IDB Funds Approved for Camisea Pipeline
Social, Environmental Standards Tightened, Challenges Remain
The Inter-American Development Bank voted today to approve $135 million in loan funds for the private consortium in charge of construction of the Camisea Gas Pipeline in Peru.
This controversial project consists of two pipelines that will transport natural gas from the Amazon region of eastern Peru to the coast, where it will be processed and exported, and used to generate power. The government of Peru expects the project will make the country a net exporter of energy and add 0.8% to its GDP growth for each year of the project's life.
The pipeline threatens the environment and indigenous people in the project area. Water pollution, deforestation, erosion, and health crises from contact between isolated peoples and outsiders are all significant dangers. Oxfam America has supported Peruvian organizations advocating for better social and environmental standards, and for the independent monitoring of the project. The agency also joined with these groups to call on the IDB to delay funding for the project until these loan conditions were established.
After delays in consideration of the loan request, the funds were approved on September 10, 2003. Under this decision, the IDB has committed itself to continuous monitoring of the consortium companies with the new conditions imposed. These conditions include greater and stricter environmental and social controls, the development of further environmental evaluations and baseline data, and immediate public disclosure of environmental impacts as well as of the companies' progress in achieving the conditions laid out in the loan agreement. The loan conditions also mandate a clear role for civil society organizations and local communities in monitoring the entire project, a significant improvement over the current situation. Such conditions are unprecedented at the IDB.
According to Martin Scurrah, the Regional Director of Oxfam America's South America program, "Oxfam America and its partners and allies lobbied vigorously, not to oppose the project—which is important for the country's energy security and will provide a less contaminating energy source—but to ensure that it is carried out with respect for the environment and the affected communities."
The advocacy process around this loan has been by far the greatest mobilization to date of civil society around an IDB decision. It involved a coalition of over 20 civil society organizations in Peru, including a group of Oxfam America partners. These groups and their allies amongst NGOs in the US obliged the IDB and the US Government to respond to their criticisms and proposals about the project. This led to the postponement on the IDB's decision at the end of July. Many of the well-founded arguments of civil society groups pointed to deficient environmental impact assessment and problems with the process of site selection for the gas processing plant on the coast. The inability of the government and the consortia to refute these arguments led to the refusal of a loan by the US Export-Import Bank.
The US representative to the IDB, José Fourquet, abstained from the IDB vote on environmental grounds and cited future changes needed in policies at the Bank. According to an article in the Financial Times on September 10th, 2003, Fourquet said, "Looking ahead, this project highlights the pressing need for the IDB to establish a policy to improve consultation with and address the needs of indigenous peoples. We want to work with the IDB on the application of its environmental oversight to facilities that are closely related to projects being funded."
Several concerns remain about the Camisea Project. One specific area in need of attention: An independent environmental audit should be immediately carried out in the Urubamba region to identify the impacts of the pipeline path on forest and aquatic ecosystems. This should lead to the design and implementation of immediate measures for restoration and erosion controls before the next rainy season begins in November.
Concerns voiced by indigenous communities regarding severe erosion and the disappearance of fish populations from the rivers have now been corroborated by professional monitoring reports. The URS Company, a consulting firm hired by the US Export-Import Bank, and Global Village Engineers, have reported uncontrolled erosion, "woefully inadequate" impact mitigation measures, and potentially irreversible damage to rivers, streams and fish populations upon which more that 10,000 Machiguenga indigenous people depend for their food security. This damage must begin to be redressed and contained before the arrival of the new rains, which could wash away the rest of the exposed topsoil left along the pipeline route.
The Government of Peru lobbied energetically in favor of the companies and has consistently refused to engage with civil society on the issues related to the project. It has described the IDB decision as an endorsement of its environmental policies. However a close reading of the conditions imposed by the IDB indicates the policies and practices of the Government of Peru and the companies will have to be substantially improved. Civil society will need to continue to organize in order to ensure compliance with the obligations agreed to by the Government and companies. It's clear that this funding decision represents an important and unprecedented change in the Bank's policies and procedures.
It remains to be seen if the IDB will provide the level of oversight this project needs. Approval of IDB funding for this project brings with it a heavy responsibility, and the IDB and project companies must engage in serious dialogue with Peruvian civil society to develop the necessary measures to fully protect the indigenous peoples and biodiversity of the Camisea area.
More Information on the Camisea Gas Field and Pipeline Project
Camisea Gas Field and Pipeline Project
Camisea Gas Field and Pipeline: Project Dangers
Report: An Independent Environmental and Social Assessment of the Camisea Gas Project. The report is available in both English (PDF, 312KB) and Spanish (PDF, 323KB).