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Oil can be a winning lottery ticket for a country, transforming economies wherever it's found. But what happens when you can't get the oil out?
A perfect storm is gathering in South Sudan.
Oil fueled Sudan's bloody two decade long civil war, but now for the black goal to keep flowing to China, its main buyer, both sides need each other.
South Sudan, the world's youngest country, depends on oil to fund its economy, but a blocked pipeline has left the already crisis rocked country rapidly running out of money and with the world's attention elsewhere, unable to get enough help.
Uncertainties in the face of critical political events necessary for a peaceful transition a rapidly deteriorating economy, exacerbated by the in critical oil infrastructure and oil revenue. Time is running out, and the costs of inaction at this juncture are too great.
On this episode of The Next Africa podcast, we'll look at what's gone wrong in South Sudan and how the impacts of a failing state are being felt.
On the streets of the nation's capital.
I'm Jennifer Zabasajep and this is the Next Africa Podcast, bringing you one story each week from the continent, driving the future of global growth with the context only Bloomberg can provide. Joining us this week is our reporter at large, Simon Marx. He's been reporting on this story for Bloomberg News and he's with us now. Hi, Simon, how are you hi?
That great?
Thanks thanks for being on the podcast this week.
So let's just start with the little history of South Sudan. It's known as the world's youngest country. How did it manage to gain its independence just a little over a decade ago?
Take us back to that.
Yeah, so South Sudan, as you say, it does have this tagline as the world's youngest country. It got its independence in July twenty and eleven after a referendum was held in the country, and this happened after long standing tensions with Sudan in the north. Obviously Sudan South Sudan used to be unified, but because the capital Khartum controlled all the finances and took a lot of the money from the South, which is oil rich, there's always been
this standoff between these two countries. Over who gets the lion's share of that, and so that led eventually to a referendum and the country's independence.
You talked a bit about this, but the natural resource what makes this country really rich in theory is oil, right, But how much oil are we we actually talking about here?
Yeah, In the case of South Sudan, oil revenues really account or nearly all government revenues.
It's over ninety percent of what the government earns.
Comes from a series of oil fields, mainly in the north of the country and in total, before war broke out in neighboring Sudan last year, it was producing about one hundred and fifty thousand barrels a day of oil and that was going through a pipeline all the way to the Red Sea coast where it was exported out
of Port Sudan. Earlier this year, in around February, there were rumors that began perculating that the oil pipeline just inside Sudan, its northern neighbor where there's a civil war underway.
Had burst and that oil production had stopped.
And eventually information came out from the government that indeed there had been a blockage in the pipeline that was caused from a lack of diesel to run generators and equipment that thinned the crude because South Sudan's crude oil is actually very sick and access to this area was obviously very difficult and engineers initially anyway, could not get there to fix the problem.
And this has been several months that this has gone on, Simon.
Correct, Yeah, so at least since February.
Confirmation of this rupture came through in February via Sudan's Minister of Energy and Petroleum, and ever since there's been very little oil getting out and that has resulted in pretty pretty disastrous eventualities for the government.
Yeah, Simon, maybe you can talk us through that, because surely it's trickling down to everyday people, South Sudanese people.
How is this being materialized, I guess on the ground.
Yeah, So, prior to this happening, South Sudan was already in a pretty disastrous situation. You know, it's been through years of civil war after its independence. Civil war broke out in South Sudan between its president and Vice President Rick Macha, and despite there being a peace deal in twenty eighteen, there's been a lot of violence in the country ever since that date, however, what's happened with the oil revenues has just compounded and already terrible humanitarian situation
in South Sudan. It's a country where millions of people were displaced even before this oil problem. But you know, we've had access in the capital Juba. We're really seeing a complete meltdown of the civil service of public amenities, from hospitals to schools, where teachers are no longer going
to work because they're not getting their salaries. We've spoken to teachers who are now just working odd jobs on the site, forming their own little restaurant, of their own little shop at the side of the road, for example. So that's resulted in kids not going to school. Hospitals where there used to be power are now very often facing outages. That's resulted in some cases loss of life inside hospitals due to the lack of power. So yeah, it's a really terrible situation.
And how then, Simon, I mean, if what you're describing is the situation on the ground, how is the government then functioning? What is the government doing at this point about the deteriorating situation in the country.
So the South Studentese government, in order to try and alleviate the problem with its public finances, has reached out to foreign players, mainly in the Gulf. We've spoken to officials and diplomats who are aware of what South Dudan has been up to, who have confirmed that there's been senior officials visit Dubai, for example, in the United Arab Emirates. It's to date putty unclear if they've managed to get any funds out of such countries. It does seem though
that they're having to cut costs everywhere. There's even in ministries where they had air conditioning.
