Natural Resource Management: Sudan Comprehensive Peace Agreement

Chapter III: Wealth Sharing (Signed At Naivasha, Kenya on 7th January, 2004)

1. Guiding Principles in Respect of an Equitable Sharing of Common Wealth

1.10 That the best known practices in the sustainable utilization and control of natural resources shall be followed.

2. Ownership of Land and Natural Resources

2.1 Without prejudice to the position of the Parties with respect to ownership of land and subterranean natural resources, including in Southern Sudan, this Agreement is not intended to address the ownership of those resources. The Parties agree to establish a process to resolve this issue.

2.2. The Parties agree that the regulation, management, and the process for the sharing of wealth from subterranean natural resources are addressed below.

2.3. The Parties record that the regulation of land tenure, usage and exercise of rights in land is to be a concurrent competency exercised at the appropriate levels of government.

2.4. Rights in land owned by the Government of Sudan shall be exercised through the appropriate or designated levels of Government.

2.5. The Parties agree that a process be instituted to progressively develop and amend the relevant laws to incorporate customary laws and practices, local heritage and international trends and practices.

2.6 Without prejudice to the jurisdiction of courts, there shall be established a National Land Commission that shall have the following functions:

2.6.1 Arbitrate between willing contending Parties on claims over land, and sort out such claims.

2.6.2 The party or group making claims in respect of land may make a claim against the relevant government and/or other Parties interested in the land.

2.6.3 The National Land Commission may at its discretion entertain such claims.

2.6.4 The Parties to the arbitration shall be bound by the decision of the National Land Commission on mutual consent and upon registration of the award in a court of law.

2.6.5 The National Land Commission shall apply the law applicable in the locality where the land is situated or such other law as the Parties to the arbitration agree, including principles of equity.

2.6.6 Accept references on request from the relevant government, or in the process of resolving claims, and make recommendations to the appropriate levels of government concerning:

2.6.6.1 Land reform policies;

2.6.6.2 Recognition of customary land rights and/or law.

2.6.7 Assess appropriate land compensation, which need not be limited to monetary compensation, for applicants in the course of arbitration or in the course of a reference from a court.

2.6.8 Advise different levels of government on how to co-ordinate policies on national projects.

2.6.9 Study and record land use practices in areas where natural resource exploitation occurs.

2.6.10 The National Land Commission shall be representative and independent. The composition of the membership and terms of appointment of the National Land Commission shall be set by the legislation constituting it. The Chairperson of the National Land Commission shall be appointed by the Presidency.

2.6.11 The National Land Commission may conduct hearings and formulate its own rules of procedure.

2.6.12 The National Land Commission will have its budget approved by the Presidency and will be accountable to the Presidency for the due performance of its functions.

2.7 In accordance with this Agreement and without prejudice to the jurisdiction of courts, there shall be established a Southern Sudan Land Commission which shall have the following functions:

2.7.1 Arbitrate between willing contending Parties on claims over land, and sort out such claims.

2.7.2 The party or group making claims in respect of land may make a claim against the relevant government and/or other Parties interested in the land.

2.7.3 The Southern Sudan Land Commission may entertain such claims at its discretion.

2.7.4 The Parties to the arbitration shall be bound by the Southern Sudan Land Commission's decision on mutual consent and upon registration of the award in a court of law.

2.7.5 The Southern Sudan Land Commission shall apply the law applicable in the locality where the land is situated or such other law as the Parties to the arbitration agree, including principles of equity.

2.7.6 Accept references on request from the relevant government, or in the process of resolving claims, and make recommendations to the appropriate levels of government concerning:

2.7.6.1 Land reform policies;

2.7.6.2 Recognition of customary land rights and/or law.

2.7.7 Assess appropriate land compensation, which need not be limited to monetary compensation, for applicants in the course of arbitration or in the course of a reference from a court.

2.7.8 Advise different levels of government on how to co-ordinate policies on GoSS projects.

2.7.9 Study and record land use practices in areas where natural resource exploitation occurs.

2.7.10 The Southern Sudan Land Commission shall be representative and independent. The composition of the membership and terms of appointment of the Southern Sudan Land Commission shall be set by the legislation constituting it. The Chairperson of the Southern Sudan Land Commission shall be appointed by the President of the Government of Southern Sudan.

2.7.11 The Southern Sudan Land Commission may conduct hearings and formulate its own rules of procedure.

2.7.12 The Southern Sudan Land Commission shall have its budget approved by the Government of Southern Sudan and shall be accountable to the President of the Government of Southern Sudan for the due performance of its functions.

2.8 The National Land Commission and the Southern Sudan Land Commission shall co-operate and co-ordinate their activities so as to use their resources efficiently.

Without limiting the matters of coordination, the National Land Commission and the Southern Sudan Land Commission may agree:

a) to exchange information and decisions of each Commission;

b) that certain functions of the National Land Commission, including collection of data and research, may be carried out through the Southern Sudan Land Commission;

c) on the way in which any conflict between the findings or recommendations of each Commission may be resolved

2.9 In the case of conflict between the findings or recommendations of the National Land Commission and the Southern Sudan Land Commission, which cannot be resolved by agreement, the two Commissions shall reconcile their positions. Failure to reconcile, the matter shall be referred to the Constitutional Court.

