Le Tchad obtient un score global relativement faible dans la mise en œuvre de la Norme ITIE 2019

The Secretariat’s assessment is that Requirement 1.5 is mostly met. Some stakeholders consulted from government and industry considered that the objective of the annual EITI work plan providing a key accountability document for the MSG vis-à-vis broader constituencies and the public had been fulfilled. However, some CSOs considered that the objective was mostly met, given the perceived need for more meaningful consultations in the work plan’s development and call for more detailed plans for capacity building, particularly for MSG members. The International Secretariat’s view is that the objective is mostly met. Chad has maintained an updated and publicly accessible EITI work plan that it appears to have updated annually during the period under review. Chad EITI work plans covering 2018-20, 2021 and 2022 are accessible on the Chad EITI website, with a detailed matrix of 2022 work plan activities published as a standalone supporting document. The draft work plan was developed by the national secretariat, which solicited input from the International Secretariat and development partners prior to circulating it to the MSG for input and approval. The 2022 work plan was approved at the MSG’s 24 March 2022 meeting. The MSG’s submission for this Validation notes that the draft EITI work plans were submitted to members of all three constituencies beyond the MSG but that no input was received. Several CSOs consulted called for a revision of the process for developing the EITI work plan and considered that the current consultations represented the minimum required. They considered that a more bottom-up approach of consulting the broader constituencies before preparing a draft of the work plan would ensure greater input from constituencies and strengthen stakeholders’ buy-in to EITI work planning. Nonetheless, a review of minutes of meetings of the MSG and its working groups indicates that there is a regular review of progress in work plan implementation, which appears to have informed work plan updates. The annex to the 2022 work plan also includes an assessment of progress in implementing the 2021 work plan. In its comments on the preliminary assessment, the MSG highlighted plans to ensure more extensive consultations with stakeholders beyond the MSG in the development of the next EITI Chad work plan, in a process expected to be supported by the African Development Bank, starting in October 2022. The objectives of Chad’s successive EITI work plans appear to have been aligned with national priorities for the extractive industries, particularly the 2030 National Development Strategy. This was confirmed in stakeholder consultations. The 2022 work plan includes activities related to strengthening systematic disclosures of EITI data by both government entities and companies. The annex to the 2022 work plan sets out work plan activities that are time-bound, measurable and costed, with sources of funding identified. Several activities do not have clear costings however, with several planned items noting that the source of funding is to be confirmed. The work plan includes activities to address capacity constraints, although axis 5 of the work plan includes general plans for capacity development, rather than training sessions on specific topics. Several CSOs called for more detailed planning of capacity building sessions as they considered that there was a significant need to build the capacity of newer MSG members, particularly from government. The 2022 work plan requires MSG discussions to go beyond the minimum requirements of the EITI Standard and includes activities aimed at articulating the Chad EITI theory of change. The MSG’s ‘Outcomes and impact’ submission for this Validation highlighted recommendations in the 2019 EITI Report as exceeding the minimum requirements of the EITI Standard, given their focus on reconciling inconsistent disclosures between the various revenue-collecting government entities (Treasury, Tax Department, Customs), to strengthen the operations of the government’s Extractive Revenues Collection and Centralisation Cell, to clarify inconsistencies between the SHT’s EITI reporting and its financial statements, as well as improving the government’s oversight systems related to the repayment of the debt to Glencore. The work plan includes only one activity related to addressing legal and regulatory constraints on EITI implementation, in the form of the MSG’s work on beneficial ownership legislation. While work plan activities related to follow-up on EITI recommendations imply Chad EITI’s engagement in planned legal and regulatory reforms, these are not described in the work plan or other Chad EITI documents. Nonetheless, beyond general activities related to following up on recommendations from EITI reporting and Validation, the work plan also includes specific activities linked to follow-up on recommendations from thematic reports commissioned by the World Bank. The work plan includes activities related to establishing a legal framework for beneficial ownership disclosures, but only includes general plans to formalise a contract disclosure working group and to develop a plan for contract disclosure. The work plan does not provide a clear plan related to contract disclosure. The timetable for the work plan’s implementation appears aligned with deadlines for Chad’s EITI reporting and Validation. In its comments on the preliminary assessment, the MSG highlighted the enactment of the 2019 Government Decree (1835/PR/MPE/2019) that led to the formulation of a contract disclosure plan, which was published in July 2022. The new plan includes activities and responsible stakeholders for each, although it does not provide a clear timeline for implementation of planned activities.

The Secretariat’s assessment is that Requirement 7.1 is partly met. Most stakeholders consulted considered that the objective of enabling evidence-based public debate on extractive industry governance through active communication of relevant data to key stakeholders was still far from being achieved in the period under review given the lack of outreach and dissemination activities since 2018 due to funding constraints. Several CSOs consulted noted that it should have been possible to develop relatively low-cost dissemination activities through community radio stations in this period, even in the context of significant funding constraints. The Secretariat’s view is that there has been back-sliding since the previous Validation and that the objective is partly met in the period under review. Chad has continued to publish EITI Reports on its website in the period under review, including the 2017 EITI Report in June 2020, the 2018 EITI Report in December 2018 and the 2019 EITI Report in February 2022. In January 2021, Chad EITI published a 13-page summary of the 2018 EITI Report prepared by the IA, although there is no evidence of summary reports being prepared on the basis of the 2017 or 2019 EITI data. The MSG’s ‘Outcomes and impact’ template for this Validation highlights the lack of translation of EITI data into other languages (Arabic) in the case of the last three EITI Reports (covering 2017-19), which meant that the EITI data was not accessible for the majority of the target audiences who only speak Arabic. Several stakeholders consulted highlighted access challenges related to EITI Reports, given that many stakeholders in Chad faced challenges in Internet access and in understanding materials in French. Four thematic reports funded by the World Bank have been published on topics including a Chad EITI administrative procedures manual, a diagnostic study of the Chad EITI Secretariat, a Chad EITI work plan implementation risk assessment, and a study on Chad EITI communications. However, these studies are focused on internal Chad EITI issues rather than designed as communications products for the broader constituencies or general public. In its comments on the preliminary assessment, the MSG highlighted that it considered the March 2021 EITI Chad study on the proposed communications strategy to constitute EITI Chad’s communications strategy. While it noted that the strategy had not yet been implemented in the period under review, the MSG noted that the strategy was included under a specific axes of the 2022 EITI Chad work plan and that the AfDB had committed to support this work. The MSG further noted that the new Chad EITI Report would be disseminated as soon as the necessary funds were disbursed and that the EITI Chad Secretariat was preparing the presentations for these dissemination events in the meantime. Several stakeholders consulted from civil society and development partners called for greater MSG attention to communicating EITI findings in simple and accessible language, given their perception of the highly technical language used in EITI Reports that did not facilitate access to this information. The development of the mini-cadastres for mining and petroleum hosted on the Chad EITI website was widely recognised by stakeholders consulted as an important development in facilitating public access to license and contract information, however. With support from the World Bank however, Chad EITI published a study in March 2021 aimed at strengthening Chad EITI communications activities, which included a proposal for the development of a communications strategy. The study segments target audiences for EITI communications activities and considers needs and access challenges. The draft communications strategy report includes recommendations for the MSG to consider in finalising the communications strategy, although available evidence does not indicate that these were yet followed up on. However, stakeholders consulted noted that the recommendations of the communications study had been reflected in the 2022 EITI work plan but had not yet been implemented given the lack of financial resources dedicated to communications activities. Available evidence from the MSG’s Validation templates and stakeholder consultations indicated that there had been no EITI outreach and dissemination activities since the last dissemination activities based on the 2014-2016 EITI Reports in the ten districts of the capital N’Djamena in September 2018 (see ToR). Stakeholders consulted from all constituencies confirmed that there had been no dedicated outreach or dissemination events since 2018, initially due to lack of funding following the end of EU funding in 2019 and subsequently due to both funding constraints and pandemic-related restrictions since 2020. The main dissemination effort in the period under review beyond publication of EITI Reports on the Chad EITI website has been the publication of a communiqué by the Minister of Petroleum and Energy in January 2022 encouraging the public to consult the Chad EITI website. The efforts of Chad EITI to promote the use of EITI data in national print and broadcast news appears to have declined in the period under review, with evidence of coverage in the press clippings in 2017-18 provided for this Validation but little evidence of use of EITI data in the national press since then. Coverage of Chad EITI implementation and findings appears to have slowed since 2020, which is partly attributable to the effects of the COVID-19 pandemic but primarily due to the lack of EITI dissemination activities according to stakeholders consulted. There is extensive evidence of use of EITI data by development partners such as the World Bank, IMF, African Development Bank, EU Delegation and others, as well as two civil society studies ongoing in 2022 drawing on EITI data in analysing subnational transfers of petroleum revenues. The MSG’s ‘Outcomes and impact’ template for this Validation refers to advocacy notes and Parliamentary debates drawing on EITI data, although there is no further documentary evidence of these briefings and stakeholder consultations noted that these briefings had been prepared in the past, but not during the period under review. However, in its comments on the preliminary assessment, the MSG highlighted recent EITI-related outreach and dissemination activities, including activities held by the civil society organisation CERGIED (including its calls for an independent audit of SHT, its public criticism of SHT’s financial management, and a forum on public participative budgeting in June and July 2022) and the day-long civil society reflection event in Moundou focused on the management of subnational transfers of petroleum revenues in July 2022, which was transmitted to N’Djamena-based stakeholders via the FM Liberté radio station (available on the EITI Chad website). Chad’s EITI Reports have also been a key source of information for several workshops organisation by the civil society organisation Centre for Studies on Training and Development (Centre d’Étude de Formation et de Développement – CEFOD).

The Secretariat’s assessment is that Requirement 7.2 is fully met. Stakeholders consulted did not express particular views on progress towards the objective of publication of extractive information in open data and interoperable formats. The Secretariat’s view is that the objective has been fulfilled given the existence of a clear Chad EITI policy on publication of data in open format and the practice of disclosure of EITI data in such formats, even if most other extractive data systematically disclosed on government portals has yet to be published in open format. The Chad EITI Open Data Policy was agreed in December 2017 and published on the Chad EITI website. While the policy does not explicitly define the terms of release of EITI data, noting only that they should be disclosed in ‘appropriate formats’, it does confirm the free terms for use and reuse of EITI data. Chad has consistently prepared summary data files for all EITI Reports to date, including for 2019, which are published on the EITI global summary data repository and website, as well as the national EITI website. The majority of both financial and non-financial data in the 2019 EITI Report has been published in standalone annexes in open format. The Ministry of Petroleum, Mines and Energy’s Decree 1838/PR/MPME/2019 provides a robust foundation for building the government’s systematic disclosures of data ranging from the full text of contracts and licenses to information on mining and petroleum activities, which could cover a large share of data required by the EITI Standard if interpreted broadly. The MSG has not yet undertaken a review of the availability of systematic disclosures on government and company websites in open format, but has plans to do so as part of activities in its 2022 work plan to follow up on its mainstreaming feasibility study supported by the World Bank. Chad EITI has made efforts to improve the accessibility of data on the extractive industries, for instance launching a mini-cadastre portal with license and contract information, although the data does not appear to be available for bulk download in open format. However, the cadastral portal links a map front-end user interface to specific contracts that have been disclosed. The Ministry of Finance and Budget’s Observatory on Public Finances website was established to provide oil and gas production and export data, available for download in open (.csv) format.