Uba is a very hot city.
Everything's turned off and civil servants just don't turn up to work and they're unable to pay in many cases salaries for your average state worker. So the state pretty much is on the verge of bankruptcy.
Stick with us, Simon. When we come back, we'll look more into what daily life is like at the moment in South Sudan and whether there's any hope for improvement.
We'll be right back. Welcome back today.
On the podcast, we're digging into South Sudan and how a broken oil pipeline has left the country desperately short of any income. Simon Marx has been following this story very closely. Simon, you were taking us through a lot of the stories of daily life for people there. I wonder if there's any person or story that really stuck out to you that you think really describes or encapsulates the situation that South Sudan is in right now.
There are many stories on the ground there of people suffering to access basic services that the government ordinarily would provide. There was one story when we spoke to a woman,
her name is Sarah at Teng. She was stood outside the Al Sabah Children's Hospital in the capital where she was trying to get access to medicine for her one year old daughter who had problems respiratory problems, and she told us that essentially there was no medication left inside the hospital and she'd been going back to the hospital continuously since February when the oil pipeline ruptured, to try and get some medication for her.
Daughter and just hadn't been able to do it.
And I think, you know, her situation really encapsulated some of the desperation on the streets of Juba, the capital of this country, and in theory, the place where you would go to get help if you have a sick child.
Would you say that there's an awareness from the international community of just how bad it is and how pressing AID needs to get into South Sudan.
I think, you know, inside NGOs and UN agencies there is a sense of how disastrous the situation is there, but unfortunately it's totally overshadowed by what's happening just north in Sudan, where there's a full blown civil war that's been going on for over a year now, and all the focus is there, where a famine has been announced and tens of thousands of civilians are dying amid the warfare there. So in comparison, unfortunately, South Sudan really is somewhat forgotten about that.
There also seems to be a.
Fair amount of apathy around trying to make this country actually work. There was so much hope in the beginning to create this new nation, and two years after its independence it fell into civil war. Orn's never really managed to hold proper elections and get the ball rolling on forming its state. So unfortunately, the people I talk to, though, there is quite a lot of simply almost giving up.
And that's even despite the fact that potentially there is an outcome in which the oil pipeline is fixed and it's turned back on again. Are there still people that are holding out hope for that eventuality?
Yes, there is some light at the end of the tunnel.
Very recently, officials from South Sudan's Petroleum Ministry have visited Port Sudan to inspect equipment at the port there ahead of what they say is an imminent resumption of oil production. But you know, we're still waiting. They say it could happen any day now. Officials within the consortium the oil operators do also confirm that aiming at end of October beginning of November.
So then what's next to look out for, Simon? Is it when potentially the taps turn back on. What is it that you're closely watching?
Yeah, I think the next thing to watch it will be if the oil can flow again, But also what happens to the money that the government earns as a result of this, and if they start providing services to its people or if they continue to take advantage of some of that money for themselves. One aspect of this whole thing that we spotted is everyone who's been investing
in oil working in the oil industry. When that sector dried up, they began investing in land in Jubrn and this has produced a spike in land praises in some cases. And we've reported that to these businessmen involved in the oil sector at some points coming into the city with bags of cash to speculatively get their hands on land. So yeah, you can see the sort of other spillover effects.
Through this from the lack of oil production.
Would you say there's a hope amongst the population that things could potentially turn around soon for them.
I think there's a lot of dissatisfaction generally amongst the public in the current government.
Elections were supposed to be held this year.
The country's partners, including the US, are not endorsing elections this year because they feel they won't be free and fair, and so the population definitely they want services back, but I think they also want more responsible leaders running government to go hand in hand with that.
And you can read Simon's piece for Bloomberg City Labs on Bloomberg News platforms right now.
Here's a few other stories we're following in the region.
Mosim began.
Opposition politician Venancio Mundlin has called for a country wide strike to protest preliminary results that put him in second place in the country's presidential election. He urged supporters to paralyze the country, according to a video posted to his social media channels, including YouTube, on Wednesday. Mundlin has repeatedly said he was winning, and the US has offered intelligence sharing to both the DRC and Rwanda in a bid to bring about a ceasefire in the conflict that has
displaced more than two million people. US officials have touted the success of their intelligence diplomacy, but it hasn't yet led to a stable end to hostilities. You can follow these stories across Bloomberg, including the Next African Newsletter. We'll put a link to that in the show notes. This program was produced by Adrian Bradley. Don't forget to follow and review this show wherever you usually get your podcasts.
I'm Jennifer's Abasaja. Thanks as always for listening.