Project proponents claim that the revenues from the oil production and transit fees will feed government coffers and can then be used to address broader development needs. However, there is no system in place within the project to ensure that this will happen. In addition, the construction of the pipeline had an adverse effect on women and minorities in the affected countries. (For more information go to reports on oil projects’ impact on gender inequality and Kurdish villages in Turkey). During the early stages of planning and construction a number of local and international NGOs were calling on the IFC and EBRD to refrain from funding the BTC pipeline project until a number of political, social, developmental, and security concerns were adequately resolved. Among the initial unresolved issues were questions of transparency, corruption, the uncertain impact of the Host Government Agreements on the affected countries’ further development, and the pipeline’s environmental, health, and social impacts.
Despite various legal challenges to the project and corruption claims against SOCAR, in November 2003, the IFC and the EBRD each approved financing of the project in the amount of a direct loan to BTC Co. for USD 125 million and another USD 125 million in commercial bank syndication for a total of USD 500 million.
Local and international NGOs are focusing on monitoring the implementation of the project and its adherence to the policies of the institutions and to international standards. Major transparency victories came about when the Caspian Development Advisory Panel (CDAP), British Petroleum’s independent advisory panel, requested that BP report BTC payment data. Another positive development was the disclosure of the Production Sharing Agreement (PSA) and Host Government Agreements (HGAs) at the request of the IFC.
However, social and environmental concerns remain even after the pipeline’s opening. In its 2007 Sustainability Report, the EBRD highlighted the BTC project. It noted continuing issues, including waste management, local infrastructure not meeting project standards, resettlement and compensation grievances, community development program challenges, and land reinstatement in Georgia and Azerbaijan. In many ways, Georgia appears to be most adversely affected by the BTC pipeline. Its residents and NGOs are responsible for 31 of the 34 complaints to the Office of the Compliance Advisor/Ombudsman (CAO). Although CAO staff visited Georgia on a few occasions, civil society actors have not found the CAO responsive. Georgian residents have filed complaints to the CAO, seeking compensation to damage to their homes and livelihoods, but the CAO has repeatedly rejected complaints or claimed a lack of evidence to connect damage to the BTC pipeline. Accordingly, villagers and civil society have been subjected to constant frustration and have seen their grievances largely unaddressed.
Due to the volume of complaints, CAO recommendations included an independent review of grievance mechanisms and an appeals mechanism in Georgia. One of the open complaints alleges BTC Company has not followed through with promises to monitor the effects of the pipeline on land quality. The other, filed in February 2008, deals with land rights.
Residents in Georgia have also filed complaints with the EBRD’s Independent Recourse Mechanism (IRM), alleging that they were denied compensation for damages. After a complaint in 2007, BTC Company refused to participate in a problem-solving initiative, despite recommendations by the IRM, due to fears the initiative could harm the company’s position in a pending civil suit case.
CAO BTC Pipeline (CAO website)
BTC Pipeline Summary of Complaints, CAO, March 27, 2008 (CAO website, Acrobat pdf)
IRM Annual Report for 2007, Independent Recourse Mechanism, 2007 (EBRD website, Acrobat pdf 0.2 MB)
EBRD Sustainability Report 2007, EBRD, July 2008 (EBRD website, Acrobat pdf)
BTC Pipeline finally opens, 2005 (Platform website)
Caspian Development Advisory Panel website