Friday, July 3, 2026
News and Views from the Global South
DEVELOPMENT-CHAD: Pipeline Project Off to a Wobbly Start
Emad Mekay
- A high-profile pipeline project in Chad that is backed by the World Bank has come under fire for a lack of transparency, amid rising concerns that oil revenues are being redirected from poverty-fighting efforts.
According to a report released Thursday by Catholic Relief Services and the Bank Information Centre, the massive pipeline project may actually lead to a worsening of socioeconomic conditions in the Central African country, while strengthening its corrupt ruling oligarchy.
The 3.7-billion-dollar oil facilities, which include a 1,000-kilometre pipeline designed to carry oil from Chad to the Atlantic coast of neighbouring Cameroon, was predicted to boost state coffers by at least two billion dollars over the next 25 years, or 80 million dollars per year.
The pipeline, which transfers 225,000 barrels of oil a day, is a joint venture between U.S. oil giants ExxonMobil (which holds 40 percent of the private equity) and Chevron (25 percent), and Malaysia’s state oil company Petronas (35 percent).
"The several billion dollars in oil revenues that the Chadian government will be receiving represent an important opportunity to reduce grinding poverty in Chad," Ian Gary of the Catholic Relief Services and co-author of the report told reporters in a teleconference on Thursday.
"But with billions of dollars falling outside the revenue transparency safeguards, limited government capacity to spend the money effectively and ongoing problems with human rights and the rule of law, we are concerned that poverty reduction objectives may not be achieved," he said.
Despite protests from local and international groups who decried the social and environmental costs of the project, the World Bank decided to co-finance it with 292.2 million dollars. The European Investment Bank (EIB) provided an additional loan of 144 million euros.
Bank officials promised that the project would help fight poverty in the country by increasing government revenues by 45-50 percent per year.
But the new report, " In Chad’s Oil: Miracle or Mirage? Following the Money in Africa’s Newest Petro-State", identifies several weaknesses and loopholes in the management of petroleum revenues despite the involvement of global financial institutions and the international attention paid to the project.
"The Chad-Cameroon project came to our attention because it is such a major endeavor…and because of the catalytic role played by the international financial institutions in getting this project started," said Nikki Reisch of the Washington-based Bank Information Center and a co-author of the report.
The report says that one of the most serious loopholes in Chad’s oil revenue management system is the failure to apply rules regarding transparency, accountability and pro-poor expenditures to all oil projects in the country.
The report acknowledges that the pipeline from Chad to the export terminal in Cameroon has spurred the rapid growth of the country’s petroleum sector, but notes that regulations governing oversight of oil activities and revenues do not apply to developments outside the first three fields in southern Chad, operated by the ExxonMobil-lead consortium.
Exploration is ongoing with growing interest from foreign oil companies, and ExxonMobil plans to pump oil from new fields by the end of 2005 or early 2006.
"Revenues from these new fields, combined with forthcoming taxes on oil production which also fall outside the revenue management system, may soon dwarf those that are covered by the country’s transparency rules and monitored by the innovative government-civil society petroleum revenue oversight committee," says the report.
The Washington-based World Bank had promised to help prevent the project from leading to further poverty or corruption – as oil booms have in other poor nations like Equatorial Guinea and Nigeria.
The Bank, whose role in the project represents the largest single private investment in sub-Saharan Africa, insists that a tight mechanism was put in place to ensure the transparent management of oil revenues.
The Bank says Chad has agreed that, after servicing the loans, 10 percent of royalties and dividends will be held in trust for future generations, five percent will be for regional development in the oil-producing area, and 80 percent will be devoted to education, health and social services, rural development, infrastructure and water management.
Yet critics say the Bank’s record of favouring corporations, along with the continued corruption and lack of capacity in the Chadian government, cast doubt on its effectiveness.
They refer to reports that the Chadian government ranks among the most corrupt and most abusive of human rights in the world. The government also used the first 4.5 million dollars of the signing bonus that it received from the oil companies to buy arms to fight its northern rebels.
The new report says that for all the attention given to the pipeline project’s transparency innovations, "much remains hidden concerning the oil sector and revenues generated from production. Confidentiality clauses continue to shield key contracts between oil companies and the government, which are negotiated in secret by a handful of select officials."
In order for the petroleum revenue oversight committee, the independent press and civil society groups to play an effective watchdog role regarding the use of the money, reports of mismanagement or corruption must be followed up by government action, the report urges.
"Everything in the Chad model rests on the enforcement of laws and sanctions for violators in a country with a history of neither," said Reisch.
"The project depends heavily on the political will of the government to respect the rule of law, develop accountable institutions and encourage democracy. While transparency is essential for oversight, it alone does not lead to accountability," she said
While watchdog groups agree that it is too early to declare Chad’s oil project a failure or a success, the experience to date underlines the danger of investing in the extractive industries before a country is shown to meet minimum conditions of respect for human rights, fiscal transparency, and demonstrated government capacity to implement pro-poor programmes.
"At a time of heightened awareness of the pitfalls of dependence on petroleum exports, the World Bank has justified its involvement on the ability of the project to transform Chad’s economy and benefit the country’s poor," said Reisch. "The very propriety of World Bank support for the extractive industries is largely riding on the outcome of this experiment."
The report recommends that the ExxonMobil-led consortium publish all contracts regarding hydrocarbon exploration and production and provide key information regarding oil revenues directly to Chad’s Petroleum Revenue Oversight and Control Committee.
The report also demands that the World Bank and its sister Washington-based public lender, the International Monetary Fund (IMF), require demonstrated progress on enforcement of laws relating to fiscal management before they authorise further support.
Chad has a population of nearly nine million, with 80 percent living below the poverty line of less than two dollars a day. According to the World Bank, most of the country is desert or semi-arid land, with a harsh physical environment and a very narrow economic base.
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DEVELOPMENT-CHAD: Pipeline Project Off to a Wobbly Start
Emad Mekay
- A high-profile pipeline project in Chad that is backed by the World Bank has come under fire for a lack of transparency, amid rising concerns that oil revenues are being redirected from poverty-fighting efforts.
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