Chad world bank resolve oil dispute

Chad, World Bank Resolve Oil Dispute
Chad News 7/14/2006
The World Bank and Chad resolved a dispute over oil revenues that will result in significant increases in government spending on projects that benefit the poor, the lending institution said Friday.

"This is a huge step forward," World Bank President Paul Wolfowitz said in a statement issued in Washington as he traveled in Africa.

"The Chadian authorities have committed to ensuring that all oil revenues, not just the royalties, are spent on health and education and other basic needs of the poor."

The dispute on the use of oil revenues led to suspension of $124 million in World Bank loans to the arid, landlocked Central African country. The two sides then signed an interim agreement in April that restored the loans.

Under the accord signed Thursday, Chad, one of the world's poorest countries, will commit 70 percent of its budget spending to priority poverty reduction programs and provide for long-term growth by creating a stabilization fund to be used after the oil fields run dry.

The programs cover health, education, agriculture, infrastructure, environment, rural development, land mine removal and good governance.

In addition, the government and the bank agreed to strengthen the independent authority that oversees the use of oil revenues.

The new agreement also provides for the continued allocation of 5 percent of oil revenues for projects benefiting the Doba region, where the oil fields are.

Earlier this year, the bank said Chad had breached a 1999 agreement -- the first of its kind-- to obtain bank financing for the Chad-Cameroon Pipeline Project. Its parliament had passed legislation in December that made major changes in the accord, primarily to abolish the post-oil boom stabilization fund.

Chad justified its move by saying the rules, which had been praised by human rights and anti-poverty groups, had to be adjusted in favor of more flexibility in using revenues and fighting poverty.

Chad President Idriss Deby also said the government needed more security forces and equipment to deal with a growing internal rebellion and with the influx of refugees from neighboring Sudan's conflict-ridden western province of Darfur.

An ExxonMobil-led www.exxonmobil.com consortium exported 133 million barrels of oil from Chad between October 2003 and December 2005, according to World Bank statistics.

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