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The Chad-Cameroon Petroleum Development and Pipeline Project

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by

Mah S.

on 21 November 2013

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Transcript of The Chad-Cameroon Petroleum Development and Pipeline Project

The Chad-Cameroon Petroleum Development and Pipeline Project
OVERVIEW OF THE PROJECT
Oil discovered in the 70’s

Oil consortium

Public and private partnership

Revenue Management Plan (RMP)
Outline
Overview of the project
The Main actors involved

Financing structure of the project

Fairness of the deal

Pros and Cons

Conclusion and Aftermaths
THE MAIN ACTORS INVOLVED
Chad
Oppression
Poverty
Human rights abuse
Civil unrest

Cameroon
Decade long recession
Corruption and Human right abuse
Reform programs

The World Bank
The lender of last resort
International Finance Corporation
WB’s implication in the project
THE PROJECT'S FINANCIAL REQUIREMENTS
THE PRIVATE SIDE needs the World Bank’s involvement.

The World Bank funds projects, not companies.

SOLUTION: Exxon Mobil designs a project for the DEAL
Special-purpose vehicle

Limited recourse debt (off-balance sheet financing).

Access to more fund sources

Higher leverage ratio

REDUCED Sovereign risk

Lower project risk (political, financial, social and credit) AND reduced borrowing costs.
FAIRNESS OF THE DEAL
Financial revenues distribution : Private vs Public

Environmental costs

social benefits
PROs
The WB and its mission

The project enhanced transparency and preparation process

Reduces poverty in both countries

Reduces misuse of revenues

Prevents the involvement of neighboring countries
CONs
Failure of past projects

Governments’ lack of commitment

Negative impacts on the environment and on local people

The limitations of the RMP

CONCLUSION AND AFTERMATHS
THE RMP FAILED

THE WB WITHDREW THEIR FUNDS

The Chad government repeatedly violateD the project agreement

ENVIRONMENTAL IMPACTS

Backlash from the NGOs

Exxon Mobil continueS to operate the oil facility based on market conditions for the foreseeable future.
PROJECT FINANCE
THANK YOU!
Full transcript