The Impact Of Oil Revenues On Poverty And Its Management In Chad

The chad’s oil transporting from landlocked southern chad to Atlantic coast of Cameroon for export, represents the forem ost test case of the extent to which oil revenues can be used to alleviate poverty in a challenging developing country context. The most innovative feature of the project is the establishment of a legal framework that earmarks money for poverty reduction e xpenditures and creates an oversight committee to ensure the transparent management of the country’s oil wealth. Touting the promise of petrodollar for chad’s poor over public concerns that new revenues would be lost to corruption and mismanagement, the World Bank provided financing that catalyzed the led oil development. Given the dismal track record of oil producing countries around the world and the high stake in a country as unstable as chad, this experiment has come into the international limelight. Th e fate of the 4 billion dollars plus project is not only of vital importance to the people of chad, who hope to reap its benefits but risk bearing enormous costs if oil production leads to corruption, conflict and the further concentration of power in the hands of a few. It is also of great interest to other countries facing the challenge of transforming their oil wealth into benefits for their people; to donors attempting to solve the problem of the resources curse; and to energy- hungry industrialized cou ntries searching for new and stable source of oil. Poverty, politics and petrodollar, the chad is a landlocked country with a long history of civil war, continued political instability, a weak judicial system, widespread corruption and all-encompassing institutional capacity problem. This is a benefits for the poor and the stakes are high, if chad’s oil money is mismanaged, it could mean increased hardships and conflict for the nearly seven million people in chad living on less than 1 dollar per day. Since independence 1960, chad has known more years of war than of peace, and rising tensions in the region mean that violence is never far off. A coups attempt in May 2004, reminded observers of the fragile political environment, and tensions have increased over the attempt by president of the republic ruling party to change the constitution to allow him to run for a third term in 2006. The respect the Chadian oil experiment depends largely on the political will of the government face internal and external threat s, such political will appears to be in short supply. T he chad’s landlocked treasure, after decades of on-again, off again exploration and negotiations,in July 2003 Chadian oil began to flow through the 1,050 kilometer pipeline,produced by a consortium comprised of the American company and t he Malaysian state oil company.Production from the three active fields in the Doba basin reached its current peak capacity of 225,000 barrels per day in late 2004 and more than 60 tanker shipment have been exported to date. Beyond the 1 billion barrels estimated reserves in these three fields, the presence of the pipeline infrastructure is spurring new oil production and exploration in chad.. T he project consists of five components: 1) the strengthening public financi al management component will support to prepare for a consolidated budget, manage budget expenditure, manage treasury and public accounting, and develop a financial management information system. 2) The poverty database and strategy component will support activities to develop a poverty database, produce a poverty profile, and formulate a participatory strategy for poverty reduction. 3) T he human resources development component will help to improve the competence and quality of civil service. 4) The oversig ht and control component will support the said functions mandated by the law on petroleum revenue management. 5) T he monitoring economic reform and coordinating capacity building component will support the pursuit of macroeconomic stabilization and privati zation agenda, preparation and negotiation of adjustment programs with external partners, and monitoring of, and reporting on, the implementation of adjustment programs.