Identifier
Created
Classification
Origin
06NDJAMENA39
2006-01-12 12:00:00
CONFIDENTIAL
Embassy Ndjamena
Cable title:
CHAD:NEW OIL LAW PROMULGATED
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C O N F I D E N T I A L NDJAMENA 000039
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 01/12/2015
TAGS: PREL EFIN ENRG EPET PGOV CD
SUBJECT: CHAD:NEW OIL LAW PROMULGATED
Classified By: (05) N'DJAMENA 1875 (NOTAL)
C O N F I D E N T I A L NDJAMENA 000039
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 01/12/2015
TAGS: PREL EFIN ENRG EPET PGOV CD
SUBJECT: CHAD:NEW OIL LAW PROMULGATED
Classified By: (05) N'DJAMENA 1875 (NOTAL)
1. (SBU) Summary: President Deby promulgated the amended oil
revenue management law on January 11, reportedly after being
shown a letter from the World Bank to Citibank requesting
Citibank to block transfers to Chad's account. We understand
Chad's options to include foregoing oil revenues for the 3-4
months necessary for World Bank loans to be paid back with
oil revenues; alternatively, it could seek to have the oil
law amended again so that oil royalties are deposited
directly in the GOC Treasury. Esso is uncomfortably in the
middle of the situation, and is concerned that the GOC may
take actions in haste which would both spell the end of the
oil college's oversight and which would precipitate the
departure of the World Bank from Chad. The hoped-for test
case for transparent oil revenue management is rapidly
fraying. End summary.
Shock and anger from GOC
--------------
2. (C) President Deby signed the amended petroleum revenue
management law (reftel) on Wednesday, January 11, thereby
bringing the law into force. Esso Country Director Ron Royal
was called to see the Minister of Petroleum later the same
day to discuss the World Bank (WB) letter to Citibank (dated
January 6) requesting Citibank to block transfers to Chad's
account. Esso representatives reported that the Minister of
Petroleum was "shocked" at the WB's actions. The Minister
informed them that the President was furious, and had signed
the law immediately after seeing the letter from the WB. The
Minister of Petroleum asked Esso if it would be able to
advance them royalties (Esso reported to Emboff that they
refused). During the same meeting, the Minister intimated
that Equatorial Guinea might be able to provide a loan to pay
off the WB loans. In a meeting in a similar vein between the
Minister of Finance and the local IMF Representative,
Minister Tolli told IMF rep Wayne Camard that the WB action
was "a stab in the back." The Council of Ministers is meeting
January 12 and the Minister of Plan is expected to release a
communique denouncing the recent WB steps.
Comment: next steps
--------------
3. (SBU) Our contacts stress that the GOC's anger is based
not only on the fact that the account is blocked, but also
that the WB apparently failed to notify them of the action
until five days after the fact. We understand that the GOC
has essentially three options: they can allow the bank to be
paid back with oil revenues for the approximately USD 60 -
100 million that the WB is owed. (Comment: we understand that
royalties from the escrow account will continue to flow to
outstanding IDA and IBRD debts. End comment.) This would
take approximately 3-4 months at current royalty rates of USD
25 million a month. Alternatively, the GOC could immediately
move to amend the Chadian law which states that the oil
royalties must be deposited in the Citibank account and
direct that they be deposited directly to the GOC treasury.
(Esso, in fact, is concerned that the GOC will direct them to
deposit the royalties directly into the GOC Treasury even
without a change in the law). According to Esso, this step
might precipitate litigation by the World Bank and embroil
the parties in protracted legal proceedings. Or finally, the
GOC could tell the World Bank that they are ready to enter
into serious negotiations. Given the bruised feelings on the
part of the GOC, this last option seems remote at this point.
4. (SBU) Esso is seeking to stress its neutral position vis
a vis the dispute between the WB and the GOC, as it is not a
signatory to the agreement. Nonetheless, it is uncomfortably
in the middle of the matter, and is very concerned that the
GOC may take actions in haste which would both spell the end
of the college's oversight and which would precipitate the
departure of the World Bank from Chad. The hoped-for test
case for transparent oil revenue management is rapidly
fraying. End summary.
