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Part 2: Yabog Expansion Project and Gasyrg Pipeline Project The Yabog expansion project and the Gasyrg pipeline project are closely related in terms of their environmental and social impacts. Both pipelines follow the same route from the San Alberto and San Antonio gas fields near Yacuiba in the Tarija region to Rio Grande, where they connect with the Bolivia-Brazil pipeline.
The Yabog Expansion Project
The Yabog expansion project will raise the capacity of the 30-year-old Yabog pipeline, owned by the Bolivian hydrocarbons transportation company Transredes. The project will take place in phases throughout the next seven years according to market demand. The capacity of the 24-inch Yabog pipeline will initially increase from 8.2 million to 14 million cubic meters per day (cmd) although much larger expansion could follow.
The first stage of expansion of 6 million cmd was awarded an environmental license in late 2001 and is already underway. A new pipeline is being installed alongside the existing pipeline connected by 30-inch parallel loops. Initial expansion will be completed in October 2002 and is expected to cost US $40 million. Further expansion plans over the next seven years and other upgrades could cost over US $434 million.
Transredes has requested an estimated US $250 million from multilateral development banks. The Inter-American Development Bank (IDB) is currently reviewing a proposal for a loan of US $125 million to finance the Yabog Expansion Project and the upgrade of Transredes-owned gas transportation infrastructure. The Andean Development Corporation (CAF) is also considering financing for the same projects through a loan to Transredes.
Financing could be jeopardized by the financial collapse of Enron, part-owner (25%) of Transredes. IDB approval of the Transredes loan would deepen the bank's connection with Enron at a time when other multilateral banks such as OPIC are canceling Enron loan agreements. Moreover, a Bolivian government commission is investigating alleged irregularities in contracts surrounding the creation of Transredes, which were signed by Enron and Bolivia's state oil and gas company YPFB.
Further Yabog expansion is also dependent on Transredes reaching agreements with the Transierra consortium involved in the Gasyrg project to settle gas supply and tariff issues. In addition, another environmental license must be solicited.
Inter-American Development Bank Project ID: BO-0192 Transredes S.A.
Total Amount of Loans: $US 125 million to "Transredes S.A", a company in which Enron and Shell each have a 25% stake, and jointly have administrative control
- $75 million direct loan (type A)
- $50 million syndicated loan (type B). Although the $50 million will be syndicated through private banks, the loan is an Inter-American Development Bank loan
Description of Enron's involvement in the company Transredes
Representatives from the Inter-American Development Bank continue to make disingenuous arguments that they are not financing Enron because Transredes is a self-sufficient Bolivian company, and the investments in Transredes are solvent and independent from the part of Enron that went bankrupt in the U.S. In reality, Transredes S.A. is a capitalized company created in 1997 in Bolivia (capitalization is partial privatization, in which the State typically retains a 50% stake, leaving the remainder to private investors. However, through capitalization, private investors do not pay the State proceeds, but, rather commit to invest in the newly capitalized company) Through capitalization assets from the Bolivian state oil and gas company YPFB were transferred, and Enron and Shell allegedly invested US$ 263.5 million, obtaining 50% property rights and administrative control (note, whether Enron actually invested money is uncertain). Transredes is in charge of hydrocarbons transport in Bolivia. The ownership structure of Transredes is: Enron (25%); Shell (25%); (both Enron and Shell via TR holdings); two Bolivian Pension Funds, Futuro de Bolivia AFP and AFP Previsión BBV (34%), and private investment funds and former workers of YPFB (16%)). Therefore, the state no longer has 50% ownership, as was originally agreed upon by the World Bank and Inter-American Development Bank. Interestingly, Ivan Rodriguez of Transredes said that of the 16% that is comprised of ex employees of YPFB, some of them had sold their shares to private companies Fondelec and Indosues.
Allegations that Enron's Entrance into Bolivia was not through an Open Bidding Process
excerpt from Jimmy Langman's August 2002 article in "Latin Trade":
"Bolivia’s Congress, too, is looking into corruption allegations involving Enron’s acquisition of 40% of the Bolivian side of the lucrative Bolivia-Brazil pipeline and 50% of the state’s oil and gas company transport unit during the 1993-97 government of Gonzalo Sánchez de Lozada.
