BY ATAK NGOR
South Sudan has last week resumed exporting 90,000 barrels of oil per day; however, this may mark the beginning of sanctions, an expansion of corruption on an industrial scale, asset seizures, and legal disputes with former investors and creditors.
In this opinion piece, I will highlight some looming threats resulting from the resumption of oil exports, why the economy will get worse rather than better, and the potential complete collapse of the government in 2025. After South Sudan’s independence in 2011, instead of focusing on infrastructural development and fulfilling the promises made during the liberation struggle, such as the SPLM’s vision of ‘taking towns to the people,’ the government prioritized corruption and internal leadership struggles from the outset. In June 2012, President Salva Kiir accused more than 75 senior South Sudan officials of stealing at least US$4 billion. The government made successive critical mistakes, including failing to take 100 percent ownership of the oil sector, not canceling pre-existing contracts and licenses, and neglecting to build oil refineries to supply both domestic needs and refined petroleum exports to neighboring countries. As a result, South Sudan became dependent on Sudan for oil exports.
In 2022 alone, according to an interim report by the United Nations Panel of Experts on South Sudan on 1 December 2023, the government received over US$2 billion (S/2023/922) from its share of the oil, and the government seemed invincible. Meanwhile, some insiders and special interest groups who had been awarded contracts for major projects were laughing all the way to the bank. This eventually backfired on 15 April 2023, when the war in Sudan erupted. To make matters worse, South Sudan’s government was slow and reluctant to devise a new strategy to address potential crises, including the shutdown of the oil pipeline—a scenario for which the cabinet was entirely unprepared.
Who really owns South Sudan’s oil?
Many South Sudanese, including those within the government, falsely believe that South Sudan’s government owns the oil, but that is far from the truth. This is not just mismanagement but a case of pure corruption and bribery by members of South Sudan’s national cabinet, beginning in 2011 after independence. They failed to cancel or renegotiate previous contracts and licenses. In 2023, this came back to haunt the country when the Swiss Supreme Court awarded $2.7 billion to Vivacell Telecom and found that South Sudan is bound by an arbitration clause in an agreement entered into by Sudan before South Sudan’s independence. A ministerial decree of 2012 confirmed that the licensee was accepted as a “duly licensed Telecommunications Operator within the Republic of South Sudan under the terms and conditions of [its] original license issued by the Republic of Sudan,” according to Schellenberg Wittmer, a leading Swiss law firm.
Oil resumption details
South Sudan resumed oil production in Blocks 3 and 7 on 8 January with 90,000 bpd, the petroleum minister revealed last Tuesday. Blocks 3 and 7 are operated by Dar Petroleum Operating Company (DPOC) which is owned by China National Petroleum Corporation (CNPC) (41%), Petronas (Malaysia) (40%), Nilepet (8%), Sinopec (China) (6%), and Tri-Ocean Energy (Egypt) (5%), as documented by Global Witness.
It is critical to note that South Sudan’s share of this 90,000 bpd is only 7,200 bpd or 8 percent. The crude oil current price is around $74 per barrel which means that South Sudan’s government is due to make around $532,800 per day or $14,918,400 per month before any costs or expenses. The government’s current 2024/25 finance budget is SSP4.1 trillion (around $773 million) which is around 23% of the budget. This does not include costs incurred by DPOC, nor the billions in oil advances and oil-backed loans.
A mere 7 percent ownership
The two other oil operating companies, Nilepet, owns 5 percent of the Greater Pioneer Operating Company (GPOC) and 8 percent of the Sudd Operating Company (SPOC), making Nilepet’s average ownership in the three companies a mere 7 percent. If these three companies generate a profit of $100, Nilepet would only receive $7, while the foreign companies would take $93. I believe that if South Sudanese truly understood this, there would be a revolution by tomorrow morning. South Sudan cannot develop with a mere 7 percent ownership in the oil sector. The government seems to have forgotten that the natural resources belong to the people of South Sudan, and it is merely the custodian of these resources. The government should not mortgage its responsibility or cut deals with foreign or domestic private companies.
The looming sanctions
In November 2024, it was reported by Radio Tamazuj that the government of South Sudan had reached an agreement with Sudan’s rebel group, Rapid Support Forces (RSF) to protect a 237-kilometer stretch of the Greater Nile Oil Pipeline in an active war zone and ensure the smooth flow of South Sudan’s crude oil to Port Sudan for export to international markets. The RSF is not protecting the pipeline for free, so South Sudan is likely paying them. Now that the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned Mohammad Hamdan Daglo Mousa (Hemedti), the leader of RSF, its weapons supplier, and related companies, South Sudan risks being sanctioned by the U.S. for its continued dealings with the RSF. Sudan’s government likely supported the RSF agreement as the oil blockade deprived them of much-needed revenue.
