Next Steps (Issue Closed, BP/BTC Action, other) BP/BTC Summary explanation result: Agreement, Disagreement, 2005 followup

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1 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation The summary table below presents the results of a facilitated workshop between and the NGO Social Working Group Representatives held on May 17, Meeting Attendees: Dan Bliss ( BTC,,Social/Community Relation Manager), Matin Akhundlu (BP Community Relation Coordinator), Isabel Miranda (BP, NGO Monitoring Report Adviser), Andrew Buchman (BP,External Engagement Project Strategy Coordinator), Galib Efendiyev (OSI Transparence Oil Revenue and Public Finance Programme Director), Esmira Asadullayeva (OSI, NGO Monitoring Programme Coordinator), Elmira Gasimova (NGO Monitoring Support Officer) Gulaya Guliyeva ( Coordinator of the Social Issues NGO Monitoring working Group), Ilham Huseyinlu ( Evaluator of the Social Issues NGO Monitoring working group), Mirvari Gahramanly (Member of the Social Issues NGO Monitoring working group), Zohrab Ismayil (Member of the Social Issues NGO Monitoring working group), Tamkin Eminly (Member of the Social Issues NGO Monitoring working group). This was an opportunity for us to engage in a constructive dialogue and to hear directly from you your views and recommendations. We are pleased to provide our feedback and we have defined below the following criteria to convey our responses: Accept (A) : We accept the recommendation and finding and we will take steps to address your recommendation or provide evidence on how has already addressed this issue. Accept with Qualification (AwQ): This applies to recommendations or findings where we understand and appreciate the findings and/or recommendations the WG s have made in their course of investigation, but we disagree with some of their views regarding the steps the company has taken to address these concerns. We therefore qualify our agreement in providing details of our policies and actions that already address the issues raised. We also use this criteria in cases where there is a mismatch between the NGO finding and related recommendation. Reject (R): We disagree with the WG finding and recommendation and in the Summary provide our views. In some cases the findings and recommendations needed further investigation and all parties agreed to follow up the discussions in the next round of monitoring. (D-f05).The column in the table reflects actions to be taken where appropriate.

2 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 1. Social welfare and business opportunities of communities affected by BTC/SCP projects 1.1 The process of community mobilisation within the frameworks of the CIP is not very effective in a number of communities. The maximum participation of the local communities in Community Group elections was not ensured. Links between organisations implementing the project and communities are weak. There are conflicts between some Community Groups. Most community members have very little information about the community and projects being conducted in the area Mobilisation of the communities to participate in several welfare and business development initiatives should be enhanced and promoted. New techniques should be widely applied. It is important to strengthen the links between the organisations implementing projects and local communities Suggested Recommendation; The CIP should examine and implement interventions that allow communities to make the most of the CIP. To provide on going opportunities to strong communities and provide support to less able communities AwQ The CIP has an ongoing strategy to build upon the work that has been accomplished to date and maximise the benefits to the communities along the pipeline route. All new programs seek to push communities further in using the skills learned during the first phase and where possible, programs focused on economic development are being implemented. Other reviews of the BTC/SCP CIP have found the opposite to be true in terms of links between the implementing partners and the communities. See public documents SRAP Panel Report (relevant points in appendix 1) and Executive Summary of mid-term evaluation (Appendix 2) A Closed

