Chad’s Oil: Miracle or Mirage?

Publication Type: Papers

The Chad-Cameroon Petroleum Development and Pipeline Project, transporting oil from landlocked southern Chad to the Atlantic coast of Cameroon for export, represents the foremost 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 (Chad’s Law 001 and subsequent amendments and decrees) that earmarks money for poverty reduction expenditures and creates an oversight committee to ensure the transparent management of the country’s oil wealth. Touting the promise of petrodollars 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 ExxonMobil-led oil development. Given the dismal track record of oil-producing countries around the world and the high stakes in a country as unstable as Chad, this experiment has come into the international limelight. The fate of the $4-billion 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 “resource curse”; and to energy-hungry industrialized countries searching for new and stable sources of oil.

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