World Bank to be more selective in oil, gas loansPublished by MAC on 2004-06-18
Friday June 18 2004
By Lesley Wroughton, Reuters
Washington - The World Bank will continue funding oil, coal and mining projects, but will be more selective, it said on Friday in response to a review that recommended it phase out support for such projects.
"Our future investments in extractive industries will be more selective, with greater focus on the needs of poor people and a stronger emphasis on good governance and on promoting environmentally and socially sustainable development," the bank said in an executive summary of its response obtained by Reuters.
World Bank President James Wolfensohn commissioned the independent review of the bank's activities in oil, gas and mining projects in 2000, following concerns by environmental and human rights groups that its participation in the sector contributed to poverty instead of alleviated it.
Led by Emil Salim, Indonesia's former environment minister, the review recommended the bank radically change its approach to funding such projects and even stop supporting some.
In the past year, World Bank affiliates have helped fund two major private sector oil projects in developing countries -- the Chad-Cameroon and the Baku-Tblisi-Ceyhan pipelines -- which both help carry crude thousands of kilometers overland to the coast.
Bank directors met earlier this week to discuss its official response to the review following three months of consultations with governments, industry and non-governmental groups.
The bank said it would dramatically increase its support for more environmentally friendly renewable energies and clean energy sources.
It said its participation in oil, gas and mining projects is expected to remain relatively small at less than 5 percent of its total lending per year.
The bank said the impact of its involvement in such projects would mean greater environmental and social standards.
"By staying engaged on a selective basis, we can have an influential role in ensuring that the best environmental and social practices are followed and that the goal of sustainable poverty reduction is achieved," it said.
The institution said oil, gas and mining for many developing countries were important assets that will have to play a role if their governments are to reach global poverty targets.
Salim said in comments published earlier this week he expected the bank's response to represent the interests of the world's poor and "to inspire governments, industry and civil organizations to pave the path for sustainable development".
Based on the review, he said the bank was not paying enough attention to good governance and transparent institutions in resource-rich countries to ensure private investments benefited the poor.
Environmental groups said the bank's response lacked clarity and ignored the recommendation to get out of oil and coal.
"The World Bank's response is fuzzy and lacks clarity," said Jon Sohn, campaign director for Friends of the Earth.
"Judging from past bank behavior, unless implementation is absolute, binding and subject to public input, a historic opportunity to alleviate poverty will be missed," he added.