Bolivian Congressman Armando de la Parra heads the investigation. Among the “irregular” details in the Bolivia-Brazil pipeline deal are provisions that allow Enron to set up the venture as an offshore company free from Bolivian taxation, de la Parra charges. He also says that the original pipeline contract between Enron and Sánchez de Lozada was illegal because it was created under New York state, not Bolivian, law.
Parra alleges that Enron also had a suspicious advantage in the public bid for the pipeline. “The other companies invited to bid had only 13 days advance notice, while Enron had been in communication about it with Sánchez de Lozada’s offices for five months prior,” says Parra. “And then, a detailed 20-page memorandum of understanding was signed just two days after Enron won the bid.”
Corruption Allegations
Excerpt from Jimmy Langman's July San Francisco Chronicle article: "In a televised debate, Jorge Richter, a congressional candidate of the New Republican Force party, alleged that he had documents proving that Enron paid a $2.5 million bribe in 1994 to officials of the state-owned oil and gas company, known as YPFB, to influence the privatization process."
The Gasyrg Pipeline Project
The Gasyrg pipeline project involves the construction of a new 280 mile 36-inch gas pipeline by the Transierra Consortium composed of Petrobras, Total and Andina. Maximum pipeline capacity will stand at 50 million cmd. A new pipeline right of way will be cut through the forest several miles from the Yabog pipeline.
The environmental license for the Gasyrg pipeline project was finally granted in December 2001. The commencement of construction was announced February 2002 and the pipeline is due to be online in January 2003. US $120 million have already been spent on pipelines and materials and total investment is estimated at $300 million but the consortium has yet to clarify financing sources.
Yabog and Gasyrg - Environmental Impacts
The Yabog and Gasyrg pipelines traverse a mixture of populated, semi-populated areas and indigenous territories. Along the route there are lowland, mid-level and montane forests. 97% of the forests along the route are dry Chaco forests and 3% are wet forests. Bolivia's dry forests are among the richest in the world and are classed as 'globally outstanding' in the WWF/World Bank ecoregions conservation assessment. The biota of the region has affinities with the Amazon and contains many endemic species.
Concern over the environmental impacts of the Transredes project is aggravated by the company's poor environmental track record. In 2000, the spillage of 29,000 barrels of oil into the Desaguadero River from the Sica Sica-Arica pipeline resulted in major environmental damages. The spill caused $ 2.2 million of economic damage and affected 18 municipalities.
Yabog and Gasyrg - Impacts on Indigenous Peoples
The Yabog and Gasyrg pipeline projects cut through large sections of Guaraní and Weenhayek indigenous ancestral homelands including 6 legally recognized indigenous community territories, which contain 13 Guaraní communities and 3 Weenhayek communities.
The Guaraní and Weenhayek registered official complaints in response to Transierra's environmental impact assessment. The Weenhayek people and their organization ORCAWETA oppose the pipeline as it cuts their land in two. They also fear threats to their livelihood, food and water supply, cultural integrity and psychological well-being.
The Guaraní Peoples' Association has been vocal in its opposition to fossil fuel extraction operations on Guaraní territory citing damaging environmental, social and cultural impacts. The Guaraní reject both pipeline projects and demand that all plans for development in their territories be based in their own ecologically and socially sustainable Indigenous Development Plan.
These peoples report that after 30 years of activity surrounding the Yabog pipeline, game has fled the area and communities are forced to travel long distances to hunt. They fear that renewed construction activity will worsen this problem. The Weenhayek rely principally on fishing for subsistence. Transredes recognizes the possibility of spills and both projects pose the risk of contamination of local communities' water supplies, reduction in fish stock and loss of work through local fishing industry.
The new Gasyrg pipeline will open up new access to the forest and will result in increased colonization to hitherto unpopulated areas and indigenous territories. Conflict over land and natural resources is likely. A reduced natural resource base will result in malnutrition and health problems for communities. The need to acquire alternative sources of food will increase dependency on wage labor and exploitative participation in the market economy.
Both pipeline projects will bring an influx of workers bringing various social problems - sexual harassment of local women, crime, prostitution and a burden on local services and the natural resource base. The Yabog expansion project alone will require 2,200 workers.
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