Gross revenues to Chad: Royalties, taxes, dividends (Transit Account)
All direct and indirect revenues from oil extraction and transportation flow first into the Transit Account. In this account, amounts are set aside the 15th of every month to cover debts owed to IBRD and EIB.
Remaining funds are then transferred to Chad’s Borrower’s Account. which is part of the escrow agreement.
On January 15, 2005, there were $24.3 million in this account.
IBRD and EIB debt service, debt service reserves, and other fees
These accounts make provisions for Chad’s debt service payments to the IBRD (World Bank) and the European Investment Bank (EIB). There is an additional reserves account for IBRD debt service, which would be used to reimburse debts if the normal debt service account were not properly endowed.
The first IBRD debt payment of $3.05 million was made on December 15, 2005. Payments are to be made every six months thereafter. In the meantime, these funds are invested.
As of January 15, 2006 there were $498,366 in the IBRD debt service account.
As of January 15, 2006, there were €4.46 million in the EIB debt service account, the equivalent of one debt payment to the EIB. Payments to the EIB will begin in December 2006, and will be made every year thereafter. In the meantime, these funds are invested.
As of January 15, 2006 there were $7 million in the IBRD debt service reserves account. These funds will only be used if Chad has difficulty making contributions to the debt service account.
Citibank's administrative fees are also paid out of the gross revenues. These amount to $35,000 a year.
This category consists of taxes levied on the income of Tchad Oil Transportation Company (TOTCO), and the three consortium members: Chevron Chad, Esso Chad, and Petronas Chad. Share premiums are also treated like indirect revenues, and are transferred directly from the escrow accounts to Chad's general budget. They are not subject to the conditions of the Revenue Management Program.
Future Generations Fund
Ten percent of the oil’s direct revenues are set aside and invested for future use. An investment strategy is being defined for these funds. Meanwhile the Future Generations Fund (FGF) is kept in an escrow account in London, and is invested in an interest-bearing Citibank Liquidity investment account.
As of January 15, 2006, the account had a balance of $36.2 million.
Direct revenue to Chad: Royalties and dividends (Borrower’s Account)
After allowances are made for debt servicing, all indirect and direct revenues move to this account.
Indirect revenues, comprised of income and customs taxes, are then allowed to flow directly to the government’s treasury account.
Of the direct revenues, which are royalties and dividends, 10 percent is put aside in a future generations fund, also housed at Citibank.
The remaining 90 percent move to a special oil revenue account in Chad.
On January 15, 2006, there was a balance of $54,815 in this account.
Special Oil Revenue Account (commercial bank)
Transfers to Chad pass through a commercial bank before continuing directly to Chad's Central Bank.
Revenue Allocation Account at the Central Bank (BEAC)
This transit account is required by Chadian law. From here, the amounts for priority sectors, the oil producing region, and the general budget are allocated to three different accounts.
Of the amount remaining after provisions for future generations, 80 percent of royalties and 85 percent of dividends (after December 31, 2007: 95 percent of royalties and 100 percent of dividends) must be spent on priority sectors. Those funds go into this account.
Chad’s Law 001 has identified the priority sectors to be:
See How are Revenues Invested?
Transfers to the various ministries are made on a quarterly basis.
Account for oil producing region
Five percent of royalties (after allotments to the Future Generation Fund) are destined to community-driven development projects in the Eastern Logone region, where the oil production takes place.
Until regional elections to choose decentralized authorities can take place in 2006, funds in this account are under the tutelage of the Ministry of Finance, and a provisional committee has been established to work with local NGOs to identify development priorities. They will also oversee project execution and evaluate outcomes. (see How are Revenues Invested?)
All indirect revenues go directly to the government’s Treasury Account.
Special oil revenue accounts
Allocations to priority sectors pass through two commercial banks, Commercial Bank Tchad (CBT) and Société Générale Tchadienne de Banque (SGTB), who make payments to the various ministries.