World Bank rejects call to leave oil, coal projects

World Bank rejects call to leave oil, coal projects

4 February 2004

Reuters News

Washington (Reuters) - The World Bank has rejected the findings of an independent report that recommends the institution phase out investment in oil and gas projects because of environmental concerns. The bank's management said in a draft of the response to the report, a copy of which was obtained by Reuters, that World Bank absence from certain oil and coal projects could result in worse quality projects and governance. "Hence the World Bank Group does not accept the Extractive Industries Review's recommendations to cease funding oil and coal projects," the World Bank said.

The review was commissioned by bank president James Wolfensohn and started work in July 2001, after criticism from the nongovernmental community about the bank's work in extractive industries. The study was led by former Indonesian environment minister Emil Salim.

Two of the bank's most controversial recent projects, the Chad-Cameroon and the Caspian oil pipelines, were approved by the lender's shareholders in the face of fierce opposition from environmental and nongovernmental groups who said the projects would do more harm than good.

The World Bank is not obliged to follow the recommendations in the report but nongovernmental groups have seized on the findings to urge the bank to change its ways.

In its response, the management also argued that restricting World Bank group financing for oil and coal projects will not reduce global supplies which would be financed and produced in other ways.