation issued November 4,2005 Briefing on environmental and social issues, implementation of WAPCO, IDA

40 West African Gas Pipeline Project

December 2005

I Mav 6,2006 1 First independent audit of ESMP implementation begins I ICF Consulting I I Mav 9,2006 I WAPCo submits 4/7/06 surnmaw of land acauisition in Nineria I WAPCo to IDA 1 May 12,2006 I Third Briefing by WAPCo health, safety and environment officer I WAF'CO, IDA

41 Management Response

Annex 4. WAGP COMMUNITY DEVELOPMENT PROGWA LIST OF YEAR ONE PARTICIPANTS

llogbo-Eremi 1 health center Ajido I water borehole, health center I Okoomi I water borehole I I ltori I water borehole I Ore-Akinde health center lmeke classroom blocks Ewupe classroom blocks Ijo ko-Otta classroom blocks, water borehole lgbesa health center Paako-Badagry Town water borehole

42

6°30’N MAY 25, 2006 MAY Ikoyi IBRD 34806 NIGERIA

n Lake u Island

g Lagoon Victoria O Oruba Magado

r e Magboro iv R LAGOS Iseri Oba Igaun Iddo Ojota Ogudu Aketu-Oja Oworonsoki Eregun Okeogbe Omole IKEJA Iganmu Suru-Lere Mushin Apapa Itire

Orudu-Olokan

Lambe

Escravos – Lagos Pipeline Pipeline Lagos Lagos – – Escravos Escravos Oshodi Ifako Isolo Coker Iju Oke-Aro Orogbe Eligbo Igbologun Junction ALAGBADO TEE Ijaiye Itoki Imore

k

e Ijoko Ijoko e

r Alagbado Amuwo C

y

r

g a

Isunba

d

a B Idowu Ipaja e Atan d Ibese a Ikotun l

Ikola

Sango-Otta Alade A Alade Ijoko –Otta Road –Otta Ijoko Ijegun Otta River Illo Owode Owode Agoro Ijako Ijako ATLANTIC OCEAN ATLANTIC Isorosi Isorosi Ojo Ewu Olugbode Olorunda Iyagbe Iba Itele

Onihale

o

Mopin w

O

Itori r

e

v

i Etere R Etere

Idimu

u Igbede j

I

r Egushi Benja Egushi Benja Oluke

e

v i Itori Itori R Arobieye Arobieye Oloya/Abiola Oloya/Abiola Mosafejo Iteku Muta Ilogbo Irewe Coker Igbessa Fowowawo Mero

Igboloye u

Isale k a Is Ijanikin r Okomi ve Erinle i of Isolation Valve Proposed Location R

Kajola Akere re Idoluwo

O Agbara er

v Maroko Ri Ologe Atan Lagoon any judgment on the atus of any territory, atus of any territory, Moba This map was produced by the Map Design Unit of The Bank. The boundaries, World and denominations colors, any other information shown on on this map do not imply, Bank the part of The World Group, legal st or endorsement any or such of acceptance boundaries. 5° 4° Ikotun Lagos Owoye Tafi

NIGERIA k

Area of Map e

Onigbongbo e

r

Gbanko C

y

PIPELINE r

Obele g a

PIPELINE d

a Ilogbo B Oniloabo UNDER THE PROJECT PROPOSED ONSHORE EXISTING ESCRAVOS-LAGOS Cotonou Iworo 2° BENIN Onimosalas PORTO NOVO PORTO Olorunsola Araromi Ale Araromi Ale Access Road to Dock Imeke Agemowo Imeke Agemowo Ajido PROPOSED WEST AFRICAN GAS PIPELINE EXISTING GAS PIPELINES GAS TERMINAL OUTLET POINTS SELECTED CITIES CAPITALS NATIONAL BOUNDARIES INTERNATIONAL Eruku 3°00’E Imeke Idagha Iyesi Idagha Iyesi TOGO 1° 3° Badagry Beach LOMÉ Ipota Akarakum Aradagun 456 PIPELINE UNDER THE PROJECT 0° 1° 2° PROPOSED OFFSHORE KILOMETERS 0° (approximate scale) ADO-ODO Compressor Station Proposed Lagos Beach Tema 123 Isalu Irago GULF OF GUINEA .5 Topo NIGERIA 0 ACCRA 23 PROJECT-AFFECTED VILLAGES 23 PROJECT-AFFECTED OF REQUESTORS LOCATION PROPOSED PIPELINE ROUTE PROPOSED ACCESS ROAD GAS PIPELINE EXISTING ESCRAVOS-LAGOS ROAD NETWORK PRIMARY ROAD NETWORK SECONDARY TOWNS CAPITAL STATE BOUNDARY STATE