The Secretariat’s assessment is that Requirement 7.3 is mostly met. Several civil society stakeholders consulted did not consider that the objective of ensuring that EITI implementation is a continuous learning process that contributes to policy-making through the MSG’s follow-up on recommendations from the EITI process had been fulfilled in the period under review. Government officials considered that the objective had been achieved although they could not describe the mechanism for following up on recommendations from EITI Reports. The MSG has tracked progress in following up on corrective actions and strategic recommendations from the previous Validation through a dedicated matrix, published on the Chad EITI website. Stakeholder consultations explained that the mechanism for follow-up on recommendations from EITI Reports consists of either including related activities in the annual EITI work plan or delegating follow-up to the MSG’s sub-committees on recommendations. The MSG established three sub-committees with different responsibilities related to EITI recommendations in the 2020-22 period. In 2020, the MSG established its first sub-committee to follow up on recommendations from Validation and EITI reporting (through Ministerial Order 44/PR/MPME/HCN/CSTP/2020). In March 2021, the MSG established an ad hoc sub-committee of government, civil society, SHT, the Chamber of Accounts (through Ministerial Order 14/PR/MPM/HCN/CSTP/2021) to follow-up on recommendations from the 2018 EITI Report related to the comprehensiveness and reliability of EITI reporting. It published its final report in August 2021. In march 2022, the MSG established a sub-committee responsible for following up on recommendations from the 2018 Validation and on recommendations from the 2018 and 2019 EITI Reports (through Ministerial Order 003/PCMT/PMT/MPE/HCN/CSTP/2022). There has been significant MSG attention paid to recommendations from diagnostic reports. The World Bank supported four studies that yielded recommendations to address the most significant gaps identified in the previous Validation, including dedicated studies that led to recommendations included in the 2022 work plan on cadastral information, revenue collection, the Chad EITI communications strategy and the MSG’s governance and operations. There has been some tangible follow-up on recommendations from the previous Validation, including in the MSG’s development of a theory of change included in the 2022 EITI work plan. The MSG has also worked with the Ministry of Petroleum and Energy and the Ministry of Territorial Administration to draft proposals for revisions of Ordinance 23 on civil society oversight, although progress is unclear since the submission of proposed revisions to Ordinance 23 to the Council of Ministers in late 2020. The Minister of Petroleum and Energy has played a key role in follow-up on specific EITI recommendations, including in sending official letters to the Chamber of Accounts in November 2020 for instance. However, consultations with stakeholders, particularly from civil society, highlighted a concern over bureaucratic inertia and lack of effective coordination of reforms across government agencies as key constraints on the follow up on EITI recommendations. Civil society stakeholders considered that the EITI’s perceived decline in influence over reforms of extractive industry governance was a reflection of weaknesses in government engagement in the EITI process due to institutional instability and frequent staff changes. Several CSOs raised concerns over a perception that the only effective mechanism for follow-up on EITI recommendations was through direct intervention of the Minister of Petroleum. This support could only be solicited in specific cases and did not represent an effective mechanism for following up on EITI recommendations in practice in their opinion. The International Secretariat’s view is that most aspects of Requirement 7.3 have been fulfilled but that concerns over the effectiveness and sustainability of the MSG’s mechanism for following up on EITI recommendations are legitimate. Thus, it considers that Requirement 7.3 is mostly met in the period under review.

The Secretariat’s assessment is that Requirement 7.4 is mostly met. Most stakeholders consulted did not express particular views on whether the objective of ensuring regular public monitoring and evaluation of EITI implementation had been achieved. However, several CSOs considered that this had not been consistently met in the period under review, given that the latest annual progress report covered three years and did not include an adequate review of the impact of EITI implementation to date. The Secretariat’s view is that most aspects of Requirement 7.4 have been addressed, but that the broader objective is mostly met given the lack of sufficient attention to documenting impact and limited evidence of consultation of the broader constituencies. Chad published annual progress reports covering 2017 in June 2018, and the 2018-21 period in March 2022. While the MSG did not prepare any structured annual review of outcomes and impact in the intervening years, there is evidence of ad hoc discussion of progress against the work plan, resource constraints and outcomes of the EITI process in MSG meeting minutes for 2019-21. In addition, the annual EITI work plan includes in annex an overview of progress in implementing the previous year’s work plan. The report of the ad hoc commission on follow-up on EITI recommendations published in June 2021 provides some overview of outcomes and impact of the EITI process. The 2018-21 annual progress report addresses most aspects of Requirement 7.4, in providing an overview of progress in the work plan, follow-up on recommendations and on EITI Requirements. However, the section on impact consists of a succinct list of strengths and weaknesses of EITI implementation rather than a narrative overview of impact and efforts to strengthen the impact of the EITI process. Several CSOs did not consider that the annual progress report had provided sufficient overview of the impact of the EITI process to date. Several stakeholders from all constituencies highlighted different types of impacts that they attributed to EITI implementation (see Effectiveness and sustainability indicators). Stakeholder consultations confirmed that the process for developing the annual progress report followed a similar process to the annual work plan’s development, with the Chad EITI Secretariat preparing a draft that is circulated to MSG members for comment. The MSG’s submission for this Validation notes that the draft EITI annual progress report were submitted to members of all three constituencies beyond the MSG but that no input was received. Several CSOs consulted raised concerns over the process for the work plan’s development and criticised the lack of sufficient time for meaningful stakeholder consultation for input to the annual progress report’s development.

The Secretariat’s assessment is that Requirement 1.1 is mostly met. Most government officials consulted considered that the objective of full, active and effective government leadership of the EITI process had been achieved, although they considered that this engagement could always be strengthened. Some industry stakeholders consulted considered that the objective was in the process of being fulfilled, despite institutional instability in this period. Several CSOs consulted did not consider that the objective was yet achieved given political changes and the decline in government provision of technical and financial resources for EITI implementation. In its comments on the preliminary assessment, the MSG highlighted the impact of the political situation, the security crisis and the COVID-19 pandemic on the provision of funding for the EITI and the implementation of EITI activities in this period, but highlighted the government’s continued support and engagement in the EITIdespite the broader context. The Secretariat’s view is that the objective is mostly fulfilled in the period under review. There have been frequent and consistent public statements of support for EITI implementation from senior government officials throughout the period under review, including through the issuance of Ministerial communiqués, circulars, orders and decrees by senior government officials, including the Minister of Petroleum and Energy and the President, as itemised in the MSG’s ‘Stakeholder engagement’ template. A senior government official, the Minister of Petroleum and Energy, has effectively led EITI implementation since the last Validation. Djerassem Le Bemadjiel was appointed Minister of Petroleum and Energy in late February 2022, replacing Oumar Djarma Torbo who was occupying the position between July 2020 and February 2022 and who kept the position during the government change of May 2021. The institutional structure of EITI implementation, with senior government representation on the MSG chaired by the Minister of Petroleum and Energy (e.g. in the 2019 MSG nominations), reflects the high-level government engagement in the EITI process. The MSG appears to include appropriate representation from government, although there have been replacements in government representatives following political changes in 2020-21. Government officials’ attendance at EITI events, including meetings of the MSG and its working groups (committees), was broadly consistent in the period under review. Yet the low frequency of MSG meetings is a concern (see Requirement 1.4). Several CSOs consulted noted that newer MSG members from government required significant capacity building on the EITI, given their perception that government officials did not view the EITI as a priority and that they did not understand the EITI’s role as a tool to support reforms in extractive industry governance. Several stakeholders consulted raised concerns over the lack of effective coordination between government officials from different ministries on EITI implementation, which caused delays in EITI disclosures and challenges in follow-up on EITI recommendations. Some industry representatives noted that frequent changes in government officials had impacted on the effectiveness of government engagement in the EITI process. Government engagement in outreach and dissemination was as weak as the overall efforts in the 2019-22 period, and there is little evidence of use of EITI data by government entities documented in the MSG’s submission for this Validation. Nonetheless, there is some evidence of the Minister of Petroleum and Energy taking steps to encourage the public to consult the Chad EITI website (see Requirement 7.1). The government appears to have engaged in most aspects of EITI implementation in the period under review, including input to the design of EITI reporting and the provision of required data. However the final report of the MSG’s ad hoc working group on follow-up on EITI recommendations in 2021 highlights that the political transition following the suspension of the constitution in April 2021 led to a weakening of EITI engagement from some government entities and companies. This was confirmed in stakeholder consultations, particularly with civil society, who noted that EITI data collection from certain government entities depended on direct intervention of senior government officials and did not appear to be sufficiently institutionalised to ensure sustainability of reporting during times of political change. The government’s provision of technical and financial resources for the EITI has been systematically lower than planned in the period under review. The World Bank-funded diagnostic study of the Chad EITI Secretariat published in April 2021 highlighted funding constraints as a key challenge for Chad EITI. Government budgeted funding for EITI implementation has oscillated around XAF 450m (around USD 740,000) in the 2019-21 period, although disbursements were only around 54% of this amount in 2019-20 and 69% in 2021. The budgeted government funding for EITI in 2022 is only XOF 200m (around USD 330,000), less than the actual annual disbursements in the 2019-21 period. The World Bank has provided XAF 175m (around USD 288,000) in annual grant funding in 2020 and 2021 through its Action Plan for the Modernization of Public Finances (Plan d'Appui à la Modernisation des Finances Publiques - PAMFIP) project, which was devoted to funding four diagnostic studies on Chad EITI. The EU has provided some funding through its PAON (Programme d'Appui à l'Ordonnateur National - Project to Support National Authorising Officers) project, although none of the XAF 163m (around USD 269,000) budgeted for 2020 was disbursed, while most (94%) of the XAF 58m (around USD 95,000) budgeted for 2021 was disbursed. Stakeholders consulted from all constituencies highlighted the impact of funding constraints on key aspects of EITI implementation, noting for instance that there had been no dedicated outreach or dissemination of EITI data since 2019 given the lack of sufficient financial resources. Several government officials however noted that budget cuts had affected all programmes funded by government grants and argued that the cuts in funding for EITI should not be interpreted as a reflection of declining government engagement. Some stakeholders consulted from different constituencies called for the inclusion of a specific line for EITI funding in the annual government budget, to ensure that funds allocated to the EITI were disbursed in full. There is evidence of the government taking actions to help overcome barriers to EITI implementation, particularly by the Minister of Petroleum and Energy. The EITI Champion has taken steps including writing official letters to government entities such as the Chamber of Accounts and the Ministry of Territorial Administration to follow up on EITI recommendations and submit recommendations for reform. The Ministry of Petroleum has issued decrees, orders (arrêtés), circulars and communiqués related to reforms directly related to the EITI process. For instance, the Ministry of Petroleum, Mines and Energy’s Decree 1838/PR/MPME/2019 provides instructions for the systematic disclosure of data ranging from the full text of contracts and licenses as well as information on mining and petroleum activities. Several government officials highlighted these interventions by the EITI Champion as evidence of the government’s proactive engagement. However, several CSOs consulted considered that government actions to lift barriers to the EITI had focused on disclosures of information, rather than on implementing reforms that would improve the governance of the extractive industries, for instance on the management of subnational transfers of oil revenues (see Requirement 7.3).

