The Chad News Archive

Chad, China, and the Oil Refinery

Reuters (1/24/12)

Chad has suspended an oil refinery agreement with partner China National Petroleum Corp. and will set up a committee to renegotiate the accord, a government minister told Reuters on Tuesday.

The move escalates a row over fuel prices for the 20,000 barrel per day plant and threatens to chill the central African country's relationship with Chinese investors, who have earmarked billions of dollars for infrastructure projects.

The refinery produces gasoline and other fuels for the domestic market at prices set by the government, which refinery officials say are too low to cover its crude costs.

"Despite the concessions granted to them by Chad authorities over fuel prices, the Chinese continue to run us around," Mahamat Allahou Taher, Chad's minister for trade and industry, said, adding that the government had issued a notice suspending the deal with China's state-run CNPC.

"An inter-departmental committee will be set up to renegotiate a new agreement," he said.

The refinery, 60 percent owned by CNPC, has been idled intermittently since it was inaugurated in June due to the disagreement over fuel prices.

The disruptions have caused fuel shortages in the country, and petrol is now being rationed.

The 588 million euro ($758 million) refinery, which is 40 percent owned by Chad state firm SHT, has lost $4.77 million since it opened, CNPC has said. A CNPC official was not immediately available to comment on Monday.

Chad announced last week it had shuttered the refinery and would expel the plant's Chinese director.

The row comes after the announcement of more than $8 billion worth of investments in Chad by Chinese companies last year.

Chad said in April it had signed a $1 billion accord with China CAMC Engineering Co for the construction of an international airport. State-run China Civil Engineering Construction Corporation (CCECC) won a $7.5 billion contract to build a railway, Chad's government said in March.

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