Wednesday, September 08, 2010

oil curse

Sao Tomé and Principe is the smallest countries in Africa, with a population of only 175 000 on its two volcanic islands. With a per capita GDP of $1 700 in 2009 it is not one of the poorest nations in Africa, but the wealth is unevenly distributed: 54% of the population lives below the poverty line and 15% in extreme poverty.

Now the Sao Tome government is getting ready to award the first contracts to exploit seven oil blocks in the waters off the island's shores with estimated reserves of about ten billion barrels. Interested companies include Chevron, ConocoPhillips, Petrobras and Tullow Oil. The oil deals give no cause for optimism. There were irregularities in procedures, political manipulation, insider trading and nepotism. Concerns about irregularities in Sao Tomé have already led to the country's de-listing from the Extractive Industry Transparency Initiative. The Human Rights Watch report warns that if the new government does not use the oil wealth for social ends, it risks suffering the unenviable fate of its neighbour to the south, Equatorial Guinea, where abundant oil wealth goes to a happy few, and most people still live in poverty.

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