South Sudan borrowed $200 million from oil operators and postponed repayments on domestic loans after the country’s six-month-old conflict cut crude output, the government’s main source of revenue, Finance Minister Aggrey Tisa Sabuni said.
Loss of about a third of revenue led the government to seek advances from oil producers in South Sudan over the past five months, Sabuni said today in an interview in the capital, Juba. The government also asked to delay payments due on loans to commercial banks and shelved plans to improve the country’s infrastructure, he said.
The loans “helped to bridge the gap” and will be repaid “in the course of time,” Sabuni said, without naming the oil companies responsible. South Sudan’s government is living “hand to mouth” with crude revenue being used to pay salaries and maintain public services, he said.
Oil output in the world’s newest nation has fallen by at least a third to about 160,000 barrels per day since fighting erupted on Dec. 15 between factions loyal to President Salva Kiir and his former deputy, Riek Machar. The conflict has left thousands of people dead and forced more than a million to flee their homes, according to the United Nations.
The country’s “heavy dependence” on oil revenue is “a very highly risky situation to be in, but that’s the reality,” Sabuni said. Production at oil fields in Unity state remains frozen after a shutdown in late December, while output from Upper Nile, the only state still pumping crude, is down by as much as 35 percent since the conflict began, he said.
South Sudan’s crude is mainly pumped by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp. The companies evacuated some staff from the country due to the conflict.
South Sudan has to “restore law and order” and stop the fighting to “create the required investment climate in order to move forward,” Sabuni said. “At the moment we’re still in the forest.”