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World Bank Chief Condemns Changes to Chad Oil Law
Xinhua Financial News
Friday, December 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.

(C) 2005 Xinhua Financial News. All Rights Reserved