Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 20-39)

16 NOVEMBER 2004

Mr John Weiss, Mr Roger Gotts, and Mr David Allwood

  Q20 Chairman: Do you think that in retrospect there should have been better quality assurance for the quality of the coating at an earlier stage?

  Mr Weiss: I think, Chairman, there are possibly two separate issues. There was all the work that went on over that year to satisfy the lenders that the proposed coating was appropriate. The issue that arose in early 2004 was a problem of the coating cracking during the conditions at that time of the year on-site where there was a particular problem of getting the material not to crack and it was a problem of the temperature, I believe, at which it was applied. So it was a rather separate issue which was particular to the on-site conditions, and the BTC Company has found a way to resolve that problem. I think that has to be regarded as rather separate from the more general decision taken by the company about the appropriateness of that coating.

  Q21 Chairman: I do not want to pursue this any further. I am not clear whether this is a brand new coating which has never been tried before or whether there is industrial experience of it and it then begs the question why did they not anticipate that the climatic or other conditions on the site would have resulted in the coating being shown to be not as good as it should have been?

  Mr Gotts: The coating has been used before. We are told it has been used on pipelines in Canada and the USA. I understand that the problem was, as Mr Weiss says, not so much with the coating itself but with the way in which it was applied during cold weather. It should have had heat applied as it was being applied.

  Q22 Sir Robert Smith: Has it been used on this kind of pipe with this kind of exterior?

  Mr Gotts: The factory coating? I understand not. It is the first time it has been used.

  Q23 Sir Robert Smith: So this is the first time it has been used in this way?

  Mr Gotts: It is the first time it has been used on a pipe with the polyethylene coating.

  Q24 Sir Robert Smith: Have you been reassured that that is an effective bond?

  Mr Gotts: Our independent engineer has said that it is.

  Q25 Sir Robert Smith: There is one last thing in terms of your evidence on this issue. In 1(c) in your letter of 19 July,[1] you talk about what you have just mentioned, that it does not really matter if the coating does not work because an intelligent pig will spot the corrosion, but it does seem a bit—

Mr Allwood: —It will not stop it, it will identify it.

Q26 Sir Robert Smith: It will identify the corrosion but presumably this means a lot of after care and intervention and re-exposing of the pipe and maintenance work. If the coating was more robust, the intelligent pig would just reassure you that it was working. But it seems from your submission that the reassurance is that it does not matter too much if the coating fails because they are going to spot it.

  Mr Gotts: I hope we did not imply that it does not matter if the coating fails. Our advice is that it should not fail but if it does it has been suggested that the coating will fail and the pipeline will then corrode. If the coating fails then the monitoring process would identify that the coating had failed and that there was a risk of corrosion, so there is a monitoring process.

Q27 Sir Robert Smith: So there would be intervention before it went to a leak?

  Mr Allwood: I am not sure, not being a pipeline engineer, and I would not want to put my life on the line, but a 40-year life with no interventions whatsoever seems remarkably optimistic. They put in the protection to slow down the advent of any corrosion, plus they have internal inspections with the intelligent pigs and they have other monitoring systems that monitor the status of the pipeline with a view that when it gets to a stage where they consider there is a potential for a slight rupture, then in advance of that they will intervene and repair the pipeline so there is an expectation that some maintenance will be required.

Q28 Sir Robert Smith: I do not think you get "slight" ruptures. I think once ruptures start in a pipeline like that it is fairly dramatic. Moving on, the NGOs have repeated their earlier criticism that you have not released an analysis of the project's environmental impact assessment as you did for the Ilisu Dam project application. Why have you not done this?

  Mr Weiss: I think there is a difference between the way in which the Ilisu Dam project was taken forward and this, in that the owners of that document on the Ilisu Dam would not approve its publication. We therefore in a sense as compensation published our own advisers' review of that document. In the case of the BTC pipeline, the sponsors have made a whole range of information available and that obviated the need for us to do what we did on the Ilisu Dam, so I think they are two different sets of circumstances.

Q29 Sir Robert Smith: Having established you could put your own assessment in the public domain, what were the reservations that restrained you this time?

  Mr Gotts: The documents which we put in the public domain on Ilisu were not internal ECGD documents, they were documents which we commissioned from external advisers and we therefore put those in the public domain. I think the document which we are referring to here is an internal ECGD document which for reasons Mr Weiss explained, we were not willing to put in the public domain.

Q30 Sir Robert Smith: What was the reason again?

  Mr Gotts: It was the Business Principles Unit assessment of the project, it is an internal ECGD document.

Q31 Sir Robert Smith: What would be the harm of it being publicly scrutinised?

  Mr Gotts: For reasons which Mr Weiss explained the ECGD internal assessment is an internal assessment.

