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Jul 3, 2006
Chad oil company deadline expires

Chadian President Idriss Deby set a Sunday deadline
A 24-hour deadline by Chad's government for two major foreign oil companies to leave the country has expired.
President Idriss Deby ordered US firm ChevronTexaco and Malaysia's Petronas, together responsible for 60% of Chad's production, to quit the country.

Three government ministers have been sacked and may be prosecuted over the alleged non-payment of taxes by the oil companies, a charge the firms deny.

It is not clear how the authorities might enforce the expulsion order.

"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," Mahamat Bechir Okormi, the country's minister for state control and ethics, told Reuters news agency in Kuala Lumpur on Monday.

"In Chad, only the national assembly can exempt companies, not a minister."

On Sunday, the government announced the dismissal of Oil Minister Mahamat Nasser Hassane, as well as the ministers for livestock and planning.

"ChevronTexaco and Petronas must leave Chad because they have refused to pay their taxes," Mr Deby said on Saturday.

Chevron says it has fully complied with tax demands and not had "official notification" to leave.

Petronas has not commented.

Taking control

The expulsion of Chevron and Petronas would leave only Exxon Mobil remaining in the consortium which handles the country's oil production.

However, since Exxon Mobil runs the pipeline and the other two firms have few staff in the country, production is unlikely to be seriously affected, the BBC's Stephanie Hancock reports from N'djamena.

President Deby said his government would take control of the remaining reserves.

The surprise decision has sent shock waves around the oil industry, our correspondent says.

The government has recently been hinting it wants to join the consortium.

Privately, many observers feel the firms may have been kicked out to make room for Chinese oil companies. Just three weeks ago, Chad resumed diplomatic relations with Beijing.

If this proves to be true, it will mark a turning point for relations in this region, our correspondent says.

History of rows

Rows surrounding Chad's oil revenues have been simmering for months.

Earlier this year, Chad threatened to stop oil production if it did not immediately receive several months' worth of oil revenues from the US-led consortium.

Last December the government fell out with the World Bank, after it changed a law which controlled how oil revenues were spent.

The bank, which financially backs the oil project, repeatedly asked Chad not to change the law but it went ahead anyway.

In response, the bank froze all payments of oil revenues to the government.

That row was settled with a deal in July, under which Chad agreed to spend 70% of its oil revenues on development schemes, with 30% going into its overall budget.
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