Financial Transparency Coalition

Global Witness

JUBA, South Sudan – The new state of South Sudan must guarantee transparency and accountability in its oil sector in order to demonstrate its commitments to sustainable development and combating corruption, said Global Witness today. The call comes on the eve of the South’s independence from the north on July 9.

The government of South Sudan is currently in the process of developing a Petroleum Law which will form the legal framework governing the oil sector beyond secession. In order to ensure the oil is managed transparently and promotes equitable development, it is imperative that the new legal framework requires:

• The detailed publication of production and disaggregated revenue data.
• The full publication of contracts.
• Continuous auditing of the sector by the Auditor General.
• Annual auditing of the sector by a credible, independent auditing firm.
• The active participation of civil society in monitoring revenues and processes.

“South Sudan is in a unique position in being able to create a completely new legal framework for their oil sector,” said Global Witness campaigner Dana Wilkins. “In order to ensure the sector is managed responsibly and in a way that benefits all citizens, the new law must contain detailed transparency and accountability provisions from the start.”

The current wealth-sharing arrangement, a 50:50 split of revenues from southern oil, officially concludes on July 9. Since the end of last year, both sides have been engaged in negotiations over how they will manage the oil sector post-secession. Progress at these negotiations has been slow and it was announced earlier this week that they would be continuing beyond the expiration of the current deal that ends tomorrow.

The two states must immediately come to an interim agreement on how to transport southern oil through the northern pipelines and port until a final deal can be agreed. The absence of an interim deal could result in either side attempting to shut down the flow of oil, a move which would greatly increase the risk of a return to war.

Critically, for any interim or final agreement to be sustainable, it must ensure that transparency and independent verification mechanisms are guaranteed from the outset so that both sides can trust they are receiving their due revenues.

“From everything we’ve heard from inside the negotiations, it is highly unlikely that when a new oil deal is agreed the text will contain explicit requirements for transparency and accountability,” said Wilkins. “This would be a very dangerous omission, and one that could seriously undermine the prospects for long-term peace in the region.”

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Contact:

For more information contact Dana Wilkins in the UK on +44 (0)7808 761 570, dwilkins@globalwitness.org.

Note to editors:

(1) A lack of transparency in the management of the current oil deal has fuelled mistrust between the north and south, risking a return to conflict when the south cited concerns it was being cheated out of revenues as one of the primary reasons for its temporary pullout from the shared government in 2007. Evidence suggests that the south’s concerns about the implementation of the agreement are not unfounded as Global Witness’ September 2009 report, Fuelling Mistrust, identified significant and continued discrepancies between oil production figures published by the Sudanese government and those published by the main oil company operating in the country, CNPC. The differences in reported production figures varied between 9-26% for different southern oil blocks.

(2) For more detailed information on the transparency and independent verification mechanisms which must be included in South Sudan’s new petroleum law, see Global Witness’ May 2011 briefing paper, Affirming Accountability.

(3) For detailed information on the transparency and independent verification mechanisms which must be included in the new north-south oil deal, see Global Witness’ October 2010 briefing paper, Tangible Transparency.

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The Task Force on Financial Integrity and Economic Development addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.

Global Witness is a  coordinating committee and founding member of the Task Force on Financial Integrity & Economic Development .

For additional information please visit  http://www.financialtransparency.org