Project Appraisal Document - Documents & Reports - World Bank PDF
Preview Project Appraisal Document - Documents & Reports - World Bank
dd ee zz riri oo hh utut AA re re Documento f uu ss The World Bank and International Finance Corporation oo clcl ss DiDi c c blibli uu PP Report No: 19343 AFR PROJECT APPRAISAL DOCUMENT dd ee ON PROPOSED zz riri oo hh utut INTERNATIONALB ANK FOR RECONSTRUCTION AND DEVELOPMENT AA e e urur LOANS IN AMOUNTS OF ss oo clcl DisDis US$ 39.5 MILLION TO THE REPUBLIC OF CHAD c c ubliubli AND PP US$ 53.4 MILLION TO THE REPUBLIC OF CAMEROON dd ee AND zz riri oo hh utut ON PROPOSED AA e e rr uu INTERNATIONALF INANCE CORPORATION ss oo clcl ss DiDi LOANS IN AMOUNTSO F US$ 100 MILLION IN A-LOANS c c blibli uu AND UP TO US$ 300 MILLION IN B-LOANS PP TO THE TCHAD OIL TRANSPORTATIONC OMPANY, S.A. AND dd ee zz CAMEROON OIL TRANSPORTATIONC OMPANY, S.A. riri oo hh utut AA FOR A e e rr uu ss PETROLEUM DEVELOPMENTA ND PIPELINE PROJECT oo clcl ss DiDi April 13, 2000 c c blibli uu PP 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.
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