U.N. experts have reported that South Sudan is close to securing a $13 billion loan from a company in the United Arab Emirates, despite challenges in managing debts backed by its oil reserves. The company, Hamad Bin Khalifa Department of Projects, registered in Dubai, is set to provide the largest-ever oil-backed loan to South Sudan. However, experts warn that servicing this loan could tie up most of the country’s revenue for many years, depending on oil prices. The UAE Mission to the United Nations declined to comment, stating that Hamad is a private company with no listed phone number or functioning website.
South Sudan, which gained independence from Sudan in 2011 following decades of civil war, relies heavily on oil as the backbone of its economy. The country faced its own civil war from 2013 to 2018, with President Salva Kiir and Vice President Riek Machar signing a power-sharing agreement to form a coalition government. Pressure from the United States and other nations is urging South Sudan to implement the 2018 peace deal more quickly and prepare for upcoming elections.
Despite its oil production, South Sudan has faced challenges in exporting its oil due to factors such as ongoing conflicts in Sudan and operational issues at oil wells caused by heavy floods. The country produces an average of about 149,000 barrels of liquid fuels per day and transfers its oil through Sudan’s pipelines to global markets, paying transit fees to the Sudanese government. The loan agreement with the UAE company is split into tranches, with 70% allocated to infrastructure projects and the loan secured against the delivery of crude oil for up to 17 years after a three-year grace period.
South Sudan’s history of oil-based debts includes a case at the International Center for Settlement of Investment Disputes related to a $700 million loan from Qatar National Bank in 2012. The government has been ordered to pay over $1 billion following the tribunal’s decision. Additionally, the government owes $151.97 million to the Eastern and Southern African Trade and Development Bank from a previous oil-related deal. The country was expected to hold elections by February 2023, but the timetable was pushed back to December 2024, with the president warning against clinging to power and potential further postponements.
The experts also highlighted South Sudan’s humanitarian crisis, with an estimated 9 million out of 12.5 million people needing protection and humanitarian assistance. The country has seen an increase in refugees fleeing the conflicts in neighboring Sudan, adding to the complexity of providing assistance to those affected by internal strife. The panel of experts emphasized the need for South Sudan’s leaders to address diverging expectations and prevent further tensions and strife in the country. With elections approaching and the economic challenges posed by the new loan agreement, South Sudan faces a crucial period in its efforts towards stability and development.
