Lessons of Experience | September 2006 | Number 1
38215
External Monitoring of the
Chad-Cameroon Pipeline Project
D
riven by the emerging policy and key issues for designing, implementing
requirements of lenders, and operating an external monitoring
heightened public concern, and mechanism for complex projects. The
the scrutiny of civil society organizations, objectivity and technical expertise of the
Lessons of Experience
the market is increasingly demanding that external monitor can add value to a project
companies adopt responsible and by increasing trust and accountability
accountable environmental and social between the sponsor and key project
practices. To assist in managing these risks, stakeholders including lenders, project-
lenders and project sponsors pursuing affected communities, civil society
complex projects in emerging markets may organizations, and government regulators.
benefit from the use of an external monitor.
The role of the external monitor is to provide To highlight the practical challenges and
an independent, impartial, and transparent value of the external monitoring mechanism,
record of the sponsor's compliance with the the publication draws illustrative examples
project's environmental and social from the experiences of IFC during the
commitments. Chad-Cameroon pipeline project. In 2001,
IFC required an external monitoring role for
A number of challenging project investment the Chad-Cameroon project and appointed
conditions may signal the need to consider D'Appolonia S.p.A., a consulting firm from
use of an external monitor, including, but Italy, to form the External Compliance
not limited to, projects involving: Monitoring Group (ECMG).1 While the scale
» multiple public and private sector and complexity of the external monitoring
partners for the Chad-Cameroon project is not
» highly visible sectors such as natural necessarily indicative of the level of effort
resource extraction and resources that would be needed on all
» significant population resettlement complex projects, these lessons are a
» indigenous peoples valuable source of practical experience with
» biodiversity and sensitive habitats external monitoring. This publication has
» complex project benefit sharing, revenue
management, and governance systems
CONTENTS
» weak national regulatory regimes.
This Lessons of Experience provides lenders 2 What is External Monitoring?
and project sponsors with an understanding 2 What are the Benefits for Project
of the business case for employing an Stakeholders?
external monitor. The publication gives 3 How to Maintain the Independence of
practical advice regarding the major steps the External Monitor
4 Key Components of the External
Monitoring Mechanism
1
The ECMG reports are published on the following website:
www.ifc.org/ecmg 15 Conclusion
The client company website can be accessed at:
www.essochad.com/Chad/Chad_HomePage.asp 16 Acknowledgements
Project-related websites of the World Bank Group can be
accessed at: www.worldbank.org/afr/ccproj/;
www.ifc.org/ifcext/africa.nsf/Content/ChadCameroonVideo
External Monitoring of the Chad-Cameroon Pipeline Project
been produced by IFC with the extensive
collaboration of specialists from D’Appolonia
S.p.A. (see “Acknowledgements” page).
What is External Monitoring?
D'Appolonia, S.p.A.
Monitoring is the sponsor's primary means for
tracking and evaluating progress toward the
implementation of commitments designed to
avoid or mitigate the environmental and social
impacts of the project. These actions are Preparation for pipeline welding.
typically specified in the sponsor's
Environmental and Social Management
Program (ESMP). The ESMP details the
procedures and actions necessary to prevent What are the Benefits for
or manage the adverse impacts identified in
the project's social and environmental impact
Project Stakeholders?
assessment. This program is commonly
For lenders, the external monitor is an
implemented by an “Environment and Social
important tool to objectively verify and
Management Unit” (hereafter referred to as the
report on sponsor compliance with
“E & S Unit”) within a sponsor's management
environmental and social conditions of the
structure.
investment agreement during project
development. The financial sustainability of
The role of the external monitor is to provide
a project can be jeopardized if agreed
field-based verification of project activities
environmental and social measures are not
and ensure compliance by the sponsor with
demonstrated to have been credibly
the commitments established in the ESMP.
implemented by the sponsor. Lenders with
On projects with potentially significant
limited in-house environmental and social
environmental and social impacts that are
expertise may benefit from the external
diverse, irreversible, or unprecedented, IFC
monitor's ability to act in part as the “eyes
requires that sponsors retain qualified and
and ears” of the lender, fostering a proactive
experienced external experts to verify their
2 management approach to help the lender
monitoring information.
develop successful projects and avoid
reputational damage and related liabilities.
Funded and logistically supported by the
sponsor, the external monitor acts as an
For project sponsors, the external monitor
impartial layer of monitoring that
increases the sponsor's ability to document,
complements the sponsor’s internal monitoring
manage, and reduce their risk exposure to
systems. In addition, the project may be
environmental and social issues. By providing
subject to additional oversight conducted
additional technical expertise to supplement
directly by the staff of lenders, government
the sponsor's E & S Unit, the external monitor
regulators, and civil society groups.
increases the operational capacity of the
sponsor's management to take timely
actions to improve performance and comply
2
The IFC requirement for external monitoring by qualified experts is
contained in Performance Standard 1, paragraph 24. Full text of with environmental and social commitments.
