South Sudan: Blackout highlights slippery oil road ahead. By Mary E. Stonaker

Becoming a new country is no easy feat, especially so in a war-torn region lacking infrastructure and possessing a fragile scaffolding of a government.

The power outage during independence celebrations at the Dr. John Garang stadium on Saturday underscored the sticky management road ahead. Thirty minutes of song-filled darkness preceded the address of North Sudan’s President Omar Hassan al-Bashir. Bashir wished his newest neighbor well and urged cooperation between the two.

South Sudan’s President Salva Kiir invited private foreign firms to increase investments in what the government of South Sudan hopes will be a stable marketplace and operating environment.

South Sudan had been operating autonomously under the Republic of Sudan, splitting lucrative and life-sustaining oil revenues equally. These oil revenues sustained both economies, fuelling 98 percent of the South’s revenues and 65 percent in the North before the split.

Presently, the development of each of the separate energy industries should be treated with immediate attention to ensure not only continued revenues but also continued and improved services to households and businesses.

As many things have yet to be decided between the two, the first matter of business should be addressing the security situation and the very real potential for war between the newly formed nation and its former federal government in Khartoum.

Escalating violence and massing military forces from the North should concern the South as the status of Abyei and other border areas have not fully been agreed upon between the two.

Abyei is one of the most oil-rich areas of North and South Sudan and would significantly position both sides. However, the North has more at stake with significantly fewer reserves now within its borders.

Western investors should be exploring investment offers in South Sudan as China, Malaysia and India already have footholds in the nation.

Though no matter where the investment originates, a new pipeline should be built to significantly decrease the South’s dependence and reliance on the North to serve as a geographic bridge to an ocean port.

Without sharing agreements in place and numerous other factors still yet to be determined, the South cannot afford to cut ties with the North but it also cannot afford to trade its independence for port access.

Financially, the two will no longer share a currency after the North announced their discontinuation of the pound following Saturday’s secession.

A sharing agreement must be settled soon in order to allow both nations to strengthen their own energy industries as well as diversify their now respectively separate economies.

Building a pipeline to Ethiopia would give South Sudan access to a major energy guzzling market but not further onto international markets due to its mountainous landscape. A pipeline through Kenya would give Juba ocean access and would diversify supply routes.

The stability of the relationship between the North and South should not be viewed as stable, even in the future after agreements may allow operational normality to return to the region.

Diversifying export options is crucial for the South as it begins its journey of independent statehood. There is a small teak wood exporting industry but measures should be developed around sustainable exports and imports as well as developing service sectors within South Sudan.

All of this requires skillfully managed energy resources and distribution.

A large majority of the population lives in rural areas with limited or no access to electricity in a country lacking an electricity grid; urban areas rely on generators.

While there are severe disadvantages to the state of the current energy sector in South Sudan, it does provide an almost clean slate on which President Kiir and the newly independent government can mold the state into a leading renewable energy center.

Solar energy currently powers some radio stations as well as over 45,000 households. It holds great potential as an industry and could be a major contributor to ushering in an era of stability and normality.

In August last year, Juba announced its intentions to build 11 hydroelectric dams along the White Nile River and others to supplement its high energy consumption.

Subsidies and tax breaks can be used but must be carefully monitored to ensure efficient allocation in this growing economy.

Foreign firms have, nominally, been invited by President Kiir to invest heavily in the new nation but a framework must be put in place to facilitate such investments.

This is just the beginning of what may be a bright future.

President Kiir spoke frankly to his fellow South Sudanese citizens and the world during the independence celebrations,
‘‘We are now free. No one knows how we suffered along the way. We have been mistreated and called second-class citizens. We shall forgive but we shall not forget. We are inviting the private sector to play a leading role in reconstruction of our country. We have all that is needed to transform this country.”

(Mary E. Stonaker is an independent scholar most recently with the Middle East Institute, National University of Singapore. She can be contacted at [email protected])