Environment: U.S. Set to Finance Bolivian Gas Project

Washington - The Overseas Private Investment Corp. (OPIC), a major U.S. export-credit agency, is ready to approve $200 million in concessional financing for a gas pipeline and power project in Bolivia – despite the objections of international environmental groups.

The agency is expected to approve the financing package for Texas-based Enron Corporation at its board meeting on June 16, according to OPIC sources.

Environmentalists and their allies in Congress, however, still hope to persuade OPIC not to approve the financing, or to require that Enron re-route the pipeline, to protect the world's last intact dry tropical forest and one of its most diverse habitats.

In a letter to OPIC President George Munoz, a bipartisan group of 25 lawmakers – including George Miller, the ranking Democrat on the House Resources Committee - called on the quasi-governmental agency to deny funding.

"It is our understanding that this project has negative implications for some of the world's most unique ecosystems," the representatives wrote. "In addition, less environmentally destructive solutions exist..."

The Enron project is part of a $2.1-billion, 3,150-km scheme to transport natural gas from Bolivia to Sao Paulo, Brazil. Enron, along with Shell, are major stockholders of Gas Transboliviano, SA, which will transport the gas within Bolivia.

One of the world's most ambitious infrastructure projects, it has attracted hundreds of millions of dollars in financing from the World Bank, the Inter-American Development Bank (IDB), the Andean Development Corporation, and the European Investment Bank.

Work on the first part of the project, the construction of a pipeline connecting the Bolivian city of Santa Cruz de la Sierra with the city of Campinas in Sao Paulo, wound up in February.When completed, the Enron pipeline will start in Ipias, Bolivia, where it branches off the main Bolivia-Brazil pipeline.

It then runs northeast through San Matias to Cuiaba, in the Brazilian state of Mato Grosso, where Enron is building a 480-megawatt, combined-cycle natural gas power plant.

Environmentalists have expressed great concern about the end route. "Nearly 90 percent of the pipeline route in Bolivia traverses extremely unique and pristine tropical forests and Pantanal ecosystems," according to Atossa Soltani, director of Amazaon Watch, a California-based advocacy group.

"Given how isolated the region is, the 30-meter pipeline right of way will open up the heart of this pristine region to uncontrolled exploitation, illegal hunting, logging, poaching, and colonization," she says.

Her views were echoed in another letter sent to Munoz sent last week by 60 environmental organizations from 25 countries.

The groups accuse OPIC of violating its own policies that forbid the financing of any infrastructure projects in primary tropical forests and have demanded the agency conducts a new study.

OPIC originally had intended for the Board to take up the project last March. But a review of an environmental impact assessment (EIA) – prepared by the Bolivian consultancy firm Entrix and paid for by Enron – coupled with mounting criticism by environmental groups, here and in Bolivia, persuaded the agency that it needed more information.

As a result, OPIC commissioned a "Supplemental Environmental Assessment" (SEA) to determine the status of the Chiquitano semi- deciduous dry forest, and other critical habitats along the pipeline's route, and recommend specific measures to mitigate the effect of the project on surrounding ecology.

The SEA was prepared by 28 scientists hired by Entrix. At the same time, an independent team of scientists assembled by a coalition of Bolivian and international non-government organizations (NGOs) conducted their own study and issued an Independent SEA (ISEA).

A major difference between the two reports was in the assessment of the conservation status of the Chiquitano forest.The SEA found that the forest had suffered enough human intervention

that it no longer met the definition of a "primary forest," as used by OPIC and the World Bank, according to a 10-page summary distributed by OPIC.

The summary said the scientists had found that 60 to 70 percent of the area along the pipeline's right of way already was degraded.

The ISEA scientists, on the other hand, found that "the forest block transected by the Cuiaba gas pipeline project is...a forest climax community or primary forest."

Moreover, the non-governmental organizations say that the SEA summary disseminated by OPIC distorts the actual findings in the much longer report.

For example, in the actual report, the ornithology, mammalogy, herpetology and entomology groups all concluded that the forest was virtually untouched by human activity and that alternative routes for the pipeline should be used.

"OPIC is being quite manipulative in selectively summarizing their own report's findings," says Soltani.

"Saying the Chiquitano isn't primary forest is like saying the Earth isn't round," according to Brent Blackwelder, president of the Friends of the Earth.

Almost 100 mammal, bird and reptile species, including hyacinth macaw, maned world, jaguar, and ocelot in the Chiquitano are currently protected by the Convention on International Trade in Endangered Species, according to the ISEA.

OPIC says that financing for the project will be conditional on Enron's agreement to re-route the pipeline a total of 30 kms in the Chiquitano and another 69 kms of the Pantanal wetland system. It must also take other measures to ensure that environmental damage is reduced.

But activists say that OPIC's terms cannot be enforced legally in Bolivia and they insist that the conditions are unlikely to have more than a marginal impact.

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