Performance Standard 1 is available at www.ifc.org/envsocstandards.
The Equator Principles II defines a broadly similar requirement as part of
Principle 9: Independent Monitoring and Reporting. Full text of the Equator
Principles is available at: http://www.equator-principles.com/documents/
Page Two Equator_Principles.pdf
Lessons of Experience | September 2006 | Number 1
The Chad-Cameroon Pipeline Project
The Chad-Cameroon project is a US$3.5 billion
development of an oil field in Chad by a
consortium headed by ExxonMobil, and a 1,070
km long pipeline extending through Chad and
Cameroon to the Atlantic coast, constructed
and operated by the Tchad Oil Transportation
Company S.A. (TOTCO) and the Cameroon Oil
The external
Transportation Company S.A. (COTCO) monitor provides
(hereafter collectively referred to as the
“Consortium”). Funded and logistically
an impartial and
D'Appolonia S.p.A
supported by the Consortium, the ECMG serves transparent record
as the external monitoring team responsible for
auditing the implementation of the Consortium's
of the sponsor’s
environmental and social commitments for the compliance with
Chad-Cameroon Oil Pipeline project. Pipeline trenching in Cameroon.
the project’s
environmental
and social
The risk for sponsors whose projects are affected communities, are typically shared by commitments.
associated with poor environmental and the sponsor and various levels of government.
social performance extends beyond
damage to the corporate brand. With respect to project affected communities
Underperforming companies can lose their and civil society groups, the external monitor
license to operate along with the critical provides a team of qualified technical experts
support of project-affected communities. that can directly investigate and report on
Their products and services may incur specific issues of concern for the local
barriers to market entry from consumers and communities in the project area. It provides
regulators, and their ability to raise capital reporting that can be an independent source
from lenders may be constrained. The of information for local communities and
technical expertise of the external NGOs, which in turn serves to foster an
monitor allows sponsors to have atmosphere of trust required for effective
documented, independently verified, and working relationships.
publicly available reports of their actions—a
critical, unbiased record which can be used
to defend against potential allegations of How to Maintain the
poor environmental and social performance.
Independence of the
The benefit of external monitoring for host External Monitor
countries is the availability, at no cost, of an
expert team that provides regular, objective Maintaining impartiality, objectivity, and
monitoring of project compliance with transparency in the eyes of all project
applicable regulations and with other stakeholders is critical to the success of the
environmental and social requirements, as external monitor. However, the reliance of the
agreed with the sponsor at the outset of the external monitor on the financial and logistical
project. The external monitor may be support of the sponsor may create perceptions
particularly useful in helping to coordinate of bias. A number of steps should be taken to
joint technical solutions where responsibilities, proactively reassure project stakeholders as to
such as community health issues in project the independence of the monitor, including:
Page Three
External Monitoring of the Chad-Cameroon Pipeline Project
» establishing a robust and transparent site
visit monitoring process by the external
monitor that demonstrates a reliance on
field-based empirical findings
» creating a well defined reporting process
for which the external monitor has ultimate
responsibility for final content
» establishing and abiding by clear
D'Appolonia S.p.A
operational protocols which define the
relationship of the external monitor to
other project stakeholders and allow the
external monitor to avoid conflicts of
ECMG Public Health Specialist consulting with community healers.
interest.
These issues, among others, are discussed in
further detail below.
During the project construction phase of the
Chad-Cameroon project, the ECMG was
composed of six permanent members,
Key Components of the
including a team leader, expert in pipeline
External Monitoring engineering and related health and safety
Mechanism issues; a team coordinator, specialist in
environmental science and engineering;
and individual specialists in socio-economic
Structure of the External and socio-cultural issues, institutional
Monitoring Team development, environmental and social
capacity building, earth sciences, and
Environmental and social issues on projects public health.
are often interrelated, a fact reinforced by
current international best practice for This varied composition of the ECMG
integrated environmental and social impact created a strong internal dialogue during the
assessment and management. In order to review of specific findings from the
properly address the environmental and standpoint of different disciplines. In addition,
social issues of complex projects, it is the multifaceted team provided technical
recommended that the external monitoring expertise and credibility to a wide range of
team be multidisciplinary in composition. issues when engaging with all interested
parties, including IFC, the Consortium, the
host governments, and civil society
Visit to tree nursery. organizations. During IFC's selection of firms
to act as the ECMG, the expert technical
capabilities demonstrated by D'Appolonia,
the firm eventually selected, was cited by
the Consortium as a key factor in convincing
them that the ECMG would be able to add
tangible value to the project.
