Project Appraisal Document - Documents & Reports - World Bank

187 Pages·2000·13.76 MB·English

by  World Bank Group

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ss The World Bank and International Finance Corporation
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PP Report No: 19343 AFR
PROJECT APPRAISAL DOCUMENT
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urur LOANS IN AMOUNTS OF
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DisDis US$ 39.5 MILLION TO THE REPUBLIC OF CHAD
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US$ 53.4 MILLION TO THE REPUBLIC OF CAMEROON
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DiDi LOANS IN AMOUNTSO F US$ 100 MILLION IN A-LOANS
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TO THE
TCHAD OIL TRANSPORTATIONC OMPANY, S.A. AND
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ss PETROLEUM DEVELOPMENTA ND PIPELINE PROJECT
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DiDi April 13, 2000
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Energy Team/AFC07
Africa Regional Office, World Bank
Oil, Gas and Chemicals
International Finance Corporation
CURRENCY EQUIVALENT
Currency Unit = CFA Franc (CFAF)
US$ 1 = 651 CFAF
FISCAL YEARS
Cameroon: July 1 -June 30
Chad: January 1 -December 31
ABBREVIATIONS AND ACRONYMS
Chevron Chevron Corporation (USA)
Chevron Chad Chevron Petroleum Chad Company Limited (Bermuda)
COFACE Companie Fran,aise d Assurance pour le Commerce Exterieur
COTCO Cameroon Oil Transportation Company, S.A. (Republic of Cameroon)
ECAs Export Credit Agencies: COFACE and US EXIM
EIB European Investment Bank
Elf Societe Nationale Elf-Aquitaine (France)
ECMT Export System Construction Management Team
EMP Environmental Management Plan, Chad Export Project
Esso Chad Esso Exploration and Production Chad, Inc. (USA)
Exxon Exxon Mobil Corporation (USA)
Export System Pipeline and FSO facilities
Field System Field development facilities at Doba, Chad
FSO Floating Storage and Offloading Facility
GoC Goverrnent of Cameroon
GoT Government of Chad (Tchad)
IDC Interest during construction
IPP Indigenous Peoples Plan
MEWR Ministere de l'environnemente t de 1' eau (Republic of Chad)
wM Ministere des finances (Republic of Chad)
MINEF Ministere de l'environnemente t desforets (Republic of Cameroon)
WME Ministere des mines et de I 'energie( Republic of Cameroon)
MMEP Ministere des mines, de I 'energiee t du petrole (Republic of Chad)
NSA Netherland, Sewell & Associates, Inc.
Petronas Petroliam Nasional Berhad (Malaysia)
Petronas Chad Petronas Carigali (Chad EP) Inc. (Cayman Islands)
Pipeline Companies COTCO and TOTCO
PPF Project Preparation Facility
Private Sponsors Exxon, Petronas and Chevron, as of March 2000, and Exxon, Shell and Elf prior to that time
SEERAT Societe d'etude et d'exploitation de la raff nerie du Tchad (Republic of Chad)
Senior Lenders IFC, ECAs and other financial institutions lending to COTCO and TOTCO
Shell Royal Dutch Petroleum Company and The Shell Transport and Trading Company, p.l.c.
