Chad: Oil, Electricity, and Inequality

The fate of a national electrification project in Chad (French) will be important to watch as an indicator of whether the country’s oil wealth will bring widespread benefit to the people. Chad has been producing oil since 2003, but most Chadians continue to live in poverty and lack access to basic infrastructure. Current statistics on electricity are revealing:

More than 80% of the production of electricity is consumed by [the capital] N’djamena. A dozen secondary towns and centers have independent networks. There is no interconnected network in the country. The rate of access to electricity hardly exceeds 3%-4% of the population of Chad, which, in twenty years, has doubled to reach eleven million inhabitants.

The government has reduced electricity prices by 37%, and is working with China’s Exim Bank to increase electricity generation for N’djamena and other areas.

Some have hoped that oil would revolutionize living standards in Chad. As of 2010 (the best data I could find), Chad produced an estimated 126,000 barrels of oil per day – a small amount from the vantage of the world market, but a large amount for that country.

Almost from the beginning of oil production in Chad, there has been a huge gap between the wealth the country has acquired and the needs of its citizens. This exchange between a National Geographic reporter and a Chadian farmer from 2005 reveals how shallow the few development projects supported by oil seemed to some Chadians:

Gratitude is simply not on the agenda in the villages we visit. Distrust and unsatisfied expectations certainly are.

“They said the majority of us would get rich, but we have just got poorer. Nothing good has come from the oil,” mutters Mbangtoloum Ngarambé, a lanky peasant farmer who grows cotton, rice, and millet in the fields around his village, Kayrati. We stand in the shade of a mango tree, watching women and children filling their enamel basins at the new water pump, which seems to me to be working pretty efficiently.

“Isn’t that something good?” I ask, interrupting the flow of Ngarambé’s displeasure and pointing at the contraption.

“Yes, that’s good.”

“And the new classrooms over there?”

“Yes, they are good.”

Cleaning his teeth with a little stick, Ngarambé studies me out of the corner of his eye as we run through all the things that are lacking around here: a modern economy with jobs, a hospital close by, paved roads, security.

In 2012, Chad’s oil wealth has still brought “only superficial change,” Celeste Hicks reports:

Ordinary Chadians could be forgiven for asking what benefit [oil] was to them. When the Chinese National Petroleum Company arrived in the late 2000s they promised something different – cashing in on their approximately 20,000 bpd concession in the Bongor Basin, the Chinese have built a refinery at Djermaya which began to produce diesel and petrol for local consumption at the end of 2011. Although this relationship has also been characteristically fraught – the Chinese chairman of the refinery was declared ‘persona non grata’ in Chad earlier this year in a row over the price the Chinese were receiving for the fuel – it has allowed Deby to give a palpable demonstration of the fruits of the oil boom. Diesel is now about 520 CFA at the pump – a guaranteed price – and noticeably cheaper than when I was last in Chad, when all of its domestic fuel was imported from Cameroon or Nigeria.

But life is still not easy in Chad – food and living costs are excessively high (Chad recently came in as the third most expensive city in the world for expatriates and those costs feed down to ordinary Chadians), and hasty promises to increase civil service salaries by up to 40% in the next two years will be difficult to achieve. Once the visitor to N’Djamena leaves the shiny new presidential quarter, very little has changed, with bad roads, few businesses and substandard housing. In the countryside, food production is poor, over three million people are facing food shortages this year – the country’s deficit is 400,000 tonnes and government stocks are only about 40,000 tonnes. UNICEF estimates that 100,000 children could die if assistance isn’t brought urgently. Literacy levels are still low, and the country is struggling to cope with outbreaks of polio, meningitis and measles.

Optimism about Chad continues in some quarters. In November 2011, an IMF official wrote that increases in oil production and improvements in security were boosting Chad’s economic outlook, though he warned that Chad needed to “rebuild a savings buffer against the risk of an oil-price drop,” “find an efficient and affordable way to shield the poor from high fuel prices,” and guard against hunger.

Chad, it seems, has the resources to take on ambitious projects to improve citizens’ lives. After years of disappointment and inequality, the success of the electrification project will help show how far the government is willing to go in achieving that goal.

For more background on the oil industry in Chad, see International Crisis Group, which detailed in a 2010 piece how Chad won “an easy victory” over the control mechanisms the World Bank and the European Union attempted to impose over its oil revenue.

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