South Sudan Passes Oil Bill, Awaiting Presidential Approval

Border areas between Sudan and South Sudan where the proliferation of oil resources is a major cause for conflict. The South Sudan government recently withdrew from the Heglig oil fields after international condemnation., a photo by Pan-African News Wire File Photos on Flickr.

South Sudan passes oil bill, waits president's approval

Mon, Aug 26 2013

JUBA (Reuters) - South Sudan's parliament has passed a long-awaited petroleum bill after years of consultation and waits for final approval by President Salva Kiir, a senior lawmaker said on Monday.

Officials hope the bill, which regulates for the first time how the government can spend oil revenues, will make the African producer more attractive for foreign investment by improving transparency.

South Sudan has struggled to build up state institutions and establish the rule of law since winning independence from Sudan in 2011 after decades of civil war.

The Petroleum Revenue Management Bill was approved in final reading late in July and is now waiting for Kiir's approval, Henry Odwar, head of the petroleum and mining committee, told Reuters.

He said the bill - which Western donors have long urged - will set out rules on how the government can spend oil revenues, the main source of its budget.

Odwar gave no details but previous versions of the bill show that up to 10 percent of the revenues will have go to a new future generation fund, a nest egg for the time when oil will run out. Part of the money must also go to oil-producing communities.

Diplomats see the bill as key to start legislation and transparency in the oil sector - there is so far almost no data available how oil revenues are being spent, with some of the money ending up in corruption. Business deals are often handed out by officials without tenders or clear rules.

Western oil firms mostly shun South Sudan, a war-torn country which seceded from Sudan in 2011 after decades of conflict with Khartoum.

Mainly Chinese, Indian and Malaysian firms operate in South Sudan, which used to pump some 300,000 barrels a day until the government turned off wells in 2012 in a row with Sudan through which all exports must go.

Cross-border flows resumed in April with much lower volumes but Sudan has threatened to close the export pipelines in a conflict over alleged rebel support.

South Sudan hopes to explore with the help of France's Total and U.S. firm Exxon a large area in Jonglei state but rebel and tribal violence has made it impossible to start. It also hopes for a foreign investor to build an alternative pipeline through Kenya or Djibouti to end dependency on Sudan's infrastructure.

(Reporting by Ulf Laessing and Andrew Green, editing by William Hardy)