Controversial oil project
gets under way in Chad
KOME, Chad (AP) –
Worlds away from frenzied oil trading rooms, a controversial project
is set to begin in the fertile fields of southern Chad, where extreme
poverty and timeless dignity coexist under the soothing shade of mango
trees.
On Wednesday, 30 years after oil exploration began in Chad, a
landlocked, former French colony in the heart of Africa, the presidents
of Chad and neighboring Cameroon and officials from an international oil
consortium and the World Bank will break ground for sub-Saharan Africa's
largest construction project -- a 1,070-kilometer (670-mile) underground
pipeline that will carry oil from 300 wells in southwestern Chad through
the midsection of Cameroon to its Atlantic port of Kribi. The oil fields
are about 320 kilometers (200 miles) southeast of Chad's capital,
N'djamena.
The oil is expected to start flowing in three to four years, and
depending on the world price, the government of Chad, the fifth-poorest
nation in the world, stands to earn between $2.5 billion and $8.5
billion from royalties and taxes over the 25-year period the reserves
are expected to last. At 225,000 barrels a day, this translates to
between $80 million to $100 million a year, nearly the size of the
country's current operating budget.
On paper, it sounds like a dream come true for this nation of 7
million. In fact, the Chad-Cameroon pipeline project has turned out to
be a testing ground for local and international non-governmental
organizations concerned about the effects of globalization and
suspicious of the role of international financial institutions in the
increasing indebtedness of poor countries.
After the government of President Idriss Deby and the Exxon-led
consortium signed a protocol agreement in November 1996, international
NGOs, particularly in Germany, warned about the danger to Cameroon's
rain forest and the Pygmies living there. Others expressed concern about
the fate of the rare black rhinoceros in Cameroon. A year later, the
World Bank, which had received a request for equity interest in the
pipeline from Chad and Cameroon, turned down the dossier because of
insufficient environmental impact studies.
Dozens of studies, discussions and meetings ensued as Exxon, the
world's largest oil company, sought to allay fears. Critics emphasized
the project's environmental hazards as well as the repressive, corrupt
nature of Deby's administration, which resulted from a coup in December
1990 that was the outcome of a 15-year power struggle among Chad's
northern tribes, a conflict that stymied oil production.
In April 1999, a consortium of NGOs in Chad called for a two-year
moratorium on the project to allow for the establishment of adequate
oversight by an independent monitoring agency. But the project went
ahead anyway.
For what is now the Exxon Mobil Corp., the operator of the
three-member consortium leading the $3.5 billion investment, the project
is a test of its commitment to the people directly affected by its
economic venture and to the environment -- concerns that have not
characterized international oil operations in other African nations like
Angola, Nigeria, Republic of Congo, and lately, Equatorial Guinea.
The two original consortium partners, the Royal Dutch/Shell Group and
the French Elf Aquitaine, pulled out last November with scant
explanation. In April, the Malaysian Petronas and the U.S. Chevron
Corp., with 35 and 25 percent shares respectively, came on board.
For the World Bank, the pipeline project represents an opportunity to
see a highly competitive commercial venture like oil production became a
motor to drive programs to alleviate poverty. But it also poses an
enormous challenge to the bank's ability -- sorely tested in the past --
to guarantee that the money generated meets the needs of the people,
most of whom live on less than 50 U.S. cents a day in Chad.
For the first time, the bank has loaned money to poor countries
through its commercial window -- $93 million to both Chad and Cameroon
-- for an oil production venture. Another $600 million will be provided
by the bank's commercial arm, the International Finance Corp., as well
as by the U.S. Import-Export Bank and France's export financing
facility, COFACE.
Bowing to international and bank pressure, Chad passed a law in
January 1999 that sets up an oversight body to monitor the management of
oil revenues and mandates that 70 percent of the oil earnings be
dedicated to health, education, agricultural and infrastructure projects
and another 10 percent deposited directly in an offshore account as
savings for future generations.
"That's why this is a new role for the World Bank in Africa and
a potentially important one, but we have to make it work," Mary
Barton, the bank's Chad representative, said. The World Bank has
established its own monitoring panel to determine whether the government
is sticking to its commitment to spend the revenues on development.
But for Gilbert Maoundonodji, head of a Chadian human rights
organization and author of an extensive critique of the oil project,
both the bank and Exxon-Mobil are naive to place much faith in Deby's
government using the money to benefit the people of Chad.
"They've never done it on any of the other World Bank projects
into which millions of CFA francs have been poured and millions stolen
with impunity," he said. "Why should oil be any
different?"
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