The Secretariat’s assessment is that Requirement 1.2 is mostly met. Most stakeholders consulted from the different constituencies considered that there had been a weakening of companies’ engagement in the EITI process since the previous Validation, although many stakeholders considered that this was due to the changing context of the extractive industries and oil companies’ activities, rather than a declining interest from companies in the EITI. The Secretariat’s view is that the objective of full, active and effective industry engagement in the EITI process is mostly met in the period under review, given weaknesses in industry coordination mechanisms related to the EITI, declining company participation in EITI reporting and gaps in industry representation in EITI activities that appear linked to the impact of the COVID-19 pandemic on company operations combined with the departure of several industry members from the MSG. There are seven industry representatives on the MSG, including five from oil and gas and two from mining. The MSG’s ‘Stakeholder engagement’ template for this Validation noted that attendance at MSG meetings by four of the seven members was regular in the period under review. However, while four oil and gas industry representatives were actively engaged in the EITI process in the period reviewed by the previous Validation, engagement appears to have narrowed since 2020 in particular. Participation of the MSG member from Glencore was less frequent since Glencore suspended production in Chad in early 2020. The illness of Yolla Zongre, a representative from ExxonMobil and the Secretary General of the Petroleum Operators Association of Chad (AOPT), since 2020 weakened his engagement in the EITI, and his MSG seat was not filled since his death in early 2021. The MSG member from SHT was replaced in 2021. Thus, the most consistent engagement in the EITI process in 2020-22 has been CNPCI, the largest oil producer in Chad as of 2021, and the mining SOE SONAMIG. Several stakeholders consulted from all constituencies highlighted the impact of Glencore’s suspension of its operations since 2020 and ExxonMobil’s decision to sell its Chadian assets to Savannah Energy on the industry constituency’s engagement in the EITI in recent years. The MSG’s ‘Stakeholder engagement’ template for this Validation noted that coordination of the oil and gas sub-constituency is effectively provided through the AOPT, although it notes the absence of coordination mechanisms within the mining sub-constituency. However, several stakeholders consulted highlighted the embryonic status of the mining sector, with no industrial mining activities to date. Records of the AOPT’s annual general meetings are documented in the constituency’s submission for this Validation. However, there is little evidence of engagement of the broader industry constituency in the EITI process. The constituency’s contribution to the ‘Stakeholder engagement’ template for this Validation notes that industry’s contributions to the development of the annual work plan and review of outcomes and impact has come from the MSG members themselves, rather soliciting contributions from the broader constituency. The constituency’s submission for this Validation also conceded that the industry’s contribution to outreach and dissemination related to the EITI process had weakened during the period under review, linked to the planned sale of ExxonMobil’s Chadian assets, the Covid-19 pandemic, and Glencore’s suspension of oil production. There appears to continue to be an enabling environment for company participation in all aspects of EITI implementation including reporting, as confirmed in the MSG’s submission for this Validation. Chad’s 2017 EITI Report was produced according to the conventional EITI reconciliation, while its 2018 and 2019 EITI Reports were published under the “flexible” EITI reporting approach agreed by the EITI Board in response to the COVID-19 pandemic. There have been weaknesses in company participation in EITI reporting, both under the conventional and “flexible” EITI reporting approaches. In the 2017 EITI Report, some 17 of the 33 material companies did not submit reporting templates, including large companies such as CNPCI and Petronas. While companies were not requested to report data for the 2018 EITI Report, the Chad EITI Secretariat sent reporting templates to the largest extractive companies in preparing the 2019 EITI Report, requesting data on beneficial ownership and social expenditures. However, the level of company responses to these data requests for 2019 is unclear given that templates were received only after the publication of the 2019 EITI Report and the data had not been published online as of May 2022. In consultations, the IA raised concerns over the way in which the “flexible” EITI reporting approach had been understood by Chad EITI and communicated to companies, given that it implied that companies were no longer required to participate in EITI reporting. Government officials explained that some companies had submitted the required data after publication of the 2019 EITI Report and that it would be possible to publish their data on the Chad EITI website. A senior government official consulted committed that the government would follow up with extractive companies to ensure their full compliance with EITI reporting requirements in future EITI Reports. There are limited systematic disclosures of EITI data by extractive companies operating in Chad. The 2019 EITI Report provides a review of systematic disclosures by oil companies of their (voluntary) social expenditures. Glencore publishes information on its payments to government and purchases of crude oil from the Government of Chad through its annual ‘payments to government’ reports. However, several stakeholders consulted from civil society and development partners expressed concern at the low level of systematic disclosures by petroleum companies operating in Chad, noting the very limited amount of information on leading petroleum companies’ operations in Chad on their respective corporate websites.

The Secretariat’s assessment is that Requirement 1.3 remains mostly met in the period under review. Chad has made efforts to address the corrective action from the previous Validation. Opinions of stakeholders consulted were split over the level of progress towards the objective of full, active and effective engagement of civil society in the EITI process, in an enabling environment. Most government and industry stakeholders consulted considered that it had been met given the work on proposing reforms to the legal framework, although some government officials considered that civil society engagement had waned somewhat in recent years (perhaps due to the COVID-19 pandemic). Most civil society stakeholders consulted considered that the objective was mostly met given legal restrictions that represented constant risk to CSOs engaged on extractive issues, even if they were not applied in practice. However, in its comments on the preliminary assessment, the MSG highlighted recent EITI-related outreach and dissemination activities led by CSOs, including workshops and press releases by activities held by the civil society organisations CERGIED and CEFOD, which have included critical views of the government and SOE’s management of the oil sector (including its calls for an independent audit of SHT, its public criticism of SHT’s financial management, and a forum on public participative budgeting in June and July 2022) and the day-long civil society reflection event in Moundou focused on the management of subnational transfers of petroleum revenues in July 2022, which was transmitted to N’Djamena-based stakeholders via the FM Liberté radio station (available on the EITI Chad website). Chad’s EITI Reports have also been a key source of information for several workshops organisation by the civil society organisation Centre for Studies on Training and Development (Centre d’Étude de Formation et de Développement – CEFOD). The Secretariat’s view is that the objective remains mostly met, without considerable improvements since the previous Validation. A more detailed assessment of progress in addressing Requirement 1.3 and adherence to the EITI protocol: Participation of civil society is provided in Annex A. Civil society MSG members have continued to be protected by provisions of the Government Decree on the EITI that explicitly bans any reprisals towards MSG members for their public expression in the context of the EITI process and have continued to drive the constituency’s engagement in the EITI. However, despite recommendations from the previous Validation for these statutory protections to be expanded to stakeholders beyond the MSG, there is no evidence that this has been implemented in practice in the past three years. Chad EITI has proposed reforms to provisions of laws and regulations (e.g., Ordinance 23) that curbs civil society’s ability to operate freely and these have been submitted by the Ministry of Petroleum and Energy to the Ministry of Territorial Administration. However, the Council of Ministers has not approved such reforms to date, amidst the political developments in 2021 including the suspension of the Constitution in April 2021. In practice, Chad EITI has not yet successfully expanded the enabling environment for the broader civil society constituency to be actively, fully and effectively participate in the EITI process, without fear of reprisal. There is no evidence that the MSG has considered or proposed any reforms on the scope of the provisions in the presidential decree to protect civil society members of the MSG to include other members of the broader constituency, beyond proposals for the revision of the legal framework for civil society’s activities in Chad. In an environment where civil society can face criminal charges for public expression on issues categorised as ‘political’ and amidst anecdotal evidence of (often anonymous) intimidation and threats against civil society working on extractive industry and governance issues. There is no evidence of criminal charges against civil society stakeholders involved in the EITI process for their public expression on natural resource governance in the period since the previous Validation. There are credible allegations of self-censorship on the part of members of the broader civil society constituency engaged in EITI implementation, in relation to issues covered by the EITI Standard, such as the management of off-budget oil revenues, subnational transfers and environmental impacts of the extractive industries. There is also evidence that civil society has faced challenges in its operation, including social media bans and Internet restrictions in 2018-20 and bans on public demonstrations. Thus, the Secretariat’s view is that there have been breaches to the EITI protocol: Participation of civil society related to freedoms of expression and of operation, despite evidence of civil society active engagement in the EITI process.

The Secretariat’s assessment is that Requirement 1.4 is mostly met, as in the previous Validation. Most stakeholders consulted considered that the objective of an independent MSG that can exercise active and meaningful oversight of all aspects of EITI implementation that balances the three main constituencies’ interests in a consensual manner had been achieved in the period under review, despite the impact of the COVID-19 pandemic on the frequency of MSG meetings. Some members of government and civil society considered that further improvements in the MSG’s oversight were needed, including in building MSG members’ capacities, strengthening mechanisms for coordinating with the broader constituencies, and a renewal of MSG members after a postponement in the MSG’s renewal during the COVID-19 pandemic. The Secretariat’s view is that the objective is mostly met given these weaknesses in the MSG’s oversight of EITI implementation. The last renewal of MSG membership was completed in December 2018, although there have been ad hoc replacements of MSG members from government and industry in the 2019-21 period. The legal framework establishing the EITI in Chad was last updated in October 2018 with Presidential Decree 1637/PR/MPE/2018, which names the types of organizations to be represented on the MSG and confirms each constituency’s right to appoint its own MSG members. While the renewal of MSG members was due in late 2020 given the two-year (renewable) term for MSG members, Secretariat staff explained that a decision had implicitly been taken by the Chad EITI Secretariat to effectively postpone the renewal of MSG membership by two years due to the COVID-19 pandemic, although this de facto decision is not documented. The last renewals of MSG members were conducted in 2018. The nominations process for civil society was well documented and appears to have been open to all, while the appointment of government MSG members was in accordance with the Decree institutionalising the EITI. There have been frequent changes in government MSG members in 2020-22. The nominations process for industry appears to be ad hoc, through the Chad EITI Secretariat writing to individual companies and the operators of producing oil and gas consortiums requesting their nominations to the MSG, with little documentation of the process aside from the appointment letters sent to Chad EITI. The MSG’s ‘Stakeholder engagement’ template for this Validation notes that the practice for replacements of MSG members, as followed in the case of two deaths of MSG members in 2021, is for the Chad EITI Secretariat to coordinate with the Ministry of Petroleum to write to the relevant institution to ask for a replacement to be appointed. In practice, several industry MSG seats have been left vacant in 2020-22 following the death of MSG members and the suspension of Glencore’s production (see Requirement 1.2). In practice, consultations with stakeholders from all constituencies highlighted weaknesses in some MSG members’ capacities in the period under review. Several stakeholders noted that the frequent replacement of government MSG members significantly impacted new members’ capacities to fulfil their duties. While acknowledging Chad EITI work plan activities dedicated to capacity building, several CSOs considered this insufficient and called for much more capacity building of new MSG members upon their appointment. There also appear to be capacity constraints within the Chad EITI Secretariat, with an April 2021 World Bank-funded diagnostic study of the national secretariat issuing extensive recommendations for strengthening the entity’s capacities and structure. Many stakeholders consulted and the MSG’s submission for this Validation highlighted funding constraints as a key reason for both direct capacity constraints and indirect impact on the availability of training for MSG members and secretariat staff. While there appear to be constraints on members of the broader civil society constituency on freedom of expression and operation, Article 24 of the Decree on EITI provides explicit protection for MSG members in relation to their expression in the course of their EITI duties. Although Article 17 of the 2017 Decree institutionalising the EITI refers to the need to issue a Ministerial Order (arrêté) for the organisation of the MSG and Chad EITI Secretariat, this Order has not been issued to date. In practice, the MSG has established through Ministerial Order three distinct sub-committees to focus on various aspects of recommendations from EITI implementation and Validation. In 2020, a first sub-committee was established to follow up on recommendations from Validation and EITI reporting. In March 2021, an ad hoc sub-committee was constituted follow-up on EITI recommendations, publishing its final report in August 2021. In March 2022, a sub-committee was established to follow up on recommendations from the 2018 Validation and for reviewing recommendations from the 2018 and 2019 EITI Reports. The MSG has established other ad hoc working groups to focus on specific issues for a timebound period, such as the working group on gender aspects of the extractive industries that prepared a dedicated action plan reflected in axis 5 of the 2022 work plan. The MSG appears to have taken steps to improve its internal governance in practice. For instance the MSG’s matrix tracking progress on follow-up on the last Validation notes steps to improve advance notice of meetings, circulation of documents, and codifying per diem practices. The MSG last updated its ToR Presidential Decree 1637/PR/MPE/2018) in October 2018, which appears to cover all of the main aspects of Requirement 1.4.b, but has not been updated for the 2019 EITI Standard. Thus, the ToR does not include specific reference to adherence to the Code of Conduct or conflict of interest provisions, nor to gender aspects of representation, although there are related activities in Chad EITI’s 2022 work plan. The MSG’s ‘Stakeholder engagement’ template for this Validation does not highlight any significant deviations from the ToR in practice aside from the frequency and number of MSG meetings, both prior to and during the COVID-19 pandemic. While the MSG is required by its ToR to meet once a quarter, it only met three times each in 2019 and 2020, and twice in 2021. The MSG’s ad hoc committee on follow-up on recommendations established in April 2021 met regularly until it completed its report in June 2021. The MSG notes that it considers the EITI Code of Conduct to have been respected in practice in the period under review and describes the MSG’s effective oversight of production of EITI Reports, approval of work plans and annual progress reports. Ministerial Order 045 /PR/MPME/HCN/STP of March 2020 formalised the statutory rules for per diems related to the EITI, although the practice does not appear to be published. Decision-making appears to be by consensus, with advance notice of meetings and circulation of documents (see examples of meeting notices). Minutes of MSG meetings are available on the Chad EITI website, albeit spread out over various pages covering meetings in 2019, 2020 and 2021, which are not comprehensively listed on the Chad EITI webpage for meeting minutes. Older MSG meeting minutes (for the 2014-19 period) are also disclosed. While Chad EITI has made significant efforts to address corrective actions from the previous Validation, the Secretariat’s view is that there has been insufficient implementation of the pertinent recommendations in the various studies on Chad EITI to date. Thus, the Secretariat’s view is that the technical aspects of Requirement 1.4 are mostly met.

