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Implementation Completion Report (ICR) Review - Environmental Management Capacity Building Pilot Project Of The Hydrocarbon Sector

1. Project Data:   
ICR Review Date Posted:
Project Name:
Environmental Management Capacity Building Pilot Project Of The Hydrocarbon Sector
Project Costs(US $M)
 5.8  3.27
Loan/Credit (US $M)
 4.8  3.0
Sector, Major Sect.:
Central government administration, Other social services, Oil and gas,
Law and justice and public administration; Health and other social services; Energy and mining
Cofinancing (US $M)
 0.0  0.0
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
12/03/2003 04/30/2005
Evaluator: Panel Reviewer: Division Manager: Division:  
Alvaro J. Covarrubias
Ronald S. Parker Alain A. Barbu IEGSG

2. Project Objectives and Components:

a. Objectives
The overarching objective is to improve the social and environmental management of the hydrocarbon sector. Specifically, the project was expected to: (a) strengthen the capacity of institutions and communities involved in or affected by hydrocarbon sector activities to participate in the regulation and mitigation of social and environmental impacts; (b) improve stakeholder access to relevant information in a timely manner; (c) improve the capacity of the VMEH for on-site monitoring, evaluation, and reporting; (d) increase knowledge of the extent of problems in the development and implementation of Environmental Impact Assessments (EIAs) and increase compliance with EIAs and application of best practices by oil companies; (e) analyze and develop mechanisms for financial sustainability of social and environment management; (f) review and make compatible existing regulations and develop new regulations when necessary; and (g) develop and pilot a participatory, institutional framework that would facilitate the processes described above.

b. Components (or Key Conditions in the case of Adjustment Loans):
1. Institutional Strengthening(appraised US$2.6 million; actual US$1.67 million): (a) technical assistance for the regulation and mitigation of social and environmental impacts of hydrocarbon activities; (b) training of government agencies' staff, civil society organizations, locally affected communities and local consultations; (c) inter-institutional coordination to establish an Inter-Institutional Technical Coordinating Council (ITCC) and Regional Technical Councils (RTCs) and implement a series of workshops and seminars to facilitate coordination of regulations and operational procedures; (d) consultation workshops with stakeholders.

2. Logistics and Communication(appraised US$0.3 million; actual US$0.24 million): acquisition of essential equipment to facilitate the work of government agencies contributing to information sharing among all stakeholders. Implementation of a web-site within the framework of the Environmental Action Plan for the Hydrocarbon Sector.
3. Information Baseline and Studies(appraised US$1.7 million; actual US$0.58 million). The studies included: (i) sustainable financing of an environmental regulatory framework; (ii) analysis and development of a strategy for the dissemination of public information, consultation, and participation; (iii) coordination of regulations, procedures, roles and functions; (iv) analysis and design of procedures for social and environmental regulation and mitigation; (v) analysis of social and environmental practices of oil companies and development of best practices guidelines; (vi) preparation of seven regional case studies; and (vii) assessment of hydrocarbon sector contingency plans.
4. Administration, Coordination and Monitoring (appraised US$1.2 million; actual US$0.78 million): (i) creation of Project Coordination Unit (PCU); (ii) hiring of external consultants to provide an independent annual evaluation progress; and (iii) external audits.

c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The project cost US$3.27 million (56.4 percent of the original cost estimate) of which the Bank financed US$3.00 million (92.5 percent of the Credit) and the Government contributed US$0.27 million equivalent in local cost (27.0 percent of its originally estimated contribution, only for project component 1). Activities not carried out in project component 1 (training of government agency staff, civil society organizations, locally affected communities) and in project component 3 (analysis and development of a strategy for the dissemination of public information; systematic mechanisms for consultation and participation; proposed mechanism for financial and institutional sustainability of social and environmental management of hydrocarbon sector; and several regional case studies) were the main causes of lower project cost. The Credit closing date was extended twice for a total of 16 months. The second extension allocated time and resources to support the preparation of a new Hydrocarbon Law and help the Government develop a consultation/information process to pass a revised legal framework. This key activity was added as project component 5 towards the end of project implementation.

3. Relevance of Objectives & Design:

The development objective was and continues to be important and timely for the economic and social development of Bolivia. Since the 1997 reform and capitalization of the hydrocarbon sector in Bolivia and access to the Brazilian natural gas market, the private sector has made huge investments in exploration/production and construction of pipelines (about US$800 million per year, on average). There are 17 oil companies active in exploration and production activities with a drilling program of about 19 exploration wells a year in five prefectures, nine indigenous people community areas, and nine protected areas creating significant social and environmental impacts. Consequently, there was and still is a strong need for improved socio-environmental management of hydrocarbon exploration, production and transportation activities, including compliance of operators with social and environmental regulations, and coordination and agreement among national, regional and local government agencies on their respective roles.

The process of learning and innovation (LIL) was applied for the first time in Bolivia, and the participatory approach chosen for project design had the flexibility to adjust the timing of activities and flow of funds during project implementation as needed.

The project was not mentioned as one of the key lending operations under the Bank's Country Assistance Strategy for Bolivia. However, it was discussed in the Comprehensive Development Framework and it was expected to contribute to the Opportunity Pillar by contributing to: (a) increasing and maintaining physical productive infrastructure and the capacity of the public and private sectors to manage it; (b) strengthening the regulatory framework and promoting private participation; and (c) strengthening the key performance indicators of the CAS and CDF in terms of mainstreaming environmental and social safeguard compliance in infrastructure projects.