3 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 1.2 CIP has not covered all of the communities along the route of the BTC pipeline. For instance, despite the establishment of a unified community comprising two villages in Agdash and Kurdamir, only one village has benefited from the project Micro-projects must be implemented in communities that should have been covered by the CIP, but actually have not. The method for prioritising community projects should be improved and preference should be given to projects that will equally benefit several communities AwQ With the inception of the NNGO Capacity Development Program, 106 communities along the BTC/SCP pipeline route will now benefit from the CIP (Appendix 3). The 106 communities include communities outside the 4 km corridor Topal Hasanli for example. Closed 1.3 FINCA has established links poorly with Community Groups. Instead of giving preference to Community Groups and community members in the process of issuing loans, FINCA has built up its business mostly in markets FINCA s mechanism for interacting with communities should be improved and a control mechanism needs to be established over this process. FINCA should be influenced to collaborate with communities in the process of issuing loans and give preference to sustainable projects R Finca s program has a broader mandate than just the pipeline affected communities and is reliant upon clients that have viable businesses and that are able to meet loan qualification requirements. Finca s program is dependent upon turn over of capital in loans and efficiencies in delivery of financial services. Finca has typically focused on urban trade as the mainstay of its portfolio, but under the CIP, Finca has developed additional loan products and is constantly monitoring and responding to demand. See Appendix 4 for a breakdown of current activity. Disagreement. The Monitoring Group and held a long dialogue about understanding concerning mission of microcredit, FINCA.

4 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 1.4 FINCA s interest rates are higher than those of Azeri banks and other micro-loan organisations. This fact increases project risks and impedes the creation of sustainable business structures. FINCA s interest rate policy regarding CIP funds should be revised. A Finca charges interest rates that are supported by the market. Comparing interest rates between Finca and commercial banks is problematic given how different the services are. Many of the loan recipients are in their second, 3 rd and even 4 th cycle of loans indicating a strong and ongoing demand for Finca loans. Finca is currently reviewing and changing their terms on loans and taking other steps that will help the rural population along the pipeline benefit more from their micro-finance program. Agreement Closed Finca is currently reviewing and amending their interest rates as well as the conditionality of their loans to make it easier for rural clients to meet pay back requirements. Please see Appendix 4.

5 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 2. Support for community access to improved social infrastructure 2.1 There is an uncertainty in the handover policy of transferring authority to appropriate bodies to use the facilities launched and financed by CIP. For instance, the Community Centre of Borsunlu community in Goranboy is now being used as a canteen by Community Leader The status of each facility constructed or rehabilitated within the frameworks of the CIP should be determined and transferred to the appropriate bodies for task oriented use with all necessary documentation (i.e. municipality and other communities) AwQ The community center in Borsunlu plays an integral role in the activities of the community (see Appendix 5). BTC/SCP and our implementing partners encourage activities that enhance sustainability. To that end, if the community center can help support itself and serve the community longer by providing fee for services, that is supported. The main issue is that the funds received are tracked in a transparent manner and that the funds go to cover costs associated with the delivery of services as well as serve as a source of funds to supplement the Community s sustainability fund. This will be investigated Agreement Action: list, and status check A list of all infrastructure projects built or renovated under the CIP will be developed with a corresponding indication of on whose balance the structure resides. A review of use of revenue will be conducted in Borsunlu

6 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 2.2 Funds allocated for the implementation of community projects are sufficient for partly resolving a priority problem identified by the communities. (see: Results of CIP monitoring commitments answer to eighth question). Moreover, the principle of the 25% community contribution does not consider the level of community mobilisation. For instance, members of the Garagemerli community in Shamkir could not collect the 25% community contribution and, therefore, children are still studying at school under poor conditions Funds allocated for community projects should be increased; community contribution terms should be lowered in poorly mobilised communities. A model for a pilot project for stimulating public involvement in this process should be created Suggested recommendation; Funds allocated for community projects should be increased; community contribution terms should be evaluated on a case by case basis in those communities that are small or for some other reason unable to meet the 25% in kind contribution. Pilot projects should be considered as a way to stimulate other communities to apply similar projects themselves. AwQ It is unrealistic at this point to increase budgets for micro-projects as most have been completed. The BTC/SCP CIP is continuing to fund the implementation of more micro-projects through other programs and through local NGOs Ojag, MADAD Funds from CIP are intended to help people become better able to resolve their community issues themselves. It is a process, with the micro-projects as a hands on learning experience. The CIP can not be responsible for covering all of the social needs of all the members of all of the communities along the pipeline route. With regard to the 25% in kind contribution this element of the program is something that has been proven in refugee and IDP communities to enhance the sustainability of projects through active participation and ownership by the communities. Garagemerli has mobilized the required 25% and have chosen to implement an artesian well and irrigation program, not a school. A Closed

