Chad threatens to close oil pipeline

Thousands rallied in Chad’s capital N’Djamena yesterday in support of the president following a defeated rebel attack, while the oil minister threatened to shut down the country’s oil pipeline unless the government is compensated for frozen oil revenues.

President Idriss Deby’s government appears desperate to attract international attention to solve Chad’s political, economic and security problems.

Deby announced on Friday that he was severing relations with neighbouring Sudan and threatened to expel 200,000 Sudanese refugees if the international community did not do more to stop what he claimed were Sudanese backed-rebels from destabilising his government before the May 3 presidential election.

Oil Minister Mahmat Hassan Nasser told the Associated Press in an interview yesterday that the pipeline would be shut down unless the international community ensured Chad received its oil royalties by midday on Tuesday.

Chad’s oil exports – 160,000 barrels per day – are small by international standards and have a high sulphur content, reducing their value. But Deby appears to be gambling that any threat to the world oil supply, no matter how small, will bring attention to his plight and free up funds he needs to finance his government.

In January, the World Bank froze an escrow account with 125 million dollars in oil royalties in London, Nasser said. It also cut 124 million dollars in financial assistance after Chad changed an oil revenue law passed in 1999 as a condition for the World Bank’s support for the pipeline.

Nasser said the World Bank must either release the funds or the operators of the pipeline must compensate the Chadian government.

The law required two-thirds of oil revenues to go toward improving living standards in one of the world’s poorest countries. It also required 10% of proceeds to go into a savings fund to be used when Chad’s oil reserves are exhausted.

But the National Assembly amended the law in December. It doubled the money going to the government’s general budget, freed funds in the savings funds and added security – buying arms and equipment for the military and other security forces – to the programs that received over two-thirds of the royalties.

Nasser said Chadian officials met twice with World Bank representatives to unfreeze the funds, but without success. He said that without payment, the government would have to shut down the pipeline, which flows through Cameroon to the Atlantic Ocean.

“The government has the right to act as it sees fit if obligations are not met,” Nasser said. He said such a move would not harm his government, but would hurt other businesses and Cameroon, which have been collecting their revenues from the oil.