SNH Societe Nationaled es Hydrocarbures (Republic of Cameroon)
STEE Societe tchadienne d'eau et d 'electricite
TOTCO Tchad Oil Transportation Company, S.A. (Republic of Chad)
Upstream Consortium Chevron Chad, Esso Chad and Petronas Chad, an unincorporated joint-venture
Upstream Operator Esso Chad
US EXIM Export-Import Bank of the United States
Bank: IFC:
Vice President: Vice President:
Jean-Louis Sarbib Jemal-ud-din Kassum/Assaad Jabre
Country Director, Chad and Cameroon: Director, Oil, Gas and Chemicals:
Serge Michailof Philippe LidtardlRashad Kaldany
Sector Manager, AFTGI: Manager, Oil, Gas and Chemicals:
Mark Tomlinson Maria da Graea Domingues
Task Team Leaders: Investment Officers:
Philippe Benoit, Michel Layec Shahbaz Mavaddat, Eric Siew
1
ProjectA ppraisalD ocument
Chad/CameroonP etroleumD evelopmenta nd PipelineP roject
Chad/Cameroon
PetroleumD evelopmenat ndP ipelineP roject
CONTENTS
A. ProjectD evelopmentO bjective.. ...................... 4
1. Project development objective
2. Key performance indicators
B.1 StrategicC ontext:C had. ....................... 4
1. Sector-related CAS goal supported by the project
2. Chad: Main economic and sector issues and Government strategy
3. Economic and sector issues to be addressed by the project and strategic choices
B.2 Strategic Context: Cameroon ....................... 8
1. Sector-related CAS goal supported by the project
2. Main economic and sector issues and Government strategy
3. Economic and sector issues to be addressed by the project and strategic choices
C. ProjectD escriptionS ummary.. ....................... 0
1. Project components
2. Key policy and institutional reforms supported by the project
3. Benefits and target population
4. Institutional and implementationa rrangements
5. Bond Issue and Shareholder Financing
6. IBRD Loans and Support Arrangements
7. Security and Support Arrangements for the IFC Loans
8. Cofinancing: EIB
D. ProjectR ationale. ....................... 18
1. Project alternatives considered and reasons for rejection
2. Major related projects financed by the Bank and/or other development agencies
3. Lessons learned and reflected in project design
4. Indications of Govemrnent commitment and ownership, and
of Private Sponsor commitment
5. Value added of Bank and IFC support in this project
E. Summary Project Analyses ......................... 23
1. Economic
2. Financial
3. Market and Offtake Arrangements
4. Technical
ii
ProjectA ppraisalD ocument
Chad/CameroonP etroleumD evelopmenta nd PipelineP roject
5. Institutional
6. Social
7. Environmentaal ssessment
8. Participatorya pproach
F. Sustainabilitya nd Risks. .................................................... 33
1. Sustainability
2. Critical risks
3. Possiblec ontroversiala spects
G. MainI BRD and IFC Loan Condition.s.. .................................................. 38
1. Board PresentationC onditions
2. Effectivenessc onditions
3. Other
4. Main Features of the ProposedI FC Loans
H. Readinessf or Implementatio.n.. ................................................... 40
I. Compliancew ith BankP olicies. .................................................... 40
Annexes
Annex 1. Project Design Summary. .................................................... 43
Part A. Chad
Part B. Cameroon
Annex 2. DetailedP roject Descriptiona nd Project Schedul.e. .................................................5 1
Annex 3. EstimatedP rojectC osts and FinancingP lan. .................................................... 57
Table 1. EstimatedP roject Costs