D'Appolonia S.p.A
It is important to note that during the initial
planning phase the key individuals
comprising the external monitoring team
Page Four
Lessons of Experience | September 2006 | Number 1
may not have full knowledge of all the
project's technical issues. Accordingly, it may
be helpful to create an understanding
between lenders and the sponsor to allow the
team to be complemented by additional
specialized experts for unplanned issues which
may arise during project development.
Maintaining
D'Appolonia S.p.A
On the Chad-Cameroon project, this flexibility
impartiality,
allowed for the addition of a cultural heritage
expert to the ECMG who helped identify and objectivity, and
mitigate key gaps in the Consortium's
Revegetation of the pipeline right-of-way in the Atlantic Littoral transparency
management of impacts to cultural heritage Forest of Cameroon.
in the eyes of
sites during construction of the pipeline.
Incidents of inadequate management of all project
heritage sites along the pipeline route resulted stakeholders is
in a retroactive non-compliance citation by During construction, the ECMG also added
critical to the
the lenders against the Consortium. Further an ecologist who provided key input into the
incidents that may have resulted in costly management of invasive species and overall success of the
project delays were avoided due to the bio-restoration issues along the pipeline route. external monitor.
dialogue between the ECMG and the Additionally, the presence of a public health
Consortium's E & S Unit, which allowed for the expert on the team played an important role
identification and management of potential in facilitating joint approaches to managing
cultural heritage impacts. the occupational health issues of employees
and the larger community health issues faced
by communities and government authorities.
Operational Protocols of the
Lesson 1 — “An integrated External Monitor
environmental and social approach
facilitates effective monitoring.”
The formulation of operational protocols may
» The effectiveness of the external monitor is be helpful to clearly establish the role and
greatly improved by mobilizing an integrated interaction of the external monitor with
and technically capable environmental and
respect to other project stakeholders. On the
social team.
Chad-Cameroon project, the operational
» This integration allows the external monitor to
interact with the sponsor and provide expert
protocols promoted the need for active
evaluation of environmental and social issues, cooperation between the ECMG and
and to foster engagement with project- Consortium's E & S Unit. The responsibility to
affected communities, government, and civil provide objective, external reporting on ESMP
society organizations. compliance to IFC and the lender group
» Flexibility to expand the external monitor based on accurate data and empirical
team to confront new, unplanned issues is
findings was defined as the exclusive
helpful, but should be carefully considered to
responsibility of the ECMG. For host country
ensure unnecessary costs for the project
sponsor are avoided.
governments and related agencies, the
» Consulting the sponsor during the selection of protocols reinforced that the ECMG was not
the external monitor provides a key meant to replace, but rather to complement,
opportunity to build trust in the technical effective project monitoring by government
capability of the external monitor. regulators.
Page Five
External Monitoring of the Chad-Cameroon Pipeline Project
significant logistical resources and
Lesson 2 — “Clear operational cooperation from the sponsor and
protocols are critical to the
all project stakeholders. The sponsor should
perception of independence
expect an initial period of start-up
and impartiality of the external
adjustments, particularly with respect to the
monitor.”
establishment of a working relationship
between the sponsor’s E & S Unit and the
» Clear operational protocols allow the
external monitoring team.
external monitor to avoid conflicts of interest
and maintain a position of independence
with project stakeholders and affected The upfront costs incurred by the sponsor
communities. employing the external monitor are not
» Once established, every effort should be insignificant. These costs, however, should be
made to ensure that all project stakeholders weighed against the potential costs from
are aware of, and abide by, the operational project delays, environmental and social
protocols governing the activities of the
liabilities, corporate brand damage,
external monitor.
potential litigation, and community
upheaval that can emerge as complex
projects are sited and constructed.
With respect to interactions with civil society,
the ECMG was defined as an independent At the end of the two year construction
entity readily available to listen to civil phase of the Chad-Cameroon project, the
society concerns provided they could direct ECMG cost to the Consortium was
identify specific grievances or complaints approximately $US1.5 million for the labor
that could be investigated in the field. In and travel expenses of quarterly site visits,
practice, it proved difficult to ensure that the and an additional $US 2 million budgeted by
ECMG did not become a parallel grievance the Consortium to provide technical and
mechanism for the project. Early in the logistical support for the ECMG. Annual
project it was therefore necessary to make ECMG site visits during the operations phase
clear that the ECMG would not respond to cost approximately $US100,000 per visit. The
generalities, such as “pipeline construction is total direct costs of labor, travel, technical,
going to deteriorate the quality of life for the and logistical support of the ECMG are
local villagers”. However, specific technical estimated at less than 5 percent of the
issues such as “hydrotest discharge water Consortium’s total environmental and
has damaged farmland near a specific social management costs (approximately
village and the farmer has not been $US 40 million) for the project.
compensated” could and would be
investigated by the ECMG.
Village well constructed by the Project in Chad.
