The World Bank has adopted new financing regulations aimed at preventing corrupt leaders from shoring up their regimes using oil and gas revenue, it announced this week.

The World Bank has adopted new financing regulations aimed at preventing corrupt leaders from shoring up their regimes using oil and gas revenue, it was announced yesterday.

The bank, however, rejected demands that it stops funding petroleum projects altogether.

“There was broad consensus that we should remain engaged because we do add value to the business,” Mr Rashad Kaldany, director of the World Bank’s oil, gas and mining department, said.

He said the bank will henceforth require companies and countries to undertake public disclosure of the monetary institution’s views on corruption in a country before a loan for a oil or gas project is made available.

Kaldany said the World Bank management would rework some aspects of the changes in the next few weeks.

Lending to the oil mining sector has come under heavy criticism from activists who accuse the bank of allowing corrupt regimes to consume its funds at the expense of their poor citizens.

“The World Bank has missed an historic opportunity to bring its lending in line with its mission,” said Nadia Martinez, an analyst at the Institute of Policy Studies, which has been critical of the bank’s lending programmes in poor nations.

US companies including Halliburton and ExxonMobil have benefited from the World Bank’s funding of oil projects in poor countries such as Chad, and Azerbaijan. Last year, the bank approved $11 billion in loans to the oil and gas mining amid demands that it pulls out of the sector.

An independent review panel of the bank recently recommended that it pulls out of oil, gas and coal mining projects by 2008, saying such loans do not benefit the poor who live where the natural resources are found.

The World Bank agreed to an approach that is “business as usual with marginal changes,” according to Emil Salim, the Indonesian official that led the bank’s review of the oil projects.

The Extractive Industries Review found that World Bank-funded oil and gas projects have not contributed significantly to poverty alleviation, he wrote in a report to the bank’s board in June.

Meanwhile, US stocks fell as investor worry about high energy costs hurting corporate profits intensified as oil prices approached $48 a barrel.

But investors will get some diversion as Google Inc. makes its debut on the the Nasdaq. Google, the year’s most anticipated initial public offering priced far below initial estimates, fetching just $85 per share and raising $1.67 billion as it was hit by a string of missteps and lackluster market conditions.

Concerns that surging oil prices will hurt corporate earnings in terms of both higher costs and softer demand for their products have dogged stocks for weeks. Crude futures have set records in 14 out of the past 15 trading sessions. The Dow Jones industrial average was down 24.85 points, or 0.24 percent, at 10,058.30.

Kennedy Senelwa, The East African Standard (Nairobi), August 20, 2004