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Tue, Aug 29, 2006 - Page 10 News List

Chadian minister says oil firms failed to pay tax

AGENCIES , KUALA LUMPUR AND N'DJAMENA

A Chadian minister denied yesterday that his country's expulsion of two foreign energy companies at the weekend was aimed at winning greater control of its oil resources.

Chad ordered the US giant Chevron and Malaysia's Petronas on Saturday to leave the country for failing to honor tax obligations.

"The solution is to pay their tax," Mahamat Bechir Okormi, the country's minister for state control and ethics, said in Malaysia's capital of Kuala Lumpur.

"We want them to pay the tax. There's no other solution. It's not a matter of control," said the minister, who was in Malaysia to attend a meeting of Islamic nations on anti-corruption.

"The problem was that Petronas and Chevron had to pay tax, then they arranged with a certain individual, a minister, in order to get a tax exemption. In Chad, only the national assembly can exempt companies, not a minister," he said.

Chad's surprise move followed its decision to create a new national oil company which it said should become a partner in the country's existing oil-producing consortium, led by Exxon Mobil and including Chevron and Petronas.

Petronas holds 35 percent of the consortium, Chevron 25 percent, and Exxon the remaining 40 percent.

Landlocked Chad, which began pumping crude in 2003, produces around 160,000 to 170,000 barrels per day but most of its people remain poor. Industry experts said the government was anxious to carve out a more advantageous position as Chad's oil production, which began in 2003, expanded.

Chadian President Idriss Deby further suspended three oil ministers and two other Cabinet members who negotiated deals with Chevron and Petronas, government officials said on condition of anonymity.

Oil Minister Mahmat Hassan Nasser, Planning Minister Mahmat Ali Hassan and Livestock Minister Mockhtar Moussa were suspended because they negotiated the terms of the agreements with the companies, the officials said.

It was unclear how Chad might carry out the expulsion order, which Deby announced in a message broadcast on state-run radio on Saturday. Chevron and Petronas have a skeleton staff of only three in the African country.

A Petronas official in Kuala Lumpur said on Sunday that the firm had not yet received notification of the expulsion order.

Malaysian Prime Minister Abdullah Ahmad Badawi said Hassan Merican, president of Petronas, was trying to obtain more information from the company's office in Chad, Malaysia's national news agency Bernama reported.

Chevron said in a statement on Saturday that it had not been behind on any tax payments and had not been told it must leave Chad.

"Chevron has not received any official notification from the Republic of Chad government asking Chevron to leave the country over tax issues," the statement said. "However, Chevron has been in full compliance with all of our tax obligations."

If the two companies are evicted, Chad could turn for help to China, which is seeking deals with oil-producing countries in Africa, analysts said.

One expert in Chadian affairs, political scientist Roland Marchal, said Deby is unlikely to go through with the expulsion.

"Deby is playing both the nationalist card because he is saying that foreign companies are taking Chad's money, which is popular, and also that if these two companies are not flexible enough to come to a new agreement where Chad receives more money, then Deby can always talk to the Chinese," he said.

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