Is Sudan sharing its oil wealth properly?

JOHANNESBURG – Since 2003, when Sudan and the semiautonomous government of South Sudan signed an agreement to form a coalition government and to share their country’s oil wealth, the two former rivals have been bickering over just how much money each side should get.

Now, a report by the London-based rights group Global Witness indicates that there may be a 10 percent discrepancy – worth around $600 million – between how much oil foreign-owned petroleum companies have pumped out of the ground, and how much revenue the government of Sudan has received.

The report comes at a particularly tense time, when the nation is gearing up for national parliamentary elections perhaps this year, after an all-out war between northern and southern tribal groups was narrowly averted earlier this year, and when the Darfur region and parts of the South remain unstable.

“It’s not surprising that there are discrepancies between the oil industry and the government’s oil revenues,” says Alex de Waal, a Sudan expert at Harvard University. “There are suspicions at every step of the chain.”

Longsimmering suspicions

In some ways, Global Witness’s report simply adds firm statistics to what had been long-felt mutual suspicions between the governments of Khartoum in the north, and Juba in the south. The two governments had fought a two-decade-long civil war to a draw, killing millions of civilians along the way, before agreeing to form a unity government and attempt reconciliation.

A report like this one is unlikely to spark off fresh fighting, but it will do nothing to build up the necessary trust required to ease tensions between the two rivals.

Sudan’s reliance on Chinese-owned oil companies to do much of the drilling does nothing to make southern Sudanese feel better.

Chinese firms and Khartoum

Chinese companies, which are often themselves state-owned, do not have any outside auditors or private share-holders to report to, and thus no incentive to keep matters clean.

In the case of the oil revenues along the boundary between northern and southern Sudan – an oil-rich Mason-Dixon line – China simply pumps what it can and computes how much it will give to the government in Khartoum. Khartoum then passes along just over half of those revenues to the South. Unless, of course, it decides to give less.

Southern Sudanese politicians regularly gripe about what they consider to be Khartoum’s untrustworthiness when it comes to oil revenues. Khartoum, for its part, responds that the government of the South is notorious for corruption.

In 2007, I met up with Angelina Teny, a member of the southern-based Sudanese People’s Liberation Movement, who was also the second-most powerful minister in the Sudanese Ministry of Mining and Energy. Ms. Teny told me frankly the government of Sudan simply does not know how much revenue the Sudanese oil industry produces.

"We have an oil revenue calculation committee, and every month, we look at the production and sales figures, and work out the figures for who takes what," she says. But the production and sales figures all come direct from the Chinese-led oil consortium known as the Greater Nile Production Company, to the Ministry of Mining and Energy, without any way of checking whether the figures are accurate.

"Right now, those figures are just based on production, and then shared between North and South," she says. "There isn't much trust, that's why you hear complaining from the South Sudan about the amounts they are getting."

The fact that so little has changed since 2007 – the lack of trust on one hand, and the lack of full-out conflict on the other hand – is both a cause for concern, and a reason for hope.