The first oil from the wells is expected to reach international markets via loading facilities off the coast of Cameroon around the end of 2003.
The World Bank, which revealed this in a statement said the project, could result in nearly US$2bn in revenues for Chad and US$500mn for Cameroon over the 25-year production period. “By 2004, the pipeline would increase government revenues by 45-50% per year in Chad, where per capita income is US$200 and illiteracy is over 50%.”
The World Bank institution said it has been involved in the project in a number of ways. For instance, the statement noted, “it has supported the development of a sound revenue management programme, triggered the application of the bank group’s environmental and social policies, and ensured broad public consultations in the two countries and around the world.”
The project’s private sponsors led by ExxonMobil, the operator, Petronas, and Chevron are financing about US$3bn, or 81%, of the total costs. The bank is providing US$92.9mn in International Bank for Reconstruction and Development (IBRD) loans (US$39.5mn to Chad and US$53.4mn to Cameroon, amounting to about 3% of project costs) to finance the governments’ minority holdings in the joint-venture pipeline companies. The International Finance Corporation (IFC) is providing a loan of US$100mn to the government holding companies about 2.7% of the total debt and has mobilised another US$100mn for the companies in commercial lending under a B-loan umbrella.
The World Bank disclosed that International Development Association (IDA) credits totaling nearly US$47mn are providing financing for three parallel support projects to build capacity in Chad and Cameroon that would help to assure successful implementation of the pipeline project.
The World Bank statement notes that, a revenue-management law passed by Chad’s Parliament in December 1998 commits the government to using its oil revenues for poverty reduction. The law sets out the following targets for those revenues:
- 10% of royalties and dividends will be held in trust for future generations;
- 5% will be earmarked for regional development in the oil producing area;
- 80% will be devoted to education, health and social services, rural development, infrastructure and water management.
The law, according to the bank also created an oversight committee that includes representatives of civil society, parliament, the supreme court, and the government. The committee must authorise expenditures from the Special Oil Revenue Account. Annual audits of petroleum accounts will be published, and the bank and the government will carry out regular expenditure reviews.
Additional benefits from the project include infrastructure improvements in Chad, and to a lesser extent, in Cameroon, employment generation, a spur in private investment, and further oil exploration and development in both countries.
As fallout to this historical development, IFC executive vice-president Peter Woicke says, “the World Bank Group has also launched an initiative to support the growth and development of small businesses in Chad.”
Chad has a population of nearly 8mn, with 80% living below the poverty line. Most of the country is desert or semi-arid land, with a harsh physical environment and a very narrow economic base. The official inauguration of the pipeline project is scheduled for