Home | News    Saturday 7 April 2012

South Sudan parliament favours oil industry secrecy over transparency

April 6, 2012 (JUBA) - South Sudan’s parliament has voted against a bill seeking to make contracts and information about the young country’s oil industry more transparent by making it available to the public.

The lawmakers’ decision has created some public criticism. As well voting against the Petroleum Bill, which would have required the government to provide justifications for oil contracts with individual companies, MPs also voted against publishing sales and production data.

The decision comes after the second reading of the amendments to the Petroleum Bill, by Henry Dillah Odwar MP, chairperson of Energy Committee. on 2 April.

Around 98% of South Sudan’s budget was generated by oil until a dispute with north Sudan over transit fees led to Juba halting its 350,000 barrels per day production of crude in January, threatening the economies of both nations.

Since South Sudan’s independence in July 2011 the oil fee dispute had not been resolved, with the landlocked country having no short-term option but to export through Sudan. From December, until when the pipes were turned off in late January, figures provided by South Sudan indicate that over 6 million barrels of southern crude has been confiscated by Khartoum. This figure has not been publicly confirmed or denied by Sudanese officials.


During deliberations, George Bureng, an SPLM member of the National Assembly representing Central Equatoria State said he would prefer to see that oil related information be limited to only relevant institutions not the general public because information about oil could be used against the country by her enemies, referring to Khartoum.

“It is good to allow [the] public [to] access any information but sometimes there is sensitive information which cannot be made available to the general public”, Bureng told the house.

Bureng, a member of the country’s ruling Sudan People’s Liberation Movement (SPLM), described information as “power” but added that "it can also bring a disaster if it is not used properly."

He advised parliament that "we must be careful with the way we need to use it, especially when it is sensitive information. Information related to oil as such needs limited access, especially that it is the information related to oil which is now the contested hot cake”, he said.

Oil fees are one of the main issues being discussed by Sudan and South Sudan at African Union-chaired talks in Addis Ababa, Ethiopia.

The MP, however, suggested researchers could be allowed access to the information in some circumstances.

Another MP, Aleu Ayeny Aleu, a chairperson of the parliament’s public security committee said making “sensitive information” available to the public would undermine national security as the information could be used against South Sudan.


However, Henry Dillah Odwar MP, chairperson of the parliament’s energy committee, told Sudan Tribune on Friday that although observations by MPs could be logical given the current political standoff with Khartoum, it was still important that members recognise the commitment of the government to transparency, accountability and fighting corruption.

Odwar questioned how publication of oil production volumes and revenue would affect national security or its oil sector, instead of attracting foreign investors and international financial institutions like the World Bank and International Monetary Fund to provide financial assistance to the country.

He explained that the committee made the recommendations in line with the constitutional requirements against corruption President Salva Kiir Mayardit’s pledged in September 2011 that his government will ensure and promote transparency and accountability in the oil sector.

In December South Sudan joined in the Extractive Industries Transparency Initiative (EITI), seen as an important step in fighting against corruption which has become endemic in South Sudan since it gained autonomy from North Sudan in 2005 as part of a landmark peace deal.

The EITI is an international body that works to promote transparency in resource-rich countries through verification and full publication of company payments and government revenues from oil, gas and mining. Odwar argued that limiting information to institutions and very expensive industry databases would deny the rightful owners - South Sudanese citizens - access to information relating their own natural resources.

Making this information available "very important", he said because "it allows the citizens know how many barrels are produced, sold, and for how much they are sold."

"This information is also needed so that citizens are able to know and to be sure that contracts have been awarded fairly and that the government has gotten the best possible deal”, he explained.

South Sudan’s parliament also debated an amendment that would guarantee citizens free access to information from the Ministry of Petroleum on how natural resources are being managed. A further amendment discussed would have given auditors a mandate to continuously monitor the petroleum sector to identify real-time corruption or mismanagement.

James Mafer James Diar of the Unity Community Organization and Enlightenment Trust (UCOET), said that the attempt by some members of parliament to limit public access to information about oil resources demonstrated an intention to illegally profit from the industry.

“The intention of these people is that they want is that to steal oil resources. What else could be another reason? It means that they want to steal public resources because they will only be the one to know how much is being produced. How much is sold and all other data. This is a clear corruption”, Diar told Sudan Tribune on Friday.

Diar said that South Sudan’s parliament was copying the systems of government in Sudan that had provoked the 21 year war between the SPLM against successive Khartoum regimes.

From 2005 until July 2011 the SPLM shared South Sudan’s oil 50:50 with north Sudan and formed a power sharing government in Khartoum with the National Congress Party for a six year interim period leading up to the referendum on independence last year.

Diar said: “I really do not understand why the same people who used to complain about Khartoum [are] not able to release information related to oil during the interim period would now do the same to their own people.”

Dana Wilkins, the lead on oil in South Sudan for Global Witness, an international non governmental organisation working on natural resource governance, corruption, and conflict around the world, has come out in supportive of MP Diar and the amendments proposed by the fenergy committee.

She argued that recommendations are commendable because they observe commitment to good governance.

“Transparency in the way the oil sector is managed in no way threatens national security. The only people that this ‘national security’ argument will protect are individuals or companies seeking personal enrichment at the expense of the South Sudanese people.”

She gave African examples of similar transparency, explaining that Ghana’s petroleum legislation includes robust transparency requirements; Botswana’s diamond wealth management is good regional model, particularly its strong auditing systems; Ghana, the DRC, and Liberia all publish oil contracts.

Wilkins’ remarks made in an e-mail to Sudan Tribune on Thursday added that the best worldwide examples include Brazil, which she said is incredibly transparent about all aspects of its oil sector and this has translated into strong economic growth and much greater accountability in government.

She also made mention of Norway as being a world leader in responsible oil governance and transparency. Before the shutdown the Norwegian government had been working with South Sudanese authorities and companies to improve the efficiency the country’s oil wells.

Countries signed up to the Extractive Industry Transparency Initiative already publish or are currently getting systems in place to publish audited revenue data annually including more than 20 countries in Sub-Saharan Africa.

Kathelijne Schenkel, of the IKV Pax Christi/ECOS (European Coalition on Oil in Sudan) reacted to the bill by telling Sudan Tribune: “Though the draft Petroleum Bill is quite a strong document, its effectiveness can only be measured by the people who are the real owners of South Sudan’s petroleum wealth. Transparency therefore is very important, so the people can verify that their Government is indeed managing the oil industry in their best interest.”

Anthony Venables, a Professor of Economics at Oxford University and the Director of the Oxford Centre for the Analysis of Resource Rich Economies said in an email to Sudan Tribune that: “All the evidence points to the importance of transparency in successful resource management. Policy made in an environment of secrecy and without proper debate and discussion is all too often bad policy.”

In December 2011 the US Secretary of State Hillary Clinton said that “Nowhere will the transparency and accountability that President Kiir has promised be more important than in managing South Sudan’s abundant natural resources. We know that it will either help your country finance its own path out of poverty or you will fall prey to the natural resource curse, which will enrich small elite, outside interests, corporations, and countries, and leave your people hardly better off then when you started.”