2 February 2007
The World Bank recently released its annual report on Bank Management’s progress in implementing the recommendations laid out in the 2003 Extractive Industries Review (EIR).
The EIR was a three-year, independent evaluation of World Bank Group support for the oil, gas and mineral sectors. Its final report presented a series of recommendations, including that the World Bank Group should not support EI investment in countries where pro-poor governance is inadequate.
The World Bank Group’s Management responded to the EIR in 2004 by proposing modifications to its EI operations and related policies. Its modest reform commitments were grouped under the headings of governance, revenue and contract transparency, information disclosure, environmental and social impacts, and poverty alleviation.
Some findings and reactions:
- World Bank Group EI operations have increased substantially – between 37%-44%. The report under-reports this figure by 4-7%.
- The IFC’s private sector EI portfolio for FY06 ($508.9 m) has increased at least 52% over FY05 ($334.3m). This fact is not disclosed in the report. The figure jumps to 60% if the overlooked Alliance Oil project is included. The World Bank EI increase is equal to 37%.
- IFC oil projects receive the largest share of EI investment. Oil projects represent 47% of the IFC’s EI projects; gas 37%; and mining 16%. The major share of World Bank investment was for gas infrastructure and MIGA’s only EI project guarantee was for mining (US$ 110 m).
- The report still does not provide any tracking of management response (MR) commitments across projects – not project-by-project or aggregate project results for each MR commitment. The report only includes selected project-level information on selected EIR related issues. The report also lacks updated information on implementation.
- The report fails to provide trends based on indicators outlined in the EIR, such as poverty reduction, economic diversification, or improved social and environmental conditions/programs.
- The report fails to provide significant project or country-level results, and lacks information on critical issues such as contribution to PRSP goals, poverty reduction, consideration of alternatives, best international practice measures, net employment effects and negative impacts.
- The MR commitment on the disclosure of governance assessments and on the disclosure of how governance considerations apply to sequencing and project design decisions is still not being met, and there is no indication of any intention to do so.
- Poverty monitoring is not transparent or accountable.
- There are no specific examples provided on the criteria used to assess the level of community support for any EI operation.
- Although it is generally believed that the WBG is making some positive progress on revenue transparency, the report does not discuss the Bank’s initiatives in this area.
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