IADB OK's Loan for Enron Backed Pipeline in Bolivia

Washington - The Inter-American Development Bank has approved a controversial loan for a Bolivian company partly controlled by bankrupt U.S. energy giant Enron to build a gas pipeline through an environmentally sensitive forest.

Environmental groups have lobbied hard to stop the $132 million loan winning approval at the bank but the loan went through on Wednesday.

Three groups recently wrote to the U.S. Treasury, which has the largest and most influential vote at the bank, asking it to oppose the loan for environmental reasons and because of the Enron connection.

The United States abstained from voting in favor of the project at the Wednesday board meeting.

The IADB said the money will go to Bolivia's main gas transportation company, Transredes, to support an investment program to expand capacity to transport natural gas and liquids. Transredes is partly controlled by Enron and Royal Dutch/Shell l Group.

The two companies are involved in other gas pipelines and an oil pipeline in Bolivia.

Environmental groups said those other pipelines have poor records for environmental and social responsibility and they fear this next pipeline will be the same.

"They have two other gas pipelines and an oil pipeline that had a spill in 2000," said Nadia Martinez, of the Sustainable Energy and Economy Network at the Institute of Policy Studies in Washington.

"It spilled oil into a river that is important for water supplies for the whole country."

The pipeline will run through the Chaco forest which is a mixture of populated and semi-populated indigenous territories. Martinez said the forest is among the richest in the world according to World Bank and World Wildlife Fund classifications. It is home to endemic species and animals that are on the verge of extinction such as the Chacaon Peccary, a member of the pig family.

The IADB said in a statement the project will create jobs, increase Bolivia's exports, contribute to overall economic growth and ensure the continued viability of a strategic industry in which the country's pension funds are heavily invested.

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