World Bank calls-off Chad oil deal

13 September 2008

The World Bank has called off its oil pipeline deal with Chad over a dispute with the government on its failure to channelise profits to tackle poverty in the country.

The bank had provided financial backing for the oil project in an effort to enable the African country to tackle poverty by channeling the proceeds on development projects including health and education.

The pipeline was widely regarded as a test case for chanelling Africa's oil wealth to benefit its poor and spur development in the fund-starved countries in the continent.

In December the government of President Idriss Deby fell out with the bank, when it changed a law on how oil revenues were to be spent, despite the World Bank urging it not to.

The bank retaliated by freezing all payments of oil revenues to the government.

The dispute was settled in July with Chad agreeing to spend 70 per cent of the oil revenues on development projects and allocate the remaining 30 per cenjt into its overall budget.