More transparency needed on South Sudanese oil -- Global Witness
The Niles: What rights do ordinary South Sudanese have to benefit from their country’s oil?
Global Witness: The Petroleum Revenue Management Law, which has not yet been passed, will dictate exactly how the oil-producing states and local communities will directly benefit from the oil. However, the indirect benefits to the wider population will be dictated much more by the annual budget process, by how the government decides to allocate money. This means the press, local civil society, and all interested citizens should pay close attention to the budget process and to the annual reports from the Ministry of Finance and the Audit Chamber which analyse how closely the government keeps to that budget.
The Niles: How should the oil revenues be used to benefit ordinary South Sudanese?
Global Witness: South Sudanese citizens are the rightful owners of the oil. As such, they deserve to see exactly how the oil and its revenues are managed so that they can call the government to account to ensure all revenues go to national budget rather than private bank accounts, and that it is then used on the programmes and projects that are in the best interest of the people.
The Niles: If South Sudan agrees on an oil deal with Khartoum, what problems do you foresee?
Global Witness: The Comprehensive Peace Agreement’s oil deal was constantly threatened by mistrust and concerns of cheating because there was no transparency or independent verification of the revenue split. Though the new oil deal is a very different arrangement, the same principles apply in that public reporting and independent accounting will be necessary to make sure the same problems do not undermine the new deal and risk a return to conflict or another production shut down later on.
The Niles: If oil production resumes, where should the revenues be directed? Are there priority areas that should be targeted?
Global Witness: Longer term development programmes like education and health should of course be a priority. However, as difficult as it can be when facing so many pressing development needs, it is also very important that the government directs some of the oil revenues to the reserve funds set up by the Transitional Constitution. This is so that the government has a buffer for when oil prices are low and there is a budget gap, and also so that future generations are able to benefit from the extraction of the country’s oil even after production ends.
The Niles: What is your impression of South Sudan’s petroleum/oil law?
Global Witness: The new law includes many general requirements on transparency, and fair and open allocation of contracts. If enforced properly, these requirements could ensure that all South Sudanese citizens are able to see and trust in how their resources are being managed.
The Niles: Where is the transparency and problem in the law?
Dana Wilkins in Juba, Septmeber 5.
Global Witness: The law requires that the Ministry of Petroleum and Mining publishes key production, revenue, and expenditure data, contracts and licenses, the justification for the award of contracts, and the beneficial ownership information for companies, among other things. (See section 76(1)).
Though very general, the transparency provisions included in the law are very good. But this is just on paper, and what matters more is how the law is actually applied. The Ministry now has a website. Though it is still under construction, there are links to petroleum agreements, licenses, oil sales and tendering, prices, and other documents. Hopefully these links, particularly those documents which could be uploaded easily like the petroleum agreements, will be sorted out shortly.
The Niles: How transparent are sales on oil?
Global Witness: The sale of crude oil can be a murky business even in the most established oil-producing countries because the industry is not very transparent and there can be private trades made. South Sudan’s oil is a public resource. As a public resource, the information on how it is sold, at what price, to whom, and how the money is received should all be public. This will need to include all oil sales by the Ministry of Petroleum and Mining as well as by Nilepet, which receives its own share of crude oil production as a stakeholder in oil blocks.
The Niles: How can different social actors work to ensure the transparent use of the oil revenues?
Global Witness: As in any functioning democracy, the executive is responsible for publishing information and managing the oil sector responsibly and according to the law. The legislature is responsible for representing the interests of the people and overseeing how the executive is managing the oil. Also, when the executive is not publishing important information or it is not being disseminated widely enough; the National Legislative Assembly should make it available to its constituents. The judiciary must investigate and prosecute any cases of corruption and mismanagement. The media is responsible for reporting information to the public and for calling on the government to share more as needed. Civil society should also be calling for more information and better government systems as needed, and ideally helping citizens better understand and exercise their rights and oversee how the oil sector is managed.
The Niles: What is the role of the media and the civil society in the oil sector?
Global Witness: The media and civil society should ideally be watchdogs on how oil is managed. However, the oil sector is extremely complex and can be very difficult to understand and report on in a way that is accessible to ordinary citizens. South Sudan’s media and civil society have a real challenge ahead of them in calling for and accessing government information, analysing it, and reporting on it to the public. From everything I have seen in South Sudan and the people I have met, I am certain that the will to do this is here. But it will require a lot of time and focus, and will be difficult to do with the currently limited capacity, manpower, and experience.
The Niles: Based on the knowledge you have; how big are South Sudan’s oil reserves? Is there truth behind last year’s warnings that the oil will last for ten years only?
Global Witness: The government reported recently that it estimated proven reserves to be approximately 1.7 billion barrels. Without new oil finds, South Sudan will stop being a major producer of oil within the next decade. There may very well be new reserves discovered but the predicted decline makes it all the more important that this critical resource is managed responsibly and transparently now, and that newer industries like mining are also being monitored.
