Overview and role of the EITI
Chad’s economy is largely dependent on the oil sector, which began production in 2003. In 2019, the oil sector contributed 20% of the country’s GDP and more than 80% of its exports. Chad’s mining sector is primarily artisanal and mostly based on the exploitation of building materials such as gravel, clay, sand and limestone, as well as rock salt and gold. The sector contributed nearly 4% of the country's GDP in 2019.
Social conflicts and public debate have arisen around the management of oil revenues, including the oil-backed loans granted by Glencore in 2013 and 2014. Chad has used the EITI platform to shed light on the terms of these loans and how they are being reimbursed.
Economic contribution of the extractive industries
- to government revenues
- to exports
- to GDP
- to employment
- Chad’s 2018 EITI Report adopted a flexible approach and included a section on the impact of the COVID-19 pandemic on the extractive sector.
- Chad was the first country to include oil transportation (from the Chad-Cameroon pipeline) and refining (from the Djermaya refinery) in the scope of its EITI reporting. This led to better public understanding of the midstream hydrocarbons sector.
- ITIE Tchad pioneered efforts to publicly disclose information about the terms of the oil-backed loans granted by Glencore, showing that most of Chad's revenues from the oil sector were primarily directed to reimbursing the loan. Chad also participates in the EITI's targeted efforts on commodity trading, achieving progress in disclosing information about the sale of the government's shares of oil.
Chad’s oil sector is mainly governed by the Law on Hydrocarbons while the mining sector is governed by the Mining Code. The sectors are managed under the Ministry of Petroleum, Mines and Energy and is governed by two legal regimes. A concession regime applies to companies established before 2007, whereby the state cedes control of the oil in exchange for the payment of a production royalty (usually paid in kind) in addition to the corporate profit tax.
Companies established from 2007 onwards are subject to a production sharing regime. Agreements are concluded between the operator and the government, according to which the first bears the expenses and risks associated with the exploration and operation of the project, in return for future production. The production sharing agreement recognises that legal ownership of natural resources remains with the state.
Petroleum permits are awarded by the Ministry of Petroleum, Mines and Energy through either a tender process or by mutual agreement. Mining licenses are awarded on a first come first served basis.
In 2018, the Chadian government committed to publish extractive contracts. In 2019, ITIE Tchad began publishing petroleum licenses and contracts on its an website following the adoption of a government decree mandating the of all oil and mining contracts within 90 days of being ratified. Some contracts are also available via the Resource Contracts Portal.
Chad does not have a legal framework mandating the disclosure of beneficial ownership in the extractive sector. Chad published its beneficial ownership roadmap in January 2017, which includes agreeing a definition of beneficial ownership, adopting a beneficial ownership law, publishing data online and setting up a public register. Chad’s EITI multi-stakeholder group adopted the definition of the 4th Directive of the European Union on illicit financial flows and requires that companies report politically exposed persons.
While Chad’s 2018 EITI Report provides some information on the legal owners of oil and mining companies, the country has yet to publish comprehensive beneficial ownership data.
The Public Treasury manages all the state’s revenues from the extractive industries. In accordance with Law n°002/PR/14 and Law N°016/PR/2000, dividends and royalties from the extractive sector are distributed as follows:
- 50% of royalties and 50% of dividends are intended for investments in priority sectors, e.g. health, social affairs, education and infrastructure;
- 45% of royalties and 50% of dividends are intended to cover the operating expenses of the state;
- 5% of the remining royalties are transferred to subnational governments of producing regions (mainly the Doba and Koudalwa regions).
ITIE Tchad is administered by the Chad Multi-Stakeholder Group (MSG) in accordance with the decrees of 03 octobre 2018 and of 07 janvier 2019 which describe the mechanisms of implementation. The MSG is hosted by the Ministry of Petroleum, Mines and Energy (MPMPE) and chaired by the Minister of Petroleum, Mines and Energy, Mr Oumar Torbo Djarma.
Government announces commitment to join the EITI
Multi-stakeholder group is formed
Candidature application is submitted
2018 EITI report
Next Validation is expected to begin
Chad was found to have made meaningful progress in implementing the 2016 EITI Standard in May 2019, following its first Validation. The Validation identified nine corrective actions to be addressed by the country’s next Validation, which commenced in April 2022.