South Sudan’s agreement with the RSF could come under serious scrutiny and potential economic sanctions by the U.S., especially since the proceeds from oil are not being properly used to support development and progress, but rather the proceeds are simply fueling corruption in South Sudan, as the country grapples with floods, food insecurity, disease outbreaks, and government salaries going unpaid for over a year. The United Nations projects that almost 7.7 million people will be acutely food insecure this year, which the UN defines as when a “person’s inability to consume adequate food puts their lives or livelihoods in immediate danger”. In November 2024, the UN’s World Food Programme (WFP), World Health Organization (WHO) and UN Children’s Fund (UNICEF) raised the alarm over worsening hunger, malnutrition, and disease outbreaks in South Sudan.
The U.S. could exempt South Sudan from the consequences of breaching its sanctions; however, I do not see why they would do that. It could embolden the government further, leading to an expansion of corruption on an industrial scale. U.S. President-elect Donald Trump is likely to view President Salva Kiir unfavorably, given that no meaningful progress has been made in the last four years, corruption continues unchecked, and that Kiir was among the first leaders to congratulate then President-elect Joe Biden in 2020.
Asset seizure and legal disputes
In two court cases from August 2023 to May 2024, South Sudan was ordered to pay $3.70 billion, the equivalent of its entire debt of $3.72 billion. The first case of $2.7 billion awarded to Vivacell Telecom, a Lebanese-owned mobile operator was very unfair and deeply troubling, as the amount does not reflect the company’s assets nor value it held in South Sudan.
● August 2023: The Swiss Federal Supreme Court rejected South Sudan’s bid to overturn a partial award in a US$2.7 billion ICC dispute with Vivacell Telecom, a Lebanese-owned mobile operator over a license issued before the state gained independence.
● May 2024: South Sudan was ordered by the International Centre for Settlement of Investment Disputes (ICSID), an agency of the World Bank to pay US$1 billion to Qatar National Bank after losing a court case due to a debt the country was unable to pay back to Qatar Bank.
● 28 September 2023 (pending): Elsewedy Electric, an Egyptian energy group has filed a case against South Sudan at the ICSID for issues related to their contract signed in 2019 to develop a 20 MW solar power plant, a 35 MWh battery storage system and a training center near Juba.
● 23 August 2024 (pending): Petronas filed a case against South Sudan at the International Centre for Settlement of Investment Disputes (ICSID), an agency of the World Bank. Petronas could seek US$1.25 billion in damages which if awarded South Sudan should kick out the World Bank because this is a robbery of the South Sudanese people’s future at this point.
Petronas is Malaysia’s state energy company that has operated in South Sudan for 30 years and on 7 August 2024, Petronas announced, “the withdrawal of its operations in the Republic of South Sudan (RSS). The decision was made following two years of divestment initiatives in alignment with PETRONAS’ long-term investment strategy amid the changing industry environment and accelerated energy transition.” Many articles stated that Petronas was in talks to sell the local assets to Britain’s Savannah Energy, who pulled out of the deal the same day, however, this former is misleading. In the great wisdom of Nilepet’s managing director Bernard Amour who on 19 August 2024 said that Nilepet would assume all assets and responsibilities held by Petronas in South Sudan. This was the bait Petronas was looking for and Amour delivered it to them.
On 23 August, Petronas filed a case against South Sudan at the ICSID, an agency of the World Bank. “Petronas International Corp has initiated arbitration proceedings at the International Centre for Settlement of Investment Disputes on the divestment of its operations in the Republic of South Sudan,” the company was quoted by local media, declining to comment further due to the ongoing arbitration process.
The truth is Savannah announced that it had entered into a sale and purchase agreement with Petronas for $1.25 billion on 12 December 2022, a good four months before the war broke out in Sudan. According to Savannah’s press release issued on 7 August 2024, “Despite the substantial efforts of all parties since that time, it has not been possible to complete the proposed transaction on the envisioned terms, and the original sale and purchase agreement is terminated. PETRONAS has announced today that it has served notice to unilaterally withdraw from its interests in the relevant exploration & production sharing agreements.” Savannah would have acquired interests in three operating companies that operate Block 3/7, Block 1/2/4, and Block 5A.
In another press release issued the following day, the company said: “Savannah remains in active discussions with the relevant parties around an alternative potential transaction about an acquisition of the Assets. Such alternative potential transaction, should it be concluded, (or a reversion to the original transaction), would still constitute a reverse takeover transaction under AIM Rule 14 and, accordingly would be subject to, inter alia, shareholder approval.” This indicates likely a term (s) had been triggered in the original agreement which warranted a revision of the purchase price due to the war in Sudan. But Petronas refused and withdrew from the country, hoping that South Sudan would take over the asset, so they could sue the country in an international court seeking $1.25 billion or likely more in damages.
Furthermore, Petronas was in a rush to exit South Sudan to avoid a pending environmental audit report by South Sudan’s parliament examining the environmental damages caused by oil operating companies and Petronas. This is how these foreign companies operate. They are complete vultures, who will pollute your water and your citizens, recoup billions annually for 30 years, abandon the assets before a critical environmental audit report is released, and then sue your country at an international court seeking billions of dollars. Since Petronas’ case is now pending in court, and oil exports have resumed, the company could seek a court order to seize oil shipments once they reach their destination. Even if Petronas does not, other creditors may do so and they would likely be granted.
