Nothing signed yet: Bak denies $3b deal with US firm

Nothing signed yet: Bak denies $3b deal with US firm

The Minister of Finance and Planning, Bak Barnaba Chol, denied a statement posted by the Presidential Press Unit over the weekend that South Sudan had struck a $3 billion deal with American company to buy shares from PETRONAS. 

The Presidential Press Unit noted in a statement that Bak had revealed that South Sudan had reached a $3 billion agreement with “Caltech Investment” to purchase shares from PETRONAS, which is about to pull out its operation in South Sudan.

The statement further revealed that the minister said that $1.2 billion would be invested in the oil sector, while the other portion would be injected in vital infrastructure projects such as roads.

According to the alleged deal, the American-based company would partner with the South Sudan government to purchase and take over the shares of the Malaysian state-owned company, PETRONAS, as one of the ways of tightening the grip in the oil sector and turning things around.

However, yesterday evening Mr Bak called for a press conferencing to clarify the issue. He said South Sudan had sought loan from Caltech Trading Corporation and not Caltech Investment named in the statement issued by the PPU.

He changed tune claiming there was no deal reached between South Sudan and Caltech Trading Corporation to go for a joint venture in buying the shares of the oil company. He noted that although he had been in contact with the company since last month on how to cooperate, nothing has been formalised in a signed deal

“We have not signed a deal with Caltech Corporation. What happens if you want to borrow money from an entity or financial institution? It goes through a process,” Bak claimed.

“As of now, no commitment has been made,” Bak said.

Bak appealed to the public to remain confident, adding that reaching a deal requires a lot of processes and is not a one-day event.

“The government of South Sudan follows a transparent and thorough process when engaging in significant investment agreements. Any such agreements would require careful consideration, including legal and financial due diligence, as well as approval from relevant government bodies,” Bak said.

“We understand the importance of providing timely and accurate information to our citizens and the international community. Therefore, we assure that the developments related to this matter will be communicated through official channels in accordance with our nation’s transparency and accountability standards,” he added.

Meanwhile, he accepted that negotiations are underway for South Sudan to acquire a long-term loan from Caltech Trading Company.

“Initially, we requested Caltech to provide us with $3 billion, which is true, but they have yet to accept or confirm,” he said.

Bak added that the money was requested as a long-term loan that would be paid over a period of 13 years.

He claimed that the reason for the loan is to help South Sudan purchase shares from PETRONAS and use the other fund for infrastructural development.

He claimed that what took place was a normal, brief meeting between Caltech Trading Corporation and President Salva Kiir after he had attended the UN General Assembly.

Exiting the market

In 2022, PETRONAS announced its decision to exit the South Sudan oil sector after 24 years of service and investment.

Just after Petronas declared such a stand to pull out of the South Sudan oil sector, it was reported that the UK company Savannah Energy reportedly signed an agreement to acquire the entire oil assets meant for the Malaysian company in South Sudan for a total sum of $1.23 billion.

According to the signed deal, Savannah will acquire PETRONAS’s interests in three joint operating companies that operate Blocks 3 and 7 (40% working interest); Blocks 1, 2, and 4 (30 per cent working interest); and Block 5A (33.9 per cent working interest).

The joint operating companies in South Sudan’s oil sector comprise DAR Petroleum Operating Company (DPOC), Greater Pioneer Operating Company (GPOC), and Sudd Petroleum Operating Company (SPOC).

If confirmed that the deal between South Sudan and Caltech Investment would be a major blow to Savannah Energy which has been working on the acquisition of Petronas’ South Sudanese assets since December 2022.

In August, the US Department of State, the Department of Labor, and the Department of Commerce issued an advisory to highlight the risks for U.S. businesses, individuals, and other persons, including academic institutions, research service providers, and investors (hereafter “businesses and individuals”) conducting or contemplating business in South Sudan.