VZCZCXRO4221
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHYD #0514/01 1601302
ZNR UUUUU ZZH
R 091302Z JUN 09
FM AMEMBASSY YAOUNDE
TO RUEHC/SECSTATE WASHDC 9972
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/HQ USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 02 YAOUNDE 000514 
 
SIPDIS 
SENSITIVE 
 
Department for AF/C and EEB 
Department Pass USAID 
USDOC for ITA - Burress 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD EWWT CM
SUBJECT: CAMEROON'S LOM PANGAR IS WORLD BANK'S DAM PROBLEM 
 
¶1.  (SBU)  Summary.  The Government of Cameroon (GRC) is pushing 
breathlessly to construct the Lom Pangar dam by 2012, but the GRC's 
impatience causes heartburn for the World Bank, which is eager to 
finance the project but wary that the GRC will not adhere to World 
Bank guidelines for environmental and social impact.  Lom Pangar, a 
critical piece of Cameroon's development plans, is a retention dam 
which will regulate the flow of the Sanaga River, thereby increasing 
power production from existing dams and facilitating the 
construction of new facilities at Natchtigal and Song Mbengue. 
Anglo-Australian mining giant Rio Tinto is lobbying for Lom Pangar's 
quick completion to enable the expansion of its aluminum refinery, 
but the dam site will affect sensitive ecological zones in 
Cameroon's East Region and require $50 million in renovations to the 
Chad-Cameroon Pipeline, owned by Exxon/Mobil.  The GRC remains 
engaged with the World Bank, but is actively soliciting financing 
and looser conditionalities from other sources, including French 
development agency AFD.  End Summary. 
 
Lom Pangar: A Big Dam Project 
----------------------------- 
 
¶2.  (U)  The proposed retention dam at Lom Pangar in the Sanaga 
River Basin would generate 30 MW of power and is critically 
important for downstream power production.  By regulating the Sanaga 
River to maintain a year-round flow, Lom Pangar would increase 
production of existing dams at Edea and Song Loulou by 130 MW.  More 
importantly, Lom Pangar is a prerequisite for the construction of 
new facilities along the Sanaga, including power plants at 
Natchtigal and Song Mbengue that Anglo-Australian mining giant Rio 
Tinto needs for the planned expansion of its aluminum refinery in 
Cameroon.  Hydromine, an American project developer involved in 
exploration of bauxite resources in the Adamoua Region (reftel), is 
exploring the possibility of developing hydropower at Pont Rail and 
Mbakaou; both projects are predicated on the completion of Lom 
Pangar. 
 
GRC Balking at World 
Bank's Safeguards 
-------------------- 
 
¶3.  (SBU)  Lom Pangar has been in the GRC's energy plan since at 
least 1999, but the project has been repeatedly stalled by 
government indecision about how to implement the project.  Poloffs 
spoke June 4 with a World Bank official involved in the discussions 
between the GRC and World Bank, who said the project was "12 months 
away from completing the safeguards process" in January 2006.  At 
that point, the GRC, having decided the World Bank process was too 
arduous, focused on identifying alternate, less demanding funding 
sources while continuing to engage only half-heartedly with the 
World Bank.  As a result, according to the World Bank official, 
there has been no substantive progress toward complying with World 
Bank standards since January 2006 and the environmental and social 
impact studies completed since then are not up to international 
standards.  As of June 2009, Cameroon is still about 12 months away 
from completing the documentation and studies needed to meet 
international standards for environmental and social safeguards. 
Cameroon's Electricity Development Corporation (EDC) is the lead GRC 
agency for the Lom Pangar project (and the steward of Cameroon's 
power sector infrastructure).  On June 1, the EDC launched an 
international tender, with World Bank funding, to identify a 
consultant to act as project manager for the Lom Pangar project. 
According to the tender documents (available at 
http://www.edc-cameroon.com/ ), the consultant will help EDC develop 
and implement the project plan to build Lom Pangar. 
 