On 31 December 2024, President Kiir’s New Year’s Message acknowledged the failures of his government and stated: “We in [the] government of today must do our best in 2025 to change course.” The President also stressed they “must ensure every South Sudanese is on board to collectively navigate this [uncharted] territory of challenges and to write our history as the generation, which made it possible for this nation to exist in harmony and unity.” However, without elections at the county and state levels in 2025, is that possible? If the government is serious about ensuring every South Sudanese is on board, it can only achieve this through elections by the end of 2025, allowing state governors, MPs, and county commissioners to be elected by their respective electoral constituencies. President Kiir also stated that 2025 will be: “A year where we will make great compromises, choose leadership over politics and our children will sing songs of freedom with joy.” However, after using presidential decrees for more than a decade, President Kiir must lead by example show his compromise, and allow South Sudanese to choose their own local and state governments. It would demonstrate that the President is genuine, kind, and committed to the democratic process of South Sudan.
The President’s New Year’s Message also highlighted some achievements, including the completion of bridges, ongoing road construction, and the removal of illegal checkpoints on roads and rivers which are great news, but the removal of illegal checkpoints was long overdue. The New Year’s Message failed to mention the South Sudan men’s national basketball team and the two runners who competed in the 2024 Summer Olympics and I thought this was a missed opportunity. The basketball team was the single greatest achievement of South Sudan in 2024. As of November 2024, South Sudan’s men’s team is ranked 1st in Africa and 23rd in the world.
I had issues with two achievements highlighted, the first is that: “Two solar power plants with a total of 40MW already installed at Nesitu will be commissioned by the end of January 2025 to be injected into the grid. An additional 5 Mega Watt solar plant will be installed in Yei town.” First, the 20 MW Nesitu solar plant had a total cost of 50 million, which means it cost $2.5 million per MW. But the cost for the additional 5 MW solar plant in Yei town is $150 million, meaning it costs a whopping $30 million per MW which is 12 times more expensive. South Sudan had signed a contract with Elsewedy Electric, an Egyptian energy group in 2019 to build a 20 MW solar power plant, a 35 MWh battery storage system, and a training Centre near Juba. Elsewedy Electric has now a pending case against South Sudan at the ICSID.
I have previously written on Radio Tamazuj about how this 5 MW project is a total scam and a case of corruption, which the public should not forget was approved by every single member of the cabinet without any objection. This is why we need elected representatives in 2025, Your Excellency, President Kiir. For context, Amea Power announced last year in Uganda a 24 MW solar project, costing only USD 19 million, or roughly USD 791,666 per MW. In reality, the 5 MW solar plant in Yei should only cost $3.96 million. Therefore, the remaining $146 million likely went to corruption instead of being used to build an additional 184 MW of electricity. The cabinet approved this agreement, which highlights how complacent the government is when it comes to corruption that benefits them.
The last achievements highlighted in the New Year’s Message I had issues with are: “Over 50 schools and 40 health facilities across South Sudan will be connected to power. These efforts will see the reduction of electricity cost by more than 20%.” If solar panels and batteries are provided to 50 schools and 40 health facilities, why would there be an ongoing cost for electricity? Also, providing 50 schools with electricity is a drop in the ocean because there are about 8,000 primary schools, 120 secondary schools, and 12 universities in the country. This is a mere 0.61 percent of the total schools in South Sudan. In 2016, there were an estimated 1,747 public health facilities in South Sudan, a mere 2.2 percent will be connected to power. These are disappointing achievements, and I should note that school teachers including university staff have not been paid for over one year, along with the rest of government employees.
Conclusion
The resumption of oil exports marks the beginning of a new set of challenges for South Sudan, including potential U.S. sanctions, asset seizures by creditors, legal disputes, and continuing corruption. There are pending cases against South Sudan and two finalized cases, totaling $3.7 billion, already awarded to creditors; these now threaten seizures of oil shipments. With a new U.S. administration, visa restrictions will be the least of the concerns for the unnamed individuals who obstruct life-saving humanitarian aid in South Sudan. The new administration will likely intensify targeted sanctions against these individuals, holding them accountable for undermining peace and stability.
South Sudan will likely need to engage with the U.S. to address some key issues, but corruption and the lack of accountability remain major obstacles. Even if none of these outcomes materialize, without the government addressing President Kiir’s call to ‘change course,’ as stated in his New Year’s Message, the economic situation could continue to worsen. But is the government truly serious about changing course and returning the looted billions of dollars from abroad, including from neighboring countries and the Middle East? It is likely not. The resumption of oil production will only embolden the government and further expand corruption on an industrial scale. This unchecked corruption will spiral the economy out of control, leading to mass protests, civil unrest, and the eventual collapse of the government as we know it.
The writer is a South Sudanese filmmaker and political analyst focusing on South Sudan’s economy, governance, and corruption. Through his thought-provoking opinions, he seeks to shed light on the pressing issues shaping the nation’s future. He can be reached via X, formerly Twitter.
The views expressed in ‘opinion’ articles published by Radio Tamazuj are solely those of the writer. The veracity of any claims made is the responsibility of the author, not Radio Tamazuj.