Table 2. Project Costs -- Allocation by Country
Table 3. EstimatedP roject FinancingP lan
Table 4. EstimatedG overnmentF inancingP lan
Table 5. GovernmenBt orrowing
Annex4 . EconomicA nalysisS ummary. .................................................... 61
Annex5 . FinancialS ummary. .................................................... 79
Annex 6. Procurementa nd DisbursemenAt rrangements.. ................................................... 81
Table A. Project Costs by ProcurementA rrangements
Table B. Thresholdsf or ProcurementM ethodsa nd Prior Review
Table C. Allocationo f Loan Proceeds
Annex7 . Project ProcessingB udgeta nd Schedule. ............................... ..................... 83
Annex 8. Documentsi n the IBRD ProjectF ile .................... ................................. 85
Annex 9. Status of Bank Group Operations.. ............... .................................... 87
Part Al. Chad: Loans and Credits
Part A2. Chad: IFC Portfolio
Part B 1. Cameroon: Loansa nd Credits
Part B2. Cameroon: IFC Portfolio
iii
ProjectA ppraisaDl ocument
Chad/CamerooPne troleumD evelopmenatn d PipelineP roject
Annex 10. Countrya t a Glance:. ................................................................. 91
Part A. Chad
Part B. Cameroon
Annex 11. PetroleumR evenueM anagemenPt rogram( Chad).. .................................................9 5
Part A. Summary
Part B. Law on RevenueM anagement
Part C. Annext o Loan Agreemento n PetroleumR evenueM anagemenPt rogram
Part D. Lettero n RevenueM anagement
Annex 12. CorporateS tructurea nd FinancingP lan Diagrams.. ..............................................1. 31
Diagram 1: Project CorporateS tructure
Diagram2 : ProposedF inancingP lan
Diagram3 : Exxon,P etronasa nd ChevronC orporateS tructures
Annex 13. ContractualF ramework.. ................................................................ 135
Annex 14. Summaryo f EnvironmentaAl ssessmentsa nd
MitigationP lans (Chada nd Cameroon.). ........................................................1. 39
Annex 15 Summaryo f Compensationa nd
ResettlemenPt lans( Chad and Cameroon.). .....................................................1. 55
Part A. Chad
Part B. Cameroon
Annex 16 Summaryo f IndigenousP eoplesP lan (Cameroon). ...............................................1 63
Annex 17 ConsultationS ummary( Chada nd Cameroon).. ....................................................1. 67
Annex 18 ParallelS upportP rojects: SummaryD escription.s. ...............................................1 73
Part A. ChadP etroleumS ectorM anagemenCt apacityB uildingP roject (IDA Credit)
Part B. Chad Managemenot f the PetroleumE conomyP roject (IDA Credit)
Part C. CameroonP etroleumE nvironmenCt apacityE nhancemenPt roject (IDA Credit)
Maps IBRD 30058, 30092 and 30787. ................................................................. 177
- Project Facilities
- International Waterways
- Cameroon National Park Offsets
iv
Project AppraisalD ocument
Chad/CameroonP etroleumD evelopmenta nd PipelineP roject
Chad/Cameroon
PetroleumD evelopmenatn d PipelineP roject
Project Appraisal Document
World Bank: Africa RegionalO ffice,A FC07
IFC: Oil, Gas and ChemicalsD epartment
Date: April 13, 2000 [] Draft [X] Final
World Bank
Task Team Leaders: PhilippeB enoit,M ichel Layec
CountryD irector: Serge Michailof Sector Manager:M ark Tomlinson
ProjectI D: TD-PE-44305 Sector: Energy Program Objective Category: Environmentally
CM-PE-51059 SustainableD evelopment