Funding and Logistical Arrangements
for the External Monitor
The resources required for the external
monitoring mechanism can be expected to
vary as a function of the project's complexity
and the extent of potential environmental
D'Appolonia S.p.A
and social impacts. The relationship with the
external monitoring mechanism may call for
Page Six
Lessons of Experience | September 2006 | Number 1
It is important to emphasize, however, that
Lesson 3 — “Sponsor although project reports, monitoring data
management support for the (e.g., water and air quality, noise, etc.) and
external monitor is a key determinant
ESMP key performance indicators (e.g. non-
of success.”
compliant citations, recordable spills,
consultation statistics etc.), help the external
» To be successful, the sponsor's management
monitor to observe trends, flag potential
needs to fully support the activities of the
external monitoring team. The sponsor should issues, and assess data completeness and Direct field
consider creating a small, focused team validity, they should not be considered
monitoring is an
within their E & S Unit to interface with the sufficient to replace actual site visits. Field
lender and coordinate with the external verifications allow the external monitor to essential task of
monitor. obtain first-hand observations of project- the external
» From the beginning of the project, the lender, affected areas and communities, to
the sponsor, and the external monitor should monitor.
investigate issues, to explore options to
establish a common vision for the
correct non-compliance situations, and to
constructive and positive role of the external
monitor. ensure that previous corrective actions have
been implemented.
Site visits by the ECMG were coordinated and
In addition, the Consortium provided a jointly conducted with the Consortium's E & S
dedicated staff member to manage the Unit. To collect relevant information on project
relationship with the ECMG, a decision that status, progress, and environmental and
greatly enhanced overall performance. The social issues, the ECMG held one-day
Consortium's E & S Unit facilitated the work of individual meetings with the major project
the ECMG in terms of ensuring availability of stakeholders, including the Consortium's E & S
key staff for meetings, assisting with the Unit, the main project contractors and sub-
provision of documents, information, and contractors, project-affected communities,
field data, and organizing logistical government regulators, and civil society
arrangements during project site visits. organizations. These meetings allowed the
ECMG to be briefed on recent project
developments from all stakeholder
Site Visit Activities of the External perspectives, and to establish priority issues for
Monitor field verification. The World Bank office in the
region played an important role early on in
the project by assisting in the identification of
Site visit activities of the external monitor
typically involve stakeholder meetings and
interviews, review of project monitoring data
and records, direct field monitoring, and Community meeting with the external monitor in northern Cameroon.
close-out meetings to present and discuss
preliminary findings.
Leading up to and during each site visit, the
ECMG received ready access to the latest
field reports from Consortium's E & S Unit,
detailing the implementation and monitoring
of the procedures and actions contained in
D'Appolonia S.p.A
the ESMP. These findings formed the basis of
the ECMG's day-to-day interaction with the
Consortium's E & S Unit during site visits.
Page Seven
External Monitoring of the Chad-Cameroon Pipeline Project
local and national NGOs interested in the
project and conducting their own project
monitoring.
ECMG field monitoring activities typically
included on-site substantiation of
environmental and social issues identified by
the various project stakeholders and
D'Appolonia S.p.A
pertaining to the conditions of the ESMP. For
example, field visits by the ECMG highlighted
traffic safety and road dust as significant
impacts of increased project-related
transport activities, which were not fully ECMG close out meeting with officials in Cameroon.
identified in the project design phase and
relevant parts of the ESMP. Although the
Consortium was investigating corrective
actions, the increased focus on the issue acquisition (including resettlement,
provided by the ECMG ensured that the compensation, and livelihood restoration),
Consortium implemented a series of and community health and safety.
transportation safety measures such as
speed controls, community awareness Close out meetings were held at the
raising, convoy management, and road by- conclusion of site visits and involved the
passes, in addition to more effective dust ECMG, the Consortium's E & S Unit,
suppression. government representatives, and the
lenders. The meetings allowed field
Other technical issues that were monitored observations, findings, and preliminary
on site visits included protection of natural conclusions to be presented, and
resources, waste management and pollution information gaps, additional data needs,
prevention, project footprint reinstatement, and factual inaccuracies to be identified.
occupational health and safety, land Site visits by the ECMG were treated as a
“snapshot in time,” consistent with the
periodic frequency of the monitoring
schedule. Additional information received
Lesson 4 — “Direct field
after the site visits was set aside to be
monitoring is an essential task of the
investigated during the next project visit. This
external monitor.”
approach allowed sufficient time for the
Consortium's E & S Unit to react to technical
» The credibility of the external monitor is
dependent on the use of direct field
observations, and to evaluate the need for
verification and the collection of empirical and implement corrective actions in time for
observations. subsequent monitoring visits.
» Sole reliance on secondary sources, such as
reports provided by the sponsor's E & S Unit
and project contractors, should be avoided,
Frequency of Site Visits
and adequate time for field verification
should be planned.