The Secretariat’s assessment is that Requirement 3.1 is fully met, as in the previous Validation. Stakeholders consulted did not express particular views on progress towards the objective of transparency in extractive deposits and exploration efforts, although several members of all constituencies welcomed the launch of the Observatory on Public Finances and the mini-cadastres for both mining and petroleum developed by Chad EITI. The objective of ensuring public access to an overview of the extractive sector in the country, and its potential, is fully met. Chad's 2019 EITI Report provides an overview of the extractive industries, including major deposits, companies in the hydrocarbon and mining sectors, and ongoing exploration activities. There are few systematic disclosures on government or company websites related to extractive activities information.

The Secretariat's assessment is that Requirement 6.3 is fully met, as in the previous Validation. Stakeholders consulted did not express particular views on progress towards the objective of transparency in the contribution of the extractive industries to the national economy, although several members from all constituencies welcomed the greater transparency on petroleum revenues managed off-budget as a result of Chad EITI, which ensured a fuller understanding of the oil sector’s contribution. Chad has used its EITI Report to centralise information on the contribution of the extractive industries to the national economy. The 2019 EITI Report provides the contribution of the extractive industries, in absolute and relative terms, to GDP, government revenue and exports. The report provides the most recent available estimate of artisanal and small-scale mining activity. While the report provides available public data on extractive employment (in absolute and relative terms), the government figures are in aggregate and for 2014 while figures from previous EITI Reports do not cover 2019. Nonetheless, the Secretariat’s view is that these gaps are reasonable given the lack of company reporting under the “flexible” EITI reporting approach and weaknesses in government systems, although the latter could have been more clearly described in Chad’s EITI Report. While the 2019 EITI Report provides only a limited overview of the location of the main extractive activities in the country, the mini-cadastre portal launched by Chad EITI and the Observatory of Public Finances provides additional information on the location of activities. Most of the information on the macro-economic contribution of the extractive industries remains disclosed through Chad’s EITI Reports, not yet through systematic disclosures by government and extractive companies.

The Secretariat’s assessment is that Requirement 2.1 is fully met. Stakeholders consulted did not express views on whether the objective of transparency in the legal framework and fiscal regime for the extractives was fulfilled, although several members highlighted the quarterly reports from the Observatory of Public Finance that covered oil revenues. By addressing the legal framework, fiscal regime, roles of government entities and reforms, Chad’s EITI reporting provides a good public understanding of all aspects of the regulatory framework for the extractive industries in Chad. While the previous Validation concluded that Chad had gone ‘beyond’ Requirement 2.1, the new EITI Validation Guide since 2021 requires that EITI implementing countries address all of the encouraged aspects of the EITI Requirement for it to be considered exceeded. The Secretariat’s view is that certain encouraged aspects of Requirement 2.1 have yet to be addressed, including the government’s systematic disclosure of information on the legal framework and fiscal regime for the extractive industries to the public.

The Secretariat’s assessment is that Requirement 2.4 is mostly met. While the assessment of progress should be exceeded in light of these efforts and their impact, the Secretariat’s view is that several smaller gaps related to the lack of comprehensive disclosure of the full text of licenses in the mining sector imply the broader objective is mostly met. Stakeholders consulted near unanimously highlighted the publication of petroleum contracts as an important impact of the EITI. The Secretariat concurs that the publication of all petroleum contracts is a significant achievement. Most stakeholders consulted considered that the broader objective of transparency in contracts had been achieved in the oil and gas sector, but not in mining even if the value of government revenues from the mining sector are vastly lower than from oil and gas. Chad has used its EITI implementation to significantly improve the transparency and accessibility of contracts in the oil and gas sector, which represents a form of best practice in the implementation of Requirement 2.4. In 2018, Minister of Petroleum and Energy Béchir Madet formalised the government’s policy on public disclosure of contracts and licenses in the mining and petroleum sectors, and plans to strengthen systematic disclosure of all contractual documents. The Chad EITI website now includes a data portal providing information on licenses and contracts in the mining, oil and gas sectors. This includes information on 52 mining exploration and production licenses (including ASM licenses) and 17 mining contracts, although not the full text of licenses, i.e., the full text by which a government confers on a company or individual rights to exploit resources. The portal also provides access to the full text of all 20 contracts in the oil and gas sector, including annexes and amendments. The portal provides links to the relevant published Government Decrees and contracts. While some CSOs consulted raised general concerns over the comprehensiveness of oil and gas contract disclosures, they did not cite specific amendments that had not yet been published. Stakeholders from other constituencies confirmed that all contractual documents in the oil and gas sector had been published, citing the Ministry of Petroleum and Energy’s assurances of the comprehensiveness of published oil and gas contracts and noting that a consultant contracted by the World Bank had reviewed all published contracts to ensure that all documents had been published. Stakeholders from all constituencies highlighted the publication of contracts as a key outcome attributable to EITI implementation. Some stakeholders highlighted plans in Chad’s 2022 EITI work plan to undertake a comprehensive review of all published contracts and licenses, to ensure that all documents had been published. There have been no new mining contract awards since 2018 given provisions of the new Mining Code that have phased out contracts in favour of licenses. However, the mining cadastre portal lists two mining licenses that are marked as having been awarded in 2021. None of the licenses (permits and authorisations) in the mining sector appear to be publicly accessible. Although there is a list of licenses and contracts published on the Chad EITI website, it does not provide clear references to each published document for each active license and contract. Although revenues related to mining contracts and licenses are far less material compared to oil and gas, gaps in public disclosure of the full text of mining contracts and licenses awarded or amended since January 2021 constitutes a technical gap in Chad’s progress in addressing Requirement 2.4.

The Secretariat's assessment is that Requirement 6.4 remains not assessed, given that several encouraged aspects of this requirement remain to be addressed by Chad EITI. Chad does not yet appear to have used its EITI Report to disclose information on the management and monitoring of the environmental impact of extractive industries. Some civil society stakeholders called for more information on the management of environmental impacts of the extractive industries. While none of the stakeholders consulted expressed an opinion on progress towards the objective, the Secretariat’s view is that progress has been limited to date, with scope for the EITI to meet public interests in this area. The 2019 EITI Report provides cursory references to laws and regulations that refer to the management of environmental impacts of extractive activities but does not provide additional information on statutory rules or practices related to the environmental management and monitoring of extractive investments in the country. Chad has not yet used its EITI reporting to describe the environmental impacts of oil and gas projects in Chad, nor government oversight and sanctions of environmental damages linked to oil projects in the Doba region. There is evidence of significant sanctions against oil companies for such damages in the past, including a fine of USD 400m levied on CNPCI in 2014. There is scope to expand EITI disclosures in this area given the low level of systematic disclosure on government and company websites and the high level of public interest in the environmental impacts of mining in particular.

The Secretariat’s assessment is that Requirement 2.2 is mostly met. Several representatives from government and industry considered that the objective of transparency in the rules and practices related to awards and transfers of oil, gas and mining licenses and contracts had been fulfilled given the publication of confirmations of the lack of non-trivial deviations in license awards and transfers in 2019 by the Directorates responsible for managing mining and petroleum licenses and contracts, even if this had only be done after the publication of the 2019 EITI Report. However, several CSOs, development partners and the IA considered that the objective was still in the process of being fulfilled, given a perceived lack of clarity on the way in which extractive licenses and contracts were awarded in practice. The Secretariat’s view is that the objective is mostly fulfilled. There are few systematic disclosures of information on the process for awarding extractive rights in Chad, beyond the availability of applicable laws and implementing regulations. Chad’s 2019 EITI Report provides extensive descriptions of the statutory procedures for awarding and transferring both mining and petroleum rights, although it highlights gaps in information on the technical and financial criteria used for assessing applications for awards and transfers of mining and petroleum rights. The report provides a list of documents related to applicants’ technical and financial criteria in relation to applications for petroleum rights but highlights the lack of clarity on how these documents are assessed according to the prevailing regulatory framework. Government officials consulted confirmed that there were clear technical and financial criteria assessed in license awards, related to, among other factors, the technical experience of staff and three years of audited financial statements. Government officials stated that the criteria assessed for license transfers were broadly the same as for awards, although there were some additional criteria assessed in the case of transfers. The EITI Report provides a list of mining and petroleum rights awarded in 2019 but notes the lack of availability of information on mining and petroleum rights transfers. This was confirmed by the IA, who noted that the government was required to manually collect information on license transfers and that this information had not been provided for 2019. A government official confirmed that there had been one transfer of participating interests in the oil contract operated by OPIC in 2019. While the MSG agreed to request confirmation from the mining and petroleum regulators (The Technical General Directorates of Mining and Petroleum, the DGTM and DGTP respectively) for an assessment of the existence of any non-trivial deviations from statutory award and transfer procedures for mining and petroleum rights in practice in 2019, the EITI Report highlights the lack of response from the two regulators. The EITI Report also highlights a lack of explanation for the selection of the “first come first served” procedure for all mining rights awards and the award of petroleum rights through direct negotiations in 2019. However, letters from the Technical Directorates for Mining and Petroleum were obtained after the publication of the 2019 EITI Report and published on the Chad EITI website, confirming the lack of non-trivial deviations in the awards and transfers of mining and petroleum licenses in 2019. In consultations, the IA highlighted the EITI Report’s recommendation for a detailed independent study on licensing practices, which was considered necessary in order to fulfil the objective of Requirement 2.2 given concerns over the lack of specificity of statutory procedures related to the assessment of technical and financial capacities of applicants. As an example of possible non-trivial deviations from statutory procedures, the IA noted the award of an oil contract to Ewaah Investors Ltd in 2019 through direct negotiations although there was no evidence that a Ministerial Order (arrêté) had been issued to justify this choice of award procedures, despite requirements for such an order in the Hydrocarbons Law. The IA noted that the oil contract had subsequently been cancelled given that the company had not fulfilled its work plan commitments. Some stakeholders noted that a more detailed review of licensing practices would be timely, given government deliberations on potential revisions to the Hydrocarbons Law. A development partner considered that there may be an opportunity-cost for awarding petroleum rights through discretionary awards rather than through competitive tender. The EITI Report does not include explicit commentary on the efficiency of licensing and contracting practices in Chad, it includes a recommendation for strengthening transparency in the practice of extractive rights awards and transfers.

