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Last Updated: Friday, 30 December 2005, 10:26 GMT
World Bank warns Chad on oil law
Oil pipeline being constructed in Chad
Chad's oil pipeline is more than 1,000km long
The World Bank has warned that it could take action against Chad after the country's parliament changed a law governing the use of oil revenues.

World Bank President Paul Wolfowitz said the law was a deciding factor in the bank's financial support for a massive oil pipeline project in 1999.

It guaranteed that oil revenues were used to help reduce poverty in Chad.

The new legislation gives the Chadian government more control over how it uses the money.

It abolishes what was known as the "future generations fund", which had kept 10% of the country's oil revenues for use in tackling poverty in Chad.

The government wants to use the $36m (21m) held in the fund to deal with some of the country's financial problems, which include months of unpaid salaries.

'Corruption and impunity'

The changes need to be approved by President Idriss Deby, but he has publicly supported them.

Chad's President Idriss Deby
Chad's President Deby is said to support the new oil law

Mr Wolfowitz said the new legislation was a "breach of contract" and could result in the World Bank suspending the payment of new credits and accelerating the repayment of loans it has made to Chad.

Gilbert Maoundonodji, head of Gramp-TC, a group that monitors the oil pipeline project, said that the World Bank needed to act.

"It now has a choice between learning its lesson and taking certain measures, or effectively supporting bad governance, corruption and impunity, which are prevalent in our country," he said.

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