WORLD BANK CHIEF CONDEMNS CHANGES TO CHAD OIL LAW

12-30-2005  

World Bank president Paul Wolfowitz warned of financial reprisals against Chad after the African country voted to water down a Bank-mandated law governing the use of its oil wealth.

"If these amendments become law, it will harm the well-being of Chad's poorest and most vulnerable citizens and represent a material breach of the original agreement," Wolfowitz said in a statement.

The new legislation pushed through Chad's parliament, which is dominated by President Idriss Deby's party, scraps a fund reserving 10 pct of oil revenue for future generations.

It also doubles the income earmarked for the state with no external checks, adds the judiciary and the security forces to priority sectors such as health and education enjoying the lion's share, and changes the make-up of the independent committee which monitors investments.

The World Bank said the 1999 Petroleum Revenue Management Law (PRML) was a legal condition of its agreeing to back a pipeline linking Chad to Cameroon's Atlantic coast.

It noted that in return for Bank funding, the government of Chad had promised not to amend any provisions of the law in ways that would "materially and adversely affect" the poverty-reduction strategy enshrined in the PRML.

It said the 1999 agreement allowed the World Bank, in case of a breach of contract by Chad, to suspend new credits or grants, to halt disbursement of funds, and to demand accelerated repayment of loans.

If ratified by Deby, the changes to the PRML would "substantially weaken" the poverty reduction agenda mutually agreed by the World Bank and Chad, Wolfowitz said.

"I am consulting with other partners and our shareholders on the appropriate next steps," he said.

Chad's government declared at the end of October its intention to change the law as it faced increasing financial difficulties which prevented it paying state employees regularly.

Deby has also said he wants to renegotiate the agreement with the major companies extracting his country's oil, complaining that "Chad gets only crumbs out of it".

The agreement with the international consortium operating in Chad, comprising Exxon Mobil and ChevronTexaco Corp of the United States and Malaysia's Petronas, provides Ndjamena with 12.5 pct of the income from its oil.