U.S. Agency Delays Vote on Financing ENRON’s Controversial Pipeline through Amazon Forest

AMAZON WATCH

For more information, contact:

Rania Batrice at +1.510.394.2041 or rania@amazonwatch.org


WHAT At the meeting of its Board of Directors today, the Overseas Private Investment Corporation (OPIC) voted to delay decision on loan guarantees to Enron International for a planned natural gas pipeline that would cut through 200km of primary tropical forest and 100km of pristine wetlands in the Bolivian Amazon. In recent weeks, OPIC has come under severe scrutiny by US and Latin American environmental organizations as well as other US government agencies for considering a project that violates the agency’s statutory mandate. Under the Foreign Assistance Act and OPIC’s own policies, OPIC is prohibited from financing "infrastructure projects in primary tropical forests" or projects that cause "major or unreasonable harm to the environment." President Clinton promised enforcement of this prohibition at the United Nations General Assembly Special Session (UNGASS) in 1997.

If built, the pipeline will bisect the world’s largest intact tropical dry forest. This globally important forest is the headwaters of the Pantanal watershed-the world’s largest wetland. The OPIC decision comes just months after the agency adopted new environmental standards. The adoption of these standards are viewed as a key component in the decision by Congress to reauthorize this federal agency. "OPIC’s decision to delay this project affirms President Clinton’s pledge. Their own documents for the project acknowledge that primary tropical forests will be destroyed and roads will increase illegal logging, hunting and colonization in endangered species habitat. This sends a clear message to Enron that their work is just beginning," said Jon Sohn, International Policy Analyst for Friends of the Earth.

The Project’s Environmental Impact Assessment (EIA) and independent scientists classify this region as "primary tropical forest" [expert statements attached]. Despite their own EIA, Enron and OPIC now claim the forest is secondary due to sporadic logging in some parts. "OPIC cannot approve this project without first guaranteeing that there will be no irreversible harm to these globally important tropical forests," said Atossa Soltani, Director of Amazon Watch. "The project as it stands now clearly violates the agency’s standards and U.S. laws," said Soltani.

WHERE The proposed 630-kilometer pipeline starts in Ipias, Bolivia, where it branches from the main Bolivia-Brazil pipeline (already under construction), runs northeast to San Matias, and thence to Cuiaba, Brazil.

WHO The project sponsors are the US-based Enron International, and Shell International Gas Ltd. Non-governmental organizations such as Amazon Watch, Friends of the Earth and World Wildlife Fund-Bolivia have been urging OPIC not to approve the project at this time.

WHEN OPIC’s Board voted at its March 9 meeting in Washington, D.C. to delay the vote on the project until outstanding concerns can be resolved. Enron is reported to have already begun clearing the right of way and moving in construction equipment.

WHY Opposition to the project is based on the following reasons:

Negative impacts on fragile primary tropical forest and wetland ecosystems traversed by the pipeline.
Lack of sufficient consultation and final agreement between project sponsors and affected populations regarding compensation, mitigation, and indigenous peoples development plans (the proposed route crosses the Santa Teresita indigenous areas).
Increased logging, hunting, and colonization resulting from the use of the pipeline’s 30-meter wide right of way as an access road (this effect is already occurring with the main Bolivia-Brazil pipeline project).
Lack of local government capacity to monitor and regulate Enron and Shell’s environmental performance
OPIC’s failure to respond to concerns raised and documented by NGOs since November 1998.
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