» Close out meetings should be held at the
conclusion of site visits to allow field The frequency of visits by the external
observations and conclusions to be monitor to the project site is normally
presented, and factual inaccuracies to be determined by the likelihood of impacts
identified. predicted to occur at different phases of the
» Successful site visits require extensive logistical
Page Eight support from the sponsor.
Lessons of Experience | September 2006 | Number 1
project cycle. Planned schedules for site visits
may also require adjustment, however, due
to unexpected project specific issues. It is
recommended that the precise schedule of
the site visits be determined based on the
prevalence of impacts in different project
phases.
The external
D'Appolonia S.p.A
For the Chad-Cameroon project, the
monitor plays a
frequency of ECMG site visits was significantly
higher during the construction phase, key role during
because the potential for adverse project transition
environmental and social impacts was Pipeline stringing in the rainforest of Cameroon.
from construction
highest during the pipeline and permanent
facility construction. The ECMG undertook to operation
four project site visits per year during the phases.
construction phase of the project. Once the The transition from construction to operations
pipeline construction was completed in late needs to be carefully planned and
2003 and project completion was achieved implemented by both the sponsor's E & S Unit
in mid-2004, the ECMG schedule changed to and the external monitor. During the last
annual visits as part of the operations phase. semester of the construction phase for the
Additional visits during the operational phase Chad-Cameroon project, the ECMG played
are conducted only as necessary. This a key role in ensuring that transition plans and
reduction in the frequency of monitoring sufficient overlapping of staff and resources
reflects the relative decline in the potential within the Consortium's E & S Unit were in
significance of environmental and social place to maintain satisfactory performance in
issues due to end of the construction phase terms of ESMP compliance. The transition also
and the consequent reduction in the project entailed commensurate changes to the
workforce and related activities. structure of the ECMG including team
reduction, redefinition of key team
specializations, and modification of
monitoring protocols during site visits.
Lesson 5 — “The external
monitor plays a key role during the
project transition from construction Monitoring Compliance
to operation.”
» The frequency of visits by the external During site visits, the external monitor may
monitor to the project site is normally identify a real or potential “non-compliance”
determined by the likelihood of impacts situation, which occurs when either the
predicted to occur at different phases of sponsor's E & S Unit or a project contractor
the project cycle. fails to implement a specific environmental or
» The attention and assistance of the external social commitment contained in the ESMP.
monitor is critical to ensuring a smooth
transition between project phases.
As shown in Figure 1 on the next page, the
» The shift from construction to operations
phases requires restructuring of both the definition of levels of non-compliance
sponsor’s E & S Unit and the external monitor developed for the Chad-Cameroon project
to account for different monitoring and ranged from level 1 (least important) to level 3
implementation requirements for the ESMP (most severe), and each required a set of
that are specific to the operations phase.
Page Nine
External Monitoring of the Chad-Cameroon Pipeline Project
actions on the part of the Consortium to
address the issue depending on the severity Lesson 6 — “The lender should
of the potential impact. The information be the arbiter for decisions of non-
provided by the ECMG was used by the compliance with the ESMP.”
lenders as a direct source to assign
» Definitions of non-compliance provisions
significant non-compliance citations to the
should be clearly established at the outset of
sponsor, as needed.
the project.
» The lender should maintain sufficient
The lender may choose whether the leverage with the sponsor to ensure the
external monitor should make the official resolution of non-compliance citations.
determination of non-compliant situations or
instead provide information to the lenders so
that they may issue the non-compliance
citation as necessary. The experience of the
ECMG indicates that it may be Level 3 definition is controversial because it is
advantageous to leave the ultimate decision necessary to define what constitutes both
to assign non-compliance with the lender. “damage” and a “specifically protected
This may increase the leverage of non- sensitive resource.” This issue was particularly
compliance declarations and promote a important when the findings of the ECMG
positive response by the sponsor. The were used to assign a Level 3 non-
external monitoring team is then afforded compliance concerning impacts to cultural
the flexibility to investigate and report to the heritage sites. The ECMG was able to
lenders regarding all potentially significant overcome this ambiguity by reporting any
issues based on its professional judgment. situations that were considered critical issues
and providing factual observations to IFC
In addition to the questions of which party and other stakeholders to allow them to
should issue non-compliance citations, the assess the potential non-compliance
Chad-Cameroon project highlighted the situation.
