Oil infrastructure project in Azerbaijan, Georgia and Turkey
Lead NCPUnited Kingdom
Supporting NCP(s)France, Germany, Turkey, United States
DescriptionSpecific instance notified by several NGOs regarding the activities of BTC Corporation operating in Azerbaijan, Georgia and Turkey.
Theme(s)Concepts and principles, Disclosure, Environment, General policies
Date29 Apr 2003
Host country(ies)Azerbaijan, Georgia, Turkey
SourceNGO
Industry sectorTransportation and storage
StatusConcluded
Summary

The UK NCP issued three statements related to this specific instance:


In April 2003, the UK NCP received a request for review from several NGOs alleging that BTC Corporation (BTC) had breached the concepts and principles, general policies, disclosure, and environment provisions of the Guidelines in relation with the Baku-Tblisi-Ceyhan (BTC) pipeline, an oil infrastructure project crossing Azerbaijan, Georgia and Turkey. The NGOs also contacted the French, German and US NCPs with regard to their concerns. The UK NCP lead the work on this specific instance with input and close co-ordination with the other NCPs involved.*

The NGOs specifically alleged that the company exerted undue influence on the regulatory framework, sought and accepted exemptions related to social, labour, tax and environmental laws, failed to operate in a manner contributing to the wider goals of sustainable development, failed to adequately consult with communities affected by the project and undermined the host governments' ability to mitigate serious threat to the environment and human health & safety.

The NCP's analysis of the specific instance resulted in a final statement in 2007. However, this original statement was withdrawn following a procedural review by the UK NCP Steering Board, which identified a flaw in the process followed by the UK NCP, namely that the NCP had not provided an opportunity for the NGOs to see and comment on a report by BP, BCT’s largest shareholder. A revised final statement was issued with revised recommendations to the company taking into account the report by BP.

After analysing the NGOs' comments on the BP report, the UK NCP concluded that BCT had not failed to comply with the Guidelines regarding the negotiation and constraints of  the BCT legal framework and the compensation process, including concerns over not contributing to sustainable development. The NCP however found  that BCT had failed to address compensation and grievance concerns in the north-east of Turkey, such as concerns of intimidation by local partners, and consequently breached the employment and industrial relations provisions of the Guidelines (Chapter Ve paragraph 2 (b)). Therefore, the UK NCP recommended that the company consider and report on ways that it could strengthen procedures to identify and respond to reports of alleged intimidation.

The NCP's follow up statement evaluated the progress made by BCT in implementing the UK NCP’s recommendations. In light of the responses by the parties it was determined that BTC had taken steps to identify ways to strengthen its procedures for recording and responding to reports of intimidation. However, the UK NCP remained concerned that BTC made no reference to a number of important issues, for example the setting up of a grievance management process. The UK NCP thus encouraged BTC to implement all of the identified ways of strengthening the company’s procedure.

 

* the German and French NCPs independently assessed the NGO's request.

In December 2003 the French NCP requested that the NGOs reformulate their request. The NGOs did not respond and the NCP concluded its involvement in 2007.

The German NCP assessed whether or not the allegations applied to the German subsidiary the NGOs had referenced in their request, and found that it had not been involved in the consortium in question or in any other part of the project. In its decision of July 2003, the German NCP found that a subsidiary company cannot be held generally responsible for the activities of its parent company.