Senate Hearing Critical of Camisea Pipeline
25 July 2006
Large energy projects under scrutiny on Capitol Hill.
It was in a packed Senate hearing room, full of government representatives, press, lobbyists, and expert witnesses that the crucial question was asked: Is the Camisea gas pipeline project in Peru living up to expectations?
A top US Treasury official provided one answer. “We are of the view Camisea has not been a success. It could have been better designed, and it could have been--working with the NGOs—it could have been probably better handled," Assistant Secretary of the US Treasury Clay Lowery told the Senate Foreign Relations Committee, explaining how Inter-American Development Bank (IDB) funds used in the project could have been better spent.
The Senate Foreign Relations Committee, led by Chairman Richard Lugar (R-Indiana), held the hearing to discuss the effectiveness of lending for energy projects by multilateral development banks. Among these projects are the World Bank’s financing of the Chad-Cameroon pipeline, as well as the Camisea gas pipeline that was partly funded with $75 million from the IDB.
In Peru, the Camisea pipeline, running from the rainforests of southeastern Peru to the coast, has had serious leaks on five occasions in the last two years, and local communities are concerned about pollution of the Urubamba River and reduced fish catches. In addition, the failure of natural gas revenues to “trickle down” directly to indigenous communities and others near the pipeline has contributed to the view by many inside and outside Peru that the project has so far failed in its development objectives.
The Chad-Cameroon pipeline project, which included the establishment of a special bank account to funnel revenues into development projects, is also on the skids. Chad went back on the deal with the World Bank and started using some oil money to arm its military to fight off a rebellion. The World Bank suspended loans to Chad earlier in 2006 but has resumed lending following an agreement which gives the government much more leeway in how it spends its oil windfall.
Carlos Herrera Descalzi, a former Minister of Energy and Mines in Peru, provided expert witness testimony on the disappointment of local communities: “The feeling of the people is that they are not being reached by the benefits of Camisea. They consider that the promises were too much, and what they really received is too few.”
The Senate Foreign Relations Committee hearing was held as the Inter-American Development Bank and the Export-Import Bank, both of which use some US taxpayer funds to support development projects, are expecting requests for funding for a second phase of the Camisea project sometime in the second half of 2006.
Oxfam America staff in Peru and Washington have been in close contact with US government officials for several years, providing information from our partners on project impacts and have facilitated discussions between representatives of indigenous communities in the Camisea region and key policy makers in Washington.
“It is unusual for the Senate Foreign Relations Committee to put a spotlight on projects like Camisea and Chad-Cameroon,” said Oxfam America’s policy advisor Ian Gary after the hearing. “Comments from the US Treasury send a powerful signal about how closely the government will scrutinize any funding decisions by the IDB or the US Export-Import Bank for the second phase of Camisea.”
