Country Report Chad March 2011

Foreign trade and payments: China's importance continues to grow

Following a meeting with the Chinese minister of foreign affairs, Yang Jiechi, in the Chadian capital, N'Djamena, in mid-February the president, Idriss Déby, announced that he hoped to boost co-operation between the two countries, particularly in the fields of health, infrastructure, telecommunications and health. Although the term "co-operation" is in fact a euphemism for Chinese aid in exchange for access to Chad's hydrocarbons reserves, that in no way detracts from the large and growing importance of China to Chad as a source of imports and investment. Symbolic of this increasingly important relationship, in mid-February Mr Déby and Mr Jiechi jointly laid the foundation stone of a new parliament building in the Chadian capital, which will be paid for by China.

However, the relationship has not always been easy. In September the Chinese government warned contractors to be extra vigilant while working in Chad following the kidnap of a Chinese businessman in the company by "bandits". Equally, much as the Chadian population appreciates the benefits of infrastructure projects completed with Chinese money, there is increasing resentment at the lack of local jobs that these generate. For example, construction of an oil refinery north of N'Djamena is being undertaken almost entirely by Chinese workers. The majority shareholder in the project, China National Petroleum Corporation (CNPC), argues that this is inevitable given the lack of skilled local workers, but has pledged to train more Chadians in the future. Located at Djermaya, just north of N'Djamena, on the route to Massaguet, the small refinery (with initial processing capacity of 20,000 barrels/day) is scheduled to be operational by 2011. The refinery will be supplied with crude oil piped from the Koudalwa field, 300 km away in the Chari-Baguirmi region. The refinery underscores another growing local concern about Chinese investment in Chad: the environmental impact. Environmentalists have noted that the refinery will be barely 15 km from the Chari River, which feeds Lake Chad, the country's primary source of water, and which is already being rapidly depleted.

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