Amid ongoing financial challenges, South Sudan is reportedly negotiating a colossal loan backed by its oil reserves with a United Arab Emirates company, raising concerns about the country's ability to manage its debt.
South Sudan is reportedly close to securing a $13 billion loan from a company in the United Arab Emirates, despite its long-standing difficulties in managing debts backed by its oil reserves. The United Nations Security Council's panel of experts disclosed the potential deal in a report, noting that the loan would be the country's largest ever oil-backed loan.
Hamad Bin Khalifa Department of Projects, the UAE company involved in the transaction, has raised questions due to its lack of a listed phone number, a malfunctioning website, and a non-functional email address. The UAE Mission to the United Nations declined to comment, citing the company's private nature.
Since gaining independence from Sudan in 2011, South Sudan's economy has heavily relied on oil revenues. However, the country has faced numerous challenges, including a bloody civil war from 2013 to 2018 and ongoing economic turmoil.
In 2013, South Sudan's oil production peaked at 245,000 barrels per day, but it has since declined to around 149,000 barrels per day. The country faces difficulties exporting its oil due to its landlocked status and its reliance on Sudan's pipelines, for which the Sudanese government charges transit fees of $23 per barrel.
South Sudanese Information Minister Michael Makuei Lueth has attributed the decline in oil exports to external factors, such as the ongoing civil war in Sudan and waterlogged oil wells caused by heavy rainfall.
The $13 billion loan, as outlined in documents signed between December and February, would reportedly allocate around 70% of the funds to infrastructure projects. The loan would be secured against crude oil deliveries over a 17-year period, following a three-year grace period.
The UN experts have raised serious concerns about South Sudan's oil-based debts. The country lost a case in the International Center for Settlement of Investment Disputes related to a $700 million loan from Qatar National Bank in 2012. The panel has also confirmed that the government owes $151.97 million to the Eastern and Southern African Trade and Development Bank.
South Sudan was expected to hold elections in February 2023, but the timeframe has been extended to December 2024. President Salva Kiir has warned lawmakers against delaying the polls further. The UN experts have emphasized that the elections would be a "significant milestone" but expressed concern about the limited time available to address tensions and conflicts.
The country is also facing a severe humanitarian crisis, with an estimated 9 million people in need of protection and humanitarian assistance. The influx of refugees from Sudan has further complicated the situation. The UN experts have called for increased international support and a resolution to the ongoing conflict to address these humanitarian concerns.