  Mr Allwood: ECGD policy is that information about environmental, social impacts, and human rights impacts must be in the public domain. Our case impact analysis process description on our website makes it clear that we expect the owners of that of information, the project sponsors, to put it in the public domain at the appropriate time in the project's development which is very early on, usually before we become involved. BTC Co did that so we have no quarrels with their transparency. For the Ilisu project the owners of the draft environmental impact assessment would not put that in the public domain. They only did so after several years of discussions with them. The owners of the re-settlement action plan refused to put that in the public domain. To get round that and to ensure that the information, although not the actual document, was in the public domain, we commissioned external consultants' reports on it and published those.

Q32 Chairman: What we are really saying is that when an external independent assessment is published it is as much in the possession of the people who write the report as the people who receive it but when it is done by people like you, if you so wish, it can assume the status of advice to ministers, and advice to ministers is not supposed to be allowed into the public domain?

  Mr Weiss: I think, Chairman, as I said right at the beginning, the particular document we were talking about was internal advice and it was used as the basis for subsequent ministerial advice. Whether there is some halfway house between what we did publish in the Note of Decision and that document which would obviate the need for publishing internal advice but would give reassurance to interested parties that all issues had been fully taken into account that may be something that we could consider for the future.

Q33 Chairman: We realise that in some respects this is a fruitless discussion with you because the decision does not rest in your hands. What we are trying to do is to establish the status of the relevant documents whereby some of them can be published and discussed and other ones, which might equally be the substance of advice to ministers, but because they are advice to ministers are deemed as such by the authorities then they cannot be published and people do not want them published.

  Mr Allwood: For the Ilisu project because we were commissioning them specifically to get round the fact that the project sponsor would not do it, we told the consultants as well as obtaining the information that we were using their report to put the information out, but that was a one-off that we do not expect to be repeated. We clearly tell project sponsors for the future it is up to them to be sure that information is in the public domain.

Q34 Sir Robert Smith: If we could move on to the assessment of the impact of the project on human rights. Things have happened— I think you sent us something yesterday— but up until then as far as the NGOs were concerned you had not responded to their accusation of a failure of due diligence in the assessment of the impact of the project on human rights and in the investigation of a number of serious abuses of human rights, particularly in Turkey. In presenting your submission to us in the summer you conceded that you had not addressed these issues and promised to submit further evidence on this after the summer. It is well after the summer now and I think yesterday we received a letter of 9 November from the Foreign Office to the Kurdish Human Rights Project, which they are happy to be published as evidence. Where was delay in the "after the summer" promise and the fact that this is what has appeared now? Was it in the Foreign Office?

  Mr Allwood: As you will see from the letter, it is quite a long letter with a great deal of detail and we and the Foreign Office, who take the lead on human rights issues, wanted to be absolutely confident that we had addressed all of the issues raised by the NGOs and that we had addressed them fully. It took a long time to put that information together, for which we can only apologise.

Q35 Sir Robert Smith: Obviously we need to do a bit more studying as it only arrived yesterday. In the case of Mr Ferhat Kaya they are saying in the letter that they are not confident of a link between his treatment and his connection with the cases to do with the pipeline. Has the Foreign Office accepted that he is involved in cases to do with the pipeline?

  Mr Weiss: I am sorry?

  Mr Allwood: Yes, I have met Mr Kaya on two occasions and he has been lobbying on behalf of some of the local people against the pipeline.

Q36 Sir Robert Smith: But the Foreign Office's view at the moment is that whilst he may be being maltreated it is for something else rather than his connection with the pipeline?

  Mr Allwood: That is right.[2]

Mr Weiss: I think the key point from the Foreign Office letter is that there is not a link, or at least they have not established a link, between his arrest and his BTC activities.

Q37 Sir Robert Smith: Have they managed to establish what he has been arrested for then?

  Mr Allwood: Yes, the Embassy in Ankara is aware of the circumstances of his arrest. It is not to do with the pipeline.

Q38 Sir Robert Smith: Although obviously when human rights are being abused people do not necessarily say "we are doing this to you because . . . "

  Mr Allwood: I do not think it is our position to speculate about potential linkages.

Q39 Sir Robert Smith: Thank you.

  Mr Allwood: What we can say is that as far as the project and its concept was set out, the pipeline route was very carefully selected to avoid any settlements so no people have been physically moved from their homes in order to establish the project. Some people have had their land acquired for a short period of time while the pipeline is put in place and then they will have that land use back again whereas the above ground installations, the pumping stations, have been acquired for the life of the project.

1   Appendix 1. Back

2   Note by witness: The Embassy in Ankara is aware of the reasons given for Mr Kaya's arrests by the Turkish authorities. They are not to do with the pipeline. The FCO are also aware of the allegations of his maltreatment during these periods of arrest and of his activities in connection with the BTC pipeline project. However the FCO has not been able to reach a view on whether the arrests were connected with Mr Kaya's BTC activities. Back

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