The Secretariat’s assessment is that Requirement 2.3 is mostly met, with considerable improvements since the previous Validation. Most stakeholders consulted considered that the objective of transparency in property rights related to extractive deposits and projects had been fulfilled in the petroleum sector, and would be met in mining once the new cadastral portal was launched later in 2022. However, some civil society stakeholders and development partners raised concerns over the delays in plans to develop a modern cadastral management system for oil and gas and considered that the temporary solution of the oil and gas mini-cadastre hosted on the Chad EITI website was not satisfactory given the significance of oil and gas for the Chadian economy. Chad has used its EITI implementation to establish the most comprehensive source of information on mining and petroleum licenses and contracts available to the public to date. The Observatory of Public Finances and Chad EITI have established a mini-cadastre portal for both mining and petroleum rights, which covers most mining licenses and contracts, and all petroleum contracts. All information on oil and gas contracts aside from dates of application are publicly disclosed through this portal. In the mining sector, while the portal provides all information listed under Requirement 2.3.b aside from dates of application for 52 licenses and 17 contracts, the list of licenses and contracts does not appear comprehensive of all mining rights active in the period under review. Indeed, annexes to the 2019 EITI Report provide a mining rights register that lists 115 active mining licenses at the end of 2019. In consultations, the IA considered that there were more active contracts than the 17 mining conventions listed on the mini-cadastre. However, government officials explained that this was a misunderstanding and that a single convention could cover dozens of non-contiguous licenses, which explained why there were fewer conventions than licenses. Officials also reiterated that the 2018 Mining Law had phased out conventions in favour of mining licenses. While the EITI Report provides some information listed under Requirement 2.3.b for the 115 active mining licenses, there are gaps in the availability of dates of application, license coordinates and commodity(ies) covered by each mining license. For mining, a cadastral management system is being developed and an online portal is expected to be launched later in 2022, with stakeholders consulted noting that the system was at the final test phase in May 2022. In oil and gas, the World Bank included in its project for the mobilisation and management of domestic resources (Projet de Mobilisation et Gestion des Ressources Intérieures - ProMoGRI) plans to support the Ministry of Petroleum and Energy in developing an oil and gas cadastral system and contract management system. Although the ProMoGRI was restructured in 2020 due to the impact of the COVID-19 pandemic, the MPME officially requested in April 2020 that the cadastre be maintained in the restructured project. While there was consensus that the mini-cadastre covered all active oil and gas contracts and rights, several stakeholders consulted considered that the development of the petroleum cadastre would be delayed until after 2023.

The Secretariat’s assessment is that Requirement 2.5 is partly met. Most stakeholders consulted considered that the objective of transparency in ownership of extractive companies was still far from being achieved, given that the legal and regulatory framework had yet been reformed to enable the collection and public disclosure of beneficial ownership data. Several stakeholders from all constituencies highlighted Chad EITI’s plans to develop an enabling regulatory framework, with support from the European Union. The Secretariat’s view is that the objective is still far from being fulfilled, pending enactment of required legal and regulatory reforms. Chad has used its EITI implementation to pilot the collection of data on beneficial owners of extractive companies, although it has not yet established a legal or regulatory framework for the systematic collection and disclosure of beneficial ownership data from all companies holding or applying for extractive licenses. Chad EITI’s beneficial ownership roadmap agreed in 2016 is considered by the 2019 EITI Report to codify the government’s policy in favour of the disclosure of beneficial owners of extractive companies, although there is no evidence that the government’s policy on beneficial ownership transparency has been further formalised or codified since then. Pending the establishment of a definition of the terms “beneficial owner” and “politically exposed person” in national legislation, Chad EITI has agreed definitions for the purposes of EITI reporting, as well as thresholds for disclosure and quality assurances required of companies. Pending the establishment of an enabling legal environment for beneficial ownership transparency, Chad EITI has sought to collect data from extractive companies through EITI reporting. In its comments on the preliminary assessment, the MSG highlighted advances in developing a national legal framework for beneficial ownership transparency, although the draft law has yet to be enacted and implemented at the time of this Validation. Thus, beneficial ownership data has not yet been requested or disclosed from companies applying or bidding for extractive rights (licenses and contracts). Stakeholders consulted from different constituencies highlighted that a study reviewing the legal framework for beneficial ownership disclosure and providing an action plan for further steps was being finalised in May 2022 and that the next step would be for Chad EITI to contract a consultant to develop draft legislation related to beneficial ownership, with support from the EU. However, several stakeholders noted that the timeframe for establishing the regulatory framework for beneficial ownership disclosure was unclear given competing political priorities during the period of transition since 2021. While the 2019 EITI Report was prepared according to the “flexible” approach based on unilateral government disclosures, Chad EITI nonetheless sent reporting templates for companies requesting legal and beneficial ownership data from extractive companies in the preparation of the 2019 EITI Report. However, only one company submitted this template, confirming that the sole reporting company (Esso Exploration and Production Chad Inc.) is a wholly-owned subsidiary of a company listed on the New York Stock Exchange. Thus, Chad EITI has not disclosed information on the beneficial ownership of any extractive companies in recent (2018 and 2019) EITI Reports, although the 2018 EITI Report provided information on other extractive companies that were wholly-owned subsidiaries of publicly-listed or state-owned companies. However, the 2019 EITI Report does not provide additional guidance on accessing publicly-listed companies’ reports on their ownership to their respective stock exchanges. Chad’s 2019 EITI Report provides a cursory review of data collection on beneficial ownership for 2019, but it does not seem that Chad EITI has yet published an assessment of the comprehensiveness and reliability of beneficial ownership data collected and disclosed to date. Government stakeholders consulted noted that additional beneficial ownership data had been collected from material companies after the publication of the 2019 EITI Report. The company register in Chad is not accessible online and the 2019 EITI Report explains that legal ownership information is only available upon request and with justification from the Register of Commerce and Mobile Credit (Registre du Commerce et du Crédit Mobilier - RCCM). Chad’s 2019 EITI Report provides the 2018 EITI Report’s disclosures on the legal ownership of 18 of the 33 extractive companies included in the scope of EITI reporting in 2018, but the legal ownership of all extractive license-holders does not yet appear to be publicly accessible.

The Secretariat's assessment is that Requirement 2.6 is partly met, which indicates back-sliding compared to the previous Validation. Some government officials consulted considered that the objective of transparency in extractive SOEs’ financial management had been achieved through Chad EITI reporting, several stakeholders consulted from civil society, government, development partners and the IA considered that the objective was mostly met, given delays in publication of SHT’s audited financial statements and the lack of participation of SHT-PCCL in the latest round of EITI reporting. However, SHT-PCCL recorded no profit, retained no earnings and did not reinvest in its operations in 2019. Several stakeholders consulted from various constituencies considered that the 2019 EITI Report provided the most comprehensive review of SOEs’ financial relations to date but noted several recommendations in the EITI Report that indicated that further work was needed to fulfil the objective. The IA raised concerns over the lack of explanation by SHT in the 2019 EITI Report of certain transactions identified in its 2019 financial statements and the comprehensiveness of SOE loans and guarantees disclosures in the oil and gas sector. The Secretariat’s view is that progress in EITI reporting of the financial relations between SHT and the state are more comprehensive than information systematically disclosed by the SHT, even if the 2019 financial statements of the company were belatedly published in July 2022. However, given the ad hoc nature of publication of the 2019 financial statements when the 2016-18 financial statements remain unpublished indicates that previous disclosure practices have deteriorated since the previous Validation, and thus that the objective of Requirement 2.6 is partly met. In its comments on the preliminary assessment, the MSG argued for a revision to the assessment of ‘partly met’ based on the recent publication of SHT’s audited financial statements for 2019 and of the agreement transferring 10% in CNPCI’s equity to SHT in March 2016. Nonetheless, the Secretariat’s view is that, while these recent publications are welcome, there has been insufficient work by EITI Chad to analyse these documents and provide a diagnostic of the practices in the financial relations between extractive SOEs and the state in the period under review. While the 2019 financial statements have been published for SHT, SONACIM and SONAMIG, the financial statements of SHT-PCCL have not yet been published. There are three material SOEs in the extractive industries in Chad according to its latest EITI reporting, including SHT (and its extractive subsidiaries) in the oil and gas sector, as well as SONACIM and SONAMIG in the mining sector. There are few systematic disclosures related to extractive SOEs’ financial relations with the state. Chad has used its EITI reporting to clarify the statutory procedures and actual practices related to the financial relations between extractive SOEs and the state, albeit in more detail for oil and gas than for mining. Chad’s 2019 EITI Report describes the statutory rules related to SOEs’ financial relations with the state, although the rules related to the ability of the SHT and its subsidiaries to reinvest in their operations and secure third-party financing are not entirely clear. Third-party publications (including from the IMF) indicate that SHT’s Board of Directors has significant discretion in deciding the company’s profit retention and reinvestment in its operations. The rules related to SONACIM’s right to raise third-party financing in 2019 are also unclear from the EITI Report. The 2019 EITI Report describes the practice of SOEs’ financial relations with the state in the year under review, but does not describe the practice of retained earnings, reinvestments or third-party financing for SHT’s subsidiary SHT-PCCL, nor of SHT’s retained earnings in 2019. However, in consultations government officials and the IA explained that there was no flow of oil revenues through SHT-PCCL given that all cash payments were deposited to the offshore Citibank account and that the marketing of the government’s in-kind revenues was handled by Glencore. Several government officials and the IA explained that SHT-PCCL’s lack of participation in EITI reporting for 2019 did not cause any material gaps in the comprehensiveness of EITI disclosures, given that SHT reported on behalf of its subsidiary (see Requirement 4.5). However, a development partner raised concern over the principle of SHT-PCCL’s lack of EITI reporting given that the SOE should have led by example in its participation in EITI disclosures. Chad has used its EITI reporting to provide a diagnostic of disclosures of SOEs’ audited financial statements, with the latest EITI Report highlighting the lack of publication of extractive SOEs’ financial statements since 2015 (although the IA was provided with a copy of SHT’s 2019 financial statements for the preparation of the EITI Report). The 2019 EITI Report provides an overview of state and SOE equity participations in extractive companies, including the terms attached to the equity interests, but notes the lack of public information on the state’s equity interests in the oil and gas company CNPCI, which has become the largest oil and gas operator in Chad. In consultations, the IA explained that it had received inconsistent explanations of payments from CNPCI to SHT in 2019, including that the revenue flows accounted for either dividends or oil and gas revenues. It was noted that CNPCI had not provided clarifications on the level of state equity ownership in the company. A list of state and SOE participations in extractive projects is provided, including the terms attached to each participation, although there are gaps in disclosures related to oil and gas contracts involving three oil and gas consortiums (CNPC, Griffiths Energy Chad, and Petrochad Mangara). In its comments on the preliminary assessment, the MSG highlighted the publication of the March 2016 agreement and the January 2018 Memorandum of Understanding transferring the 10% equity interest in CPNCI to SHT following the dispute over the oil spill on CNPCI’s fields in 2014. This agreement confirms that SHT has held a 10% equity interest in CNPCI since March 2016. Finally, the 2019 EITI Report identifies several loans and guarantees provided by the state and SOEs to extractive companies (including other SOEs) based on a review of financial statements given that these were not disclosed by EITI reporting entities but notes a number of gaps in the public accessibility of information on the nature and terms of several loans and guarantees. The report itself raises concerns over the comprehensiveness of disclosures related to state and SOE loans and guarantees in the oil and gas sector. Chad has made some progress in clarifying the statutory rules related to the corporate governance of SHT, but has not yet used its EITI reporting to describe the practices in the period under review, nor the rules and practices related to procurement, sub-contracting as well as capital and operating expenditures. Such disclosures are encouraged, not strictly required, by Requirement 2.6.c. Public sources of information indicate that former President Idris Deby Itno’s son Séïd Idriss Déby Itno was named Director General of the SHT in December 2018, before being replaced in that position in March 2020. Since the 2018 change in management, SHT has ceased publishing its audited financial statements and has ceased systematically disclosing a description of the management of SHT’s oil revenues. Several stakeholders consulted from different constituencies highlighted the establishment of a committee chaired by the Technical Director General for Petroleum, which would follow up on EITI recommendations related to SHT in particular and was considered an important development to strengthen transparency in the SOE’s financial relations. In June 2022, several senior members of SHT’s management, including Director General Michel Boayam and Deputy Director General Tahir Issa Ali Souleymane, were arrested on suspicions of embezzlement of funds (as covered in press articles here, here, here, and here). There is significant public interest in SHT’s financial management, including press releases from CSOs such as the CERGIED.

