South Sudan resumed oil production on January 8, 2025, after a year-long suspension due to conflict in nearby Sudan. Oil is critical for the country’s economy, contributing over 90% of its revenue, yet skepticism exists regarding its benefits for citizens. Analysts warn that historical patterns of corruption and mismanagement could undermine potential advantages from this restart amid ongoing economic challenges.
South Sudan, the youngest nation globally, has recently resumed oil production after a year’s halt due to ongoing conflict in Sudan. This restart, initiated on January 8, 2025, brings mixed feelings regarding its potential impact on the nation, which continues to face severe economic challenges, corruption, and institutional weaknesses. The Minister of Petroleum, Puot Kang Chol, maintains optimism that this will revitalize the economy. “We believe that with resumption, resources will be back on the table.”
Chol confirmed that oil production would restart at facilities operated by the Dar Petroleum Operating Company (DPOC), a consortium with a mere 8% government stake. Meanwhile, China and Malaysia are the largest stakeholders, controlling 41% and 40%, respectively. The restart follows the lifting of a ban on oil exports from South Sudan, initiated by Sudan, which cited force majeure due to its ongoing civil war.
Initially, South Sudan targets an oil output of 90,000 barrels per day, significantly lower than the pre-shutdown figure of over 150,000 barrels. Chol indicated plans for increased production if feasible. South Sudan possesses three-quarters of the former Sudan’s oil reserves but depends on Sudanese infrastructure for exporting oil to global markets. Oil exports account for over 90% of South Sudan’s national revenue.
The resumption of oil production offers the Juba government a critical lifeline amid a substantial economic downturn. However, public sentiment remains skeptical. Analyst Boboya James Edimond described the situation as a “mixed blessing,” indicating that while the government may benefit, the citizens tend to see little improvement.
Historical patterns show that increases in oil revenues often exacerbate corruption and societal inequalities, casting doubts on whether the resumption will positively impact the populace. Edimond emphasized that for the situation to improve, oil resources must be managed in a transparent and accountable manner to benefit the citizens.
Freelance journalist Patrick Oyet added that the benefits of oil production in South Sudan rarely reach the public, with widespread poverty and inflation persisting. Many civil servants have gone unpaid for over a year, indicating a failure of government institutions. South Sudan’s economy has contracted significantly during the shutdown, with a 5% GDP reduction and a 70% decline in the oil sector.
Despite its oil wealth, South Sudan’s national budget stands at a mere $1.3 billion, the lowest in East Africa compared to neighboring countries. Analysts attribute the economic woes to poor governance and weak institutions despite early independence prospects of oil benefiting all citizens. Geopolitical factors, including relations with major powers, have discouraged foreign investments in the oil sector, compounding the nation’s financial difficulties.
Edimond recommends diversification into other sectors like mining, forestry, and trade to build a more resilient economy less reliant on oil. He raised concerns about possible misallocation of oil revenues to fund factions involved in the ongoing Sudanese conflict, risking the stability of South Sudan and its essential oil infrastructure.
While oil production’s resumption might bring some hope amidst economic struggles, it also threatens to expose longstanding governance issues. Edimond succinctly stated, “there’s only hope if the oil can be utilized to eradicate poverty.”
South Sudan is a fledgling nation that gained independence from Sudan in 2011 after numerous conflicts and negotiations. The country is rich in oil resources, possessing about three-quarters of the former Sudan’s oil reserves, but remains heavily reliant on exporting through Sudanese pipelines. Its economy, largely dependent on oil exports which constitute over 90% of its revenue, has faced significant setbacks due to prolonged conflicts and poor governance. The recent resumption of production marks a crucial moment for South Sudan, amidst continuing concerns about corruption, societal inequality, and economic mismanagement.
The resumption of oil production in South Sudan signifies a critical juncture for the nation’s economy, which has severely suffered due to prolonged conflict and mismanagement. While it may provide an immediate boost to the government, the potential benefits for the broader populace remain uncertain, driven by a historical context of corruption and inequality. Strategic governance and diversified economic ventures are essential for transforming oil wealth into tangible improvements in the lives of South Sudanese citizens.
Original Source: www.dw.com