importance of clearly stating the definition of
non-compliance provisions. For example, the
Fig. 1 Example of
Non-Compliance
Classification System
Level 3:
for the Chad-Cameroon
Serious
Project
Impact to an
identified sensitive
resource
Level 2:
Expeditious Action
Required
Could give rise to a serious impact
to an identified sensitive resource
Level 1:
Source: D'Appolonia S.p.A
Early Warning
No significant impact, but not consistent with ESMP
Repeated Level 1-type incidents can escalate to a
Level 2 non-compliance situation
Page Ten
Lessons of Experience | September 2006 | Number 1
The External Monitor and Other Layers of responsible for implementing different
Project Monitoring aspects of the project's ESMP. These
contractors and sub-contractors each had a
monitoring system within their management
On complex projects, the monitoring of ESMP structure, and the Consortium's E & S Unit
commitments typically involves internal interacted with these groups during
monitoring systems of the sponsor and the monitoring activities. The Consortium's E & S
main project contractors, and external Unit assumed overall responsibility for Successful project
monitoring by the lender and government monitoring the social and environmental
monitoring
regulators. Successful project monitoring compliance of contractors and sub-
requires the development and integration of contractors associated with the project. requires the
these multi-layered monitoring systems. For development
the Chad-Cameroon project, the ECMG was Initial site visits by the ECMG, however,
and integration
positioned as an additional observer to demonstrated the limited capacity of sub-
oversee the sponsor’s internal monitoring contractors to implement environmental and of multi-layered
systems and complement the external social commitments, which posed a risk to monitoring
oversight conducted by other project overall ESMP compliance. On subsequent site
systems.
stakeholders. Figure 2 indicates the position of visits, the ECMG did not limit its field
the ECMG in the multi-layer monitoring system monitoring to the Consortium and its main
implemented for the Chad-Cameroon project contractor activities, but also
project. included field verification of sub-contractor
responsibilities in the ESMP.
The internal layers of the monitoring system for
the Chad-Cameroon project consisted of External monitoring on the Chad-Cameroon
environmental and social monitoring project involved both the lenders and
provided by the Consortium and their government regulators. Depending on their
contractor companies. As is typical of capacity, some lenders may use in-house or
complex projects, the Chad-Cameroon contracted environmental and social
pipeline involved numerous contractors and specialists to monitor the implementation of
sub-contractors, each of which was the ESMP. It is important to note that although
Fig. 2 Multi-layer Monitoring System for the Chad-Cameroon Pipeline Project
CONSTRUCTION PHASE OPERATIONS PHASE
E
X Layer 5 Monitoring by IFC/World Bank Staff
T
E
R Layer 4 External Monitoring (ECMG) (Annual visits)
N (Quarterly visits)
A
L
Layer 3 Government Regulatory Monitoring
I
Source: D'Appolonia S.p.A
N
T
Layer 2 Monitoring by the Sponsor’s Environment and Social Management Unit
E
R
N Layer 1 Self-Monitoring by Contractors/Sub-Contractors
A
L
Page Eleven
External Monitoring
Independent of the
Monitoring onChad-Cameroon
the Chad Cameroon Pipeline
Pipeline Project
Project
and social commitments contained in the
Lesson 7 — “Monitoring the ESMP. The perception of the ECMG's
performance of contractors and neutrality was reinforced by its reliance on,
sub-contractors is critical to project and reporting of, empirical findings.
success.”
The ECMG assessment reports were
» Lenders should conduct regular in-country submitted to the lenders and copied to the
supervision of the project. For lenders with Consortium shortly after the conclusion of
limited staff resources and capacity for each site visit. The Consortium was given the
these activities, the role of the external opportunity to comment one time on any
monitor can be critical to successful factual inaccuracies within a fixed number
implementation of the ESMP. of days following receipt of the reports. It is
» The limited capacity and expertise of sub- recommended that the lender and the
contractors to implement environmental
sponsor have an opportunity to suggest
and social commitments should be
improvements to the reporting if there
recognized and addressed.
» The main project contractors should be appears to have been factual inaccuracies
contractually obligated to comply with the in the compiled observations or
sponsor's ESMP and to establish an internal interpretations, or if important information
monitoring system. Although contractor was not presented to explain field
compliance with the ESMP is the ultimate observations, compliance assessment and
responsibility of the sponsor, their implementation strategies. However, to
performance can be improved through
maintain credibility, it is critical that the
involvement of the external monitor.
ultimate responsibility and decisions
regarding the content of final reporting for
public disclosure rests with the external
monitor.
a role of the external monitor is to be in part
the objective 'eyes and ears' of the lender,
Based on the experience of the Chad-
this should not substitute, but rather
Cameroon project, it is recommended that
supplement, the regular in-country project
the reports of the external monitor be
supervision performed by the lender. For
published on a specific and clearly
lenders with limited staff resources and
identifiable website. Due to limited access to
capacity for supervision and monitoring
the internet in Chad and Cameroon, the
activities, the role of the external monitor
World Bank country offices were instrumental
assumes additional importance to successful
in distributing paper copies to government
project implementation of the ESMP.
agencies, project affected communities,
and civil society groups. The ECMG made
efforts to confirm that sufficient dissemination
Reporting the Findings of the of the previous report had taken place prior
External Monitor to subsequent project site visits.
