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

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

The panel of experts said in a report to the UN 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 on South Sudan, said in the oil section of the report obtained this week by The Associated Press that “service on this loan is likely to consume the majority of South Sudan’s revenue (for ) would consume many years, depending on oil production. Prices.”

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

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

Shortly 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 deal and formed a coalition government. South Sudan is under pressure from the United States and other countries to speed up implementation of the 2018 peace deal that ended the civil war and prepare for elections.

According to the latest update from the US Energy Information Administration, South Sudan produced an average of about 149,000 barrels of liquid fuels per day in 2023. The landlocked country uses Sudanese pipelines to transfer its oil to Port Sudan for shipment to world markets, in accordance with the Sudanese government, which pockets $23 per barrel as a transit fee for oil exports.

South Sudan’s 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 that oil wells, which were submerged by heavy flooding during the last rainy season, were not yet fully operational.

The oil section of the expert report states that documents for the company’s loan from the UAE, signed between December and February by South Sudan’s finance minister, indicate that the loan was split into tranches.

According to the documents, about 70% of the loan should be allocated to infrastructure projects, with the first payment amounting to more than $5 billion, the panel said. After a three-year grace period, “the loan will be insured against the supply of crude oil for a period of up to 17 years.”

The panel of experts asked serious questions about South Sudan’s oil debts.

South Sudan lost a case at 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 yet reached a decision on how much the government should pay, but The Sudan Tribune reported on Sunday that South Sudan had been ordered to pay more than $1 billion.

The panel of experts also said it had confirmed that the government owes $151.97 million to the East and Southern African Trade and Development Bank as a result of a previous oil-related deal.

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

UN experts say the South wants to secure an amount of $13 billion. just weeks after his former rival became deputy, he proposed a further postponement of the election.

The panel of experts said this would be “an important milestone” and warned that the country’s leaders have little time “to ensure that divergent expectations do not fuel further tensions and conflict.”

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