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South Sudanese oil resumption raises sticky questions

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(Globalpost/GlobalPost)

Singing and dancing marked South Sudan's revival of oil production this month, raising hopes the precious resource could finally benefit a nation that fought for decades to gain control of it.

But along with the celebrations have come warnings that strict accountability will be needed to thwart corruption when billions of dollars in revenue pour into the world's youngest country.

"Risks of corruption and mismanagement in the oil sector remain high," the rights group Global Witness advised.

Resumption of oil production, which previously provided about 98 percent of government revenue for South Sudan, offers an impoverished nation that has been wracked by rebellion and hunger a chance to rebuild.

Crucially, the event offers hope that the fledgling country -- which won independence from Sudan in July 2011 following deadly fighting that raged almost continuously for more than 50 years and broke out again last year -- can now live in peace with its former foe.

"South Sudan is committed to live in peace with Sudan and to share the benefits of the oil," South Sudanese oil minister Stephen Dhieu Dau said as he turned production back on.

The two nations almost fell back into all-out fighting along their un-demarcated border in April and March 2012 amid a conflict prompted in part by disputes over oil.

Tensions remain high, with both sides accusing the other of backing rebels as proxy forces against the other, despite Sudan's President Omar al-Bashir praising friendly relations on his first visit since South Sudan's independence earlier this month.

After one of Africa's longest civil wars, landlocked South Sudan split off, retaining roughly 75 percent of the 470,000 barrels per day of crude produced by the formerly unified country, while refinery and export pipelines run north to the Red Sea through Sudan.

Juba halted crude production in early 2012, accusing Khartoum of theft in a row over export fees that was only resolved earlier this month after a string of deals were signed but not implemented.

-- Chance to develop an impoverished nation --

Resuming the flow of oil boosts chances for peace, but management of the lucrative resources is a concern, because vast amounts of money were lost through corruption before the shutdown.

Last year, President Salva Kiir wrote to 75 past and present officials asking them to return $4.0 billion in allegedly stolen public money, cash that should have been spent on development.

So far however, no one has been prosecuted and no funds have been retrieved.

"The South Sudanese government has made consistent rhetorical and legal commitments to manage the oil sector transparently and in the best interests of all citizens," Dana Wilkins of Global Witness told AFP, while asking for clarification of reports of "secretive contract allocations".

"The recent resumption of production and imminent flood of revenues will be the major test of those commitments," Wilkins added.

The United Nations warns that a million people are "severely food insecure" -- with the war-ravaged eastern Jonglei region especially hard hit -- and is appealing for more than a billion dollars to address urgent humanitarian needs this year.

While the oil was cut, the country was propped up by donors, and the UN has estimated that aid agencies provide "at least 60 percent" of healthcare.

Opposition leader Lam Akol has warned that the war-weary people need to taste "the fruits of peace" and has criticised generous spending on the army at the expense of health or education.

Oil economist and former government advisor Kimo Aban Adibo says that 40 percent of revenue is used for paying salaries of a bloated military and civil service, but is hopeful that priorities might change with elections due in 2015.

"Among different government circles...they are really concerned about the way they have been allocating the oil resources to the extent where they were unable to deliver services", Adibo said. "The next budget will have more money allocated to services such as health and education."

Deputy Health Minister Yatta Lori Lugor, who admits donors also bought the government's share of medicine last year when cash ran out, says officials want a fresh approach to ensure oil wealth is not squandered.

"I think that people are serious about corruption, and we are going to see that this oil goes for the development of the people", Lugor said.

Such promises have in the past remained only rhetoric, and the vast majority of South Sudanese live in rural areas where the only visible signs of government are soldiers.

In dusty Juba, luxury cars worth more than the salaries of the government officials they belong to bounce down rutted roads between the shacks that most people in the city live in.

But in the key oil field of Thar Jath, teenager Nyandyel Tap talks enthusiastically about how things will now change.

"Oil has opened and we will be happy and there will be development", she says, calling for a school to be built.

Until now, the only benefit has been free lifts from cars passing through the oil fields, a dusty expanse dotted by greasy wells around which her family herd their cattle.

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http://www.globalpost.com/dispatch/news/afp/130420/south-sudanese-oil-resumption-raises-sticky-questions