The oil-rich country of South Sudan is on the brink of securing a monumental $13 billion loan from a company in the United Arab Emirates, according to U.N. experts. Despite the country’s struggles in managing debts backed by its oil reserves, this deal could be a game-changer for South Sudan’s economy.
The panel of experts, responsible for monitoring an arms embargo against South Sudan, revealed in a report to the U.N. Security Council that the loan with the company, Hamad Bin Khalifa Department of Projects, would be the largest-ever oil-backed loan for South Sudan. This loan, if finalized, would have significant implications for the country’s financial future.
South Sudan, which gained independence from Sudan in 2011 after years of civil war, heavily relies on oil as the backbone of its economy. However, the country has faced internal conflicts, including a civil war from 2013 to 2018, which have hindered its economic progress. The pressure is mounting on South Sudan to implement the 2018 peace deal and prepare for elections, as urged by the United States and other nations.
The U.S. Energy Information Administration reported that South Sudan produced an average of about 149,000 barrels of liquid fuels per day in 2023. The country uses Sudan’s pipelines to transport its oil to Port Sudan for global markets, with the Sudanese government collecting transit fees for the oil exports.
Despite its oil production, South Sudan has faced challenges in its oil exports due to various factors, including ongoing conflicts in Sudan and operational issues with oil wells. The loan documents from the UAE company indicate that a significant portion of the loan would be allocated to infrastructure projects, with the loan secured against the delivery of crude oil for up to 17 years after a three-year grace period.
However, the panel of experts raised concerns about South Sudan’s existing oil-related debts, including a case in the International Center for Settlement of Investment Disputes involving a $700 million loan from Qatar National Bank. The government is also reportedly indebted to the Eastern and Southern African Trade and Development Bank for over $150 million from a previous oil-related deal.
South Sudan was initially scheduled to hold elections before February 2023, but the timeline was postponed to December 2024. The country’s leaders are under pressure to ensure a smooth transition and prevent further tensions and conflicts as the nation navigates its economic challenges and political transitions.
In addition to its financial struggles, South Sudan is also grappling with a humanitarian crisis, with millions of people in need of protection and assistance. The influx of refugees from neighboring Sudan has further complicated the humanitarian situation in the country, highlighting the urgent need for stability and support for the people of South Sudan.
As South Sudan moves closer to securing this substantial loan, the country faces a critical juncture in its history, with the potential for economic growth and stability on the horizon. However, the challenges ahead remain significant, and the decisions made by the country’s leaders in the coming months will shape the future of South Sudan for years to come.