Interview: Why did an oil company launch a development initiative in Bangladesh?

Contaminated water in Karial slum, one of the urban slums of Dhaka. (UN Photo/Kibae Park)

Oil and gas giant Chevron is trying to take its experiences in the private sector and apply them to international development. It has implemented programs in Angola, Nigeria, Kazakhstan and now Bangladesh. The company committed $10 million to its five-year Bangladesh Partnership Initiative (BPI), in September. Its aim is to “promote economic stability, job creation and accelerate sustainable growth in local communities where Chevron operates.”

A year prior Chevron finalized a deal to provide roughly $130 million in compensation for its oil spill in the ocean northeast of Rio de Janeiro, Brazil. Roughly one-third of the money will be devoted to social and environmental projects, according to the company.

Fellow oil companies, like Exxon Mobil, have moved into the development sector in the past few years. I posed some questions via email to Chevron Bangladesh Country Manager Geoff Strong about the corporation’s new program, its intentions and Chevron’s motivations in Bangladesh. Here is what he had to say:

Why does Chevron think it is important to invest in a development program in Bangladesh?

We have learned through decades of experience that our business success is deeply linked to development and progress of the communities in which we operate. In this vein, Chevron has launched the Bangladesh Partnership Initiative (BPI), a new, five-year, $10 million social investment initiative focused on supporting economic development in the communities around our operations in the country’s greater Sylhet region.

The opportunities to support development in the Sylhet region are particularly significant. When we started developing projects in 2006, over one-third of all households in this region were living below the poverty line. These were predominantly agrarian communities in an area with virtually no industrial presence. So, with challenging development conditions come huge opportunities to improve their lives and to be a part of their success.

What similar programs to the one in Bangladesh has Chevron undertaken? Can you describe the impact and the lessons learned from those programs?

Chevron has for many years worked to implement a similar partnership model in other countries. Starting with an initial program in Angola, Chevron has approached development and social investment in several areas, building off successes and lessons learned along the way.

Notably in Nigeria, Chevron developed the Niger Delta Partnership Initiative (NDPI) to support programs aimed at generating economic development and peace in the Niger Delta region. NDPI is focused on creating sustainable livelihoods by increasing income, employment opportunities and equitable economic growth in the region. To date, NDPI has trained more than 5,500 people through 51 training programs, including 400 local business owners and employees; created 600 new jobs and established 172 partnerships so far; and encouraged other international organizations to get involved, generating an additional $50 million in funding, for a total of $90 million to date.

Following the success of the private-partnership model of NDPI, Chevron is taking a similar approach to economic development in Bangladesh through BPI and also in western Pennsylvania through the Appalachian Partnership Initiative, which will focus on workforce training to help create jobs and grow the economy of the region.

Given that Chevron already employs more than 4,000 people, why not support development by expanding your own job base?

At Chevron, we know that if our communities succeed, then we succeed. We help local communities share in the success of our operations through local hiring. We have provided employment opportunities for about 1,200 local workers on the Bibiyana Expansion Project and have spent an average of nearly $6 million this year on goods and services with local businesses in the Bibiyana area alone.

But we also know that social investment and partnerships can create a far greater impact than financial investment can achieve alone. That’s why we work on building local capacity and community programs, like BPI, as it is a complementary approach to development that helps to magnify impact. This approach also advances the economic strength of the region by building a better educated community that is prepared with the skills necessary to fill the jobs Chevron and other industrial entities have to offer.

Which organizations will you be partnering with in Bangladesh? How will you work together?

Bangladesh is on the leading edge of innovative development practices, so there are strong economic development models available here that we can build on and many capable partners with whom we look forward to collaborating. BPI builds on 10 years of initiatives with local NGOs and will continue to engage new partners and opportunities.

Chevron recently commissioned three strategic studies by internationally reputed institutions to understand the landscape and to link the local context and opportunities with the local and national market structure. To start, an economic opportunity assessment was done by U.S.-based research firm Global Development Solutions (GDS) to develop a household profile of target communities and to capture the commercial activities to help identify intervention points with the most potential. A second study conducted by GDS identified a list of sectors and projects that would increase utilization of current local enterprises, through both import- and export-oriented market opportunities.

A third study was conducted by international firm Swisscontact, which will help strengthen and expand the existing village self-help groups to generate improved livelihoods and social inclusiveness in priority unions. Besides these three strategic studies, Chevron is in discussion with leading private sector and bi-lateral and multilateral donors to identify partnership opportunities.

Are there other financial commitments coming from partners for BPI?

