Oil may be a mixed blessing for impoverished Chad

Rory Carroll, Africa correspondent
Friday October 10, 2003
The Guardian

Chad will join Africa's oil states today when a spigot linked to a 650-mile pipeline is ceremonially opened, ushering in what optimists say will be a new era of wealth and development for the impoverished desert nation.

But pessimists have declared today a "day of mourning" on the grounds that the bonanza will mire Chad in the corruption and economic distortion which have plagued Africa's other oil producers.

The pipeline, snaking from the southern Doba basin through desert and jungle to Cameroon's offshore Kribi oil terminal for shipment across the Atlantic, is expected eventually to transport 225,000 barrels a day, yielding annual revenues of $80m (£55m) - increasing government revenue almost by half.

Several heads of state and 600 guests are due to attend the ceremony in Kome where President Idriss Deby will open the spigot. Yesterday he said the oil should bless, not ruin, his country. "The coming oil income should not divert us from our usual economic activities. We must build a modern and working Chad together."

Calling on a nation dogged by war since independence to make a new beginning, he added: "I know that in a country marked by 30 years of pain, violence, and the misdeeds of dictatorship, the restoration of peace is lengthy work."

Oil companies backing the project are ExxonMobil, with 40%, Malaysia's Petronas, 35%, and Chevron, 25%. It took $3.7bn to drill some 300 oil wells in the Doba basin.

After withholding approval the World Bank invested $200m and, more crucially, its authority, in the project. Angola, Equatorial Guinea and Nigeria are showcases of how oil can breed kleptocratic elites and fuel corruption, conflict and poverty.

The World Bank has gambled on Chad bucking the trend after the government agreed to set up a revenue watchdog and passed a law stipulating that 80% of the petro-dollars go towards health, education, agriculture and infrastructure.

Chad is ranked as one of the world's most corrupt countries. Civic groups and even members of the watchdog predict the wealth will be taken by the elite, distort the economy and strengthen repression. They promised a silent protest today against "the ongoing impunity with which basic human rights are routinely being violated."

Bad omens, they say, are that Shell and Elf pulled out of the project without explanation in 1999, and the International Monetary Fund demanded early repayment of $7.6m after the government allegedly gave erroneous information about spending.

http://www.guardian.co.uk/oil/story/...059875,00.html

Chad's new oil bonanza buys guns, not schools

(Filed: 11/10/2003)

The latest scheme to end a continent's pernicious corruption has got off to a sorry start, reports Tim Butcher, Africa Correspondent

Yesterday should have been a great day for Africa. The president of Chad opened a 650-mile pipeline that will give the world a new source of oil and flush hundreds of millions of pounds into the desperately poor country.

For the first time, too, there was a revolutionary attempt to stop Africa's politicians stealing the money. Set up by the World Bank, it was meant to be a model for development.

Stung by the examples of Nigeria and Angola, where the benefits of oil wealth were denied to the people, the Chad scheme marked a serious attempt at change.

But, with the leaking of news that the first £3 million of oil money has been spent on arms, and aid groups declaring yesterday a "day of mourning" for the loss of the country's potential wealth, the scheme is already in trouble.

President Idriss Deby turned the taps on the pipeline at a colourful opening ceremony in Kome, in the south of the country, watched by the heads of state of Nigeria, Gabon, Cameroon and Equatorial Guniea.

Nils Tcheyan, of the World Bank, issued a warning that the country's rulers must "efficiently use oil revenue to improve living conditions for all Chadians". He added: "To achieve this, we need good economic management and good governance."

But there was little optimism yesterday in the country, where many see the imminent flow of oil more as a curse than a blessing.

A vast complex of hi-tech drilling and pumping facilities has been constructed as part of the £2.2 billion investment. The pipeline snakes through almost impenetrable rainforest into Cameroon.

When Chad's oil facilities reach full production, 250,000 barrels of oil will be pumped each day through the pipeline, earning the country royalties of about £60 million a year and doubling its current annual earnings.

Under terms of the anti-corruption plan, the money will go to an independently administered account at a financial institution in the City of London.

In theory, funds can be drawn from this account only if approved by the Chad government and an independent committee including a number of non-politicians. Eighty per cent of the money is to go on national schemes in education, health and infrastructure.

Shortly before the opening ceremony, Mr Deby insisted that the oil revenues would be used responsibly, saying: "We must build a modern and working Chad together."

However, the first proceeds were spent on arms after Mr Deby's government invoked a clause within the agreement allowing military spending in times of national emergency. Chad has had an armed rebellion in the north for more than five years.

Supporters of the scheme hoped it was a temporary glitch, but it is not clear whether the government of Chad, the most corrupt nation in Africa according to a survey by the World Economic Forum, is serious about financial probity.

"Chad has to be different because we're staking our reputation on it," a World Bank official told The Economist magazine.

Ngarlejy Yorongar, an MP from the oil region, supported the "day of mourning". He said: "We don't even know how many barrels they will be pumping a day."

http://www.telegraph.co.uk/news/main...1/ixworld.html