Global Witness (London)

28 September 2012

East Africa: Public Accountability Absent From New Sudan and South Sudan Oil Deal

press release

Sudan and South Sudan's new oil deal fails to guarantee citizens the basic information they need to hold their governments accountable for the vast amounts of money involved, said Global Witness today.

After several years of negotiations, Sudan and South Sudan yesterday signed a series of landmark agreements, including one on the terms under which South Sudan will export its crude oil via Sudan's pipelines and port. [1] Both countries are heavily reliant on oil revenues and have previously fought for control of oil fields either side of their common border. While the new agreement establishes mechanisms for internal information sharing and auditing, it includes no requirements for transit and financial data or audit reports to be made public. This lack of public accountability is particularly concerning given the allegations of high-level corruption that both governments are facing.

"Sudan and South Sudan's citizens are the ultimate owners of their countries' natural resources," said Global Witness campaigner Dana Wilkins. "Yet they have been totally cut out of this new oil deal, with no way to verify the amount of oil and money that will be transferred between their governments."

The fees paid by South Sudan for use of Sudan's processing facilities, pipelines, and port will range between US$9.10 and US$11 per barrel, depending on the route by which the crude oil is piped out. Juba has also agreed to transfer an additional US$3 billion to help Khartoum fill the gap in its finances caused by the loss of oil reserves now controlled by South Sudan.

The new oil deal establishes a Petroleum Monitoring Committee including representatives from both governments and an independent chairperson appointed by the African Union. This Committee will be responsible for monitoring the operational and financial implementation of the arrangement. [2] Sudan and South Sudan also agreed to appoint an independent auditor to report on the operating companies and identify any problems.

Though the Committee and the independent auditor are potentially very useful mechanisms for building trust between the governments, neither is required to publish anything. Unless their reports and the relevant production and payment data are publicly disclosed, it will be impossible for citizens even to check whether these oversight mechanisms are working.

The new agreement also includes an article on transparency. However, this only requires that the Sudanese and South Sudanese governments be 'mutually transparent'; each sharing relevant information with the other.

"The absence of real transparency - meaning full public disclosure - in this new deal could have long-term consequences for democracy and stability in both countries," added Wilkins. "South Sudan has included many strong public reporting and accounting requirements in its new legal framework. It is now all the more important that these are implemented without further delay. For its part, Khartoum should put in place public disclosure laws that enable Sudanese citizens to see how their leaders are spending their country's share of the oil wealth."

Notes:

[1] Available at http://sites.tufts.edu/reinventingpeace/files/2012/09/Oil-Agreement-between-SudanSouth-Sudan0001.pdf

[2] The 2005 Comprehensive Peace Agreement which ended the last civil war included a deal to split southern oil revenues 50:50 between the central government in Sudan and the semi-autonomous southern government. Though a Joint Technical Committee was set up to review the implementation of that deal, very little information was made available to the public.

Public accountability absent from new Sudan and South Sudan oil deal (PDF)

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