Source: AFP
Oil-dependent South Sudan is at risk of economic and political turmoil due to the disruption of a key pipeline to its war-torn neighbor Sudan, experts have warned.
Analysts expressed deep concern over the loss of crucial oil revenue in one of the world’s poorest countries and the possibility that it could force South Sudan’s first election to be delayed once again.
In a letter dated March 16, Sudan’s energy minister declared force majeure over a “major rupture” in the pipeline that sends crude from South Sudan to the Red Sea city of Port Sudan for export.
It said the rupture occurred in February in a “military operations area” in Sudan, where conflict has been raging since April last year.
Boutros Magaya, head of South Sudan’s parliamentary subcommittee on oil, warned of the “serious consequences” of the shutdown on people’s livelihoods and security and that the country faced an “imminent economic crisis”.
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“With the loss of the majority of our national income, we face the grim prospect of a humanitarian disaster, political instability and security turmoil (in) our already fragile state,” it said in a statement on Tuesday.
“Significant losses”
Despite its oil wealth, the world’s youngest nation has struggled to find its footing since gaining independence from Sudan in 2011, battling ethnic violence, chronic instability, poverty and natural disasters.
About nine million of the 12.4 million population are in need of humanitarian aid, according to UN figures.
Oil exports accounted for about 90 percent of South Sudan’s national income, and Magaya warned it could lose at least $100 million a month without oil sales.
“This will result in significant income losses, increased market prices, fuel shortages, prolonged power outages, transport disruptions and other essential services that are vital to the well-being of our citizens.”
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South Sudan’s ruling elite has been accused by the UN of massive looting of public coffers and resources, with the country ranked 177th out of 180 on Transparency International’s corruption index.
When South Sudan became independent, it captured about three-quarters of the oil reserves of the old Sudan, while Khartoum retained control of all pipeline and export facilities.
According to bp’s World Energy Statistical Review, South Sudan produced 153,000 barrels per day in 2021, while Sudan’s output was 64,000 bpd.
Wages unpaid
Sudan has been at war since April 2023, when fighting broke out between the army and the paramilitary Rapid Support Force (RSF).
The conflict has killed thousands of people, forced millions to flee — including an estimated 500,000 in South Sudan — and pushed the country to the brink of famine.
The Juba government, which has been involved in efforts to end the conflict in Sudan, has not publicly commented on the force majeure declaration.
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Boboya James Edimond, executive director of the Juba-based Institute for Social Policy and Research think tank, said oil sales finance 95 percent of government operations.
Even when the oil was flowing, he said the government has been unable to pay salaries of civil servants for months.
“And if the oil is not going to flow, there will be a collapse of the government which may force citizens to protest and the military is likely to be involved,” he warned.
Akol Maduok, head of the economics department at the University of Juba, bluntly said the situation was not “good” for the average South Sudanese.
“The situation will worsen in the next two or three months because the central bank may be short of foreign reserves and will not be able to provide hard currency to the market.”
Andrew Smith, senior Africa analyst at risk intelligence firm Verisk Maplecroft, said the hit to public finances caused by the damaged pipeline meant it was “very likely” that elections scheduled for December would be delayed.
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“Juba appealed for more funding for the polls from the international community in early February, before the pipeline was destroyed,” he said in a note to AFP.
“Any funds he receives to cover oil revenue shortfalls will now be directed towards appeasing the political elite and not towards already under-resourced election preparations.”
Source: AFP