7 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 2.3 Occasionally, the dominance of a certain group was evident in identifying community problems within the frameworks of the CIP. That impeded the identification of a real priority. The majority of respondents in the communities have indicated problems with gas and electricity as the major issues. However, only a few projects have been conducted to partly resolve the problems with electricity The future policy of the CIP should focus specifically on projects related to accessing energy resources and elaborating task-oriented activities aimed at resolving this problem as communities consider this to be the most problematic issue Suggested Recommendation; Where possible and within the limits of available microproject budgets, the CIP should strive to assist communities in improving access to energy AwQ Under the CIP, 6 communities have rehabilitated their electrical systems by installing new transformers and/or electric cables/poles and one community in Hajiqabul repaired the gas line to the school. Access to energy is a widespread problem throughout Azerbaijan and meaningful interventions cost a great deal more than what is available in the CIP funding. Please refer to the original objectives of the CIP RFP there is no indication that CIP ever intended to address the issue of access to energy, but we are developing a community based program that includes energy management and renewable energy. Where possible, BTC/SCP will work with communities on energy management and renewable energy through future programs as well as coordinate with BP s Energy Bus to deliver workable energy related solutions implementable at the local level. Closed

8 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 2.4 The sustainability of micro-projects has not been properly considered. Thus, there is no control mechanism over the implementation of project sustainability plans in some communities. Examples of this are the reconstructed roads in the Saritepe village of Shamkir, the artesian well project in Akstafa Closer cooperation should be maintained with communities for project sustainability and to develop sustainability plans on infrastructural development Suggested Recommendation; Communities should receive sustainability training to ensure that implemented micro-projects can be managed and maintained by the communities themselves over the long term. AwQ (or rewrite) Both IRC and Save the Children have implemented sustainability training for those communities with completed projects. The focus of the trainings involve the development and management of a community fund that will be used to maintain the rehabilitated infrastructure and also serve as a source for funding future projects by the communities. IMC is also doing the same thing through their Community Health Management Boards for the clinics along the pipeline route. Closed

9 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 3. Support for agricultural development in regions along the pipeline route 3.1 Loans are not favourable for agricultural development in a number of regions along the pipeline given high interest rates and timeframes. Therefore, the number of people receiving loans from FINCA for agricultural projects is extremely low. People who have received loans for agricultural projects are reluctant to do so again. For instance, during interviews held in Shamkir, farmers expressed their concern with regard to loan process and interest rate. More efficient and longterm loans should be created for agricultural development: The aim should be to establish control over a stable turnover of funds allocated for FINCA within the 4-km corridor Suggested Recommendation; A review of Finca s loans targeted at rural clients should focus on better meeting the needs and capabilities of loan recipients involved in agriculture or animal husbandry A, with new version The CIP micro credit program was not designed specifically for the agricultural sectors along the pipeline. It is a tool designed to provide access for the smallest and poorest of entrepreneurs to capital and to help those entrepreneurs to move from subsistence level activities to more commercially viable activities (see Appendix 4). The local NGO Agro Informazi Merkezi (AIM) is responsible for most of the support from the CIP at this point in time to the farmers along the pipeline route. See the end of Appendix 2 for information on AIM from the mid-term evaluation of the CIP. The evaluators were impressed with the over 70 handsome brochures on modern farming and livestock that AIM uses both in trainings and for distribution to farmers. All of the newly trained Extension Agents that we interviewed felt the trainings gave them the necessary tools to earn money as consultants to farmers. Closed

