Open Letter to World Bank Group President Regarding IFC Support for Shell in Nigeria

 

May 28, 2001

 
President James Wolfensohn
World Bank Group
1818 H Street, NW
Washington, DC 20433 USA

Dear President Wolfensohn, 

The Environmental Rights Action/Friends of the Earth, Nigeria and the undersigned Niger Delta based organisations are writing you to express our concerns about the proposal of the International Finance Corporation (IFC), a member of the World Bank Group, to support the activities of Shell in Nigeria. The proposal involves the IFC contributing US$15 million to a fund to be managed in a partnership with Shell Nigeria and an unnamed Nigerian Bank. The purpose of the fund is to provide loans to so called small and medium-sized local contractors working for Shell and other Shell affiliates in the Niger Delta area of Nigeria.

We are shocked that the IFC will ignore the safeguard policies of the World Bank in this project that will impact on the environment, livelihood and communal integrity in the violated Niger Delta area of Nigeria.

It appears that the IFC has considered the profitability of the proposed investment and ignored the social and environmental costs to be borne by the communities of the Niger Delta area as a result of the proposed project, due to the following factors:

Shell Nigeria otherwise known as the Shell Petroleum Development Company has been widely condemned for human rights abuses, including its collusion with the Nigerian authorities for the mass murder of community people impoverished as a result of the devastation of their natural environment and the destruction of community sources of livelihood by Shell and other transnational oil companies operating in the Niger Delta area. We understand that Shell has over the past years invested heavily on an image laundering campaign in Europe and North America. However, the media campaigns have not resulted in improvement in practice of the company in the Niger Delta of Nigeria. Oil spills continue regularly as a result of breakdown of old, ill-maintained pipelines, oil wells and other facilities. Shell and her contractors continue to disregard even basic environmental precautions in the forests, wetlands and community farmlands as oil spills are burnt openly and waste products are disposed of indiscriminately etc. Shell is very tardy in investing in the elimination of the destructive flaring of associated gas. And the company continues to be protected by soldiers in some of its installations in Rivers, Bayelsa and Delta States. It is exactly the activities of companies like Shell that have made the Niger Delta area risky for investors like the IFC , and most importantly, for the local communities in the area.

The contractors to Shell have been operating in an environmental and socially destructive manner as Shell does not encourage real compliance with standards and as the Nigerian government continues to treat environmental protection of the Niger Delta as low priority issue.

Oil and gas contracts and oil and gas contractors do not create jobs in a sustainable way. Contractors to Shell operate on a hire and fire basis depending on the availability of contracts. During brief spells on the employ of Shell contractors, workers are forced to operate under difficult working conditions with very low wages in and up to 12 hours working days. Shell is increasingly relying on contractors to avoid providing real employment. We should point out that the unsustainability of oil and gas contract employment has resulted in hundreds of thousands of displaced unemployed labourers inhabiting the slums of oil cities such as Port Harcourt and Warri in the Niger Delta.

The pattern of award of contracts to local contractors by Shell suggests a tendency towards bribery of influential individuals within communities who become agents of destabilisation within their communities. Many communal crises in the Niger Delta area are a direct result of the mode and execution of contracts by the Shell.

The oil industry as presently structured can create huge profit for companies and revenue for government but cannot be relied upon for eradication of poverty in communities. On the contrary more investments in the oil-mining sector will exacerbate poverty and dislocation in the communities of the Niger Delta area of Nigeria. This is also the experience of other communities in developing tropical countries.

Considering the foregoing, it is our position that the proposed IFC partnership with Shell Petroleum Development Company is irresponsible and is in contempt for the communities of the Niger Delta area. We, therefore, call on the IFC and the World Bank Group to abandon the dangerous idea of the so-called Niger Delta Contractor Revolving Credit Facility.

We implore the World Bank Group to discontinue lending and strategic support to unsustainable oil and mining projects that destroy our environment and impoverish our peoples.

Sincerely,

Oronto Douglas, Deputy Director
Environmental Rights Action (ERA)

Nnimmo Bassey, Director
Environmental Rights Action (ERA)

Isaac Osuoko
Oilwatch Africa

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