Chad makes progress in transparency, more work needed in reforms

EITI Report calls for reform of the mining cadaster system.

Banners flew high in across Chad last year proclaiming “Transparency in natural resource management, the key to sustainable development”. This goal, set by EITI Chad which is led by Mrs Amina Mahamat, former state secretary at the Ministry of Finance, aligns with the goals of the global EITI. The EITI is standard to promote open and accountable management of natural resources, to use information to drive extractive sector reform and improve the lives of citizens.

Information on payments and revenues from the oil and mining sectors was recently published in Chad’s 2013 EITI Report. It showed that the Chadian economy received USD 1.7 billion from the hydrocarbon sector, which corresponded to nearly 72% of total government revenues, and USD 3.8 million from the mining sector. The EIT Report also contained recommendations for how the country could bring more transparency into the management of natural resources.

Recommendations guide policy makers on how to improve extractive sector management

The EITI reporting process in Chad can make an important contribution to policy change. The extent to which the recommendations made in the EITI Reports are followed up is crucial to the impact of the EITI.

Fair Links, the Independent Administrator who prepared the 2013 report, recommended the development of a mining cadaster. This would provide citizens with accessible information about the mining sector and allow them to know who is extracting where. The mining cadaster would centralise mining contracts, as well as all available information on the companies holding licenses for exploration and exploitation of oil, minerals and quarries. An open, transparent and up-to-date cadastre system would also help this landlocked nation to attract foreign direct investment to develop its oil, gas and mining sectors.

The EITI Report also spelled out recommendations to encourage the Ministry of Energy and Petroleum and the state-owned national oil company “Société des hydrocarbures du Tchad (SHT)” to increase transparency and accountability. Since its creation in 2006, SHT is assuming an ever increasing role in the management of the oil and gas sector. Its wide ranging mandate to implement Chad’s hydrocarbon, industrial and trade policy has put SHT at the centre of all government transactions in the oil sector-- from issuing licenses to the sale of crude oil belonging to the government.

The report highlighted the need for adequate reporting tools to monitor these complex transactions, including oil backed loans from Glencore, a commodity trading company that buys crude oil from SHT and operates an oil field in Chad. The 2013 EITI Report revealed that the absence of such tools prevented the government from distinguishing the barrels of oil sold on behalf of the Public Treasury to be transferred to the government’s budget and the barrels sold to pay off the loan from Glencore.

A goal in sight

During the public information day last year, citizens in 23 regions across Chad had the opportunity to learn about transparency in the extractive sector. The government will now consider the recommendations in the 2013 report alongside the Chad EITI multi-stakeholder group.