Copyright 2000, Associated Press
October 18, 2000

It sounds like a dream come true for Chad: an oil project that could earn millions of dollars for the world's fifth-poorest nation. It's also a test for globalization, a chance to prove that a major industrial project can help alleviate poverty.

Thirty years after oil exploration began in Kome, Chad's president was attending today's launching of a project to build a 670-mile pipeline to ship oil from southwestern Chad through Cameroon to market.

The project with an oil consortium led by Exxon Mobil Corp. could bring in millions of dollars for this landlocked nation of 7 million people. And the World Bank — making its first foray into supporting oil production — aims to keep a watchful eye over where the money goes.

The bank has faced angry protests that projects it backs do not do enough for the poor. Already the pipeline deal has raised fears the profits will be soaked up by corruption rather than help Chad's people, most of whom live on less than 50 cents a day.

"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," said Mary Barton, the bank's Chad representative.

The bank is putting up only about 3 percent of the project's financing. But that has given it enough leverage to insist on monitoring in a bid to ensure that profits go to Chad's development.

The underground pipeline — Sub-Saharan Africa's largest construction project — will carry oil from 300 wells in southwestern Chad through neighboring Cameroon to its Atlantic port of Kribi.

Production is expected to begin in three or four years, and depending on the world price for oil, Chad's government stands to earn between $2.5 billion and $8.5 billion from royalties and taxes over 25 years. That translates into $80-100 million a year — about the size of Chad's operating budget.

Chad's President Idriss Deby, the president of Cameroon and officials from the World Bank and the oil consortium were kicking off the project with a public ceremony today.

But the project has long raised an outcry from international non-governmental organizations, or NGOs, over environmental damage and over where the profits would go.

After Deby's government and the oil consortium signed a protocol agreement in November 1996, 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 rare black rhinoceros in Cameroon.

A year later, the World Bank turned down the dossier because of insufficient environmental impact studies.

Dozens of studies ensued as the consortium sought to allay fears. At the same time, critics warned of the repressive, corrupt nature of Deby's administration, which came to power after a December 1990 coup. For 15 years, this landlocked former French colony has been torn by a power struggle between its northern tribes, a conflict that stymied oil production.

The World Bank came back into the project, lending $93 million each to Chad and Cameroon — its first loan 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. The loans are at a commercial rate — not the reduced rates given for development projects in Chad and elsewhere.

Exxon Mobil was joined by Malaysia's Petronas and U.S. Chevron to lead the $3.5 billion investment.

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. The law 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. The World Bank has established its own monitoring panel to determine whether the government sticks to those commitments.

But for Gilbert Maoundonodji, head of a Chadian human rights organization and author of an extensive critique of the oil project, the bank and Exxon-Mobil are naive if they believe Deby's government will monitor itself.

"They've never done it on any of the other World Bank projects into which millions (of dollars) have been poured and millions stolen with impunity," he said. "Why should oil be any different?" Error: Unable to read footer file.