1° r

e k v

Owo i e

Ere R

e

r

50 100 Kilometers

C a

y w r

GHANA g REQUEST FOR INSPECTION: e

BADAGRY a Y d a B

0 0 25 50 75 Miles Ifesowapo Host Communities Forum African Gas Pipeline Project of the West (representing 12 communities) Kumasi WEST AFRICAN GAS PIPELINE PROJECT Onfo 6°30’N Takoradi 2° 1° 2° 6° 4° ANNEX111

SUPPORTING LETTER FROM GHANA

Friday, June 09,2006

The Executive Secretzriat The hspection Panel,

200433

Dear Sir

ANA (FOE-GH.)

We write to you to express ow support for ow colleagues in Nigeria in relation to a complain lodged by the lfesowapo Host Con1mu ties host Fomofthe West Africa Gas pipeline project inspection panel on the West Africa ~asp~~e~ine.We would like to ask that our names be added to the request for inspection. By this letter we also wish to inform you of issuss we consider critical to the ~~~le~entatjonofthe West A ea Gasp~pe~i~eProject and believe in good faith that a call for meaningful action will heed e concerns raised in this letter of complaint.

ile we acknowledge the ~o~~~bu~~o~of energy ~e~~e~o~~entto poverty alleviation in the West ca subregion, we wish to draw your a~te~t~o~to the critical issue of lack of transparency during rhe project's design and assessments. At your own insistence, the promoters ofthe WAGP integrated public consultation engagement int~the project's desi tion ofthe vital importance of erstanding stikeholders' op~~~~s. recogpized need for public c~ns~~tatio~has not been adequately addressed, and the persistent calls from civil society org~~~a~io~sfor this to be underiaken have gone unheeded.

It is on record ( the media) that Ghana's Energy Conimission raised major concerns regarding gas pricing benefit sharkg and the pmject's long tern1 economic benefits to Ghana. As you may be aware, the Energy Commission is a democratic statutory ~~st~t~t~o~that owes its creation, existence and responsibility to the people of Ghana. ~~~~~~~ent~y,any concern raised by such aE institution should be accorded the necessary ~tt~~~t~~~it deserves. However, we have hilowed the WAGP development process and have to date ne evidence to suggest that the co~su~~~t~o~ process has been expm ed to examine the Commission's ~~n~e~s. In oar view, it i y revisiting this critical eo sure stre~~~ene~national co~~~~ereda vital pillar

