Identifier
Created
Classification
Origin
06NDJAMENA243
2006-02-17 13:49:00
UNCLASSIFIED
Embassy Ndjamena
Cable title:
CHAD: NEW DEVELOPMENTS ENHANCE GOC REVENUES, BUT
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UNCLAS SECTION 01 OF 02 NDJAMENA 000243
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA,
ENERGY FOR GPERSON AND CGAY
E.O. 12958: N/A
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: CHAD: NEW DEVELOPMENTS ENHANCE GOC REVENUES, BUT
BUDGETARY WOES CONTINUE
REF: NDJAMENA 182 AND PREVIOUS
UNCLAS SECTION 01 OF 02 NDJAMENA 000243
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA,
ENERGY FOR GPERSON AND CGAY
E.O. 12958: N/A
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: CHAD: NEW DEVELOPMENTS ENHANCE GOC REVENUES, BUT
BUDGETARY WOES CONTINUE
REF: NDJAMENA 182 AND PREVIOUS
1. (SBU) SUMMARY: While discussions between the Government of
Chad and the World Bank over revisions to the revenue
management law remain at an impasse, other developments are
affecting the country's oil sector. The agreement between
the GOC and the Taiwan state-owned China Petroleum Company
has introduced a new player in the Chadian oil market, and
has injected much-needed cash into the economy. The GOC is
nevertheless struggling to deal with the deficit projected in
the 2006 budget due to suspension of World Bank and IMF
assistance. Meanwhile President Deby has lashed out at the
1988 Convention between the GOC and Esso. His concerns over
the country's budgetary shortfalls may dissipate when he
realizes the large windfall from the Consortium's tax
payments coming his way. END SUMMARY.
- - - - - - - - - - - - - - - - - - -
GOC-TAIWAN OIL DEAL: 17 MILLION MORE
- - - - - - - - - - - - - - - - - - -
2. (SBU) The January 18 GOC-Taiwan oil exploration agreement
has been hailed by Chadian and Taiwan authorities as an
extremely positive development in ties between the two
countries. Outgoing Taiwanese Ambassador to Chad, Cheng
Shin, told Ambassador on February 2 that the agreement would
be extremely beneficial for the Chadians and the Taiwan China
Petroleum Company (CPC),which had always been keenly
interested in entering the Chadian petroleum sector. Taiwan
First Secretary Alex Hu added that while actual discovery of
oil would probably not occur for nearly four years, the
actual exploratory phase would still benefit Chadian through
employment opportunities and infrastructure development.
3. (SBU) Minister of Petroleum Nasser Hassan told the
Ambassador on February 6 that a critical component of the
agreement was the receipt of USD 17 million into the public
treasury, which would assist any budgetary shortfalls. He
echoed Ambassador Shin's positive comments, adding that the
agreement would allow exploration to occur in areas that
would soon be re-linquished by the Canadian drilling company
Encana.
4. (SBU) Esso Country Manager Ron Royal told the Ambassador
January 27 that Minister Hassan consulted extensively with
him on this deal prior to its conclusion. According to
Royal, the agreement between the GOC and Taiwan was referred
to as a "carried interest" arrangement (the GOC had a 30
percent share and Taiwan has a 70 percent share).
Essentially, the CPC would cover 100 percent of the costs of
exploration leading up to discovery. Once a discovery was
made, Taiwan would have the opportunity to produce and market
the oil until all of the accrued costs were recovered. The
GOC would then begin earning revenue. Royal added that the
agreement also included an arrangement involving the creation
of a national oil company to market the crude oil in the
international markets.
- - - - - - - - - - - - -
BUDGET PROBLEMS CONTINUE
- - - - - - - - - - - - -
5. (SBU) The oil deal struck with Taiwan alleviates some
short-term budgetary concerns for the GOC. The Chadian press
has reported that the GOC, after months of incurred salary
arrears, is finally able to pay its civil servants and
pensioners. Nevertheless, larger problems with the 2006
Budget persist. During their February 7 meeting, Minister of
Finance Abbas Tolli told the Ambassador that the suspension
of the PRGF and specific World Bank programs has created a
budget deficit of approximately 37 billion CFA, as specific
resources were programmed based on the assumption of
continued donor support. Tolli stated that the Government
will be able to reduce that deficit with the
recently-obtained revenues from the Future Generations Fund,
which amounted to 27 billion CFA, and 7 billion CFA in
budgetary support from the Bank of Central African States
(BEAC).