LendingI nstrument: SpecificI nvestmentL oan Programo f TargetedI ntervention: [ ] Yes [X] No
A. Chad
ProjectF inancingD ata [X] Loan [ ] Credit [ ] Guarantee [ ] Other [Specify]
For Loans/Credits/Others
Amount( US$m /SDRm): IBRD Loan of US$ 39.5 million
ProposedT erms: [ ] Multicurrency [X] Singlec urrency
Gracep eriod (years): 5 [ ] StandardV ariable [ ] Fixed [X] LIBOR-based
Years to maturity: 13 years
Commitmenfte e: 3/4%
Servicec harge: 0%
Front-EndF ee: 1%
B. Cameroon
ProjectF inancingD ata [X] Loan [ ] Credit [ ] Guarantee [ ] Other [Specify]
For Loans/Credits/Others
Amount (US$ m/SDRm): IBRD Loan of US$ 53.4 million
ProposedT erms: [1 Multicurrency [XI Fixed Spread
Gracep eriod (years): 5 [ ] StandardV ariable [X] Fixed [ ] LIBOR-based
Years to maturity: 15 years
Commitmenfte e: 3/4%
Servicec harge: 0%
Front-EndF ee: 1% Loan includesU S$ 5.34 millionp remium( see SectionC .6)
Total Chad and Cameroon: IBRD Loans of US$ 92.9 million
IFC
InvestmentO fficers: ShahbazM avaddat,E ric Siew
Director: PhilippeL ietard/RashadK aldany Sector Manager: Maria da Graca Domingues
Project ID: 4338 Sector: Oil, Gas and Chemicals
Borrowers: Cameroon Oil Transportation Company and Tchad Oil Transportation Company
A-Loan: US$ 100 million
B-Loan: up to US$ 300 million
2
ProjecAt ppraisaDl ocument
Chad!CamerooPne troleumD evelopmenatn d PipelineP roject
Financingp lan (US$m illion):U S$3,723.9m illion( seea lso diagrami n Annex 12)
Private Sponsors'E quity 2,206.4 59.2
(Exxon4 0% Petronas3 5% Chevron2 5%)
- -
Expor, i-:.. t-.:.:-: -C--..:.'.:.':..r''.'.'E.e..E RdtLi itA gencies/Commerci.aB.la t....ti.!.'n V...L..!.Ek. . .' ':' s 600.0 16.1
E 4iiiiiigg.i . ..iE.i 2giiiiZii[ .i................i iggii
CapitalM arketsB ond Issue 400.0 10.7
:T 2 B-oa 3:: ; 8;, 1tt; l;; ;;;; ; ;4t;t00.00
-I(cid:21) :D: Ca*eroon Equity* 4::3 tgt.g5 N 1.S;2 00:.::, ,,,,,,,::AS,:A,:;,:, :,,,;,, ,, ,,
I.: .. ChadlEquity* 32.5::-..0.9-
EIB: CarneroonE quity* 26.5 0.7
EIB: Chad Equity* 15.0 0.4
Total 3,723.9** 100.0
* Does not includei nterest duringc onstructiono r other loan charges. Breakdowno f IBRD and EIB loanst o Chad and Cameroons et
out in Ann-3 e-xi 3, Tiaf b-SliiieS-i 5 . ;' > ........................................................................................... ' > >'
** Portion of equity financing from Private Sponsorsa nd Governmentst o be provided as subordinated loans and other forms of
Prqivuaastie e Sqpuiotyn.s Tohres 's Eouqrucnesio tfy f1u5n1ds4c 1o0ve0r costs from2 000 onwardsa nd5 e5x.c ludec osts4 a7lr eady1b 9o1rn 2e 6(p8r5in.8c0i. p allyb y Private Spon8s5o9rs.)2
(Ebxexfoorne a4n0d% in c-ludPientgr 1o9n9a9s. T3h5e% pCr oe-rjenc2t %costs do not include costs of about US$ 43 million incurred for drilling wells after 2005
(utl20) prxmtl 5% of project costs are LocalC ostsa nd9 5% are ForeignC osts
GovernmenPt roject Costs is estimateda s follows( US$ million- - see Annex 3,T ables 4 and 5 for more details):
Chrevroon 70053.%80)*9.
Chad 34.0 5.0 13.5 11.0 47.5 5.9
--
Carneroon 70.0 10.3 70.0 8.7
-- --
TotalE quity: 1,5 21.4 100.0 679.9 100.0 122. 6 100.0 802.5 100.0
Debt:
ECAs/CoprnrerciaBl anks 514.7 42.9 85.3 42.9 600.0 42.9
Capital Markets Bond Issue 343.1 28.6 56.9 28.5 400.0 28.6
IFCA L oan 85.8 7.2 14.2 7.1 100.0 7.1
IFCB .Loan . .257.3 21.5 42.7 21.4 300.0 21.4
Total Debt: 1,2 00.9 100.0 199.1 100.0 1,400.0 100.0
Grand Total 1,521.4 l1,880.8 321.7
___2,202.5 ____
* Portiono f equity financingf romP rivate Sponsorsa nd Governmnenttos be provideda s subordinatedl oans and other formso f quasi
equity.
3
ProjecAt ppraisaDl ocument
Chad/CamerooPne troleumD evelopmenatn dP ipelineP roject
Borrowers: Republico f Chad; Republico f Cameroon
ResponsibleA gencies:
Export System: Cameroon Oil Transportation Company (COTCO); Tchad Oil Transportation Company
(TOTCO)
Field System: Esso Explorationa nd ProductionC had, Inc. (Esso Chad) See below
--
Chad:* Annual 6.00 7.50 9.50 11.00 2.00
Cumulative 6.00 13.50 23.00 34.00 36.00
Cameroon: Annual 7.80 10.80 15.60 17.20 2.00
Cumulative 7.80 18.60 34.20 51.40 53.40
Total (Chad/Cameroon) Annual 13.80 18.30 25.10 28.20 4.00
Cumulative 13.80 32.10 57.20 85.40 89.40
* Assumest hat US$ 3.5 million in unallocatedf imdsp rovidedt o Chadr emain undisbursed( see Annex 3, table 5)
Expectede ffectivenessd ate: September3 0, 2000 Closingd ate: June 30, 2005
4
Project AppraisalD ocument
ChadlCameroonP etroleumD evelopmenta nd PipelineP roject
A. PROJECT DEVELOPMENT OBJECTIVE
1. Project development objective (see Annex 1)
The development objectives of the project are, through environmentally and socially sound private
investment in the petroleum sector:
* to increase Chad Government expenditures on poverty alleviation activities; and
* to increase Cameroon fiscal revenues available for financing priority development expenditures,
in the context of the Government's strategy for economic growth and poverty reduction.
2. Key performance indicators (see Annex 1)
The key performance indicators are: (a) an increase in Chad of at least US$ 40 million per year in
petroleum-financed budgetary expenditures on education, health, infrastructure, rural development and
the environment and water resources in FY2005-2009; and (b) an increase in Cameroon of at least
US$ 40 rnillion per year in FY2005-2007 in petroleum-generated revenues available to finance priority
development expenditures.
B.1 STRATEGIC CONTEXT: CHAD
1. Country Assistance Strategy (CAS) goal supported by the project
CAS document number: 15287 - CD Date of latest CAS discussion: February 15, 1996
New CAS document: 19365-CD Date of upcoming CAS discussion: May 2000
Chad's central development objective is to reduce poverty by accelerating sustainable economic growth
and increasing expenditures targeted at poverty alleviation, especially for health, education, infrastructure
and rural development. The Bank's assistance strategy supports this objective by promoting an economic
environment conducive to private sector development, catalyzing private investment to increase domestic
revenues to finance expenditures in sectors essential for poverty reduction. Chad joined IFC in April
1998, in anticipation of IFC financing for the pipeline. Under Extending IFC's Reach initiative, the
Corporation is exploring small investments in tourism and manufacturing as part of its efforts to support
small and medium-sized enterprise development. The proposed project supports these Group efforts,
using the country's oil resources as the engine of Chad's economic program. In particular, oil revenues
would generate additional funding for the poverty reduction sectors. The project also fits well with Bank
Group's strategy of stimulating private sector-led growth by playing a leading role in attracting
significant foreign direct investment to Chad.
2. Main economic and sector issues and Government strategy
a. Economic issues:
Chad is among the least developed and poorest countries in the world. It was ranked 163rd among 174
countries surveyed in the United Nations Development Programme's 1998 Human Development Report.
Key poverty indicators -- income, living conditions, food security, access to basic health care and
education, life expectancy and infant mortality rates -- are well below sub-Saharan Africa averages.
Chad's underdevelopment and poverty can be traced to a large extent to a difficult climate, its landlocked
position, extended periods of civil strife, and Government policies that until recently have not been
conducive to development.