The multi-billion dollar project, co-funded by the World Bank and a consortium of oil companies led by ExxonMobil, is expected to generate up to 250,000 barrels of oil a day when it reaches full operating capacity.

But promises of riches for the landlocked desert country of eight million, where per capita income is well under a dollar a day, have met with scepticism among environmental and human rights groups, as well as opposition groups who fear that little of the newfound oil wealth will trickle down to the poor.

The oil, which is being pumped from 300 wells in southern Chad's Doba basin, will take two months to reach Cameroon's Kribi terminal through a pipeline over a distance of 1,050 kilometers (650 miles), and another two months before the first tanker is loaded.

Production is estimated at 12.5 million tonnes in the first year.

The project's total price tag of 3.7 billion dollars included a 1.5 billion dollar investment to develop some 300 oil wells the Doba basin and 2.2 billion in the pipeline crossing Cameroon.

Reserves are estimated at around 900 million barrels, and it has been calculated that over 25 years, the resource could generate some two billion dollars for Chad, a prospect that helped President Idriss Deby sweep back to power in elections last year.

The income should provide annual revenues of 80 million dollars for Chad and 20 million dollars for Cameroon. In Chad this would be enough to increase government revenues by half, according to the World Bank.

The project was dogged from the start by corruption concerns, and the World Bank initially withheld approval, demanding transparent management of the revenues.

The Anglo-Dutch oil company Shell and Elf of France pulled out of the deal without explanation in 1999, and for some time the project appeared to be in doubt.

Although World Bank investments of under 200 million dollars for the project form only a fraction of the total cost, they were considered essential as a guarantee to ensure the participation of private corporations -- ExxonMobil and Chevron of the United States and Petronas of Malaysia -- in a high risk venture.

To address the Bank's concerns, Chad passed a law under which 10 percent of the income must be deposited in an international bank for the benefit of future generations, while 80 percent will be used to finance priority sectors such as education, health, environment, water and rural development.

Another five percent will be used to benefit the local population of the Doba basin.

In addition, a commission of government, legislative and civil society representatives was created to monitor spending of oil revenues.

Critics remain skeptical, however. The US-based Catholic Relief Services said last month that corruption and political repression in both Chad and Cameroon could prevent benefits from reaching the people.

Transparency International has also raised concerns, and last month the World Economic Forum ranked Chad the most corrupt of 21 African countries surveyed on good governance citeria.

The International Monetary Fund (IMF) has faulted the Deby government in the past for lack of transparency and poor management of public funds, refusing to admit Chad into a group of countries eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.

The country is struggling under a debt burden of more than one billion dollars.

In 2000 the government admitted diverting four million dollars in investment funds intended for the pipeline project into buying weapons for use in its war against northern rebels.

The IMF late last month demanded early repayment of 7.6 million dollars because it says Chad gave it erroneous information in obtaining the money.

And Deby was also accused of nepotism after he appointed a relative to be prime minister.

TERRA.WIRE