***********************
* Missing Section 002 *
***********************
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA,
ENERGY FOR GPERSON AND CGAY
E.O. 12958: N/A
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: CHAD: NEW DEVELOPMENTS ENHANCE GOC REVENUES, BUT
BUDGETARY WOES CONTINUE
REF: NDJAMENA 182 AND PREVIOUS
1. (SBU) SUMMARY: While discussions between the Government of
Chad and the World Bank over revisions to the revenue
management law remain at an impasse, other developments are
affecting the country's oil sector. The agreement between
the GOC and the Taiwan state-owned China Petroleum Company
has introduced a new player in the Chadian oil market, and
has injected much-needed cash into the economy. The GOC is
nevertheless struggling to deal with the deficit projected in
the 2006 budget due to suspension of World Bank and IMF
assistance. Meanwhile President Deby has lashed out at the
1988 Convention between the GOC and Esso. His concerns over
the country's budgetary shortfalls may dissipate when he
realizes the large windfall from the Consortium's tax
payments coming his way. END SUMMARY.
- - - - - - - - - - - - - - - - - - -
GOC-TAIWAN OIL DEAL: 17 MILLION MORE
- - - - - - - - - - - - - - - - - - -
2. (SBU) The January 18 GOC-Taiwan oil exploration agreement
has been hailed by Chadian and Taiwan authorities as an
extremely positive development in ties between the two
countries. Outgoing Taiwanese Ambassador to Chad, Cheng
Shin, told Ambassador on February 2 that the agreement would
be extremely beneficial for the Chadians and the Taiwan China
Petroleum Company (CPC),which had always been keenly
interested in entering the Chadian petroleum sector. Taiwan
First Secretary Alex Hu added that while actual discovery of
oil would probably not occur for nearly four years, the
actual exploratory phase would still benefit Chadian through
employment opportunities and infrastructure development.
3. (SBU) Minister of Petroleum Nasser Hassan told the
Ambassador on February 6 that a critical component of the
agreement was the receipt of USD 17 million into the public
treasury, which would assist any budgetary shortfalls. He
echoed Ambassador Shin's positive comments, adding that the
agreement would allow exploration to occur in areas that
would soon be re-linquished by the Canadian drilling company
Encana.
4. (SBU) Esso Country Manager Ron Royal told the Ambassador
January 27 that Minister Hassan consulted extensively with
him on this deal prior to its conclusion. According to
Royal, the agreement between the GOC and Taiwan was referred
to as a "carried interest" arrangement (the GOC had a 30
percent share and Taiwan has a 70 percent share).
Essentially, the CPC would cover 100 percent of the costs of
exploration leading up to discovery. Once a discovery was
made, Taiwan would have the opportunity to produce and market
the oil until all of the accrued costs were recovered. The
GOC would then begin earning revenue. Royal added that the
agreement also included an arrangement involving the creation
of a national oil company to market the crude oil in the
international markets.
- - - - - - - - - - - - -
BUDGET PROBLEMS CONTINUE
- - - - - - - - - - - - -
5. (SBU) The oil deal struck with Taiwan alleviates some
short-term budgetary concerns for the GOC. The Chadian press
has reported that the GOC, after months of incurred salary
arrears, is finally able to pay its civil servants and
pensioners. Nevertheless, larger problems with the 2006
Budget persist. During their February 7 meeting, Minister of
Finance Abbas Tolli told the Ambassador that the suspension
of the PRGF and specific World Bank programs has created a
budget deficit of approximately 37 billion CFA, as specific
resources were programmed based on the assumption of
continued donor support. Tolli stated that the Government
will be able to reduce that deficit with the
recently-obtained revenues from the Future Generations Fund,
which amounted to 27 billion CFA, and 7 billion CFA in
budgetary support from the Bank of Central African States
(BEAC).
***********************
* Missing Section 002 *
***********************