The Chad-Cameroon Pipeline Project--Assessing the World Bank's Failed Experiment to Direct Oil Revenues towards the Poor

The World Bank's engagement with projects involving extractive industries has not proven particularly successful. Especially in Sub-Saharan Africa, it has actually often made matters worse. Borrower countries' economies failed to grow, and corruption increased; the poor did not benefit from the revenues that were generated. This paper assesses the complex legal and institutional framework of the World Bank project that many hoped would change this bleak record: in the highly publicized and controversial Chad-Cameroon Pipeline Project, the Bank catalyzed the largest private investment in the history of Sub-Saharan Africa. This model project featured new and untested contractual, statutory, institutional and fiscal mechanisms which were intended to make Chad's oil revenues transparent and compel the Government of Chad—one of the world's poorest—to expend its oil revenues on areas consistent with the project's agreed poverty reduction objective, such as education and health.

Despite these heroic measures, in 2008 the revenue allocation program collapsed, and the Bank's projects in Chad terminated prematurely. Not for the first time, the government of Chad had unilaterally altered the underlying laws to enable more security and military spending. Yet again, the poor had not profited from the oil revenues.

We analyse in this paper whether the Bank's failure in the Chad-Cameroon Pipeline Project was due to specific errors in the framework of contracts, laws and institutional structures the Bank deployed—errors which could, in theory, be taken as lessons for a future project making use of an improved revenue allocation system—or whether generally the Bank's entire concept of contractually imposing a revenue allocation system is flawed, such that any attempt to revive such a system on another occasion is misguided and futile.