CHAD-CAMEROON PIPELINE PROJECT: OVERVIEW OF HUMAN

UNCLAS NDJAMENA 001356

SIPDIS


SENSITIVE

DEPARTMENT FOR AF/C, G, DRL, INR; LONDON AND PARIS FOR
AFRICA WATCHERS, TREASURY FOR OTA, ENERGY FOR GPERSON AND
CGAY

E.O. 12958: N/A
TAGS: ECON EFIN ENRG EPET PGOV PHUM CD
SUBJECT: CHAD-CAMEROON PIPELINE PROJECT: OVERVIEW OF HUMAN
RIGHTS ISSUES IN CHAD

REF: A. NDJAMENA 1227

B. NDJAMENA 1151

C. NDJAMENA 1150

D. NDJAMENA 910

E. NJDAMENA 901

F. NDJAMENA 867

G. NDJAMENA 866

H. NDJAMENA 454

I. NDJAMENA 661

J. NDJAMENA 550

K. NDJAMENA 402

L. NDJAMENA 72

M. NDJAMENA 53


1. (SBU) Summary: With oil flowing, the Chad-Cameroon
pipeline project and the conventions that govern it are now
being tested. Human rights groups in Chad and their
international partners continue to monitor and raise
compensation, environmental, social, and security issues.
While recognizing that there is room for improvement on all
fronts, we believe that the pipeline project in Chad has
avoided the widespread corruption, environmental damage,
social conflict, and security force abuses experienced in
neighboring African oil producers. It must be emphasized
that local perceptions (for good or for ill) are formed in
the absence of an effective judicial system or contract
enforcement mechanisms which could provide a common basis for
understanding whether the parties (the oil consortium and the
Government of Chad) are abiding by their obligations. As a
result of these factors, the oil company, rather than the
Government bears the brunt of the criticism and demands.
Given the newness of the project, the dynamics of the
relationships among the consortium, human rights groups,
local residents, and government are still developing. End
Summary.

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BACKGROUND
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2. (SBU) Human rights groups in Chad and their
international partners continue to monitor and raise
compensation, environmental, social, and security issues
related to the Chad-Cameroon pipeline project. This
assessment of the criticisms of the project has been derived
from Embassy, Department of Energy, and OPIC personnel visits
to the oil-producing region, regular contact with human
rights groups and the Oil Revenue Management College,
meetings with visiting members of international
non-governmental organizations, and from meetings with
government and oil company officials over the past year.


3. (SBU) As previously reported, the Esso-led consortium
(with partners Chevron and Petronas) has a relatively small
footprint in Chad. Esso has taken steps to learn from the
volatile situation in the Niger Delta in Nigeria, where oil
companies become the primary provider of key government
services and corrupt local government officials and chiefs
abscond with funds meant for local communities. In Chad, the
conventions governing the pipeline were designed to avoid
many of the problems faced elsewhere in Africa and resulted
from extensive consultations with civil sociey and local
communities.


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COMPENSATION PACKAGES
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4. (SBU) Displacement of families and compensation packages
are (and will be) a continuing source of criticism of the
pipeline project for human rights groups. In Chad, three
hundred families were displaced due to pipeline construction.
They were given a number of options for relocation and the
consortium reconstructed their houses and paid them for their
land. During the individual compensation phase of the
project, market value was determined and Esso paid each
family in the presence of local officials and traditional


leaders. Each family selected its package and signed for it.
Their photographs were taken accepting the packages. After
the project's construction was completed, Esso allowed the
families to return to the area and farm the land for which
they have been compensated as long as they do not damage the
property. Problems are now arising from individuals who
claim their were never paid or not paid enough. We
understand that some of this is being instigated by local
chiefs, who are trying to collect ten percent from the
packages paid to the individuals. Furthermore, many
international NGOs are encouraging locals to demand
compensation based on the number of trees cut down for
construction. However, this would mean that the local
residents would receive less money for their property,
according to a comparison with the current compensation
packages.

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ENVIRONMENTAL ISSUES
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5. (SBU) The key environmental problem in the region is
dust pollution. Respiratory ailments are prevalent, largely
the result of the increased truck traffic on laterite roads.
Local government officials raise this negative aspect of the
project frequently. The consortium paved a few roads, but
uses molasses and water to keep down the dust. Molasses
actually forms a hard surface, but must be replaced after the
rains and its availability varies. Initially, the consortium
avoided settled areas and conducted extensive public
consultations at which the local population insisted that
some road be built through populated areas. In places where
Esso avoided villages, many individuals moved alongside them
despite being warned repeatedly about the dust. Esso built
roads to "Chad standards", which means laterite. The bottom
line is that the local population wants all the roads to be
paved with asphalt in the area. The consortium maintains
this is a function of government and should be put forward as
a desired use of the oil revenues.


6. (SBU) Human rights groups complain about ground water
quality. The World Health Organization reports a high level
of iron in the soil and water content that pre-existed the
pipeline project. When local communities selected well
projects as part of their compensation, they were confronted
with the iron content of the water. Esso would like to
explore the option of creating a reservoir for the high
volume of ground water being pumped from the wells, which can
then be treated for distribution. However, Esso is not
currently pursuing this option because it fears opposition
and litigation from many quarters. In terms of its drilling
operations, the consortium meets U.S. standards for water
quality. Esso readily admits that gas flaring is an
unanticipated problem and it is seeking solutions. For now,
Esso uses most of the gas to power the gas turbines which run
the facilities, rather than diesel fuel. The air quality in
the area is monitored regularly and meets accepted standards.

