US embassy cable - 05NDJAMENA1662

C O N F I D E N T I A L  NDJAMENA 001662 
 
SIPDIS 
 
 
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA, 
ENERGY FOR GPERSON AND CGAY 
 
E.O. 12958: DECL: 10/11/2015 
TAGS: CD, ECON, EFIN, ENRG, EPET, PGOV, Oil Revenue Management 
SUBJECT: PRIME MINISTER AND NATIONAL ASSEMBLY PRESIDENT ON 
OIL LAW REVISIONS 
 
REF: NDJAMENA 
 
Classified By: Political/Economic Officer Kathleen FitzGibbon for reaso 
ns 1.4 (b) and (d). 
 
1.  (C)  Summary:  Prime Minister Pascal Yoadimnadji and 
National Assembly President Nassour defended proposed 
revisions to the oil revenue management law in meetings with 
the Ambassador on November 10.  Yoadimnadji said the 
Government has moved forward with the revisions and remains 
open to dialogue on the issue.  The Ambassador assured 
Yoadimnadji and Nassour of the willingness of Chad's 
international partners to work to find a solution to Chad's 
revenue management problems, but urged them not to revise the 
law without the World Bank's concurrence.  However, the 
Chadian Government had not yet received the World 
Bank-International Monetary Fund proposal.  The proposed 
revisions were delivered to the National Assembly's majority 
leader on November 10, beginning the process of consideration 
at the legislature.  End Summary. 
 
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PRIME MINISTER: SPIRIT OF LAW REMAINS 
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2.  (C) On November 10, Prime Minister Pascal Yoadimnadji 
told Ambassador and P/E officer that Council of Ministers 
approved the proposed revisions for the oil revenue 
management law in an extraordinary session earlier in the 
week.  The proposed revisions include eliminating the Future 
Generations Fund, increasing from 15 to 30 percent the funds 
directly deposited in the treasury, and changing the priority 
sectors to include security, territorial administration, and 
justice.  New oil production would be covered by the existing 
revenue management system.  Yoadimnadji expressed his concern 
that the critics of the revisions are focusing on the Future 
Generation Fund.  He asked when does the future generation 
begin.  He told the Ambassador that Chad's problems must be 
treated differently than Benin, Senegal, or Cameroon.  Chad 
is a country coming out of years of civil war which has 
resulted in military weaknesses, poor state administration, 
and to some extent, corruption.  The same remedy cannot 
necessarily fix the problems of different countries. 
 
3.  (C) According to Yoadimnadji, President Idriss Deby 
identified the establishment of security as the country's 
first priority, followed by good governance.  The Prime 
Minister blamed theft of government resources and other 
corrupt practices on the prevailing insecurity, which has 
created a culture of impunity.  Without security, Yoadimnadji 
argued, Chad cannot rectify its other problems.  He also 
noted that as an example, the recent military mutiny in the 
east cost the Government a great deal of money and 
demonstrated the need to reorganize the presidential guard 
and the military and to implement the recommendations of the 
military review.  The Prime Minister stated that Chad also 
cannot accept being told not to revise the law without being 
offered concrete proposals to solve its situation. 
 
4.  (C) Ambassador Wall reiterated concerns that the 
revisions be made in concert with the World Bank.  He 
reminded the Prime Minister that the oil revenue management 
law was an important symbol for many other countries and it 
enhances Chad's reputation abroad.  He expressed concern that 
if Chad moves ahead with the revisions without agreement from 
the World Bank, there would be negative consequences for 
Chad's relations with its donors.  The Ambassador stated that 
it is possible to pass the 2006 budget while dialogue on the 
revisions continue.  He offered that the Government could 
make revisions to the budget during the year after 
consultations are concluded. 
 