Looking for Another Partner 
--------------------------- 
 
¶4.  (SBU)  In a 2008 briefing, officials from Rio Tinto told Poloff 
that Rio Tinto and the GRC were hoping to secure financing for Lom 
Pangar from the French Cooperation Agency (French acronym AFD) and 
the European Investment Bank.  In the June 4 meeting with Poloffs, 
the World Bank official said the GRC might approach the African 
Development Bank, the Chinese government, or other donors who would 
be likely to impose looser conditionalities on the project, but that 
AFD seemed the most likely to engage, especially in the wake of the 
May visit of French Prime Minister Fillon.  The African Development 
Bank (AfDB) is also said to be considering Lom Pangar as part of its 
plan to finance infrastructure in Cameroon's electricity sector. 
 
Why the Controversy? 
Trees, Apes, and Pipeline 
------------------------- 
 
¶5.  (SBU)  The Lom Pangar project, and in particular the World 
 
YAOUNDE 00000514  002 OF 002 
 
 
Bank's involvement, has invited controversy and criticism, 
especially from civil society organizations that argue the project 
would largely benefit Rio Tinto's aluminum operations while exacting 
an unknown social and environmental toll.  Although the proposed 
reservoir zone is relatively unpopulated, it abuts sensitive 
ecological zones, including the Deng Deng reserve that shelters 
protected species like gorillas.  Additionally, the proposed 
reservoir would flood roughly 1 million cubic meters of wood in the 
catchment area.  The GRC plans to harvest the wood, a task 
complicated by the expedited timeline and the difficulty of 
evacuating the timber-roughly one third of Cameroon's annual 
output-from the remote Deng Deng region.  The reservoir will also 
submerge the Chad-Cameroon pipeline, requiring $50 million in 
structural upgrades.  There had been some dispute over who would pay 
for the upgrades, but the consortium that owns the pipeline--led by 
Exxon-Mobil-has argued that any such changes must be paid for by the 
GRC. 
 
Project Deadlines 
------------------------ 
 
¶6.  (SBU)  Senior GRC officials, including President Biya, have made 
public statements affirming that Lom Pangar will be built on an 
expedited timeline, with the Minister of Energy and Water claiming 
in multiple public and private meetings that Lom Pangar would be 
operational by 2012.  Embassy contacts knowledgeable about the 
project say it will take about four years from ground-breaking to 
ribbon cutting (two years to build the dam; two more years to fill 
the reservoir), and that timeline does not begin until the 
financial, engineering and socio-environmental challenges are ironed 
out, which would take more than a year if done properly.  According 
to this timeline, the earliest the dam could be operational is 
¶2014. 
 
Comment:  Lom Pangar: Right 
Decision, If Done Right 
--------------------------------------- 
 
¶7.  (SBU)  The GRC has good reason to argue that Lom Pangar is 
essential for Cameroon's economic development, but it has been 
shortsighted in its management of the project's very real 
challenges.  As we have seen elsewhere, the GRC's inclination to 
rush project planning and disregard international standards has 
ended up delaying and further complicating the project.  At some 
point, the GRC will be forced to face the fact that its promise to 
have Lom Pangar online by 2012 is simply impossible.  Unless the 
French Government decides to fund the project through AFD as a 
political favor to President Biya, the shortage of alternate 
financing options will likely force the GRC to adopt the World 
Bank's guidelines. 
 
¶8.  (SBU)  We will convey our concern to the GRC-and potential 
alternative donors-about the dangers of seeking to cut corners on 
such a high-profile and sensitive project, but we will also remain 
engaged with the World Bank.  As the World Bank expert explained, 
the Bank also faces competing pressures.  On the one hand, its 
senior management is increasingly scrutinizing adherence to its own 
internal policies, so the Bank will be hard-pressed to give the GRC 
a pass on its tough criteria.  On the other hand, as the World Bank 
expert explained, "if we walk away from Lom Pangar, we will be cut 
out of any future role in Cameroon's power sector."  We will 
encourage the World Bank to remain engaged with the GRC, but stand 
firm on its demands that the project adhere to international 
standards.   End comment.