Washington – The U.S. Overseas Private Investment Corporation (OPIC) approved $200 million in financing Tuesday to help pay for a controversial natural gas pipeline project in Bolivia being developed by Enron Corp. (NYSE:ENE – news) and Royal Dutch/Shell Group .
OPIC cleared the loan in face of strong opposition from members of Congress and environmental groups, who wanted no U.S. taxpayer money for the project because it would run through one of the world’s last tropical dry forests.
In providing financing, OPIC required that almost 30 percent of the pipeline be rerouted to avoid sensitive parts of the forest and imposed other environmental conditions on the deal.
The OPIC Board said that if additional areas of critical habitat are encountered during construction, then that part of the pipeline must also be rerouted.
The board also required full implementation of an agreement signed by Enron and five environmental groups for the company to spend $20 million on land conservation programs in the region.
The pipeline would ship natural gas from Bolivia to a 480-megawatt power plant under construction in the western Brazilian city of Cuiaba, the first such plant in the country.
The cost for the pipeline and power plant project is $570 million, and should be completed in early 2000. Royal Dutch/Shell Group has a minority stake in the project.
But a bi-partisan group of U.S. lawmakers urged OPIC to deny funding for the pipeline, saying it violated reforms implemented by President Clinton in 1997 that prohibited OPIC from supporting projects located in tropical forests.
Environmental groups protested outside Tuesday’s OPIC meeting, claiming the 390-mile pipeline would harm fragile plant and animal species.
However, OPIC supported Enron claims that the project will help the environment by allowing power plants in the region to switch to clean-burning natural gas from diesel fuel and also save forests that are cut for fuelwood, reducing carbon dioxide emissions by 475,000 tons a year.
OPIC, formed in 1971, is an independent agency that provides financing to help American businesses operate in foreign markets.
