UNITED STATES NEWS

UN experts say South Sudan is close to securing a $13 billion oil-backed loan from a UAE company

May 17, 2024, 3:38 PM

UNITED NATIONS (AP) — U.N. experts say South Sudan is close to securing a $13 billion loan from a company in the United Arab Emirates, despite the oil-rich country’s difficulties in managing debts backed by its oil reserves.

The panel of experts said in a report to the U.N. Security Council that loan documents it has seen indicate the deal with the company, Hamad Bin Khalifa Department of Projects, would be South Sudan’s largest-ever oil-backed loan.

The experts, who monitor an arms embargo against South Sudan, said in the oil section of the report obtained by The Associated Press this week that “servicing this loan would likely tie up most of South Sudan’s revenue (for) many years, depending on oil prices.”

Hamad Bin Khalifa Department of Projects, registered in Dubai, has no listed phone number and its website isn’t working. An email address associated with the company bounced back. The UAE Mission to the United Nations declined to comment, saying Hamad is a private company.

South Sudan gained independence from Sudan in 2011 following decades of civil war that cost million of lives, and oil is the backbone of the young nation’s economy.

Soon after independence, South Sudan fought its own civil war from 2013 to 2018, when rivals President Salva Kiir and Vice President Riek Machar signed a power-sharing agreement and formed a coalition government. South Sudan is under pressure from the United States and other nations to more quickly implement the 2018 peace deal that ended the civil war and prepare for elections.

According to the U.S. Energy Information Administration’s latest update, South Sudan produced an average of about 149,000 barrels of liquid fuels per day in 2023. The landlocked country uses Sudan’s pipelines to transfer its oil to Port Sudan for shipment to global markets in an agreement with the Sudanese government, which pockets $23 per barrel as transit fees for the oil exports.

South Sudanese Information Minister Michael Makuei Lueth told reporters in February that outside factors, including the civil war still raging in Sudan, have hurt South Sudan’s oil exports. He also said oil wells, which were water-logged by heavy floods during the past rainy season, weren’t yet fully operational.

The section on oil in the experts report said documents for the loan from the UAE company, signed between December and February by South Sudan’s minister of finance, indicate the loan is split into tranches.

According to the documents, around 70% of the loan is to be allocated to infrastructure projects, with the first payment in excess of $5 billion, the panel said. Following a three-year grace period, “the loan will be secured against the delivery of crude oil for a period of up to 17 years.”

The panel of experts raised serious questions about South Sudan’s oil-based debts.

South Sudan lost a case in the International Center for Settlement of Investment Disputes stemming from a $700 million loan it received from Qatar National Bank in 2012.

When the panel wrote its report, the tribunal had not reached a decision on how much the government would have to pay, but The Sudan Tribune reported Sunday that South Sudan has been ordered to pay more than $1 billion.

The panel of experts said it has also confirmed that the government owes $151.97 million to the Eastern and Southern African Trade and Development Bank stemming from a previous oil-related deal.

South Sudan was supposed to hold elections before February 2023, but that timetable was pushed back last August to December 2024.

In early April, South Sudan’s president warned lawmakers “not to cling to power just weeks after his former rival turned deputy proposed a further postponement of elections.

The panel of experts said would be “a significant milestone” and warned that the country’s leaders are running short of time “to ensure divergent expectations do not fuel further tensions and strife.”

The experts also noted South Sudan’s humanitarian crisis. in which an estimated 9 million of the country’s 12.5 million people need protection and humanitarian assistance, according to the U.N. The country has also seen an increase in the number of refugees fleeing the war in neighboring Sudan, further complicating humanitarian assistance to those affected by South Sudan’s internal conflict.

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UN experts say South Sudan is close to securing a $13 billion oil-backed loan from a UAE company