United Nations experts have reported that South Sudan is on the verge of finalizing a substantial $13 billion loan from a United Arab Emirates-based company, despite facing challenges in managing debts backed by its oil reserves. The loan, which would be the largest oil-backed loan in South Sudan's history, is set to be provided by the Hamad Bin Khalifa Department of Projects.
The experts highlighted that servicing this loan could potentially consume a significant portion of South Sudan's revenue for many years, contingent on oil prices. The Dubai-registered company, Hamad Bin Khalifa Department of Projects, has not been reachable through traditional means of communication, and the UAE Mission to the United Nations has refrained from commenting, citing the company's private status.
South Sudan, a nation heavily reliant on oil for its economic sustenance, gained independence from Sudan in 2011 after enduring a prolonged civil war. Despite achieving independence, South Sudan faced its own internal conflict from 2013 to 2018, which was resolved through a power-sharing agreement between President Salva Kiir and Vice President Riek Machar.
The country is under international pressure to expedite the implementation of the 2018 peace deal and prepare for upcoming elections. South Sudan's oil production, as per the U.S. Energy Information Administration, averaged around 149,000 barrels per day in 2023. However, challenges such as ongoing conflicts in Sudan and operational disruptions due to natural disasters have hindered the country's oil exports.
The loan agreement with the UAE company, signed by South Sudan's finance minister, outlines that a significant portion of the funds will be allocated to infrastructure projects. The loan, split into tranches, will be secured against crude oil deliveries over a 17-year period following a grace period.
South Sudan's financial obligations related to oil have come under scrutiny, with the country facing legal repercussions from past loans. Notably, South Sudan was ordered to pay over $1 billion in a case related to a loan from Qatar National Bank. Additionally, outstanding debts to financial institutions from previous oil deals have further compounded the country's financial challenges.
Amidst these financial complexities, South Sudan is grappling with a humanitarian crisis, with a vast majority of its population requiring urgent humanitarian assistance. The country has also witnessed an influx of refugees fleeing neighboring Sudan, adding to the complexity of providing aid to those affected by internal conflicts.
