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The Niger Delta Contractor Revolving Credit Facility (the Facility) was created by IFC, Royal Dutch Shell and a local bank to enable the oil services sector in Nigeria to provide competitively priced term funding to small and medium sized local contractors. This facility was offered to those contractors who delivered services to Shell Petroleum Development Company (Shell) given that access to term funding was essentially non-existent for these contractors in 2001. In June 2001, Environmental Rights Action, the Nigerian chapter of Friends of the Earth, lodged a complaint with CAO raising the following concerns:
Lack of public consultation and transparency during the preparation of the Facility;
The election of Shell as a partner despite its past and present environmental and social record;
Both the employment practices and environmental/social performance of Shell contractors;
Lack of pre-existing regulatory and enforcement conditions supportive of procedural compliance by any oil economy facility operating in the region.
The oil industry has been operating in the Niger Delta for almost 50 years. By far the biggest operator is Shell, which is a joint venture between Shell and the Nigerian National Petroleum Corporation in Nigeria. Prior to 2001, between 80 to 90 percent of the gross revenue derived from oil went to the Federal Government, yet as a result of pressure from the Delta states, the government later increased the revenue percentage. CAO conducted an appraisal and accepted the complaint in June 2001.
Case Status: Closed
The Assessment Report, completed in August 2001, made the following recommendations in order to increase operational relevance and development impact:
Consider criteria to ensure that the Facility benefits contractors who are local and/or indigenous to the Delta;
Develop a participatory monitoring and evaluation program;
Improve awareness of local contractors to the availability of low-interest loans;
Examine the complementary facilities to cater to the express needs of small scale entrepreneurs for micro-credit and to ensure access to credit in the Delta.
CAO’s assessment was rejected by the complainants and CAO closed the case in January 2005.
CAO case story page: http://www.cao-ombudsman.org/cases/case_detail.aspx?id=106