crucial barrier to achieving ‘sustainable pact ~ss~ss~e~tdetailed a clear emerge t with the WAGP ~n~a~t~ct~~e,However it is very ~ce~a~~the extent to w le to utilize such a system in an accident such as a fire outbreak resulting from the WAG

~~~~a lacks the requisite capacity to ill contingency response is to be the model for managing de. In 2005 several fives were lost as a his amply reflects the country’s lack of capacity to deal with such m emergency situation. ~~~e~~re,interaction with local ople suggests they do not have my better u~~~erstand~n~ofhow to respon y situation. Security is a human right and, as such, is a very crucial issue. It should be emphasized that WAG is immune from responsibility for any indirect impacts in the course afthe project d~~,e~o~nient.This aspect raises yet more si~~~c~tconcerns because ordinary people with limited howledge and understanding of emergency response management could easily cause a fire outbreak as a result of a gas le& incident and this would have extremely sePious consequences, yet the WAGP would be ~~-~n~ from liability because the project is registered in Bemuda outside any ofthe laws ofthe untPies in West Africa. We are aware ~fyour expressed concerns for hum t you will use your influence to re-examine these concerns md the existi the WA~~,andso estab’iish~h~necessa~stllscttares t~atw~~~ romote ~~teg~ty, security and

Gal source of livelihood for a significant propo~~onof Ghana’s population. t the planned route ofthe pipeline avoids sensitive fisheries ecosystems, the project sponsors should eo it itself to undertake assessments ofth peline’s impacts on fisheries and livelihoods ing the laying of the pipeline and pe ca!?y t~~~~ou~the project’s operation. It is mt clear to what extent this wil&be a ssed. In pursuit of achieving its core mandate of poverty alleviation, it will be of credit to the if it ensures that continuous impact assessments such as these are done to ~~d~rsta~~the project’s acts QQ~livelihoods and e fisheries ecosystems agd so allow for any negative impacts to be Simildy the project’s c~~i~i~e~tto local consultation sho~ldexp in the stretch ofthe country’s coastline. nly in this way can there consuItation process, p~~ic~~~~iyconsidering the migratory tendencies ~f fishermen. Focusing YOUPSsincerely f\

MH. The0 Director,

ANNEX IV

SUPPLEMENTAL MANAGEMENT RESPONSE

roject - ar

I. . FolIowing the June 1,2006 ~an~gem~~tResponse to the equest for ~~~~ect~o~of Pipeline Project, the ction Panel visited ement to provide cl d Tafi villages in Nigeri during its field visit, the sence of a brownish-gre their ability to catch fish, and they beli ions in the area.

with the affected fishermen to better understand the

c~~~t~es~and verbal. discussions betwee esentative from

(a) the fishing nets are not going deep enough into the waters; and (b) the §~u~ge-~ike materid is catching on their fishing nets.

3. WAPCQvisited the site on June 22,2006 in the company of the community represe~tat~veto Ajido, where they met with the chief fisheman and several other local fishermen at Ajido. The fishermen stated that since May 2006 they have been noticing some bro~~sh-~eensludge-like substance on their nets and they have been unable to “reach the bott01p1.”They have encountered this problem not in the open water, but r in Badagry Lagoon, a brackish-water system between the mainland aqd the barrier island. WMGo purchased from the fishermen a sample used net so that it could analyze the substance. During the meetings with the affected fishermen, WMCoexplained the process for Horizontal Directional Drilling (FIDE)) for the lagoon crossing, using illustrations, to show that the drilling occurs beneath the bottom of the lagoon and beneath the seafloor out to 8 meters water depth.

4. This meeting was followed by several other face-to-face meetings with the affected fishermen (including the chief fisherman), further site visits to Ajido, the physical sampling of the substance, and discussions among WAPCo’s const~ct~on engineers and Health?Safety, and Environmental (MSE) auditors. WAPCo’s conclusion is that the brownish-green s;lbstance 3s a filamentous green alga, tentatively identified as a species of Spirogyra. At one stage of its life cycle, Sphgyra can take on a brownish color, which may explain why some fishermen describe the substance in their nets as brown and others as green. WAPCo also noted that there are municipal wastewater discharges into the creeks, and these are a likely source of nutrients that could cause an accumulation ofalgae in the lagoon greater thm normal. Given that the substance appears to be piant material, that its location is in the lagoon anad not the marine envir that, according to WAPCO, the MDD process in the area was completed S~Q WMCohas concluded that the problem encountere by the Ajido fis ing com~tyis not related to the installation ofthe gas pipeline. staff have also reviewed the ~~o~a~~Q~grasvided by WAP