The Secretariat's assessment is that Requirement 4.2 is fully met. Most stakeholders consulted did not express particular views on progress towards the objective of transparency in the sale of the state’s in-kind revenues. The Secretariat’s view is that Chad has used its EITI reporting to fulfil this objective, although it has not yet exceeded the objective by improving transparency in the selection of buyers or disclosure of oil sales contracts. The state collects in-kind revenues in the oil and gas sector but not in the mining sector. Chad has continued to use its EITI reporting to improve the transparency of the sales of its in-kind revenues in the period under review. The 2019 EITI Report provides the volumes of in-kind revenues collected, disaggregated by project, the volumes sold, and the proceeds of those sales disaggregated by buyer and lifting date. The disclosures cover two types of resource-backed loans (involving Glencore and the domestic refinery SRN) and one type of swap agreement (the swap of crude oil for electricity involving SRN). The report describes the repayment modalities for these special agreements and explains the marketing arrangement with Glencore Energy UK Ltd. While the crude oil sales to Glencore are disaggregated by grade, those to the domestic refinery are not. Since the last Validation, the Observatory of Public Finance has launched quarterly oil sector updates in 2018, which provide cargo-level sales data on crude oil exports, including volumes exported by each operator and sales prices per lifting. Companies buying in-kind crude oil revenues from the state have not yet been engaged in disclosures, as a basis for reconciling sales of in-kind revenues with the purchases from buying companies. The disclosures related to in-kind revenues were subject to the same quality assurances as disclosures related to payments to government in cash. While the previous Validation concluded that Chad had gone ‘beyond’ Requirement 4.2, the new EITI Validation Guide since 2021 requires that EITI implementing countries address all of the encouraged aspects of the EITI Requirement for it to be considered exceeded. The Secretariat’s view is that certain encouraged aspects of Requirement 4.2, including reconciliation of in-kind revenues sales with reporting by buyers or disclosures of crude oil sales contracts, have not yet been comprehensively addressed in the period under review. However, the systematic disclosures of petroleum export data are welcome and should be strengthened with additional contextual disclosures as encouraged under Requirement 4.2.

The Secretariat’s assessment is that Requirement 4.5 is fully met, as in the previous Validation. Most stakeholders consulted considered that the objective of transparency in SOE transactions had been fulfilled with the 2019 EITI Report, which was broadly considered as providing the most comprehensive disclosures of SOE transactions in the public domain to date. While some CSOs considered that the objective had not yet been fulfilled given their general concerns over the transparency of the petroleum SOE, SHT, no specific omissions of any SOE transactions that had not been disclosed in the latest EITI Report were highlighted. The Secretariat’s view is that, while the lack of participation by SHT-PCCL in EITI reporting for 2019 was highlighted as a concern by some stakeholders (see Requirement 2.6), this omission did not create any material gap in disclosures of SOE transactions given the lack of petroleum revenues through SHT-PCCL and the EITI disclosures by SHT on behalf of its subsidiary. Chad’s 2019 EITI Report provides the disclosures related to SOE transactions mandated by Requirement 4.5, including the value of extractive company payments to SHT, the value of government transfers to SHT, SONACIM and SONAMIG, and the value of SHT’s payments and transfers to government in 2019. The report implies that the two mining SOEs do not collect revenues from extractive companies on behalf of government and that they did not make any dividend payments to government in 2019 given that SONACIM was in deficit in this period while it implies that SONAMIG’s main source of revenue is from transfers from the State, which implies that it does not pay dividends. This was confirmed in stakeholder consultations. The lack of reporting by one of SHT’s extractive subsidiaries, SHT-PCCL is a concern, although SHT reported the lack of any SHT revenues from SHT-PCCL in 2019. Indeed, the presence of several SHT-PCCL subsidiaries in low-tax jurisdictions such as the Bahamas and Bermuda add to the importance of disclosures of financial transactions related to SHT-PCCL. However, there was consensus among stakeholders consulted that SHT-PCCL did not collect or manage any petroleum revenues in 2019, given that all petroleum revenues collected in cash are received through the offshore Citibank account, while in-kind revenues were managed by Glencore through its management of the sales of the state’s in-kind revenues. The disclosures of SOE transactions in the 2019 EITI Report were either subject to the same quality assurances as other payments to government (see Requirement 4.9) in the case of government and SOE disclosures, or were subject to an audit to international standards in the case of data sourced from SHT’s (unpublished) audited financial statements. The EITI Report highlights inconsistencies between disclosures by government entities and SHT as part of their EITI reporting on the one hand, and data sourced from SHT’s financial statements on the other, resulting in an assessment of the comprehensiveness of disclosures of financial data including on SOE transactions as ‘satisfactory’ (see Requirement 4.9).

The Secretariat's assessment is that Requirement 6.2 is mostly met. Several civil society stakeholders considered that the objective of transparency on off-budget expenditures funded by government extractive revenues was still far from being achieved and called for publication of agreements underpinning these arrangements. However, several stakeholders from government, civil society and development partners highlighted the value of Chad EITI disclosures as the sole source of information on quasi-fiscal activities linked to oil revenues. The IA considered that the calculations of quasi-fiscal expenditures in the 2019 EITI Report were close to the reality, but highlighted the lack of disclosures by government entities and SOEs on the issue. In its comments on the preliminary assessment, the MSG argued for an upgrade in the preliminary assessment of ‘partly met’, highlighting its approval of the methodology adopted by the IA for estimating quasi-fiscal expenditures and describing plans for strengthening transparency and accountability around these expenditures. The Secretariat’s view is that Chad EITI’s methodology employed for quantifying quasi-fiscal expenditures is encouraging, but that the objective is mostly met given the lack of government or SOE disclosures on quasi-fiscal activities and the resultant doubts over the comprehensiveness of disclosures to date. Chad has used its recent EITI reporting to identify and seek to quantify SOEs’ quasi-fiscal expenditures funded by extractive revenues. The 2019 EITI Report identifies three types of quasi-fiscal expenditures in the oil and gas sector that totalled an estimated USD 288.7 million in 2019. The three types of quasi-fiscal operations consist of energy subsidies related to the swap of crude oil for electricity involving the SRN refinery, SHT’s subsidised lending to the state, and the off-budget servicing of the Glencore debt. However, these quasi-fiscal expenditures were not reported by government entities or SOEs that were requested to disclose details of these types of expenditures, but rather were identified in the financial statements of the national oil company SHT and through calculations based on disclosures of the flow of revenues from the sales of the state’s in-kind revenues. This raises concerns over the comprehensiveness of EITI disclosures of quasi-fiscal expenditures as highlighted in the 2019 EITI Report, which notes that information on the servicing of the Glencore debt and level of petroleum project costs was not provided, which hindered an assessment of the government revenues in excess of the servicing of the Glencore debt. In its comments on the preliminary assessment, the MSG explained that government entities and SOEs had not reported any quasi-fiscal expenditures given their lack of familiarity with the concept of quasi-fiscal expenditures as well as its plans to pursue work on transparency of quasi-fiscal expenditures with relevant government entities and SOEs. The MSG highlighted the 2019 EITI Report’s work on quasi-fiscal expenditures as a key innovation in the report and a landmark development in Chad’s EITI implementation that would lead to more public debate on the materiality and transparency of these expenditures. The MSG’s comments also highlighted its approval of the methodology adopted for estimating quasi-fiscal expenditures in the 2019 EITI Report. The lack of disclosures of quasi-fiscal expenditures by reporting government entities also raises concerns over the reliability of information on quasi-fiscal expenditures in the EITI Report, which notes that the EITI disclosures are based on estimates by the IA rather than disclosures subject to quality assurances agreed by the MSG. Some stakeholders consulted noted that a share of the 4m barrels a year of crude oil delivered to the SRN refinery was not used to produce electricity, but was refined and supplied to other parties, including the armed forces. The disclosures in the 2019 EITI Report cover the volumes of crude supplied to the refinery, but not the volumes of electricity supplied nor the other uses of the remaining share of the state’s crude oil supplied to the SRN. Thus, while Chad EITI has clearly progressed in its efforts to disclose quasi-fiscal expenditures since the previous Validation, although the latest EITI Report is transparent about concerns over the comprehensiveness and reliability of these latest disclosures. In consultations, government officials highlighted the establishment of a Committee chaired by the Technical Director General for Petroleum, which was tasked with starting to record off-budget petroleum revenues and expenditures in the national budget. Development partners noted the lack of coordination between government entities on the debt to Glencore, which was not managed by the Ministry of Finance despite being guaranteed by the state. A senior government official highlighted the government’s intention to bring the quasi-fiscal reimbursement of national debt on the government budget.

The Secretariat’s assessment is that Requirement 3.2 is mostly met, with considerable improvements since the previous Validation. Most stakeholders consulted did not express particular views about the objective of transparency in production data. The Secretariat’s view is that the missing quarrying mineral production values are of marginal significance to Chad’s extractive industries, although it would have been possible to collect this information from material companies or develop estimates of production values. Chad’s 2019 EITI Report provides the volumes and values of crude oil production, disaggregated by individual project. Since the previous Validation, Chad’s EITI Reports have started disclosing official estimates of aggregate artisanal gold mining production volumes and values. While they have also provided production volumes for six types of quarrying minerals disaggregated by company, they have not yet disclosed production values for these minerals, which are produced by quarrying companies covered by EITI reporting.

The Secretariat’s assessment is that Requirement 3.3 is exceeded. Several stakeholders consulted welcomed the granularity of Chad EITI disclosures on exports and considered that the objective of transparency in extractive industry exports had been fulfilled. The Secretariat’s view is that the objective has been exceeded with the quality of new systematic disclosures of export data. Chad has used its EITI implementation to drive improvements in the government’s systematic disclosures of extractive export data. Since the last Validation, the Observatory of Public Finance has launched quarterly oil sector updates in 2018, which provide cargo-level sales data on crude oil exports, including volumes exported by each operator and sales prices per lifting (see Requirement 4.2). Chad’s EITI Reports disclose granular crude oil export data and a review of available sources of data on informal mining exports. The 2019 EITI Report provides crude oil export volumes and values disaggregated by company and export destination. While the report notes government confirmations of the lack of formal mineral commodity exports in 2019, it also references export data available through the U.N. Comtrade database that indicates significant exports of gold from Chad in 2019, totalling 6.9 tons of gold valued at USD 251.9m, sourced from the United Arab Emirates import statistics. The EITI Report includes a recommendation to undertake further studies of export channels with a view to formalising Chad’s gold exports. The Secretariat’s view is that the encouraged aspects of Requirement 3.3 have been addressed, petroleum export data is systematically disclosed on a government portal in Chad.

