Kome, southern Chad — Landlocked, poor and underdeveloped, Chad joined Saudi Arabia, Nigeria and other leading global oil-producing countries Friday, when President Idriss Deby formally inaugurated the 1000km (660 mile) long Chad-Cameroon pipeline in the presence of four other regional heads of state.
An unremarkable grey pipe leading into the rich red laterite earth at the massive oil facility in Kome in southern Chad, could make one of the worlds poorest countries rich.
The Chad-Cameroon oil pipeline is a US$3.7bn project. The multinational petroleum consortium responsible is led by the conglomerate Exxon Mobil (through its subsidiary Esso-Chad), and includes its two partners, the Malaysian company Petronas and Chevron Texaco, overseen by the World Bank.
It was solely because of World Bank involvement that the United States and other Western powers gave the project their blessing. Exxon Mobil was also widely reported to have been reluctant to commit to the pipeline without the World Bank as the watchdog and the establishment of safeguards unusual in normal bank projects.
Oil production is currently at 100,000 barrels a day, expected to rise to 250,000 per day at its peak. Chad is expected to earn $80m per year from oil. The oil should help ease the problems and poverty of this huge Sahelian nation. Oil revenues are expected to double the annual revenue of Chad.
Under the agreement between the government, the World Bank and the consortium, Chad is to receive a 12.5 percent share from the revenues which should go direct into an audited Escrow account in London.
Five percent of the expected petroleum revenues are destined for the development of the oil-producing Doba region. Ten percent is to be held in trust for future Chadian generations. But, by law, the lions share - 80 percent - is supposed to be spent on three key under-resourced sectors; health, education and infrastructure for the Chadian population of seven million.
Both the World Bank and the Chadian government have set up watchdog bodies to vet the process and ensure that all sides abide by the ground rules and laws.
The head of the World Bank delegation at the formal opening ceremony, Nils Tcheyan, the banks Director of Operations for the Africa region, underlined the importance of good governance and usage of Chads oil money. He said that the challenge facing Chad was "to efficiently use oil revenue to improve living conditions for all Chadians. To achieve this, we need good economic management and good governance."
Tcheyan continued: "The efficient and transparent use of the first oil revenues by the Chadian authorities will be decisive in reinforcing the confidence of the Chadian people and international bodies."
"You can't eat oil, you can't drink it," former Chadian president, Francois Tombalbaye, once said. Deby, who seized power in a military takeover in 1990, repeated those words on Friday before he swung the lever to open the valve and release the symbolic rush of viscous Doba crude oil into the underground pipeline.
He told Chadians that despite the countrys newfound oil wealth, they must continue to farm: "Chadian farmers and livestock herders should not even consider slowing down agricultural production just because weve now got oil." Deby said nothing should be taken for granted by Chadians in their "efforts to drag this country out of a state of underdevelopment and allow Chad to flourish socially and economically."
Agriculture and livestock, stressed Deby, would remain the backbone of the Chadian economy for now. He urged farmers not to be blinded by the glitter of 'black gold', stressing that oil "can in no way replace farming and livestock production."
The Doba Basin of southern Chad, where the oil fields are located, is one of the countrys most fertile farming regions, but has long been marginalized compared with the north during recurrent civil conflict and regional instability. Deby pledged that the oil would serve the "interests of peace in Chad" and promised responsible use of the petrodollars.
The countrys crude began flowing down the Chad-Cameroon pipeline in June. On October 3, the initial 950,000 barrels were shipped from Kribi across the border in Cameroon.
"Oil could be both a blessing and a curse for Chad," Mahamat Mustapha, the head of the watchdog committee monitoring Chadian oil, told journalists in the capital, Ndjamena. The same sentiment was echoed by both ministers and motor mechanics, by human rights activists and housewives (homemakers).
Benefits or doom?
But will Chads oil bring prosperity and development to the country and benefit its citizens? The government says that it has consulted with all stakeholders to put in place plans, programmes and strategies to ensure that everyone benefits from the oil wealth.
Ordinary Chadians, whose average income is less than $1 per day, certainly hope the oil revenues will improve their lives. But they look around the continent and reflect on the conflicts oil has helped to fuel in Angola and Nigeria, the civil war in Congo-Brazzaville, environmental degradation in Gabon and the questionable consequences of oil production in Equatorial Guinea.
Indeed, opponents of the Chad-Cameroon oil pipeline declared Friday a "day of mourning" to coincide with the launch. They were not invited to the symbolic inauguration of "Le Pipe," as it is known (and pronounced as in the English 'pipe'). Human rights' activists and environmental groups are concerned at what they call a lack of transparency in the process, arguing that poor Chadians may not reap the rewards of the country's newfound oil riches.
Leading the charge against the pipeline is the vocal opposition politician and member of the National Assembly, Ngarlejy Yorongar who comes from the southern region of the country. He told Radio France Internationale that the government was bent on 'swindling' the Chadian people with the pioneering oil project.
Interviewed by the BBC, Ian Gary, of the American aid agency, Catholic Relief Services, which recently published a report on Chad's oil sector entitled "Bottom of the Barrel", called Friday's inauguration "a day of great hope and also a day of great concern," commenting; "if you are trying to reform the history of oil in Africa, Chad would not be an obvious place to start."
Gary praised the setting up of an oil revenue management system, but questioned the Chad government's commitment to it. He was, in principle, in favour of an international advisory group and the revenue watchdog committee, widely touted as a first for Africa where other petroleum-producing countries have manifestly failed to set up institutional organs to facilitate transparent and accountable use of oil income.
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But Gary warned that the oversight committee could find itself overstretched and unable to fulfil its duties. "There are only nine members and four staff and they are meant to oversee the allocation of millions of dollars and approve up to 2,000 disbursements each year. The oversight they can give is somewhat limited."
Gary identified what he described as "flaws in the design. The revenue management plan has flaws. And it does not cover all oil extracted in Chad; only the three fields being inaugurated this week," he complained.
He concluded that so many safeguards had been put in place because of concerns about the "experiment in such a fragile and tense political environment in Chad."
He said he hoped for the best, but was mindful of Chad's history of instability, human rights' violations and corruption, concluding that "the best laid plans on paper may not pan out in practice."
Debys VIP guests were Presidents Denis Sassou Nguesso of Congo-Brazzaville, Francois Bozize from the Central African Republic, the Sudanese leader Omar Hassan El Beshir and Mamadou Tandja of Niger.
The notable absentee at the launch on Friday was President Paul Biya of Cameroon, home to most of the underground pipeline, which ends at Cameroon's Atlantic port of Kribi.