10 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 4. CIP Implementation Strategy and Efficiency of the CIP 4.1 The implementation of the CIP mostly by four international NGOs is not economically efficient. A significant amount of the funds allocated to international NGOs is spent on office maintenance, salaries and transportation and travel expenses More national NGOs should have an increased role in CIP implementation A, to recommen dation, R to finding requests further clarity on what the Social Working Groups means by economically efficient. has also requested information on the data that supports this conclusion Closed see 1.2 above and appendix 3

11 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 4.2 In some cases, there is a discrepancy between the expenditures envisaged in the micro-project budget and real market prices. This creates the impression that funds allocated for micro-projects are sometimes being spent aimlessly It is important to audit the financial activities of certain international NGOs, particularly, IRC and IMC with the aim of increasing the efficiency and taskoriented fashion of spending the funds allocated for the implementation of CIP projects A, to recommen dation, disagree R to finding Budgets and procurement for purchases associated with micro-projects are strictly controlled by the implementing partners. There has been an increase in the price of construction materials since the start of the CIP by as much as 50%. Available budgets have had to be re-aligned and in some cases compromises had to be made. In all instances, BTC/SCP has pushed for a level of quality in materials and workmanship that satisfies the communities. Additionally, BTC/SCP has insisted that any new structures be built with 40 cm walls and not 20 cm walls in the interests of safety. The CIP implementing partners are held to very stringent standards on financial reporting, with supporting documents required for every expenditure. Additionally, each of the implementing partners are audited annually by their own organizations and third or independent parties. The CIP will audit the financial aspects of at least 10 micro-projects to make sure that materials and items purchased correspond to budgets.

12 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 4.3 The process of drafting, assessing, approving and implementing microprojects sometimes takes several months and there is no flexibility in this process. This causes discrepancies between the budget of the expenditure and real market prices during the period when the price rises. Eventually, it has a negative impact on the quality of construction More flexibility should be introduced in the process of drafting, assessing, approving and implementing micro-projects A findings R - recommen dation The proposal approval process is strictly controlled to ensure that moneys are being used properly and it is a learning process for the communities to develop quality proposals that will realistically deliver the types of projects intended. With flexibility, a degree of control is lost on the one hand the SWG would like more accountability and on the other hand the SWG wants more flexibility. Although the two are not mutually exclusive, it is difficult to find a workable middle ground No action

13 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 5. Impacts BTC construction activities on the local communities and infrastructures % (188 respondents) of those involved in the questionnaire survey stated their disturbed by heavy equipment and machinery. The list included five factors stated as causing a disturbance. 49% (119 respondents) explained this disturbance as being primarily related to noise produced by heavy machinery and other equipment. 50% (136 respondents) complained primarily about the noise created during the day Local communities should be better informed in advance about the progress and movement of construction activities and places where heavy equipment and machinery is to be used to allow them to know when noise or other temporary disturbance will occur in construction areas AwQ: recommenda tion R: findings disturbed is a difficult term to interpret in the context of this statement. BTC/SCP conducted regular monitoring of noise levels and regularly watered areas where dust was a problem On page 18 of the report at the bottom of the page it is stated that 89% of respondents received information regarding the construction of camps and facilities related to the BTC/SCP pipeline project. Continue to provide communities with information about the project through BTC/SCP CLOs and contractor personnel via consultation and community safety meetings

14 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation % (95 respondents) are concerned with the behavior of expatriates employed in construction outside of the camp. 47% of the complainants are disturbed by their clamor while 40% are concerned with their fast driving Prior to commencement of the project it is important to develop guidelines for increasing the awareness of expatriates on local culture and behavior and maintaining positive relations with the communities A This may be true but in the question preceding this one that asks if people were disturbed by the behavior of expats outside the camp, over 88% said they were not bothered at all, not considerably or to some extent. Only 11% said that they were very much disturbed. As part of the induction process, each worker is required to participate in a training focused on cultural sensitivity and community interactions Continue to conduct cultural awareness training as part of induction for all new contractor and BTC/SCP staff