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TRANSPARENCY ISSUES
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7. (SBU) Chad's unique revenue management system is working
as intended, for now, but showing some signs of strain. The
creation of the system was a direct response to situations in
other countries where oil revenues are mismanaged and poverty
rates are growing. The College du Control et Surveillence
des Resources Petrolieres (CCRSP) or "College" oversees the
expenditure of revenues in priority sectors (Agriculture,
Education, Environment, Health, and Infrastructure).
Representatives on the College include the Director of the
Central Bank, the Director of the Treasury, two members of
the National Assembly, a representative of the Supreme Court,
unions, human rights groups, religious groups, and
non-governmental organizations. The oil revenues began
flowing into the Government's escrow account in June 2004.
The College just issued a project verification report, which
outlines many problems with the completion of projects


(septel). The Government has yet to respond.

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HUMAN RIGHTS ABUSES
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8. (SBU) There have been no reports of human rights abuses
by security personnel assigned to Esso. A private security
company provides internal security for the project sites.
Guards at well sites are unarmed. There are 175 Chadian
gendarmes assigned to area. To date, the embassy has
received no reports of abuses committed against residents by
these gendarmes. Embassy personnel work closely with Esso on
security issues and has sent eight gendarmes associated with
the project to training in the U.S., which includes human
rights training. In addition, Chadians living near the
project receive additional compensation from Esso to perform
the functions of a "neighborhood watch" as a check against
vandalism.

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SOCIAL ISSUES
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9. (SBU) HIV/AIDS and child prostitution are the most-often
cited social issues in the project area. Esso supports a
non-governmental organization's efforts to raise awareness
and combat HIV/AIDS. HIV/AIDS was already a growing issue
prior to the pipeline construction due to the trucking routes
in the area and the proximity to the border with Cameroon.
However, as the project construction brought in more outside
labor and truckers, the prevalence of HIV/AIDS and
sexually-transmitted diseases increased as well. Esso
educates, monitors, and treats its workers for STDs and has
monitors the local communities. Esso funds health programs
in the area, including HIV/AIDS awareness and malaria
prevention. Another "side effect" of the pipeline is a
significant prostitution problem in the area, which has led
to an influx of girls from Cameroon and Central African
Republic between 15 and 17 years of age.


10. (SBU) Employment issues, such as numbers of Chadians
employed, salaries, and benefits, are highly charged and the
most common critique is that the consortium has not met the
needs of its employees. The Government, unions, and human
rights groups form an unlikely alliance on these issues.
However, it is clear that local communities surrounding the
project have benefited significantly from salaries and
benefits such as education, low-cost loans, and access to
low-cost medical treatment. The consortium also faces
criticism for paying their employees too much and creating
two economic classes of local residents, those that work for
the project and those that do not. It is clear that
increased salaries has had an inflationary impact on the
costs of many goods and services.


11. (SBU) Chad's powerful labor unions criticize the
consortium on a wide range of issues, including the decreased
need for labor now that the construction phase is over. In
preparation for the eventual cut-backs, Esso provided skills
training to its employees and vocational qualification
certificates for 1,700 employees. Complaints that workers
were not paid bonuses are common, but mostly unfounded. The
Government wants Esso to give contracts to local businesses
to provide services. A key problem remains a lack of local
businesses able to meet the needs of the consortium. An
interesting development is the number of "local businesses"
serviing the consorium which are owned by Government
officials. Esso is now facing court cases lodged aainst
sub-contractors who have not fulfilled ther contracts. The
courts, however,are too weak to withstand political pressure
from the Government and the unions to fairly arbitrate
complicated commercial cases.

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COMMENT
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E



12. (SBU) The overall benefits of the Chad-Cameroon
Pipeline Project for Chad need to be judged over the
long-term. The relationships of key players--the Government,
the consortium, human rights groups, and labor unions--are
still developing. While recognizing that there is room for
improvement on all fronts, we believe that the pipeline
project in Chad has avoided the widespread corruption,
environmental damage, social conflict, and security-force
abuses experienced in neighboring African oil producers.


13. (SBU) From our perspective, the key problem in Chad is
not the conventions, but the lack of a mechanism or an arena
in which these players can discuss, negotiate, and settle
problems and deal with the consequences of oil production and
the issues being raised by the human rights groups and local
communities. The Chadian judicial system is weak and
susceptible to outside influences. There is no recourse for
the public or for commercial enterprises to obtain justice or
address perceived or real inequities. As a result of these
factors, the oil company, rather than the Government bears
the brunt of the criticism and demands. The Chadian
Government, which does not always respect the conventions it
negotiated, allows this situation to continue because it
deflects responsibility for its failure to provide basic
services and rights to its citizens. The negotiation of
future agreements and conventions in the absence of
functioning judiciaries and good governance can be informed
from the types of problems and dynamics that have arisen in
Chad.
TAMLYN


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