A robust and transparent reporting process is
Management of Change
fundamental to the integrity of the external
monitor. On the Chad-Cameroon project,
the ECMG prepared ESMP compliance
Changes are a natural feature of any
assessment reports after each site visit. These
complex project and do not necessarily
reports were based on facts directly
indicate a problem but the initiation of a
observed in the field with respect to the
process. Sponsors should be prepared for the
Consortium's adherence to environmental
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Lessons
Lessons of Experience
of Experience | August 2006 | Number 1
| September
significant ESMP changes; and iv) delineate
Lesson 8 — “Ensuring when changes should be communicated to
widespread public access to the lenders and host country governments.
monitoring reports reinforces trust in
the role of the external monitor.” The Chad-Cameroon ESMP focused primarily
on the pipeline right-of-way. From an
» To maintain the perception of neutrality, it is environmental and social standpoint,
critical that the ultimate responsibility and however, other important issues related to the Ensuring
decisions regarding the content of final associated infrastructure of the pipeline
widespread
reporting for public disclosure rests with the corridor were not given sufficient attention in
external monitor. the ESMP. These included impacts from public access
» External monitoring reports should be construction camps, pipe yards, access to monitoring
published on a specific and clearly
roads, borrow pits, and land use planning for
identifiable website. Paper copies of the reports reinforces
oil wells and related infrastructure. The
report should be distributed and made
monitoring activities of the ECMG brought trust in the role
available to project affected stakeholders.
» Widespread public access to monitoring these issues to the attention of the Consortium of the external
reports reinforces the impartiality of the and the lenders, and management of
monitor.
external monitor and the responsiveness to change procedures were used to adjust the
project impacts that affect stakeholders. ESMP accordingly to account for these
» Credible, objective reports assist the sponsor project-related impacts.
in demonstrating actions undertaken to
reduce environmental and social impacts.
The management of change procedure for
the Chad-Cameroon project is, however,
primarily an internal sponsor process with only
vague procedures for external involvement
by the lender or government regulators.
need to add or adjust mitigation measures in
While this internal company procedure may
the ESMP resulting from new issues that were
be sufficient for small changes to the ESMP,
not previously identified or in recognition
such as defining new procedures for the
that despite the best planning intentions,
remediation of borrow pits, it may be less
mitigation measures may not be as effective
effective for negotiating and addressing
as originally designed and thus need to be
more significant issues that may require
modified. A procedural approach to
substantial changes to the ESMP.
managing change is essential to ensure that
the project continues to consistently conform
to its environmental and social commitments.
It is recommended that the sponsor establish
Erosion control measures on a river crossing in Cameroon.
a “management of change” procedure to
deal with changes in impacts from the
project and with the resulting mitigation
measures which need to be included in the
ESMP. At a minimum, the procedure should
have mechanisms which: i) identify material
project scope or design changes that have
not been included in the original ESMP; ii)
identify, through monitoring, mitigation
D'Appolonia S.p.A
measures that are not achieving results and
need to be altered; iii) establish criteria to
differentiate between minor changes and
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External Monitoring of the Chad-Cameroon Pipeline Project
In instances where significant cultural
properties, natural resources and habitats, or Lesson 9 — “A procedural
sensitive species are encountered and approach to Management of
potentially impacted, or where physical Change is essential to ensure that
relocation or economic displacement of the project continues to conform to
households are required, or changes to
its environmental and social
commitments.”
project social and environmental standards
and commitments are requested, the
» A management of change procedure is
management of change procedures should
necessary to successfully adjust the ESMP to
be established and the changes jointly
deal with unexpected environmental and
assessed by the sponsor, the lender, the social impacts during project
external monitor, and government agencies implementation.
prior to the development of further » The external monitor can be a key resource
mitigation measures. During the Chad- available to the lender group and the
Cameroon project, the ECMG was primarily Consortium for technical advice regarding
proposed ESMP adjustments.
involved as a technical counterpart
» Various “classes of changes” should be
available to the lender group and the
established to differentiate between the
Consortium for technical advice regarding
degree of significance of the proposed
proposed ESMP adjustments. changes with respect to the potential
environmental and social impact of the
By involving all key stakeholders, the project activities as defined in the ESMP.
decisions regarding significant required » For significant changes, the procedure
changes to the ESMP can benefit from a should involve mandatory consultation by
the project with lenders and the external
discussion that meets the needs of all
monitor, before implementation of the
stakeholders. It is important to note that in all
revised mitigation and monitoring
considerations of ESMP changes, a balance
alternatives.
is needed in the process to limit, to the
extent possible, impacts to project
development and unplanned costs while
ensuring acceptable environmental and
social outcomes.
