South Sudan Warned Against Awarding New Oil Contracts

This article was last updated on May 26, 2022

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Global Witness said much of the oil revenues money is being spent on financing the current war in the country which doesn’t benefit citizens but instead costing development projects. Last December political disagreement among the senior members of the ruling party, SPLM threw the country into war. The disagreement later on blew into a full scale war across the country. But since the outbreak of the conflict, Global Witness said that the oil revenues have been diverted to finance the war and there is a risk that multi-million payments made by companies to secure future projects will also fail to reach the development budget. 

It said new investors also face a chaotic and insecure situation in South Sudan, which threatens to drive down the price the government can secure for remaining oil assets, as well as undermining their ability to attract responsible investors. The crisis which concentrated much on the northern part of the country has greatly affected oil production and is still threatening.  Peaceful efforts mediated by the Inter-Governmental Authority on Development (IGAD) to end the crisis have yielded little fruits so far. 

The fledgling nation is the world’s most oil dependent country, with 98 per cent of government revenue coming from oil sales at independence in 2011. This income was earmarked by the government for the development of the country’s economy and infrastructure.

“Oil revenues could be instrumental in funding the development of South Sudan and building its schools, hospitals and roads,” Emma Vickers, Global Witness Campaigner said in the statement. “It is critical that the government takes this step to ensure that what remains of the country’s oil is used to benefit its citizens when peace returns, rather than squandering on war or sold off on bad terms. 

“If President Kiir’s government is to ensure that the population’s future is not sold as well, it must issue this moratorium,” Vickers added. Global Witness said that during the recent months of the conflicts, oil has fanned the flames of the conflict, and triggered a major humanitarian crisis as government and rebel forces fought for control of the oil fields.

“The awarding of any new concessions risks a further influx of armed actors to protect them in an already highly militarized and volatile situation,” warned the activist, adding that; “with thousands already dead and 1 million people displaced, the government has a duty to avoid any action that may worsen the violence.”

South Sudan’s government has spent months developing laws which should ensure that the country’s oil sector is not a source of corruption or conflict. However, putting them into practice is still a challenge “The government owes it to South Sudan’s citizens to call time on new contracting and to step away from the negotiating table,” said Vickers. “Until peace and the rule of law have returned, this is not the time for new deals.

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