afrol News, 3 December - The government of Chad and Esso Explorations & Production Chad Inc. have confirmed that US$ 6.5 million from the first sale of crude oil from Chad's Doba oil fields has been deposited in a London escrow account at Citibank.

The World Bank in a release yesterday confirmed that Chad now not only has sold its first oil, but that the Chadian government also has received its first revenues from this industry.

The payment was made on the first sale of oil shipped from the Kribi terminal off the coast of Cameroon in October. The Doba oil field and the 1,070-kilometer pipeline through Cameroon to the Kribi facility were completed a year ahead of schedule and oil began flowing in July.

The project is expected to generate US$ 2.0 billion over 25 years for Chad, and the government in agreement with the World Bank has committed itself to using most of these revenues for poverty reduction. This was set out in a revenue management law passed by parliament in 1999 and was a condition for World Bank financing.

In addition to financing Chad's participation in the Doba oil field project, the World Bank also advised the government on a transparent revenue management structure to direct the proceeds of oil sales to poverty reduction efforts.

Under the oil revenue management law, the proceeds of oil sales, after payment of administrative fees and debt service, are then transferred to commercial banks in Chad and allocated according to a detailed key.

Ten percent of royalties and dividends are placed in a Future Generations Fund. The remaining 90 percent are spent for immediate development needs: Five percent is earmarked for regional development in the Doba oil field area. Eighty percent are to be directed to poverty reduction projects. The remaining fifteen percent are allocated to the Treasury current account

Withdrawals from these accounts can only be authorised by an oversight committee, which comprises members of civil society, parliament, the Supreme Court and government. The account is to be audited annually and the results regularly published.

The World Bank has been working to strengthen the capacity of the oversight committee and of Chad's public administration to improve the delivery of social, economic and infrastructure services.

Chad has a population of nearly eight million people, with 80 percent living below the poverty line. Most of the country is desert or semi-arid land, with a harsh physical environment and a very narrow economic base.

The World Bank has provided loans totalling US$ 134.1 million and the International Finance Corporation, the Bank's private sector arm, raised a further US$ 200 million toward the overall US$ 3.7 billion cost of the Chad-Cameroon pipeline development. The consortium, led by Esso, also includes Malaysia's Petronas and Chevron of the US.

The Doba fields currently are producing around 100,000 barrels of oil a day and are expected to reach full production of 225,000 barrels a day at the end of the first quarter of 2004.

By staff writer

© afrol News

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