15 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation % (81 respondents) lodged complaints up to seven authorities and organizations about problems and disturbance caused directly and indirectly by pipeline construction. 61% of the complaints have been addressed to local authorities while 10% to BP and its associates. 46% of the complainants (37 persons) received a positive response while 51% (41 complainants) indicated that they had received nothing whatsoever. Overall, only 28% (23 complainants) were to some extent satisfied with the responses It is important to establish a hot line service to create the opportunity for the BTC affected local communities to lodge their complains on social problems to. At the same time the companies Community Liaison Officers should closely acquaint the local communities with grievance management procedure to assist them to address their complains to appropriate bodies A Both Contractors and BTC/SCP maintain a database of complaints registered with the contractors or with BTC/SCP. We can not be responsible for complaints directed to other organizations or entities. The local NGO CLEE regularly monitors close out and satisfaction level of complainants in a random fashion and on a regular basis. All communities along the pipeline route are visited regularly by BTC/SCP CLOs. Additionally, the municipality members, community action groups, the Executive committee representatives in the village all have the phone numbers of the CLOs that are responsible for their respective villages. This issue was also discussed with the Local Content Working Group under the NGO Monitoring Programme. The suggestion made was to post CLO phone numbers in all the relevant villages so they can been reached when needed. The BP hotline number will also to be posted. BP ACTION: Take under consideration, ensure hotline

16 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 5.4 Roads in most villages and settlements located along the route of the BTC pipeline have been affected due to the movement of heavy machinery and large-tonnage lorries during construction activities. For instance, roads in Shamkir, the Muzdurlar community in Goranboy, the Garadagli and Shikhimli communities in Ujar and the Armali community in Kurdamir sustained significant damage during the construction activities. Overall, the majority of the roads used for construction purposes sustained damage Note: Other proposals and recommendations for eliminating impacts on social infrastructure have been presented by the report of the Working Group on the Use of Local Resources entitled, Assessment of BTC Pipeline Impact on Economic condition of the Regions. For detailed information, you may refer to this report AwQ The contractors are obligated to repair the roads that were used for construction purposes to at least original condition. The contractors took photographs and recorded the conditions of roads at the start of the project and so have a baseline that will be used to make sure that roads are in as good or better condition than when the project started. This is an ongoing process throughout the construction phase. Ongoing

17 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation 5.5 In a number of communities, homes located within the vicinity of the roads that were crossed by heavy machinery and lorry traffic endured cracks and damage. Among the communities visited by the monitoring group, up to 50 homes in the Girag Kasaman community in Akstafa and Shikhimli community in Kurdamir have been damaged. 5.6 Irrigation systems, which were utilised by the communities, sustained damage during construction activities The claim of those whose homes have been damaged by BTC construction should be investigated, and alleged damage to the personal property should be indemnified. The concrete addresses of claimers have been presented to. Micro-projects should be implemented in all communities that have been affected by BTC in order to eliminate negative impact. Suggested Recommendation; Irrigation or other infrastructure damaged during construction activity along the right of way and access roads should be repaired as soon as possible AwQ R as written, to redo recommenda tion BTC/SCP and CCIC have investigated these complaints. SOCAR, the Cabinet of Ministers also sent a commission to review the validity of the complaints. We are still working to ascertain the validity of the claims. One of the main findings of the commission was that the houses were not built in accordance with accepted building norms. Irrigation across the right of way is an ongoing process and often involve the contractor having to move equipment up and down the pipeline to repair or install appropriate flume pipes across the right of way. This process is very time consuming, but work is done and complaints are closed out. Potential verification in 2005 Monitoring Programme New complaints will be processed in accordance with current grievance procedure Continue to work with farmers and others and Contractors to ensure that damage is minimized and repaired as soon as possible.

18 2004 NGO Monitoring Programme BTC Pipeline Project Workshop: OSI-AF NGO Working Group Date: 17 May 2005 on Report Findings, Recommendations and Social Working Group No. NGO Finding Related Recommendation Summary explanation