The Secretariat's assessment is that Requirement 4.1 is fully met, as in the previous Validation. The majority of stakeholders consulted considered that the objective of transparency in government revenues from the extractive industries had been achieved. However, some civil society and government stakeholders consulted considered that the objective was still in the process of being fulfilled given inconsistencies in government disclosures of revenues. Several stakeholders from different constituencies considered that the 2019 EITI Report was the most comprehensive report to date. The Secretariat’s view is that the 2019 EITI Report provides comprehensive disclosures of extractive revenues in accordance with the Board-approved “flexible” EITI reporting approach. Chad EITI opted for the production of its latest (2019) EITI Report following the Board-approved flexible reporting approach, and thus relied on unilateral disclosure of extractive revenues collected by the government and SOEs rather than reconciliation with company payments. The MSG’s materiality decisions related to the selection of revenue stream and companies for which the government and SOEs provide unilateral disclosures are described in the 2019 EITI Report, even if the minutes of relevant MSG meetings have not yet been published on the Chad EITI website. All revenue flows and companies in the mining, oil and gas sectors were included with a materiality threshold of zero, alongside four oil and gas transportation and refining companies. All revenue streams are listed and described. All material government entities and SOEs participated in EITI reporting, with the exception of the Caisse Nationale de Prévoyance Sociale (CNPS) and the SOE SHT-PCCL. Gaps in disclosures by SHT-PCCL are assessed under SOE transactions (see Requirement 4.5). While data on revenues collected by CNPS from extractive companies in 2019 is not publicly available, the latest publicly available data indicates that revenues collected by the CNPS accounted for 0.46% of government extractive revenues in 2017. In consultation, the IA considered that the CNPS’ omission did not have a material impact on the comprehensiveness of disclosures, given that it would be low given the low level of employment in the extractive industries. The 2019 EITI Report highlights significant differences in disclosures by SHT and the Treasury, which it adjusts through the reconciliation of disclosures from different government entities and SHT’s audited financial statements. Several stakeholders consulted highlighted concerns over the capacity of the government’s Extractive Revenue Collection and Centralisation Cell, which was the source of reporting to the EITI on behalf of the Treasury. Government officials highlighted the Ministry of Petroleum and Energy’s recent establishment of a committee chaired by the Technical Director General for Petroleum to follow up on EITI recommendations, including on data reliability. Given the materiality threshold of zero in the selection of companies, the government has effectively provided unilateral disclosure of revenues from all companies in the 2019 EITI Report. Chad has yet to use its EITI reporting to provide guidance on the public accessibility of extractive companies audited financial statements, as it has done for SOEs in the extractive industries.

The Secretariat's assessment is that Requirement 4.3 is mostly met. While some government officials consulted considered that the objective of public understanding of infrastructure provisions and barter-type arrangements had been achieved through Chad’s EITI reporting, several stakeholders from civil society and development partners considered that the objective was mostly met given the lack of information on some of the countervailing benefit streams involved in barter-type arrangements in Chad, such as the provision of electricity in exchange for crude oil deliveries to the domestic refinery. The Secretariat’s view is that there has been substantial progress made towards the objective, but that it remains mostly met given the lack of government or SOE disclosures on barter-type arrangements and the resultant doubts over the comprehensiveness of disclosures to date, that relied on the IA’s work. Chad has used its EITI reporting to significantly improve the transparency of barter-type arrangements related to the extractive industries. There were three types of barter-type arrangements according to the definition of Requirement 4.3 in force in 2019. The first consists of a pre-payment agreement (resource-backed loan) involving the repayment of a loan from Glencore to the state through deliveries of physical crude oil. The second involves a swap of crude oil for electricity with the domestic refinery SRN. The third consists of a resource-backed loan from SRN to the state, which is repaid in physical deliveries of crude oil. Chad’s 2019 EITI Report provides most of the information required of barter-type arrangements under the EITI Standard. With regards to the two resource-backed loans, the EITI Report describes the terms of the agreements, the parties involved, the resources which have been pledged by the state (crude oil deliveries) and the value of the balancing benefit stream (loans). For the oil-for-electricity swap, the EITI Report provides the terms of the agreements, the parties involved, and the resources pledged by the state (crude oil deliveries), but does not provide the value of the balancing benefit stream (electricity) delivered in 2019. In consultation, the IA and several development partners and CSOs raised concerns over the lack of disclosure of electricity supplies in exchange for crude oil deliveries. The IA explained that the value of electricity supplies by the refinery had been provided for the 2019 EITI Report, but not the volumes of electricity supplied. Several stakeholders considered that a share of the 4 million barrels of crude oil delivered to the SRN refinery annually was used for other purposes than electricity production, with a share of crude oil allegedly refined and supplied to third parties such as the armed forces. Government officials consulted noted that the Ministry of Petroleum and Energy had the required data on electricity volumes supplied by the refinery and that it was an oversight that this data had not been disclosed in the 2019 EITI Report. The Secretariat’s view is that the lack of disclosure of the volumes of electricity provided in the context of this swap arrangement hinders an assessment of whether the arrangement provides fair value to the state. Although the report does not explicitly assess the materiality of these agreements in relation to conventional contracts, it provides sufficient information on the value of transactions related to these agreements in 2019 on which readers can base their own assessment of the materiality of these agreements. Disclosures of barter arrangements appear to have been subject to the same quality assurances as other government disclosures of extractive revenues.

The Secretariat's assessment is that Requirement 4.4 is mostly met. Stakeholders consulted did not express any particular views on progress towards the objective of transparency in government and SOE revenues from the transit of crude oil. The Secretariat’s view is that the objective is mostly met, given a lack of updated information on the status of domestic pipeline operating companies. The state receives revenues from the transportation of commodities in the petroleum sector, but not in the mining sector. Chad has continued to use its EITI reporting to disclose information on transportation arrangements for crude oil and the related revenues collected by the state. The 2019 EITI Report describes crude oil transport arrangements and discloses the state revenues related to the two oil transportation companies in which SHT holds minority equity interests. While transportation revenues collected by the third oil transportation company included in the scope of disclosures, Petrochad Transportation, were not provided in the 2019 EITI Report, information in the report indicates that the state does not hold any interest in the company. However, the report describes a fourth type of transportation arrangement related to the management of the Ronier-Djarmaya and Ronier-Kome pipelines linking CNPCI’s oil fields to the SRN refinery. While the state is entitled to transport revenues from the operations of these pipelines, the payments have been made to an escrow account pending establishment of a new pipeline company expected by end 2018. However, the report notes the lack of information on whether the new pipeline company was established and does not disclose any information on the value of payments to government related to these pipelines’ transportation of crude oil in 2019, if the new pipeline company had been established. The Secretariat’s view is that there has been backsliding compared to the previous Validation, when Requirement 4.4 was assessed as ‘satisfactory progress’, given the lack of sufficient information on the status of oil transportation arrangements related to the Ronier-Djarmaya and Ronier-Kome pipelines, operated by the largest crude oil producer in Chad, in 2019.

The Secretariat's assessment is that Requirement 4.7 is mostly met. Most stakeholders consulted did not express particular views on progress towards the objective of disaggregation in public disclosures of company payments and government revenues from oil, gas and mining. The Secretariat’s view is that the objective is mostly met, given the lack of project-level disaggregation of government (non-tax) revenues levied at the level of the individual agreement. Chad has made progress on the project-level disaggregation of data on government revenues from the extractive industries that are levied by project, rather than by company. All taxes are levied at the consolidated company level in Chad, although sector-specific non-tax revenues are levied at a project level. Chad’s 2019 EITI Report discloses the financial data on government and SOE revenues by collecting entity, revenue stream, and company. While Annex 11 of the 2019 EITI Report presents sector-specific non-tax revenues, it only presents this data disaggregated by consortium, not by individual project (given that certain consortiums operate several different projects). The name of the project to which each non-tax revenue is related is not provided in the EITI Report. The MSG has agreed a definition of project that is in line with the definition in Requirement 4.7 and has identified the revenue streams that are levied at a project level. However, while the MSG’s definition of project consists of individual licenses and contracts in cases where a company holds several licenses, the financial data on government non-tax revenues in the EITI Report is only presented by consortium, not by individual project for those consortiums that operate several projects. While there is no evidence that the MSG has yet published a list of projects that cover several agreements that are substantially interconnected, a review of the mining and petroleum cadastres appears to indicate that there is no single project that covers several substantially inter-connected agreements. The Secretariat’s view is that all technical aspects of Requirement 4.7 have been mostly addressed, although project-level disclosures of government revenues levied at a project level have not yet been provided through the EITI.

The Secretariat's assessment is that Requirement 4.8 is fully met, as in the previous Validation. Several stakeholders from different constituencies raised concerns over delays in production of EITI Reports and cast doubt on whether the objective of sufficiently timely disclosures of EITI data to be relevant to inform public debate and policy-making had been achieved. However, other stakeholders consulted considered that the objective was met given that Chad had received approvals from the EITI Board for delays in its EITI reporting. On balance, the Secretariat’s view is that the objective is fulfilled and that delays in the procurement of the IA are a reflection of weaknesses in the MSG’s oversight of implementation (see Requirement 1.4). During the period under review, Chad published its 2017 EITI Report in June 2020, its 2018 EITI Report in December 2018 and its 2019 EITI Report in February 2022. Although the 2017 and 2019 EITI Reports were published after the deadline set in Requirement 4.8 of two years after the end of the fiscal period(s) covered, Chad’s related requests for extensions on its reporting deadlines were approved by the EITI Board in March 2020 and February 2022. Thus, Chad has consistently published EITI Reports within the Board-approved timeframes throughout the period under review. The latest (2019) EITI Report confirms the period under review by the EITI disclosures. While the EITI Reports do not describe plans to improve the timeliness of EITI reporting, the Chad EITI 2022 work plan includes activities to undertake efforts to strengthen systematic disclosures, which could support improvements in the timeliness of EITI reporting over the medium term.

The Secretariat's assessment is that Requirement 4.9 is fully met, as in the previous Validation. Most stakeholders consulted from all constituencies considered that the objective of reliable disclosures on government extractive revenues to ensure public confidence in the reliability of government revenue data had been fulfilled in the 2019 EITI Report. The IA confirmed that the comprehensiveness and reliability of financial disclosures in the latest EITI Report was broadly satisfactory despite caveats related to inconsistencies between government entities’ initial EITI disclosures. The IA considered that the additional verifications of government EITI disclosures provided a satisfactory basis for data reliability. Several CSOs consulted raised concerns over the reliability of government revenue data given recent reforms (including of the Supreme Audit Institution - SAI) that were considered to have created an institutional void in the oversight of extractive revenues. However, the CSOs considered that the objective of reliable EITI disclosures had been achieved through the additional verifications conducted by the IA. The Secretariat’s view is that the objective has been fulfilled despite broader weaknesses in government and SOE audit and assurance practices in the period under review. Chad EITI adopted the Board-approved “flexible” approach to producing its 2019 EITI Report, based on unilateral disclosures by revenue-collecting government entities and SOEs. Evidence suggests that the MSG oversaw the procurement of the IA, approved the ToRs in line with the standard TORs approved by the EITI Board for flexible reporting, and agreed the reporting templates with the IA. The 2019 EITI Report provides an overview of statutory audit procedures and actual practice for government entities and SOEs, although it only describes the statutory procedures for extractive companies’ audits. Government officials consulted confirmed that the SAI, the Chamber of Accounts, had not completed its audit of public accounts for 2019 and had only just received the government accounts for 2017 to review in early 2022. Several stakeholders from all constituencies confirmed that extractive SOEs’ audited financial statements had not been published since the 2015 statements were disclosed in 2017, with several stakeholders noting that SHT had not published financial statements since a change in its management in 2018. The 2019 EITI Report describes the quality assurances agreed by the MSG for the 2019 EITI Report and provides an assessment of the materiality of omissions by the one reporting entity (SHT) that did not adhere to the agreed procedures. The report includes a clear statement on the overall comprehensiveness and reliability of financial data disclosed in the EITI Report, which the IA considers to be satisfactory with caveats related to inconsistencies in government entities’ initial EITI disclosures. However, the report’s review of the practice of government audit and assurance practices in 2019 indicates that a financial audit of government extractive revenues was not conducted for 2019, which indicates that government revenues disclosed in the EITI Report have not been subject to credible, independent audit, applying international auditing standards, despite the provision of the agreed quality assurances by the majority of reporting government entities. The IA explained that it had not relied on government EITI disclosures and had conducted additional verifications drawing on Customs data that was considered more reliable than other sources. This comparison highlighted a difference of some XAF 30bn (around USD 49m) in royalty revenue between disclosures from the Treasury and from the Customs Department. Several stakeholders from different constituencies raised concerns over the reliability of government revenue data disclosed by the government’s Extractive Revenues Collection and Centralisation Cell on behalf of the Treasury, with several stakeholders highlighting challenges in technical and financial capacities for the cell to undertake this work. The 2019 EITI Report includes a recommendation for the MSG to revert to conventional EITI reporting in future given concerns over potential weaknesses in the reliability of government financial disclosures.