WALL
SIPDIS
SIPDIS
LONDON AND PARIS FOR AFRICA WATCHERS
E.O. 12958: DECL: 01/12/2015
TAGS: PREL EFIN ENRG EPET PGOV CD
SUBJECT: CHAD:NEW OIL LAW PROMULGATED
Classified By: (05) N'DJAMENA 1875 (NOTAL)
1. (SBU) Summary: President Deby promulgated the amended oil
revenue management law on January 11, reportedly after being
shown a letter from the World Bank to Citibank requesting
Citibank to block transfers to Chad's account. We understand
Chad's options to include foregoing oil revenues for the 3-4
months necessary for World Bank loans to be paid back with
oil revenues; alternatively, it could seek to have the oil
law amended again so that oil royalties are deposited
directly in the GOC Treasury. Esso is uncomfortably in the
middle of the situation, and is concerned that the GOC may
take actions in haste which would both spell the end of the
oil college's oversight and which would precipitate the
departure of the World Bank from Chad. The hoped-for test
case for transparent oil revenue management is rapidly
fraying. End summary.
Shock and anger from GOC
--------------
2. (C) President Deby signed the amended petroleum revenue
management law (reftel) on Wednesday, January 11, thereby
bringing the law into force. Esso Country Director Ron Royal
was called to see the Minister of Petroleum later the same
day to discuss the World Bank (WB) letter to Citibank (dated
January 6) requesting Citibank to block transfers to Chad's
account. Esso representatives reported that the Minister of
Petroleum was "shocked" at the WB's actions. The Minister
informed them that the President was furious, and had signed
the law immediately after seeing the letter from the WB. The
Minister of Petroleum asked Esso if it would be able to
advance them royalties (Esso reported to Emboff that they
refused). During the same meeting, the Minister intimated
that Equatorial Guinea might be able to provide a loan to pay
off the WB loans. In a meeting in a similar vein between the
Minister of Finance and the local IMF Representative,
Minister Tolli told IMF rep Wayne Camard that the WB action
was "a stab in the back." The Council of Ministers is meeting
January 12 and the Minister of Plan is expected to release a
communique denouncing the recent WB steps.
Comment: next steps
--------------
3. (SBU) Our contacts stress that the GOC's anger is based
not only on the fact that the account is blocked, but also
that the WB apparently failed to notify them of the action
until five days after the fact. We understand that the GOC
has essentially three options: they can allow the bank to be
paid back with oil revenues for the approximately USD 60 -
100 million that the WB is owed. (Comment: we understand that
royalties from the escrow account will continue to flow to
outstanding IDA and IBRD debts. End comment.) This would
take approximately 3-4 months at current royalty rates of USD
25 million a month. Alternatively, the GOC could immediately
move to amend the Chadian law which states that the oil
royalties must be deposited in the Citibank account and
direct that they be deposited directly to the GOC treasury.
(Esso, in fact, is concerned that the GOC will direct them to
deposit the royalties directly into the GOC Treasury even
without a change in the law). According to Esso, this step
might precipitate litigation by the World Bank and embroil
the parties in protracted legal proceedings. Or finally, the
GOC could tell the World Bank that they are ready to enter
into serious negotiations. Given the bruised feelings on the
part of the GOC, this last option seems remote at this point.
4. (SBU) Esso is seeking to stress its neutral position vis
a vis the dispute between the WB and the GOC, as it is not a
signatory to the agreement. Nonetheless, it is uncomfortably
in the middle of the matter, and is very concerned that the
GOC may take actions in haste which would both spell the end
of the college's oversight and which would precipitate the
departure of the World Bank from Chad. The hoped-for test
case for transparent oil revenue management is rapidly
fraying. End summary.
WALL