5.  (C) Yoadimnadji agreed that the oil revenue management 
law revisions would not solve all of Chad's financial 
problems.  However, he said that the international financial 
institutions had not been engaged on these issues until 
recently.  Yoadimnadji added that Chad had been raising the 
idea of revising the law for the past eight months.   He also 
described the international financial institutions' approach 
as that of accountants who are not equipped to discuss key 
issues of national priorities with a head of state.  A 
 
 
country's revenue management is not just a question of 
accounts.  The Prime Minister had not yet received a joint 
World Bank-International Monetary Fund proposal for working 
together with Chad to resolve its financial woes.  He said 
that the Vice President of the World Bank called him 
regarding the proposed revisions.  As a result, Finance 
Minister Tolli is traveling to the U.S. on November 11 to 
continue discussion of the changes in Washington. 
 
6. (C) The Prime Minister stated that the Chadian Government 
is open to discussing the issue.  However, a moratorium on 
Chad's debt for a few years will not be enough to resolve the 
fundamental problems of security, administration, and 
justice.  Several times during the meeting Yoadimnadji 
admitted that government resources had been misused or badly 
spent.  He blamed this on years of disorganization and stated 
that the Government's current goodwill will help Chad exit 
the crisis. 
 
7.  (C) The Ambassador asked if the Prime Minister could wait 
for the joint World Bank-International Monetary Fund letter 
before moving forward with the revisions.  Yoadimnadji said 
that the revisions were already on their way to the National 
Assembly.  He stated that if the National Assembly chooses 
not to adopt them, then the proposed revisions will become 
just another project of the government that did not pass. 
 
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NATIONAL ASSEMBLY PRESIDENT: SUPPORTIVE OF REVISIONS 
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8.  (C) Ambassador, DCM, and P/E officer discussed the 
proposed revisions with National Assembly President Nassour 
Ouaddai in a meeting earlier in the day.  According to 
Nassour, the National Assembly is waiting for the proposed 
revisions to the oil revenue management law to arrive.  He 
confirmed that the draft had been passed by the Council of 
Ministers but did not have any additional information on when 
it would be sent to the legislature.  However, he said when 
it arrives, he will convene a conference which includes 
members of the Petroleum and Finance committees and the heads 
of the various parliamentary groupings to discuss the merits 
of the proposal.  He showed the Ambassador the legislative 
calendar for the budgetary session which ends on January 2. 
 
9.  (C) Nassour expressed his support for the revision of the 
oil law.  However, he did not discuss specific revisions 
proposed by the Government except for the utility of having a 
future generations fund.  Instead, he focused on some of the 
issues surrounding the oil project, including calculation of 
the discount rates for Doba crude and the structure of the 
oil revenue management accounts, particularly the length of 
time it takes the deposits to be cleared for use.  Throughout 
the conversation, Nassour defended Chad's right a sovereign 
country and the importance of its fundamental laws. 
 
10.  (C) The Ambassador emphasized the importance of 
considering the revisions in concert with the donors, 
particularly the World Bank.  He pointed out that the 
implications of changing the law reach far beyond Chad 
because its oil revenue management system is considered a 
model for the rest of the world.  The Ambassador also noted 
that Chad's international partners are not against revising 
the law, but believe any revisions should be made in 
consultation with key donors.  While these consultations are 
being undertaken, the 2006 budget could be considered without 
the revisions.  It could then be revised to reflect 
agreed-upon changes to the oil revenue management law. 
 
11. (U) Later in the day, National Assembly staff told us the 
proposed revisions arrived at the National Assembly in the 
afternoon to the office of the majority ruling Movement for 
Patriotic Salvation (MPS).  A copy has been e-mailed to AF/C. 
 
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COMMENT 
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12.  (C) We expect the National Assembly to begin the process 
of considering the law, which includes consideration by the 
ruling party, the President of the National Assembly, and key 
 
 
committee and party leaders.  It will then be put it on the 
legislative calendar.  The Government claims to be open to 
discuss the issue, but the process continues to move forward 
while waiting for a formal proposal by the World Bank and 
International Monetary Fund. 
 
WALL 
 
 
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