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Chad threatens to close oil tap unless bank release funds

Chad will suspend oil production from Tuesday unless it can recover funds that have been blocked by a UK bank because of a dispute between N'Djamena and the World Bank, Chadian Human Rights Minister Abderamane Djasnabaille said on Friday.

"The decision was approved by the cabinet this morning. We will turn off the oil tap at midday on Tuesday, April 18, if we don't get back the money the World Bank has blocked in the Citibank account in London," he told reporters.

"We urgently need money to solve the country's social problems," Djasnabaille said.

"We have problems in paying salaries and pensions, our hospitals lack supplies and medicines... I visited the hospital in N'Djamena yesterday... It's not normal for people who defend our country to have to sleep on the floor," he said.

But he denied suggestions that there was any link between Chad's oil ultimatum and clashes between the army and rebels on Thursday, when rebels attacked the capital, N'Djamena.

"This has nothing to do with the military situation. The problem is much older than that," he said.

On Jan. 12 the World Bank ordered the freezing of the London Citibank account in which Chad holds millions of dollars in oil revenues.

That move came a week after the World Bank suspended a US$124 million package of loans and grants as punishment for the government's attempt to sidestep provisions designed to ensure oil revenues were channelled to poor Chadians.

Chad's parliament, which is dominated by Chadian President Idriss Deby Into's party, scrapped provisions that channelled a percentage of oil revenue into key poverty-reducing sectors such as health, education and rural development.

It said it needed to change the law since growing financial difficulties prevented it paying state employees regularly.

But opposition parties accused the government of planning to use the money to bolster the military and to prepare for a presidential election on May 3, in which Deby will be seeking a third term in office.

A World Bank delegation wound up a two-week visit to Chad last week without managing to resolve the standoff.

Deby has also said he wants to renegotiate an agreement with an international consortium of companies extracting his country's oil, complaining that "Chad gets only crumbs out of it."

The agreement with the international consortium operating in Chad -- comprising ExxonMobil and Chevron of the US and Malaysia's Petronas -- guarantees N'Djamena obtains 12.5 percent of the total revenue generated by its oil.

Around US$25 million has been frozen in the Citibank account and the Chadian government says the US-Malaysian consortium operating the country's oil fields has been holding back a further 80 million since the start of the conflict.

The country of 7 million people, which is landlocked and desperately poor, has been producing oil since October 2003, routing it by pipeline to a port in Cameroon.

It is expected to produce some 900 million barrels of oil over a 25-year period, bringing in about US$80 million a year.
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