A consortium of private companies led by Chevron is financing the development of a 680 kilometer gas pipeline linking gas from fields in Nigeria to markets in Benin, Togo, and Ghana, at an estimated cost of $500 million. The World Bank Group funded initial feasibility studies for the pipeline in 1992 and in November 2004 agreed to provide a partial risk guarantee of $50 million through the International Development Association (IDA) and an additional $75 million political risk guarantee from its private insurance arm, the Multilateral Investment Guarantee Agency (MIGA). The US Agency for International Development (USAID) contributed over $1.5 million to assist in the development of fiscal and regulatory regimes and contracts between the host governments and the consortium of private investors, and the Overseas Private Investment Corporation (OPIC) agreed in February 2005 to provide $45 million for additional political risk insurance. The European Investment Bank (EIB) is expected to decide in December 2006 whether to invest €70 million (approximately $87 million) in the pipeline, while the US Export-Import Bank has also expressed interest in the project. With this support, the project’s corporate and national sponsors began construction of the pipeline in 2004. WAGP is scheduled to be completed and gas flowing through the pipeline in early 2007, after being delayed by the crisis in Nigeria's turbulent Niger Delta region, which was anticipated by community groups even before the project got started. The project has also become the subject of a claim to the World Bank Inspection Panel by affected communities in Nigeria, who have cited, among other issues, the inadequacy of the environmental impact assessment, lack of public consultation, and failure to demonstrate how the project will contribute to significant gas flaring reduction or benefits to communities promised by investors.
Civil Society Concerns
Civil society organizations in the WAGP region have criticized the World Bank Group's decision to finance the project given the ongoing violence and instability in Nigeria’s Niger Delta and the absence of a viable plan to end gas flaring. In addition to this fundamental concern, local organizations have highlighted problems with the design of the pipeline and the manner in which the project is being implemented.
Non-governmental organizations argue that project sponsors have failed to substantiate claims that WAGP will reduce gas flaring in the Niger Delta or to provide information on the project’s development benefits for local communities. Despite repeated assertions that the project will contribute to positive environmental improvements on both the upstream and downstream ends of the pipeline, neither the private sponsors of the project nor its financiers have disclosed sufficient details about where the gas for WAGP will come from, how much gas flaring will be reduced and who will benefit from the gas supplied.
NGOs in the project region have expressed concerns about:
- the absence of information and meaningful consultation with affected communities to date;
- the failure to perform a comprehensive environmental impact assessment reflecting impacts associated with upstream portions of the project (including the extraction of gas and the use of an existing pipeline) and induced developments in the Niger Delta, as well as the impacts of the industrial activities of WAGP energy consumers in Ghana;
- the risk of exacerbating crises over resource ownership and control in the Niger Delta;
- the possibility of gas leaks and potential explosions; and
- the project’s disproportionate benefit to the industrial and commercial sectors rather than the populations of participating countries.
U.S. Interest
The West Africa Gas Pipeline is mentioned in the Bush Energy Plan, not only as an investment spearheaded by a US company (Chevron), but as a potential source of natural gas imports: “[USAID] has provided technical assistance in support of a West Africa Power Pool and associated pipeline project involving a number of U.S. oil companies, and is providing assistance for the creation of a regional regulatory framework that will enable Ghana and Nigeria to become major exporters of natural gas and electricity.” The plan also indicates US Export-Import Bank participation in financing the project. (“Reliable, Affordable, and Environmentally Sound Energy for America’s Future.”, Report of the National Energy Policy Development Group, May 2001.)