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Document of The World Bank Group Public Disclosure Authorized Report No.: 503 15 THE WORLD BANK GROUP PROGRAM OF SUPPORT FOR THE CHAD- CAMEROON PETROLEUM DEVELOPMENT AND PIPELINE CONSTRUCTION Public Disclosure Authorized PROGRAM PERFORMANCE ASSESSMENT REPORT CHAD (WE3 LOAN 4558-CD; IDA CREDITS 3373-CD and 3316-CD; IFC LOAN4338) CAMEROON (WB LOAN 7020-CM; IDA CREDIT 3372-CM; IFC LOAN 4338) CHAD Public Disclosure Authorized IFC ADVISORY SERVICES (537745,534603,533974) September 16,2009 Independent Evaluation Group Public Disclosure Authorized Currency Equivalents (annual averages) Currency Unit = CFA Franc 2000 1.oo US$ 713 CFAF 2005 1.oo US$ 533 CFAF 2001 1.oo US$ 742 CFAF 2006 1.00 US$ 540 CFAF 2002 1.oo US$ 725 CFAF 2007 1.oo US$ 492 CFAF 2003 1.oo US$ 591 CFAF 2008 1.oo US$ 457 CFAF 2004 1.00 US$ 549 CFAF All dollar amounts in this document are U.S. dollars Abbreviations and Acronyms GENERAL: CAS Country Assistance Strategy cso Civil society organization DCA Development Credit Agreement EC Enterprise Center ECMG External Compliance Monitoring Group EEPCI Esso Exploration and Production Chad, Inc. EIA Environmental Impact Assessment EMIS Environmental Management Information System EMP Environmental Management Plan GDP Gross domestic product IAG Independent Advisory Group IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IEG-IFC Independent Evaluation Group (IFC) IEG-WB Independent Evaluation Group (World Bank) IFC International Finance Corporation IPP Indigenous People's Plan LUMAP Land Use Management Action Plan MTR Midterm review NGO Nongovernmental organization NORSP National Oil Spill Response Plan OFDA Oil Fields Development Area PAD Project Appraisal Document PDPP (Chad and Cameroon) Petroleum Development and Pipeline Project PPAR Program Performance Assessment Report SME Small and medium enterprise TA Technical assistance UNDP United Nations Development Program USAID United States Agency for International Development WBG World Bank Group CAMEROON: CAPECE Petroleum Environment Capacity Enhancement Project COTCO Cameroon Oil Transportation Company FEDEC Foundation for Environment and Development in Cameroon PSMC Pipeline Steering and Monitoring Committee-Comite' de Pilotage et Suivi du Pipeline (CPSP) SNH Socie'te' Nationale des Hydrocarbures (National Oil Company) CHAD: CCSRP CollBge de ContrBle et de Surveillance des Ressources Pe'troliBres (Oil Revenue Monitoring and Oversight College) CRCP Chad Resettlement Compensation Plan DPU Doba Project Unit FACIL Fonds d 'Actions Concerte'es d'lnitiative Locale FGF Future Generations Fund MMEP Ministry of Mines, Energy, and Petroleum MEWR Ministry of Environment and Water Resources PRML Petroleum Revenue Management Law TOTCO Tchad Oil Transportation Company Fiscal Year: January 1 - December 31 The World Bank Washington, D.C. 20433 U.S.A. VINOD THOMAS Director-General and Senior Vice-president Independent Evaluation Group MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT Chad-Cameroon Petroleum Development and Pipeline Construction Program Iam pleased to submit to you the performance assessment report ofthe Chad-Cameroon Petroleum Development and Pipeline Construction Program which IEG undertook in response to interest expressed by members of the Board ofDirectors. This evaluation embodies two novel features. First, it assesses the performance of a program of five IBRD and IDA financed projects, two IFC loans and three IFC advisory services in a cluster, thereby combining an evaluation ofthe development effectiveness ofthe program as a whole with an assessment ofthe performance ofeach individual operation. Second, this is the first project based performance assessment which has been jointly undertaken by IEG-World Bank and IEG-IFC. The evaluation finds that the program's fundamental development objective of reducing poverty and improving governance in Chad through the best possible use of oil revenues in an environmentally and socially sustainable manner was not achieved. It therefore rates overall program outcome unsatisfactory despite the technical and financial success ofthe main pipeline project. While the program suffered from some design flaws and supervision shortcomings, the principal reason for its overall disappointing outcome was the lack of government ownership. The disappointing development outcome notwithstanding, the evaluation also finds that World Bank Group involvement resulted in stronger environmental and social protection and in higher expenditure allocations to priority sectors than would have been the case otherwise. It concludes that the Chad-Cameroon experience should not lead the World Bank Group to avoid appropriate involvement in extractive industries, but in designing such future involvement the World Bank Group should be mindful of the important lessons ofthis complex experience. In accordance with IEG's Disclosure Policy Statement Outline (R2003-0223) that was approved by the Executive Directors on January 8,2004, this evaluation will be made publicly available unless Executive Directors decide not to disclose. IEG plans on disclosing the report on October 8, 2009, unless Executive Directors request a postponement. 1 IEG Mission: Enhancing development effectiveness through excellence and independence in evaluation. This is a joint evaluation by IEG-WB and IEG-IFC. The structure and ratings generally follow IEG-WB practice, which is explained below. Nevertheless,the findings, conclusions and ratings were arrived at jointly and by consensus of the two institutions. The Independent Evaluation Group assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the Banks self-evaluation process and to verify that the Banks work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or WBG management have requested assessments; and those that are likely to generate important lessons. To prepare a Program Performance Assessment Report (PPAR), IEG staff examine project files and other documents, interview operational staff, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, and interview Bank staff and other donor agency staff both at headquarters and in local offices as appropriate. Each report is subject to internal IEG peer review, Panel review, and management approval. Once cleared internally, the report is commented on by the responsible WBG departments, and comments are incorporated as relevant. The completed report then sent to the borrower for review; the borrowers' comments are attached to the document that is sent to the Board of Executive Directors, after which it is disclosed to the public. About the Rating System The IFC rating system for Advisory Service projects is substantively comparable to the IEG-WB system, which is mainly used in this evaluation. Use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach. IEG evaluators all apply the same basic method to arrive at their project ratings. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG-WB website: http://worldbank.org/ieg). Outcome: The extent to which the operation's major relevant objectives were achieved, or are expected to be achieved, efficiently. The rating has three dimensions: relevance, efficacy, and efficiency. Relevance includes relevance of objectives and relevance of design. Relevance of objectives is the extent to which the project's objectives are consistent with the country's current development priorities and with current Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers, Operational Policies). Relevance of design is the extent to which the project's design is consistent with the stated objectives. Efficacy is the extent to which the project's objectives were achieved, or are expected to be achieved, taking into account their relative importance. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared to alternatives. The efficiency dimension generally is not applied to adjustment operations. Possible ratings for Outcome: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory. Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized). Possible ratings for Risk to Development Outcome: High Significant, Moderate, Negligible to Low, Not Evaluable. Bank Performance: The extent to which services provided by the Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loanlcredit closing,