Prime minister resigns after civil servant strike, oil controversy

The prime minister of Sao Tome and Principe has submitted his resignation in the midst of a strike by civil servants and a row with the president over offshore oil, raising the prospect of early parliamentary elections in this small island state. Prime Minister Damiao Vaz de Almeida presented his resignation to President Fradique de Menezes on Thursday, saying his working relationship with the head of state had deteriorated to the point where the two men could no longer work together. He cited disagreements between Menezes and the government over how to deal with a civil service strike that began on Monday, as well as over the president's decision to bypass government in the controversial award of five offshore blocks to foreign oil companies in a joint development zone shared with Nigeria. If Menezes accepts the resignation of the prime minister, this former Portuguese colony of 140,000 people will face fresh parliamentary elections within three months. Legislative elections had previously been scheduled for 2006. They were due to take place alongside a presidential poll, in which Menezes was widely expected to seek a second five-year term. Vaz de Almeida's MLSTP/PSD party, which lacks an absolute majority in the country's 55-seat parliament, could theoretically avoid early elections by forming a new coalition and presenting an alternative candidate as prime minister. But political analysts said that was unlikely, since the MLSTP/PSD has fallen out with its junior coalition partner, the Independent Democratic Alliance (ADI) of former oil minister Arlindo de Carvalho, who resigned last month. The MLSTP/PSD, which led Sao Tome to independence in 1975, issued a statement on Thursday calling for both presidential and parliamentary elections to be brought forward and held at the same time. MLSTP/PSD leader Guilherme Prosser da Costa is likely to be Menezes' main challenger at the next presidential election.

Sao Tome-Nigeria joint development zone

Carvalho, the former oil minister, quit the government last month over disagreements with President Menezes over how to proceed with the award of five new offshore blocks in the joint development zone shared with Nigeria. Several alleged irregularities had been revealed in the bidding process, which began in November last year. Critics said these irregularities had resulted in ERHC, a Nigerian-controlled oil company with no drilling experience, being granted a major stake in the most attractive of the five blocks on offer. President Menezes eventually over-ruled all the objections raised and signed a deal with Nigerian President Olusegun Obasanjo on Tuesday that awarded all five blocks to the consortia that had been selected. ERHC, a US-registered company controlled by a millionaire supporter of President Obasanjo, duly received a controlling stake in the two most promising blocks where it bid in partnership with established US companies, and a minority stake in the other three blocks. Besides enjoying close ties with the Nigerian government, Texas-based ERHC also counts several former Sao Tome government officials among its shareholders. Nigeria and Sao Tome said in a joint statement that the award of this second batch of offshore blocks would trigger signature bonuses totalling US $283 million. Sao Tome, which is entitled to 40 percent of all revenues from the joint development zone, will receive $113.2 million of this windfall income. That comes on top of $49 million which Sao Tome is due to receive from a consortium led by ChevronTexaco and ExxonMobil in respect of an earlier exploration and production sharing agreement signed in February. Nigeria had earlier blocked Sao Tome from receiving any payment from the ChevronTexaco/Exxonmobil deal until it agreed to proceed with the award of the five blocks offered in the second licensing round. The twin-island state, which lies 300 km west of Gabon, now stands to receive more than $162 million in front-end payments before a single drop of oil has been discovered in its offshore waters. That is more than the tiny nation could hope to earn from 30 years of export income from cocoa, its traditional cash crop. Anxious to receive an early share of this bonanza, the civil service unions began an indefinite strike on Monday to demand a more than three-fold increase in the minimum wage from $30 to $100 per month. Vaz de Almeida's government countered that it could only afford to raise the minimum wage to $40 per month, without falling foul of existing economic policy agreements with the International Monetary Fund and World Bank, and endangering negotiations to write off a substantial part of Sao Tome's $320 million foreign debt. The outgoing prime minister and the president have each blamed each other for failing to find a solution to the civil service pay dispute.