South Sudan has for years struggled with accountability and transparency in the oil revenue collections. Billions of dollars have been lost in trying to shape the country’s oil economy. As such happens, the World Food Programme in South Sudan has offered to support the country’s unity government in its efforts to regulate fuel imports purchased by private firms by establishing a presence for the National Revenue Authority (NRA) in neighboring Kenya to enforce taxes and levies on the quantities of petroleum entering the country.
The country is rich in crude oil, despite having oil deposits, its sad to note that South Sudan imports fuel and other petroleum products from Kenya’s Eldoret region, where commercially owned tankers are loaded for transit at the Kenya Pipeline Eldoret Depot and delivered across the borders to various destinations in South Sudan.
Makur disclosed that the coalition government formed last February is working to implement governance and economic reforms enshrined in the 2018 revitalized peace deal to create transparency and accountability.
He further said that the nation’s economic hardship is due to years of conflict that broke out in December 2013.
With the looming challenges, South Sudan depends 98% on oil revenues to finance fiscal expenditure but mismanagement of oil revenues, conflict and the coronavirus affected production in northern oil fields with production falling below 300,000 barrels per day (bpd).
Currently, production is at 175,000 bpd and it is expected to rise within two years to the previous 300,000 bpd before the outbreak of conflict.
On a good note, South Sudan is a member of the East African Community (EAC), a taxation treaty that unifies the countries in the region under a joint revenue system. As an incentive, the treaty exempts WFP from taxation for fuel purchased for humanitarian use, while taxing fuel imports for all other purposes.
But without a robust and efficient monitoring and tracking system for fuel consumption, some private firms in the world’s youngest nation have been evading tax on fuel imported for commercial consumption by wrongfully declaring all their purchases are on behalf of humanitarian organizations.
Deputy Finance Minister in the transitional unity government Agok Makur said Mismanagement of oil revenues is undermining development in South Sudan and the oil wealth has been misused.
To counter this malpractice, WFP supported the country’s NRA by funding a capacity-building mission for NRA delegates to the Kenya Revenue Authority during which NRA delegates were trained by their Kenyan counterparts in customs processing procedures and best practices.
The mission resulted in an agreement to establish a monitoring office in the Eldoret region to monitor petroleum products and their transport into South Sudan as well as track the payment of duties and collection of revenues at the border. The goal is to assess the fuel requirements of humanitarian projects in South Sudan so that companies attempting to claim higher amounts for tax exemption are identified.
Buol Jacob AjakKuany, a government liaison officer who helped coordinate the visit of the NRA delegation to Kenya also said, “This is a good initiative by WFP to protect the humanitarian community and humanitarian operations. It supports the government of South Sudan in its efforts to strengthen its regulatory authority and shows the cooperation between UN agencies and the government with the shared goal of helping the people of South Sudan,”
In late June this year, Ter Manyang, executive director of the Center for Peace and Advocacy (CPA), admitted that South Sudan is poor due to lack of proper management of oil revenues and leadership is not aware of the need to save oil revenues in a future fund like other countries.
Similarly, Professor Abraham Matooch, an economic analyst and vice chancellor of Dr. John Garang Memorial University in Jonglei state, said that oil money is not enough to solve the problems facing South Sudan.
He said that the country has oil money but people should not expect much from it because its natural resources and sale in the form of crude oil and what is coming out of it cannot make the country rich without focusing on other resources.
He advised the government not to depend on oil too much but to strengthen other sectors like non-oil revenue collection.
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