Oil shortfall hits rebuilding in South Sudan
August 22, 2007 (JUBA, Sudan) — Lower than expected oil exports this year have left the government of South Sudan struggling to find cash for urgently needed infrastructure development following years of conflict, officials said.
More than 95 percent of the semi-autonomous region’s income comes from oil revenues, which finance ministry figures showed fell from $76 million in January to $28.9 million in March. Revenues are now rising, with $125 million expected in July.
“The problem is that the oil revenues we were expecting (this year) have not arrived as expected, based on the budget line,” the south’s Finance Minister Kuol Athian told Reuters.
“There was a drop but now it is rising,” he added.
Sudan’s oil wealth is shared under a January 2005 peace deal that created the southern government and gives the region the right to vote on secession from the north by 2011.
A World Bank-led report obtained by Reuters blamed the sharp fall in exports in part on problems finding a market for Sudan’s new acidic Dar blend crude, which was discounted early in 2007.
Athian told Reuters the south was seeking other income sources to temper its reliance on oil, with the government establishing an account to collect 50 percent of cash generated from customs, immigration and taxes in the south.
The government will also cut spending, chiefly by demobilising 25,000 soldiers from its huge post-war army, into which militias were incorporated under the peace deal. Finance ministry official Silvano Malith said soldiers’ salaries had cost the government $76.5 million in June.
A crackdown on “ghost” civil servants, thousands of non-existent employees on the government payroll, is also planned.
The budget shortfall means urgently needed development projects cannot go ahead in the south, which is largely devoid of infrastructure after decades of civil war.
Donors help mostly through the World Bank-led Multi Donor Trust Funds, which require the south Sudan authority to pay $2 for every $1 it receives from the MTDF.
“(The government) has been unable to pay its part due to delays in the oil revenues,” said Athian.
(Reuters)