S. Sudan overdraft appetite from oil wealth raising eyebrows

Workers drill an oil well in South Sudan. The largest investment in Southern Sudan today is Chinese who have sunk billions of dollars in the oil sector. PHOTO | AFP 

In Summary

• South Sudan could now be forced to open up its books on oil revenue following that little had changed.

By AGGREY MUTAMBO
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Even before the ink has dried on South Sudan’s new transitional government of unity deal, there are ...
allegations that Juba may have been spending oil revenue in advance against the advice and warnings of lenders such as the International Monetary Fund.

Lenders say such a move could worsen the country’s debt situation.

South Sudan could now be forced to open up its books on oil revenue following that little had changed.

Emilio Manfredi, the co-ordinator of the UN Panel of Experts on South Sudan, in a February briefing to the UN, claimed that there was no transparency in use of money from petroleum sales or the financial probity in planning for it, making officials largely unaccountable.

The panel had tabled an interim report on the country’s sanctions status.

“The Ministry of Petroleum has not ended the practice of pre-sale financing arrangements for South Sudanese oil, despite the recommendations of the IMF,” the report drafted in November, but made public this week, shows.

“The Panel was unable to verify the financial liabilities of the government related to oil advances, cargoes and repayment terms because the government has not released current data on oil sales or published its marketing report, in accordance with the stipulations in the [Peace] Agreement on transparency and accountability.”

Promoting openness

A statement from the Petroleum Ministry, however, indicated that the government has released its seventh annual report detailed financial situation on oil production, which it argued will promote openness and transparency.

“We are trying to increase transparency in the country’s oil and gas sector, specifically concerning the financial aspects.

“The Ministry of Petroleum has produced this journal which will provide all the information about our production, sales, and even the environment. We include all the opportunities in South Sudan regarding refineries, pipelines and other facilities. All this information is now available, and everyone will have access to it,” the statement said.

The report says South Sudan authorities are now in charge of all oil operations. “The Ministry of Petroleum is dedicated to forming an institutional structure and establishing business relationships in an open and transparent manner.”

Inquiry findings

“Transparency in marketing is the cornerstone to growing a new international customer base mandated to conform to the highest ethical standards, and to ensure oil revenue cash flows are conducted through proper channels.”

The Ministry said it will in future be providing press releases recent sales and production volumes, crude oil revenues, tariff and assistance fee payments to Sudan as well as other relevant marketing data.

Claims of oil revenue diversion aren’t new though. Last year, President Salva Kiir opened an inquiry into the crude oil pre-sale arrangements after he fired then Oil Minister Ezekiel Lol Gatkuoth, replacing him with Awow Daniel Chuang. Those findings were yet to be made public.

Incomplete Cabinet

“The previous government has been selling oil in advance and there has been huge corruption in the oil sector as a whole,” said James Oryema, representative of the Sudan People’s Liberation Movement-In Opposition (SPLM-IO) which forms part of the new administration.

“We want the oil revenues to be made transparent and the sale of oil in advance to stop. We would also like to see an environmental audit carried out because the sector has serious pollution issues.”

President Salva Kiir is yet to name his full Cabinet, and all the former ministers relinquished their posts last week. But being the world’s most oil-dependent country (according to the World Bank), revenues from petro sales could account for a large portion of its budget. The transitional government needs at least $100 million to start running.