The Secretariat's assessment is that Requirement 5.1 is fully met, as in the previous Validation. While most stakeholders consulted considered that the objective of traceability of extractive revenues not recorded in the national budget had been fulfilled, some CSOs considered that the objective was still in the process of being achieved given their concern over the value of extractive revenues not recorded in the national budget and the lack of reliable financial reports tracking the management of off-budget revenues. The Secretariat’s view is that the objective has been fulfilled given Chad’s EITI disclosures of the management of extractive revenues not recorded in the national budget, but that it has not yet been exceeded pending greater systematic disclosures of this information by government entities. Chad’s 2019 EITI Report lists seven types of government extractive revenues that are not recorded in the national budget and explains that two of these were not effective in 2019, implying that there were five types of off-budget extractive revenues in 2019. The value of each type of extractive revenues that is not recorded in the national budget is provided in the 2019 EITI Report. Chad’s EITI reporting has provided an extensive explanation of these types of off-budget revenues and a general explanation of their management, but explains that financial reports describing the management of these off-budget revenues are not publicly accessible. Chad’s EITI reporting has also provided an explanation of national revenue classification systems. Several development partners consulted highlighted reforms since 2020 that brought some of these off-budget petroleum revenues onto the government’s financial statements (Tableau des Operations Financières de l’Etat – TOFE) and on the national budget, including part of the government’s annual transfer of 4 million barrels of crude oil to the SRN refinery. While reforms to fully reflect all petroleum revenues on the government budget were still considered to be work in progress, they were highlighted as important steps to improve the transparency of government revenues from the extractive industries.

The Secretariat's assessment is that Requirement 5.3 remains not assessed, given that several encouraged aspects of this requirement remain to be addressed by Chad EITI. While most stakeholders consulted did not express views on progress towards the objective of strengthening public oversight of the management of extractive revenues, several CSOs consulted raised significant concerns over an alleged lack of clarity on the government’s management of extractive revenues and their use to fund specific expenditures. The CSOs considered that the Law 002 on the management of petroleum revenues was no longer effectively enforced and alleged that there was a lack of clarity on the way in which the government used extractive revenues. Chad has used its EITI reporting to disclose information on earmarked revenues, including extractive revenues both recorded and not recorded on the national budget. It has also used annual EITI disclosures to disclose information on the budget and audit procedures. The Ministry of Finance and Budget continues to publish quarterly budget execution reports and the Observatory of Public Finance issues quarterly petroleum market updates, which provide information on current developments, but not forward-looking projections. Chad EITI has used its “flexible” 2019 EITI Report (prepared in 2021) to disclose more timely information on the impact of the COVID-19 pandemic on the extractive industries and public finance management. In the Secretariat’s opinion however, there is scope to further expand the use of EITI disclosures to cover timely information to further public understanding and debate around issues of revenue sustainability and resource dependence, such as the assumptions underpinning forthcoming years in the budget cycle and relating to projected production, commodity prices and revenue forecasts arising from the extractive industries and the proportion of future fiscal revenues expected to come from the extractive sector.

The Secretariat's assessment is that Requirement 4.6 is not applicable in the period under review. There was consensus among stakeholders consulted that extractive companies did not make direct payments to subnational governments in practice, despite statutory provisions related to such payments. In practice, these payments were made to the national government, which collected revenues on behalf of subnational governments and subsequently transferred the funds. The Secretariat’s view is that Requirement 4.6 is not applicable in practice in the period under review. Chad’s 2019 EITI Report explains that there are six types of direct subnational payments according to the applicable regulatory framework, none of which are specific to the extractive industries. However, the report explains that in practice all of these company payments are collected by the national government (the DGI) on behalf of subnational governments, and subsequently transferred to subnational governments as part of general national budget transfers to subnational government budgets. The aggregate value of these government revenues is disclosed in the report, sourced from the DGI, which demonstrates that these revenues are small in value (XAF 17.98 million, or around USD 30,000) in 2019. Thus, Chad has effectively used its EITI reporting to demonstrate the lack of direct subnational payments by extractive companies in 2019.

The Secretariat's assessment is that Requirement 5.2 is mostly met. Several CSOs consulted considered that the objective of enabling stakeholders at the local level to assess whether the transfer and management of subnational transfers of extractive revenues are in line with statutory entitlements was not yet achieved, given the lack of statutory instruments regulating the transfer of a share of petroleum revenues to newer oil producing regions like the Logone Occidental. Some government officials highlighted an additional chapter included in the 2022 national budget that covered subnational transfers of petroleum revenues, which was considered an important step in clarifying the statutory revenue-sharing formula for transfers to newer oil-producing regions. Indeed, they noted that the 2022 budget codified new rules for the transfer of oil revenues to all three producing regions, although the implementing Decree for these transfers was still pending as of May 2022. In its comments on the preliminary assessment, the MSG highlighted a Government Decree (1911/PCMT/PMT/MFB) in July 2022 that established a Committee on the Management of Petroleum Revenues earmarked for Producing Regions (Comité de Gestion des Revenus Pétroliers affectés aux Provinces Productrices), which establishes an updated legal basis for subnational transfers of petroleum revenues. The Secretariat’s view is that Chad has used its EITI disclosures to improve the transparency in subnational transfers of petroleum revenues, but that the objective is mostly met given the lack of information on subnational transfers to certain producing regions such as the Logone Occidental. There is considerable public interest, particularly from civil society and communities in oil producing regions as reflected in stakeholder consultations, in the management of subnational transfers of petroleum revenues. Chad has used its recent EITI reporting to clarify the practices related to subnational transfers of extractive revenues. The 2019 EITI Report describes the revenue-sharing provisions of the legal framework for the mining and petroleum sectors, including the general revenue-sharing formula. Although the 2019 EITI Report describes other forms of subnational transfers related to government revenues that are statutorily direct subnational payments, it confirms that these are not related to extractive revenues and discloses the value of such transfers to two communes. The 2019 EITI Report discloses the notional value of petroleum revenue transfers (according to the revenue-sharing formula)) to two of the three provinces that were entitled to receive them in 2019, as well as the value of the subnational transfers executed that year (for the two provinces only). However, the lack of reporting on subnational transfers to the province of Logone Occidental is a concern. In the mining sector, the report discloses the notional value of subnational transfers per subnational government according to the revenue-sharing formula and confirms the lack of execution of these subnational transfers in 2019 given that the implementing regulations had not yet been published. The report also explains the impact of the disbanding of the Petroleum Revenue Oversight Committee (Collège de Contrôle et de Surveillance des Revenues Pétroliers - CCSRP) on the ex-ante oversight of subnational transfers. Several stakeholders consulted from government and civil society highlighted the institutional void in the oversight of subnational transfers of oil revenues and noted that the government had admitted the need for reform to improve the oversight of subnational transfers of petroleum revenues. However, stakeholders confirmed that the planned Government Decree expected to reform revenue-sharing regulations had not yet been prepared or enacted as of May 2022. The MSG’s comments noted that the Decree had been enacted and published in July 2022. One CSO noted that a bank account should have been established to receive subnational transfers for the Logone Occidental region pending the establishment of a committee to oversee these transfers, but noted that this account did not appear to have been created to date and that it was unclear how petroleum revenues to which the Logone Occidental was entitled were being managed in the interim. The MSG’s comments also highlighted the day-long July 2022 workshop in Moundou focused on discussing the management of subnational transfers of petroleum revenues.

The Secretariat's assessment is that Requirement 6.1 is mostly met. Government and industry stakeholders consulted did not express particular views on progress towards the objective of public understanding of extractive companies’ social and environmental contributions. However, several CSOs consulted and the IA considered that the objective was still in the process of being fulfilled, given that the IA had identified contractually mandated social expenditures but that extractive companies had not comprehensively disclosed these mandatory social expenditures in the 2019 EITI Report. While Requirement 6.1 was assessed as ‘not applicable’ in the previous Validation, the requirement has evolved under the 2019 EITI Standard to cover environmental payments. However, based on a review of some mining and petroleum contracts (reportedly five contracts in each sector), the IA identified contractual requirements for some extractive companies to undertake mandatory social expenditures, although it did not review all contracts. There appear to be social expenditures that are required under the terms of mining conventions (contracts) signed under the 1995 Mining Code that have not been disclosed by Chad EITI reporting, although the materiality of these expenditures in a particular year is unclear and open to question given the overall materiality of the mining sector in relation to the petroleum sector in Chad. Chad’s 2019 EITI Report provides a review of applicable laws, regulations and a selection of mining and petroleum contracts, highlighting the existence of contractual clauses requiring social expenditures in the mining sector and, since 2020 in a new PSC awarded to Ewaah Investors, in the petroleum sector. Several stakeholders from all constituencies noted that the new IA for the 2019 EITI Report had undertaken a more rigorous review of contractual clauses related to social expenditures, which was an innovation compared to previous EITI Reports. The 2019 EITI Report was the first time the IA requested information on mandatory social expenditures. In consultations, the IA and CSOs considered that a more comprehensive review of all active mining and petroleum contracts would be required to provide a full overview of all contractually mandated social expenditures. However, none of the extractive companies’ mandatory social expenditures are disclosed in the latest EITI Report. The 2019 EITI Report justifies the lack of disclosures on mandatory social expenditures in mining on the “flexible” EITI reporting approach that did not include extractive companies in the scope of reporting. The report nonetheless provides a review of oil and gas companies’ systematic disclosures of their voluntary social expenditures (CSR) in Chad. However, the Secretariat’s view is that the partial review of mining and petroleum contracts is a concern given that it hinders a comprehensive assessment of the likely materiality of mandatory social expenditures. Given the existence of clauses on social expenditures in newer PSCs in the oil and gas sector, there is scope for Chad EITI to strengthen its work in reviewing contractual clauses and actual practices related to social expenditures. Stakeholder consultations revealed significant public interest in extractive companies’ social expenditures (both mandatory and voluntary), with several stakeholders expressing a perception that the figures reported for social expenditures to the government and to the EITI did not match the reality of project execution on the ground. Several CSOs noted that mining companies’ social expenditures were often provided in-kind, through the construction of schools, clinics, roads and other social infrastructure. One CSO noted that there was considerable social tension around Glencore’s oil projects given the broad perception among the community that the company was not contributing to social causes. With regards to environmental payments to government, the 2019 EITI Report describes the legal requirements related to payments to government and other expenditures related to the environment. The report categorises one type of payment (the Environmental Protection Tax / Taxe sur la Protection de l'Environnement - TPE) as a government revenue related to the environment, although it appears to be an indirect tax on extractive activities levied on their motor vehicle use collected by the Direction Générale des Services de Douanes et des Droits Indirects (DGDDI). The IA confirmed that his was an indirect tax on the extractive industries given that it was a tax on consumption rather than on production. The report nonetheless discloses the DGDDI’s TPE revenues collected from three oil and gas companies and two mining companies, although the MSG’s Transparency template submitted for this Validation states that these disclosures are not comprehensive. The Secretariat’s view is that this tax (the TPE) represents an indirect tax on the extractive industries, although gaps in government disclosure are a concern given that the MSG has clearly included this government revenue stream in the scope of the 2019 EITI Report. Thus, gaps in the comprehensiveness of government disclosures of TPE revenues in 2019 highlighted by the MSG in its submission for this Validation is considered to constitute a gap in Chad’s progress towards fulfilling Requirement 6.1.b. Nonetheless, the 2019 EITI Report provides information on the general legal provisions for environmental rehabilitation funds and other expenditures related to the environment, but does not explain how these are monitored either by statutory procedure or in practice. The report explains that the lack of disclosures of environmental expenditures is due to the “flexible” approach in the 2019 EITI Report, which did not include extractive companies in the scope of reporting.