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Washington, December 9, 2005
— The World Bank Group released figures on its extractive industries portfolio today, showing a marked increase in financing for small and local investors, renewable and natural gas energy lending, and transparency initiatives designed to reduce corruption and improve poverty reduction. The data is part of an annual report that the World Bank Group provided to its Board a year after a wide-ranging review of its involvement in the extractive industries.
"We made several commitments to implement reforms as part of the extractive industries review," said Rashad Kaldany, director of the IFC/World Bank Oil, Gas, Mining and Chemicals Department. "This first report demonstrates that we are making considerable progress in extending our leadership position in sustainable development of the extractive industries." However, the report also noted the importance to work with local communities to ensure development. “Working with communities, investors and governments to ensure that communities benefit in the long run is a complex challenge, and we will continue to learn from our experience,” Kaldany said.
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The World Bank Group substantially increased its support for cleaner energy, such as natural gas, in fiscal year 2005, which ended in June. Gas investments accounted for 62% of oil and gas projects. International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) private sector financing in the extractive industries was concentrated in the oil and gas sector, at 81%; of this, gas projects accounted for 53%.
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World Bank Group’s financial support for renewable energy and energy efficiency rose to $748 million, more than doubling the previous year’s levels.
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Some 56% of IFC’s and MIGA’s investments are with local companies in developing countries or small internationals. In such cases, there is a particularly strong role for the World Bank Group in helping develop capacity among companies and at all levels of government to ensure sustainable development outcomes.
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The World Bank Group, in partnership with the UK Department for International Development, made significant progress over the past year in strengthening the Extractive Industries Transparency Initiative (EITI). The World Bank is now working with more than 20 countries on implementing the initiative.
The report indicates that the level of World Bank Group financing for natural resource investment is expected to grow. Increasing interest in extractive industries from developing country investors against the background of high commodity prices will likely mean more World Bank Group support to “South-South” investments, in which companies from countries such as India and China look to invest in other emerging markets.
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