PRIME MINISTER AND NATIONAL ASSEMBLY PRESIDENT ON

C O N F I D E N T I A L NDJAMENA 001662

SIPDIS


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

E.O. 12958: DECL: 10/11/2015
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: PRIME MINISTER AND NATIONAL ASSEMBLY PRESIDENT ON
OIL LAW REVISIONS

REF: NDJAMENA

Classified By: Political/Economic Officer Kathleen FitzGibbon for reaso
ns 1.4 (b) and (d).


1. (C) Summary: Prime Minister Pascal Yoadimnadji and
National Assembly President Nassour defended proposed
revisions to the oil revenue management law in meetings with
the Ambassador on November 10. Yoadimnadji said the
Government has moved forward with the revisions and remains
open to dialogue on the issue. The Ambassador assured
Yoadimnadji and Nassour of the willingness of Chad's
international partners to work to find a solution to Chad's
revenue management problems, but urged them not to revise the
law without the World Bank's concurrence. However, the
Chadian Government had not yet received the World
Bank-International Monetary Fund proposal. The proposed
revisions were delivered to the National Assembly's majority
leader on November 10, beginning the process of consideration
at the legislature. End Summary.

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PRIME MINISTER: SPIRIT OF LAW REMAINS
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2. (C) On November 10, Prime Minister Pascal Yoadimnadji
told Ambassador and P/E officer that Council of Ministers
approved the proposed revisions for the oil revenue
management law in an extraordinary session earlier in the
week. The proposed revisions include eliminating the Future
Generations Fund, increasing from 15 to 30 percent the funds
directly deposited in the treasury, and changing the priority
sectors to include security, territorial administration, and
justice. New oil production would be covered by the existing
revenue management system. Yoadimnadji expressed his concern
that the critics of the revisions are focusing on the Future
Generation Fund. He asked when does the future generation
begin. He told the Ambassador that Chad's problems must be
treated differently than Benin, Senegal, or Cameroon. Chad
is a country coming out of years of civil war which has
resulted in military weaknesses, poor state administration,
and to some extent, corruption. The same remedy cannot
necessarily fix the problems of different countries.


3. (C) According to Yoadimnadji, President Idriss Deby
identified the establishment of security as the country's
first priority, followed by good governance. The Prime
Minister blamed theft of government resources and other
corrupt practices on the prevailing insecurity, which has
created a culture of impunity. Without security, Yoadimnadji
argued, Chad cannot rectify its other problems. He also
noted that as an example, the recent military mutiny in the
east cost the Government a great deal of money and
demonstrated the need to reorganize the presidential guard
and the military and to implement the recommendations of the
military review. The Prime Minister stated that Chad also
cannot accept being told not to revise the law without being
offered concrete proposals to solve its situation.


4. (C) Ambassador Wall reiterated concerns that the
revisions be made in concert with the World Bank. He
reminded the Prime Minister that the oil revenue management
law was an important symbol for many other countries and it
enhances Chad's reputation abroad. He expressed concern that
if Chad moves ahead with the revisions without agreement from
the World Bank, there would be negative consequences for
Chad's relations with its donors. The Ambassador stated that
it is possible to pass the 2006 budget while dialogue on the
revisions continue. He offered that the Government could
make revisions to the budget during the year after
consultations are concluded.


5. (C) Yoadimnadji agreed that the oil revenue management
law revisions would not solve all of Chad's financial
problems. However, he said that the international financial
institutions had not been engaged on these issues until
recently. Yoadimnadji added that Chad had been raising the
idea of revising the law for the past eight months. He also
described the international financial institutions' approach
as that of accountants who are not equipped to discuss key
issues of national priorities with a head of state. A


country's revenue management is not just a question of
accounts. The Prime Minister had not yet received a joint
World Bank-International Monetary Fund proposal for working
together with Chad to resolve its financial woes. He said
that the Vice President of the World Bank called him
regarding the proposed revisions. As a result, Finance
Minister Tolli is traveling to the U.S. on November 11 to
continue discussion of the changes in Washington.


6. (C) The Prime Minister stated that the Chadian Government
is open to discussing the issue. However, a moratorium on
Chad's debt for a few years will not be enough to resolve the
fundamental problems of security, administration, and
justice. Several times during the meeting Yoadimnadji
admitted that government resources had been misused or badly
spent. He blamed this on years of disorganization and stated
that the Government's current goodwill will help Chad exit
the crisis.


7. (C) The Ambassador asked if the Prime Minister could wait
for the joint World Bank-International Monetary Fund letter
before moving forward with the revisions. Yoadimnadji said
that the revisions were already on their way to the National
Assembly. He stated that if the National Assembly chooses
not to adopt them, then the proposed revisions will become
just another project of the government that did not pass.

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NATIONAL ASSEMBLY PRESIDENT: SUPPORTIVE OF REVISIONS
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8. (C) Ambassador, DCM, and P/E officer discussed the
proposed revisions with National Assembly President Nassour
Ouaddai in a meeting earlier in the day. According to
Nassour, the National Assembly is waiting for the proposed
revisions to the oil revenue management law to arrive. He
confirmed that the draft had been passed by the Council of
Ministers but did not have any additional information on when
it would be sent to the legislature. However, he said when
it arrives, he will convene a conference which includes
members of the Petroleum and Finance committees and the heads
of the various parliamentary groupings to discuss the merits
of the proposal. He showed the Ambassador the legislative
calendar for the budgetary session which ends on January 2.


9. (C) Nassour expressed his support for the revision of the
oil law. However, he did not discuss specific revisions
proposed by the Government except for the utility of having a
future generations fund. Instead, he focused on some of the
issues surrounding the oil project, including calculation of
the discount rates for Doba crude and the structure of the
oil revenue management accounts, particularly the length of
time it takes the deposits to be cleared for use. Throughout
the conversation, Nassour defended Chad's right a sovereign
country and the importance of its fundamental laws.


10. (C) The Ambassador emphasized the importance of
considering the revisions in concert with the donors,
particularly the World Bank. He pointed out that the
implications of changing the law reach far beyond Chad
because its oil revenue management system is considered a
model for the rest of the world. The Ambassador also noted
that Chad's international partners are not against revising
the law, but believe any revisions should be made in
consultation with key donors. While these consultations are
being undertaken, the 2006 budget could be considered without
the revisions. It could then be revised to reflect
agreed-upon changes to the oil revenue management law.


11. (U) Later in the day, National Assembly staff told us the
proposed revisions arrived at the National Assembly in the
afternoon to the office of the majority ruling Movement for
Patriotic Salvation (MPS). A copy has been e-mailed to AF/C.

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COMMENT
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12. (C) We expect the National Assembly to begin the process
of considering the law, which includes consideration by the
ruling party, the President of the National Assembly, and key


committee and party leaders. It will then be put it on the
legislative calendar. The Government claims to be open to
discuss the issue, but the process continues to move forward
while waiting for a formal proposal by the World Bank and
International Monetary Fund.

WALL


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