The financial modalities of BPI are still being fleshed-out, but Chevron will look to partner with and leverage funding from multilateral donor agencies, local chambers of commerce, and other companies with a strong presence in Bangladesh to drive sustainability and accelerate economic growth.

What kinds of things do you envision BPI doing? Please be as specific as possible or reference examples from previous initiatives.

Over the next five years, the BPI will establish enterprise and workforce development programs in the areas where Chevron operates. The objective of these programs is to promote economic stability and accelerate sustainable growth. Chevron plans to partner with government and private sector enterprises through this initiative. To enable successful outcomes, the program will also support expanding the geographic coverage and social inclusiveness of existing Chevron sponsored microenterprise oriented Village Development Organizations, while strengthening access to broader economic development opportunities.

Will the program end entirely in five years? What structures are in place so that people benefiting from BPI sustain their improvements?

While we can’t yet know the exact outcomes or next steps of BPI, we are employing a partnership-based approach that focuses on longer-term, multi-year endeavors necessary for sustainable development. We envisage long-term lifecycles for each of our programs. We advocate sustainable initiatives, and we continue to support them until the beneficiaries are able to drive them on their own. BPI reflects an evolution in our approach to community development. For instance, because of the significant and tangible results from NDPI, Chevron decided to renew its commitment for another five years to ensure continued growth and development of the region.

Is BPI more like a pilot program that you intend to scale across the country and elsewhere in the world?

Chevron’s first partnership initiative in Angola served as a pilot program and has proven to be widely successful since its inception. Chevron has used this partnership approach because it can easily be scaled and replicated for regions across the globe to address the needs specific to those regions. In addition to BPI, economic development programs similar to the one in Angola have since been implemented in Nigeria and Kazakhstan, and will also be implemented in Pennsylvania and Thailand.

To what extent does environmental protection part of Chevron’s work in Bangladesh?

Chevron believes that preserving a clean, safe, healthy environment must go hand-in-hand with meeting the world’s energy needs. We are continually evaluating and striving to improve our processes to reduce pollution and waste, conserve energy and natural resources, and reduce the potential for environmental impacts of our activities and operations.

Chevron’s Alternative Livelihood and Village Development Organization programs help local communities build sustainable livelihoods around responsible agriculture, aquiculture and livestock rearing. Our program has successfully blended economic development and environmental stewardship. Families now use improved cooking stoves that have not only reduced their household fuel expenses, but also consume less firewood from precious forests nearby. The program has also provided solar photovoltaic panels and biogas plants as environmentally-friendly, affordable energy sources.

Chevron’s Community Development Green Initiatives program aims to boost the production of organic and high-yielding varieties of fruit, vegetable, cash-crop and pond-fish. It is also building awareness among local farmers on the harmful effects of chemical fertilizers. In partnership with our communities, Chevron has also planted over 23,500 saplings.

Your release states that “Chevron is the highest corporate tax payer in Bangladesh for the past three consecutive fiscal years.” Can you disclose how much was paid in those three years? What percentage of profit was paid in taxes?

Chevron is the largest foreign investor in Bangladesh with investments-to-date over $1.5 billion. Chevron is also the largest corporate income tax-payer in Bangladesh in fiscal years 2009-2013. Under BPI we will be tripling our annual social investments for the next 5 years.

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.

  • Jonathan Scanlon

    Tom – did you ask Chevron if they are willing to join other oil companies such as Tullow Oil that are voluntarily releasing information on payments to governments with project-level data? See http://blogs.wsj.com/riskandcompliance/2014/03/24/tullow-oil-moves-to-project-level-disclosure/ . Did you also ask them if they’d be willing to drop their opposition to Securities and Exchange Commission implementation of Sec. 1504 of the Dodd-Frank Wall Street Reform bill?

  • FRSalman

    Regardless who’s paying whom, I’d say to all extreme extent Zero Tolerance against any sort of environmental aspects is being maintained…although the cost to which is being bargained at extreme levels (costs to contractors). But for improvement & developments these costs is required to bear. Thank you for leading.

  • Bayzid M Sayeed

    Chevron should spend a portion of $10 million of Bangladesh Partnership Initiative (BPI), in transferring knowledge and technology of oil and gas industry to Bangladesh. It shall benefit Bangladesh much greatly and will fulfil Chevron’s objective – “promote economic stability, job creation and accelerate sustainable growth in local communities where Chevron operates.”

    Tom, what do you say?

    As far, I know, they strictly control their training programs. So that the local expertise do not develop, and Bangladesh should always be dependent on International Oil giants.