4 June 2014

South Sudan: Campaign Group Demands 'Immediate' Suspension of Oil Contracts

Juba — South Sudan government must "immediately" issue suspension on all new contracts in its oil industry, the campaign group, Global Witness said Wednesday. The moratorium calls come in the wake of peace talks between the country's warring parties, which was due to start in the Ethiopian capital this week, but has faced further delays.

But Global Witness said South Sudan's leaders must suspend the process of issuing new oil deals and halt any oil negotiations as world leaders struggle to find a solution to the current crisis.

"Ordinary South Sudanese have seen their country blown apart over the last five months of fighting," its South Sudan campaigner, Emma Vickers, said.

"If President [Salva] Kiir's government is to ensure that the population's future is not sold as well, it must issue this moratorium", she added.

Violence hit the world's youngest nation late last year and its persistence has now led to the displacement of over a million South Sudanese internally, as many more fled to its neighbouring countries.

In December last year, Global Witness warned that the fight to control the oilfields was potentially devastating for South Sudan's economy. Since the outbreak of conflict, it said, oil revenues have been diverted to finance the war and that there was real risk that multi-million dollar payments made by companies to secure future projects would also fail to reach the development budget.

The campaign group further said new investors face a chaotic and insecure situation in South Sudan, which threatens to drive down the price the government can secure for remaining oil assets, thus undermining the country's ability to attract responsible investors.

"Oil revenues could be instrumental in funding the development of South Sudan and building its schools, hospitals and roads," said Vickers.

"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 squandered on war or sold off on bad terms", she added.

South Sudan government, Global Witness stressed, 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 has taken a back seat as the war has worsened, and the rule of law has weakened, it observed.

"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, adding "Until peace and the rule of law have returned, this is not the time for new deals".

Prior to South Sudan's July 2011 secession from Khartoum, oil production generated millions of dollars and accounted for at least 98 percent of the young nation's annual budget.

Till now, however, South Sudan's oil is exported through Sudanese pipelines and this generates revenues, which are economically significant for the Khartoum government.

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