TREASURY TEAM MEETS WITH OIL REVENUE COLLEGE, GOC

UNCLAS NDJAMENA 001151

SIPDIS


SENSITIVE

LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA,
ENERGY FOR GPERSON AND CGAY

E.O. 12958: N/A
TAGS: ECON EFIN ENRG EPET PGOV CD
SUBJECT: TREASURY TEAM MEETS WITH OIL REVENUE COLLEGE, GOC
OFFICIALS



1. (SBU) Summary: The candidate for the Treasury Advisor
position in Chad and accompanying Treasury officials were
warmly welcomed at the Oil Revenue Management College and
government ministries during their visit to Chad from July 10
to 14. The mission was designed to introduce the prospective
Treasury Advisor to the College, government ministers, and
the representatives of the international financial
institutions. The presence of a resident advisor to assist
the College on budget issues received the full support of the
College and relevant ministries, all of which acknowledge the
importance of building the capacity in Chad's institutions
that have responsibility and oversight for petroleum
revenues. Reactions from the international financial
institutions follows in septel. End Summary.


2. (SBU) On July 11-13, a Treasury team consisting of Office
of Technical Assistance Director Michael Ruffner, Treasury
Resident Advisor Candidate Linda Gregory, and Treasury
Advisor Ken Torp, met with members of the Oil Revenue
Management College and the Ministers of Finance and Petroleum
to introduce Gregory and discuss the management of oil
revenues. P/E and E/C officers accompanied the Treasury Team
to official meetings.

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COLLEGE, TECHNICAL STAFF WELCOME TREASURY ADVISOR
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3. (SBU) On July 11, the Treasury team met with Oil Revenue
Management College Vice President Therese Mekombe, General
Secretary Barka Michel, and Bidoumi, one of the National

SIPDIS
Assembly's two representatives on the College. Mekombe said
that the College welcomes the presence of a full-time
Treasury Advisor. Mekombe said that the College will be able
to utilize Gregory's budget skills and experience. The
College anticipates that the Treasury Advisor would help the
College on budget issues pertaining to the oil revenues as
well as the College's internal budget. Information
technology assistance could be provided through visits by a
specialist who can help the College streamline its ability to
follow a project from introduction to completion and
inspection. Mekombe and Michel then turned to specific
position-related requirements. They asked if a letter of
engagement would be prepared outlining who supervises the
Treasury Advisor and pays for travel and office equipment.
The Treasury team noted that a letter of engagement and
detail terms of reference would be prepared. In addition, an
action plan would also be developed. Mekombe and Michel
emphasized that the Treasury Advisor must work solely for the
College, and not the Ministry of Finance, as did the previous
advisor. The Treasury Team assured the College that the new
resident advisor would only be working for the College, but
could help foster collaboration between the College and
government ministries. (Comment: The Colllege is concerned
about government interference in its work and is trying to be
as independent as possible from the Ministry of Finance. End
Comment.) Gregory was introduced to the College's small
technical staff and worked with them as well as members of
the College during her visit.

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MEETING WITH MINISTER OF PETROLEUM
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4. (SBU) On July 12, Minister of Petroleum Youssouf
Abassallah warmly greeted the Treasury team in his office.
Abassallah welcomed Gregory and the possibility that she
would return as the resident advisor to the College.
Abassallah stated that the Revenue Management College was
extremely important in the management of oil revenues, and
required the support of the Chadian government and the
international community. He pointed out that while it was
too early to determine whether the College was a success, it
had made some progress in its capacity to oversee the
implementation of oil revenues. However, he argued that the
College was hampered by its limited role, and said that the
body would actually be more effective if it were involved
earlier in the budget formulation stage. The fact that the
College is involved only in oversight means that it lacks the


ability to influence the execution of projects.


5. (SBU) The Minister then noted that while the College's
presence was positive, it did not solve the need to re-assess
the existing Revenue Management laws. Abassallah contended
that due to changes in the country's economic priorities, the
current laws are out-dated. The priority sectors, according
to the Minister, afford little flexibility to address
priority needs, such as government salaries, that fall out of
the scope of these sectors. Abassallah also pointed out that
a lack of unified budget system meant that government
revenues could not be transferred from non-oil to oil
priorities and vice-versa.


6. (SBU) Abassallah then turned to his own Ministry, saying
that it also faces a host of difficulties. He noted that
limited resources hinder the organization's ability to
effectively carry out its mandate to promote the country's
petroleum sector and ensure the management of its oil
resources. Abassallah explained that while he would like to
see more promotion of the country's oil potential, the
Ministry lacks the financial means to reach out to
international investors. At the same time, the Ministry
lacks the tools to monitor the exploitation of oil resources
by companies.


7. (SBU) Abassallah concluded by noting that the Ministry
required the resources to explain the impact of the oil
project to the public. He indicated that expectations
surrounding the project need to be tempered to prevent
criticism of the oil project. The Minister said that based
on projections for reduced revenue for the coming fiscal
year, the government needs to reduce expectations. Decreased
revenues will only create further tension among the Chadian
public.
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MEETING WITH MINISTER OF FINANCE
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8. (SBU) On July 13, Gregory, Torp, Ruffner, and P/E
officer were received by Minister of Finance Ngueyam Djaibe.
Djaibe had just returned from a meeting about the
supplementary budget, and although rushed, he warmly welcomed
the Treasury team. He assured Gregory that she would could
have an important impact on building the capacity of the
College. He emphasized that it is important for the College
to be involved in the budgeting process and not just at the
end stages. However, this requires an understanding of the
various budget cycles, procurement process, and finally,
project evaluation. Returning to the issue of the national
budget, Djaibe stated that the Government was initiating a
review of the oil consortium's accounts. He noted that the
price of oil has increased, but the amount of money per
barrel that Chad is receiving has not. He clearly understood
the amounts being deducted from the price per barrel, but
wanted to know why the consortium has increased fees for the
use of the pipeline and for transportation. It was his
understanding that these are fixed costs that should not
increase.

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COMMENT
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9. (SBU) Overall, the introduction of the Treasury Advisor
candidate at the College and Ministries went well. The
Ministers of Petroleum and Finance recognize the need for
capacity-building on budget issues within their own
ministries and the College. We expect they will be helpful
to a resident advisor. We will look into the issue of the
oil prices. End Comment.


10. (U) The Treasury team did not have the opportunity to
review this message before its departure.

WALL


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