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» 09.02.2010 - Herders receive support to improve pastoral resources
» 16.10.2009 - Shrinking of Lake Chad could spell regional catastrophe
» 25.09.2009 - Help out in central Africa, Ban appeals
» 17.08.2009 - US funding to help sustain Chad’s humanitarian flights
» 19.09.2008 - World Bank project failed Chadians
» 07.05.2008 - Chad joins worst regimes
» 28.04.2008 - Sahel nations lose 1.7m ha land
» 22.04.2008 - Food crisis alerted in West Africa

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Politics | Economy - Development

World Bank stops financing Chad oil pipeline

afrol News, 10 September - World Bank has stopped financing a Chad-Cameroon pipeline after Chadian government failed to keep its promise to channel oil revenue on poor.

In a statement released yesterday, the bank said it was terminating deal because president Idriss Deby 's administration failed to meet its commitments to allocate funds to health, education and rural-development projects.

The 1,070-kilometer pipeline is to ferry crude oil from Chad's Doba basin through Cameroon to Kribi port.

The US$3.5-billion pipeline project had marked first time a nation had agreed to cede control over its oil revenue as part of a system devised by World Bank to make sure money was used to fight poverty.

The bank said following talks with government, Chad prepaid outstanding balance of US$65.7 million under US$140 million loan deal on 5 September, officially ending agreement.

"Regrettably, it became evident that arrangements that had underpinned bank's involvement in Chad-Cameroon pipeline project were not working. Bank therefore concluded that it could not continue to support this project under these circumstances," statement said.

According to the bank, about 80 percent of pipeline was funded by Exxon Mobil Corp-Chevron Corp. and Malaysia's state-owned Petroleum Nasional Bhd (Petronas).

Landlocked Chad produced about 170,000 barrels a day of crude in 2006, according to United States department of energy.

Under original agreement, Chad received net royalties of 12.5 percent on oil sales from pipeline and agreed to target 80 percent of that on programmes in education, health care, social services and rural development.

Former World Bank president Paul Wolfowitz halted lending to Chad in January 2006 and froze a dollar account at Citibank in London, after government made a grab for oil revenues by altering an oil law to access more of profits.

Relations were restored in April 2006 when agreement was renegotiated and government promised to allocate 70 percent of budget spending in 2007 for programmes for poor.

Over past year, however, president Deby has signed several decrees handing him personal control over landlocked oil producer's finances and circumventing World Bank attempts to ensure a large share of oil profits go to social spending.

Relations with bank have worsened as government has tapped more of oil profits for military spending amid growing threats by rebels and increased costs related to refugees fleeing Darfur conflict in neighboring Sudan.

According Ian Gary, senior policy advisor for extractive industries at Oxfam America, bank had been warned by local and international development groups that pipeline project had little chance of reducing poverty.

Project was one of World Bank's biggest investments in Africa and billed as a test case on how Africa's oil wealth could benefit the poor if spent properly.

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