UPDATE 1-South Sudan to borrow about $1 bln from oil firms in 2014/15 -budget

Wed Jul 2, 2014 11:25am EDT

Related Topics

(Adds details from budget, background)

By Carl Odera

JUBA, July 2 (Reuters) - South Sudan plans to borrow 3 billion South Sudanese pounds, about $1 billion at the official rate, from oil companies during the coming financial year to help cover repayments on domestic loans and previous oil advances, the government said in a budget document.

South Sudan has turned to oil companies before to plug a gap caused by a drop in oil output, the main source of cash for a nation mired in conflict since mid-December. Fighting between rebels and the government has damaged some fields.

The budget anticpates revenues of 11.553 billion pounds for the 2014/2015 fiscal year, which is starting in July. About three-quarters of that is due to come from oil earnings, according to the text of the finance minister's speech dated June 25.

A lawmaker told Reuters it was presented to parliament on Wednesday.

From those revenues, the government said, 3.711 billion pounds would be paid to cover domestic loans and oil advances.

"In order to offset the negative impact these repayments will have on our budget financing next financial year, we intend to borrow a further 3 billion pounds from the oil companies," Finance Minister Aggrey Tisa Sabuni said in the speech.

He said this borrowing was "in effect rolling our obligation over until such a time as our budget is on a more sustainable financial footing."

The amount is equivalent to about $1 billion at the official rate of 2.9623 South Sudanese pounds to the dollar. Most businesses have to operate at an unofficial rate of a little more than 4 pounds to the greenback.

The minister did not name the oil companies which would be approached. The main investors in South Sudan include China National Petroleum Corp (CNPC), India's ONGC Videsh and Malaysia's Petronas.

The budget document detailed previous borrowing from companies, saying that as of June 25 it still owed CNPC $256 million and trading firm Trafigura $78 million.

The document said projected revenue was based on oil output's rising to 260,000 barrels per day by the end of the year from 180,000 bpd at the start of the year, an apparent reference to the fiscal year although it did not specify.

An oil ministry official last month put production in late June at about 160,000 bpd.

($1=2.9623 South Sudanese pounds at the official rate) (Reporting by Carl Odera; Writing by Edmund Blair and Drazen Jorgic; Editing by Robin Pomeroy)

FILED UNDER: