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Chad Cameroon Pipeline - Project Finance v2
Chad Cameroon Pipeline - Project Finance v2
Chad Cameroon Pipeline - Project Finance v2
Elf & Shell dropped from consortium due to project risks ($10.00/barrel)
Chad-Cameroon Pipelines:
Project Location
Chad-Cameroon Pipelines
Scope & Consortium
$3.7B project, divided $1.5B for oil field development, $2.2B for
pipeline and export infrastructure (1070 Km pipeline, 1mts below)
WB’s IFC lent $400 M of PF (as ‘A’ loan of $100M and ‘B’ loan of
$300M) with banks providing similar amount
The World Bank has the expertise to understand and impact the
risk issues
Corporate sponsors could not take on a project with these risks because
they do not have this expertise
The World Bank loans to projects it does not loan to companies.
The World Bank’s role
World Bank Group played four key roles
Appraised the project for sponsors and other outside
lenders to uncover important information
Assisted with the environmental assessment
Structured the project to ensure “fairness” and to minimize
social and environmental impact
Policy advice to ensure long term sustainability
Made direct investments and mobilized other funding
sources
Deter government interference
WB adds ‘Revenue Management Plan’
Concerned about Natural Resource ‘curse’, criticized by NGOs for
enabling oil development to help authoritarian regime, WB conditioned
its presence (and future loans to Chad) on RMP
RMP’s terms:
Chad’s government anticipated $1.8B in revenues over project’s life
Low 34%
High 40%
Opportunity to leverage $177 million from the World Bank for a $3.7
billion project (5% of the funding)
Commercially attractive project with conservative oil price and volume
assumptions
In the view of some the project fairly allocates project risks and returns
Chad puts in very little and stands to pull out a lot
Why Should WB Approve the Deal?
Social and environmental issues have been adequately addressed
19 volumes of environmental assessment documents
Sharing of risks
Poverty alleviation