President Kiir Explains Decision To Halt Oil Production

President Salva Kiir Mayardit delivering his speech to the National Assembly in Juba [©Gurtong]

President Salva Kiir Mayardit delivering his speech to the National Assembly in Juba [©Gurtong]

South Sudan President H.E Salva Kiir Mayardit yesterday addressed the South Sudan National Assembly, and the Council of States over the Executive decision reached last Friday to stop oil production in the country.

The legislatures were joined by senior national government officials including the Executive and the Judiciary and the Central Equatoria State’s government leadership led by the acting Governor Hon. Manasseh Lomole Waya.

Also present during the President’s briefing were the United Nation’s agencies led by the UN Special envoy to South Sudan Hilde F. Johnson, Members of the Diplomatic Corps, the Civil Society and religious leaders.

Addressing the August House for the first time this year, Kiir’s speech follows the National Council of Minister’s resolution reached last Friday 20/1/2012 unanimously to stop oil production in South Sudan on grounds that, Khartoum was stealing the Country’s oil.

He explained that, since December 2011, Khartoum has looted South Sudan’s oil equivalent to a whooping 815 million US Dollars, adding that, Khartoum has also completed constructing a tie-in pipeline designed to permanently divert 120,000 barrels of oil per day to their refineries in Khartoum, an amount Kiir said is almost 75% of South Sudan’s daily entitlements.

“The diversion of South Sudan crude has disrupted revenues that are vital to the security and welfare of the people of South Sudan. At this time, we have no guarantee that the oil flowing through the Republic of Sudan will reach its destination. We cannot allow assets which clearly belong to the Republic of South Sudan (RSS) to be subject to further diversion,” Kiir said.

“On January 20th 2012, we unanimously decided that all oil operations in South Sudan should be halted with immediate effect and no crude oil belonging to South Sudan shall flow through the pipelines on the territory of the Republic of Sudan,” said the President.

He added that, “the government stands ready to handle this situation; however, we are mindful that it cannot be done without the collective support of this August House.”

“I call upon this August House to support the decision of the Council of Ministers to stop the flow of oil and search for alternative sources of funding to manage government projects,” Kiir continued.

New Funding Strategy
Kiir said the Executive’s decision came after failures in talks with Khartoum on several avenues in an attempt to strike a fair deal between the two countries, adding that the government has so far laid down strategies on how to come up with exclusive funding to replace revenues from oil sales.

Oil covers about 90% of South Sudan total revenue to run government activities second to agriculture.

“I have instructed the Ministry of Finance to initiate contingency plans for revenue collection and allocation. This will accelerate the increase in collections of non oil revenues. It also will prioritize the allocation of existing revenue, allowing us to make the most of what we have.

“The Ministry of Finance will also look into other options for replacing the lost revenue. On existing cash reserve, rest assured that the government can operate for the immediate future depending on which cuts are made,” Kiir told the legislators.

Last week the South Sudanese Minister of Petroleum, Hon. Stephen Dhieu told the press that, Khartoum has of late demanded South Sudan to pay 32.2 US Dollars per barley as a charge for using her pipelines and facilities. Kiir disagreed with the condition while saying that it is completely out of international norms.

The President however noted that, South Sudan remains open for any dialogue with Khartoum to reach a deal that can address the oil issue.

Meanwhile the decision is viewed by some analysts as a blow to the new country with challenges ranging from insecurity, inadequate infrastructure, high maternal mortality rate among others due to lack of funds even though the legislators warmly welcomed the decision.

The President underscored insecurity as the major critical challenge in the country. “The safety, security and health of our citizens remain our priorities. Whatever, austerity measures are required, we are confident that we can continue to meet critical obligations for national security and public welfare,” Kiir said.

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