4. Achievement of Objectives (Efficacy) :

The management of the social and environmental impacts of exploration, production and transport activities of the hydrocarbon sector were not improved. The absence of Government commitment compounded with political instability, social conflicts and financial austerity (lack of counterpart funds) were major factors. Lack of consensus in the ITCC and RTCs, and lack of coordination and cooperation among key Ministries (Ministry of Economic Development, Vice Ministry of Energy and Hydrocarbon, and Ministry of Sustainable Development) led to significant delays in decision-making, or to cancellation of relevant activities and studies.

(a) Strengthening the capacity of institutions and communities involved in or affected by hydrocarbon sector activities to participate in the regulation and mitigation of social and environmental impacts(achievement: modest). The indigenous peoples organizations of the Amazonian region that live near the oil operations now have come to know about the hydrocarbon activities, the new Hydrocarbon Law, and the benefits and risks of the sector.
(b) Improving stakeholder access to relevant information in a timely manner(achievement: modest). The project helped in strengthening public consultation on Environmental Impact Assessments in La Paz and Santa Cruz, but the web-site created to disseminate sector information to stakeholders did not fully achieve its objective because many of them either don’t have access to the Internet or are not aware of the existence of the web-site.
(c) Improving the capacity of VMEH for on-site monitoring, evaluation, and reporting (achievement: negligible).An office of Environmental Monitoring and Control (OSCA) was established at Santa Cruz, fully equipped and staffed with highly qualified technical staff. Although it performed on-site monitoring and evaluation, and reported during project implementation, this capacity is no longer available because fiscal austerity measures did not allow for inclusion of OSCA in the latest national budget. Consequently, the staff left once their contracts finished at the end of the project.
(d) Increasing knowledge of the extent of problems in the development and implementation of EIAs and increasing compliance with EIAs and application of best practices by oil companies(achievement: negligible). Only studies on methodologies and development of environmental regulations, a best environmental practices guide and an action plan for contingencies in the hydrocarbons sector were realized. Planned field studies were not undertaken.
(e) Analyzing and developing mechanisms for financial sustainability of social and environmental management (achievement: negligible). The study was not done.
(f) Reviewing and making compatible existing regulations and developing new regulations(achievement: negligible ). Some studies were completed but new regulations were not prepared due to lack of Government funds.
(g) Developing and piloting a participatory, institutional framework that would facilitate the processes described above(achievement: negligible).The study was initiated but not completed.

5. Efficiency:

No quantitative measure is applicable to this learning and innovation operation. However, the meager benefits yielded by the project, reflected in its unsatisfactory outcome, its negligible institutional development and its unlikely sustainability indicate a very poor efficiency of the funds invested in it.
6. M&E Design, Implementation, & Utilization:

Responsibility for monitoring and reporting progress against quantitative indicators contained in the PIP rested with the PCU in La Paz. Project implementation reports were to include copies of the minutes of ITCC and RTCs meetings and reports on the status of agreed actions from those meetings. It can be inferred from the ICR that the PCU collected and reported the indicators contained in the PIP and that the Bank utilized them well. However, it is not clear whether the three external evaluations contemplated in the M&E design were carried out at all.
7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):


8. Ratings:
ICR Review
Reason for Disagreement/Comments
Institutional Dev.: 
Bank Perf.: 
Borrower Perf.: 
Quality of ICR: 

- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

9. Lessons:

(1) National and regional technical councils can make significant contributions to the development of the hydrocarbon sector generally, and they can lead to improvements in social and environmental management. However, in practice there is a risk that, without proper guidance, they can evolve into ineffective bodies where the participants make demands unrelated to the social and environmental management of the hydrocarbon sector.

(2) Training of indigenous people on social and environmental management can be achieved by involving them in the work of the offices doing the actual environmental monitoring and control. This gives them the opportunity to gain hands-on work experience in the social and environmental problems of the hydrocarbon sector, and it helps them to appreciate the Government’s points of view, and to begin looking at the Government as a partner rather than as an adversary.

(3) Participants in learning and innovation operations should have clear roles: (i) Local communities should play an active role in activities such as monitoring and evaluation; (ii) National federations should play a key role in passing new laws and regulations; and (iii) Only those NGOs genuinely representing civil society should be included as members of institutions such as national and regional technical councils, and their role should be as facilitators and not as decision-makers.

(4) The Bank should launch a learning and innovation operation only after getting a firm and genuine commitment of the Government to the project. Also, active participation of the Bank’s environment and social science experts is very important during project implementation, especially during periods when the project is going through difficult times.

10. Assessment Recommended?  Yes

          Why?  (i) Unsatisfactory outcome of a learning and innovation operation; (ii) find out more why the creation of national and regional technical councils did not work as planned in this project; (iii) assess to what extent the relationship between the indigenous people and the Government has improved in connection with the hydrocarbon sector activities.

11. Comments on Quality of ICR:

The ICR complies with the Bank guidelines for ICRs. However, elaborating on the lessons of experience stemming from the collection and utilization of indicators obtained as a product of project monitoring and evaluation would have increased its utility.

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