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Lessons of Experience | September 2006 | Number 1
Conclusion
Market forces are increasingly demanding
that companies take a proactive approach
towards managing the environmental and
social impacts of their projects. This IFC
Lessons of Experience publication has
demonstrated that external monitoring of
D'Appolonia S.p.A
environmental and social commitments can The external
be a powerful resource to help lenders and monitor can be
their project sponsors reduce the risks
an influential tool
inherent to complex projects.
Completed restoration along the pipeline route.
to ensure that
Throughout the publication, the experiences environmental
of the External Compliance Monitoring
and social
Group (ECMG) on the Chad-Cameroon
pipeline project have highlighted the For project affected communities and civil commitments
technical value of an external monitor. This society groups, the external monitor creates a are credibly
value is further enhanced by the external reporting mechanism that acts as an
implemented
monitor's ability to increase the transparency, independent source of information helping to
trust, and accountability between the key reinforce the credibility and trust in the project in the eyes of
project stakeholders. While the decision to sponsor required for successful projects. Host all project
employ an external monitor is related to countries, who often suffer from limited
stakeholders.
the particular scale and complexity of capacity to monitor the project themselves,
environmental and social issues associated receive objective, technical, and publicly
with a project, the business case for external disclosed assurance that the project is
monitoring is based on the monitor's ability to achieving agreed environmental and social
enhance the company's approach to outcomes.
addressing project risk.
Complex projects require companies, lenders,
All project stakeholders stand to benefit from project affected communities, civil society,
the involvement of an external monitoring and governments to work as part of a
mechanism. Project sponsors receive an partnership based on mutual responsibility
objective reporting record of their and trust. The external monitor can be an
performance on environmental and social influential tool to ensure that environmental
measures, which can reinforce the support of and social commitments are credibly
project affected communities and defuse implemented in the eyes of all project
the allegations of external critics. Lenders stakeholders, resulting in projects that are
benefit from an unbiased set of “eyes and economically, socially, and environmentally
ears” to assist them in ensuring project sustainable.
outcomes meet their environmental and
social requirements.
Page Fifteen
External Monitoring of the Chad-Cameroon Pipeline Project
Acknowledgements
“External Monitoring of the Chad-Cameroon Pipeline Project: Lessons of Experience” is the first
in a new publication series prepared by the Environment and Social Development Department
Lessons of Experience
of the IFC for the purposes of internal learning and knowledge sharing with clients and the
wider private sector. The publication was written by an IFC team comprising Christopher
Frankel (Task Manager), Patty Miller and Rosa Orellana, and carried out under the general
direction of Rachel Kyte (Director). Vanessa Manuel was responsible for design and layout.
A special acknowledgement is due to the members of the External Compliance and
Monitoring Group (ECMG) for their extensive written input and review efforts for this
publication. They include Paolo Lombardo, Roberto Carpaneto, Lori Anna Conzo, and
William J. Johnson, from the consulting firm D'Appolonia S.p.A, as well as private consultants
Frédéric Giovannetti, Jean Le Bloas, Dr. Jorge Ossanai, and Dr. Clark A. Dobbs.
The authors would also like to thank Mr. Ed Caldwell, Manager of Safety, Health and
Environment for Esso Exploration and Production Chad Inc., for his review and comment
on this publication.
Thanks are also due to the following IFC/World Bank colleagues who reviewed earlier
drafts: Rachel Kyte, Rashad Kaldany, Shahbaz Mavaddat, Richard Caines, Dennis Reyes,
Debra Sequeira, Richard Wyness, Carlos Arias, John Butler, Eric Brusberg, and Eluma Obibuaku.
IFC Good Practice Publications available at:
www.ifc.org/enviropublications
The Baku-Tbilisi-Ceyhan (BTC) Pipeline Project:
Lessons of Experience
For IFC as a lender, the process of capturing lessons of
experience from projects in an important one. In the "BTC
Pipeline Project: Lessons of Experience," IFC environmental
and social staff look back on an extremely challenging
process and endeavor to extract some of the key
operational lessons and good practices for the benefit of
colleagues, clients, and the wider institution. While it is
impossible to capture all the challenges and complexities
encountered during the design and construction phase of
the BTC project, this publication focuses on six thematic
areas where environmental and social lessons learned
were thought to be most valuable and applicable to other
IFC-financed projects.
For more information, please contact: International Finance Corporation,
Environment and Social Development Department, 2121 Pennsylvania Avenue, N.W.,
Washington, D.C. 20433, U.S.A.
Disclaimer
The views expressed in this publication are those of its authors and do not necessarily reflect the views of the wider institution.
Some of the information used in this document may come from publicly available sources such as company websites and
publications. The Lessons of Experience series does not represent a commitment by IFC to require projects it finances to take
certain or all of the actions specified in this publication. Instead, any issues arising in an IFC-financed project will be evaluated
and addressed in the context of the particular circumstances of the project.
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