Economics Press Release South Sudan

South Sudan Must Cease Oil Contracts Until Peace Returns!

Global Witness: South Sudan government must cease oil deals for the interest of South Sudan people. Deals during conflicts only benefit the investors and influence wars(Photo: file)
Global Witness: South Sudan government must cease oil deals for the interest of South Sudan people. Deals during conflicts only benefit the investors and influence wars(Photo: file)

June 06, 2014(Nyamilepedia) — Global Witness, A UK based non-governmental organization, which investigates the role of natural resources in funding conflict and corruption around the world, is urging Salva Kiir government to freeze oil deals until peace return to the country.

“Global Witness is calling on the government of South Sudan to issue a moratorium on all new oil sector contracts and to call a halt to all contract renegotiations, until peace and the rule of law are restored” the paper reads.

The UK based company highlights that the conflict has divided the South Sudanese government and overshadowed democratic principles, which may scare away the responsible investors but attract the bad ones against the interest of the South Sudanese people.

“The conflict has fragmented systems of authority and undermined democratic structures, heightening the risk of corruption, and creating an extremely unstable investment environment, which is likely to dissuade the most responsible companies and the most favourable deals.” Reads the article.

Global witness feels it is important that the South Sudanese oil be preserved until peace returns because it is being wrongly used by the government to finance the conflict instead of the needs of the suffering populations.

“The country’s oil resources have become a central focus of the violence, and revenues from the sector have been diverted away from development and towards military spending.” Reads the article

Based on their research Global Witness reiterates that deals sign at a moment of conflict do not favor the desperate governments rather than the companies taking risks. Such deals affect the nation as whole.

Witness also adds that the companies taking chances during conflicts are less quantified and most often neglect the communities and their environments, leaving greater risks for the subsequent populations.

“In addition, increased instability can dissuade responsible investors with good track records and experience in the sector, putting communities and environments near oil-producing areas at greater risk of disruption and damage caused by less qualified companies.”

The company has also cited that the South Sudanese government has already diverted the oil revenue to finance wars instead of the most needed health facilities, infrastructure, education, among others.

“In February 2014 the Minister of Finance presented a supplementary budget of 750 million South Sudanese pounds to the National Legislature of which 500 million (around US$160 million at current exchange rates) was earmarked for defence spending.” Global Witness.

“The oil sector is South Sudan’s main source of cash for development and revenues diverted to finance the conflict can never be recovered.” The paper continues.

South Sudan’s minister of defense, Gen. Kuol Manyang Juuk, has admitted earlier this year that Juba is footing the cost of the Ugandan army operations in the country.

Uganda has intensively deployed its troops in South Sudan, investing in the internal conflict  at a compensation rate believed to be higher than the normal ones.

The loyal forces have reportedly fought among themselves in Juba, Malakal and Gadiang due to indiscriminate wages.

The disables, mostly wounded in the recent conflict, have protested in Juba due to lack of payment as some quote discrimination in favor of the Ugandans, who are deployed to protect important installations and sustain the regime in power.

Global Witness adds that the use of oil revenue to fund the conflicts could also attract more rebels and militia from within the country and the region to inflame the conflict that has already affected 8 out of ten states.

“If contracts for these concessions are granted, companies would need to employ armed security forces in order to operate. In a region already home to high numbers of military and militias, a further influx of armed actors could worsen or prolong conflict.”

Four groups of Sudan rebels have been accused by the South Sudan armed opposition, the SPLA/M, of fighting alongside Salva Kiir’s loyal forces.

Global Witness believes that the moratorium on the new oil deals would:

  1. Prohibits the negotiation or signature of new exploration and production agreements (EPSAs);
  2. Prohibits the negotiation or signature of new midstream deals, refinery or transportation contracts;
  3. Calls a halt to the renegotiation of EPSAs awarded before independence;

To benefit the South Sudan citizens, the Global Witness believes that the moratorium would remain in place until:

  1. Peace and stability have been re-established across South Sudan;
  2. The Petroleum Act 2012 and the Petroleum Revenue Management Bill have been passed and comprehensively implemented;
  3. Reports of human rights abuses by both sides, particularly in oil-producing areas, have been investigated and those found guilty held to account.

South Sudan, the call for a moratorium on new oil contracts

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