World Bank concerned over bid to gut oil revenue law

The World Bank has “serious concerns” about the Chad government’s plan to do away with a special fund that safeguards petrodollars for future generations, the institution said on Thursday. The trust fund was among innovative socio-economic measures required by the World Bank in return for financing part of a vast pipeline from Chad to the Atlantic Ocean off Cameroon. But the Chad government says it needs to tap into the petrodollars now to tackle a financial crisis and bolster security in the country. “The issue is maintaining the focus of this development project on poverty reduction,” World Bank president Paul Wolfowitz said in a communique released on 8 December – the World Bank’s first official public pronouncement on the move since the Chadian administration drafted an amendment one month ago, formally setting the change in motion. The World Bank in its statement acknowledges Chad’s plight, but says the proposed change to the groundbreaking oil revenue law is not the answer. “In the World Bank’s view, these modifications alone will fail to provide a lasting solution to the recurring financial problems that Chad faces. To the contrary, they threaten to undermine the objectives of socio-economic development, poverty reduction, accountability and transparency that guided World Bank Group and other international support for the Chad-Cameroon pipeline project.” Environmental, development and civil society groups in and outside Chad have long denounced the government's plan to change the law, saying it would pose a huge threat to the Chadian people today and in the future. Ian Gary of Oxfam America told IRIN on Friday he is glad to see the World Bank break its silence on the move, but says the statement could have been stronger. “It’s significant that Paul Wolfowitz has expressed his strong concerns about the Chad government’s plan,” Gary said from Washington, DC. But he added, “I would have liked to see an outline of the consequences for Chad in its relationship with the World Bank if the change goes ahead. That would set out a clear public marker from the World Bank.” The poverty reduction measures behind the US $3.7-billion project – run by an Exxon-Mobil led consortium – state in part that 10 percent of Chad’s oil revenues must be put aside for future use, with other portions earmarked for improving health, education, roads and water supply in the country. When the spigot officially opened in 2003, the revenue-sharing scheme was touted as one that would break with the bleak record of the continent’s other oil-producing nations where petrodollars have enriched an elite few while the masses have seen little to no return. The Chadian government’s bid to scrap the future generations fund comes as President Idriss Deby tries to keep the lid on a wave of defections from his armed forces. And the landlocked country, ranked 173rd of 177 in this year’s UN human development index, has been hit in recent months with widespread labour strikes, while the government is having a hard time paying out salaries. The World Bank says it is willing to help Chad tackle its fiscal problems, "while preserving the integrity of the oil revenue management system for the benefit of all Chadians, including future generations." The communique says the Bank is waiting to hear from the Chadian authorities on an offer to discuss the way forward. Sources following the pipeline project say Chad's oil revenue amendment was expected to come to a vote in the national assembly in the coming weeks. As of the end of September – the latest data available from the World Bank’s website on the project – Chad had earned $306 million in gross direct revenues since the start of production, with $27.4 million stashed in the future generations fund.