disturbance to this sensitive ma. The work inthe Lagos Beach shore approach (454m) was completed h4

e~vi~o~en~a~staff specialist from the Bank's Abuja office will visit the site to follow up on the matter with the fishemen, local gove nt (i~c~u~~ngits environmental unit), and WAPCc, field staf€ to enswe that this matter is ~~p~o~~a~elyreferred to the Nigerian enviromental authorities. ~~~age~en~will advise the Inspection Panel. ofthe outceerne ofthese visits.

2 est Africa

~o~~ow~~gthe June 1’I 2006 ~~a~a~e~entResponse to the equest for Inspection of est African Gas Pipeline project, on June 14,2006, the Pan forwarded a letter from Friends ofthe Earth - Ghana (FOE), dated June 9,2806. The letter raises concerns about ~~nsul~at~o~~,safety and adverse ~~ve~~hoodconsequences for fishemen in Ghana as a result ofthe ~~n~~~t~onand operation ofthe pipeline. and asks that FOE be added to the inixial Request. This is ~~~age~en~’5response to the issues raised in that June 9,2006 letter. These issues were raised by FOE ipa meetings with Bank sta~d~~ngthe November 2004 ~~~~~~~a~ mission, as well as duripag e 2005 supemvision mission. Contin~~edconsultaliom me planued during ~~~le~ent~t~onan meal w@lc~~esany new ~~~or~ati~nto better manage these risks.

1. FOE states that while the imp~r$anceo~cons~~~t~on was recognized in the design ofthe Project, the issue ~f~o~su~tatio~was not handled ~~e~~ateiyin practice. FOE states that Ghana’s Energy ~o~m~s~~o~had raised concerns about the Project’s long term onornie benefit to Ghana. FOE believes that these concerns have not been taken into account in t consultation process.

PG September 2004, es~a~?en~ubl~c form was held in Accra, spec@cally to disclose the results of the ecopasmih: analysis of the Project ~~d~ro~~~~eall i~terested~~~~es,~n~l~~~u~ the Energy Co~~~~ss~onof Ghana: an o~p~rtuni~to give,input, which the Bnergy ~o~~~ss~ondid through its ~~ns~l~~t~~o~Rambdl. Bank sta~~onduc~e~a round of consu~tatio~sia all four countries in connection with appraisal to evakzaate FAPCo $. public pur~ic~at~o~program. Five formal meetings or W~~~~OFSus well m other ~nform~lconsultations were held in Ghana by WAFGO and its consultants ~~ringprepa~ati~~ofthe Ghana environ~ent~land social impact ~ssess~en~.la addition to the Nigeria co~ultat~onsdescribed in the ~anage~entResponse, the Project Appralsul Document (FAD) details the consultations held in Ghana, Benin and Togo.

2. FOE notes that the EM identified the importance of an emergency response system, but is concerned as to whether loca! people will be able to utilize and understand such a system in the case of an accident. FOE cites several instances of oil and gas related accidents and doubts that Ghana has the capacity to respond to such accidents. Past accidents are qf concern to both the Bank and PCo. WAPCo completed its system-wide emergency response plans iB Mq2006: and these me now being disclosed. WAPCo will hold open public meetings with all co~munitiesaffected by the Project to discuss proposed site-spec@c response plans and obtain co~m~~a~~feedback. The min pwpose of these meetings is to ensure that the response plans are practical andfilb understood by ~Q~mun~ties,and to clearly define the acttom to be taken by all parties - WAPCo, local and tiasiond authorities, and community members - in the event ofan uccident. The expertpanel will review the plans during its first mission and will advise Government, the Bank, md FABCo concerning their adequacy. (See June 1, 2036 Management Response, par~~aph57)

Item 3. While FOE recognizes that the planned route of the pipeline does not pass sensitive fisheries ecosystems, it believes that the Project sponsors should assess the pipeline’s impacts on fisheries and livelihoods and that the Bank should ensure that continued impact assessments are conducted to avoid any negative Project impacts on livelihoods and the fisheries ecosystem. Local consultations should include all corn~~~~~~~~salong the coastline given the migrato~y~at~e~s of the fishermen. It was not cost-efect ive to comukt with every ~~ass&i-ilco.r7rmunity; ip?~t~~d,co~~~ltations were held in ~~jor~s~~ipagce~ters,with afocus on coastal c~~munitiesin the vicini@o~p~~~~n~ la~~~fal~s. ~~~~~~s~@~ine~~and other rep~~se~tatives~fth~~sh~n~ &o~~~~i~ies ~~~ti&~ated in these