5. Guiding Principles for Sharing Oil Revenue

5.1 The Parties agree that the basis for an agreed and definitive framework for the sharing of the wealth emanating from oil resources of Southern Sudan shall include the following:

5.1. I The framework for sharing wealth from the extraction of natural resources should balance the needs for national development and reconstruction of Southern Sudan.

5.2 The Parties agree that a formula for sharing the revenue from oil resources shall be as set forth in this Agreement.

5.3 For the purposes of this Agreement. 'Net revenue from oil' shall be the sum of the net revenue (i) from exports of government oil and (ii) from deliveries of government oil to the refineries. Exports shall be valued at the actual Free on Board (FOB) export prices less the charges to deliver the oil to any export destination including pipeline and management charges. Oil delivered to the refinery shall be valued at the average FOB export prices during the last calendar month in which there was an export sale -less the charges that would have been incurred to deliver the oil to any export destination including pipeline and management charges.

5.4 An Oil Revenue Stabilization Account shall be established from government oil net revenue derived from actual export sales above an agreed benchmark price. The benchmark price will be established annually as part of the national budget reflecting changing economic circumstances.

5.5 The Parties agree that at least two percent (2%) of oil revenue shall be allocated to the oil producing states/regions in proportion to output produced in such states/regions.

5.6 After the payment to the Oil Revenue Stabilization Account and to the oil producing states/regions, fifty percent(50%) of net oil revenue derived from oil producing wells in Southern Sudan shall be allocated to the Government of Southern Sudan (GoSS) as of the beginning of the Pre-Interim Period and the remaining fifty percent (50%) to the National Government and States in Northern Sudan.

5.7 A Future Generation Fund shall be established once national oil production reaches two (2) million barrels per day. This production criterion may, as part of the National Government's normal budget process, be reduced down to one (1) million barrels per day.

5.8 The Parties agree that all funds/special accounts referred to in this Agreement and future accounts shall be on-budget operations.

Implementation History

2005

Minimum Implementation

There were two main components of natural resources uses provision in Sudan’s 2005 CPA, the first focused on land-related conflict. The CPA provided that the Government of Sudan should exercise rights in land owned by the state through the appropriate or designated levels of government. The accord also established the National Land Commission and the Southern Sudan Land Commission to arbitrate between willing parties on issues related to land claims. The Land Commissions was mandated to study and record land use practices in areas where natural resource exploitation occurs. The second issue deals with sharing revenue from oil revenue. According to the CPA provision, after paying 2% of oil revenue to the oil producing states/regions in proportion to output produced in the respective state/region, fifty percent (50%) of net oil revenue derived from oil producing wells in Southern Sudan would be allocated to the Government of Southern Sudan (GoSS) as of the beginning of the Pre-Interim Period and the remaining fifty percent (50%) to the National Government and States in Northern Sudan.

The proposed land commissions were not established in 2005. Similarly, there was no record of the Southern Sudan receiving a 50% share of oil revenues. Nevertheless, it was estimated that the GoSS would receive $1.2 billion in oil transfers as per the GoS budget estimate of 2005.1 This estimate was disputed in November 2005 as the North claimed the Hedlig oil field, which was the main contributor of the estimated oil revenue for the South. The revised estimate was $700 million.2

  • 1. "The CPA Monitor-Monthly report on the Implementation of the CPA," UNMIS, March 2006.
  • 2. "Dispute over Sudan Oil Revenue-Sharing as North Claims Heglig Field," World Markets Analysis, November 24, 2005.
2006

Minimum Implementation

The oil revenue dispute continued into 2006. For 2005, the south believed that the production amounted to as much as 450,000 barrels per day, while the north claimed that the production was at 330,000 barrel per day. The South received US$544 million in oil revenue which was deemed as insufficient by the southern authorities.3 Nevertheless, oil revenues for the remainder of 2006 increased. The total oil revenue of southern Sudan amounted to $865 million in September 2006, which increased by $73.5 million in the month of October 2006.4 The Joint Commission for Supervision of oil pricing and oil revenue had stressed that oil revenue accounts and shared distribution had been transparent and open.

The proposed National Land Commission was not established in 2006. The Southern Sudan Land Commission was established. The commission had five members who were appointed by the president of Southern Sudan.5

  • 3. "Disputes in Sudan over Oil Revenues," World Markets Analysis, February 3, 2006.
  • 4. "Southern Sudan Government share in oil revenues," Suna News Agency, December 10, 2006; "Southern Sudan Oil Revenue Up to $865 Mln Sept 2006," See News Middle East & Africa, November 3, 2006.
  • 5. "The CPA Monitor-Monthly report on the Implementation of the CPA," UNMIS, February 2009.
2007

Intermediate Implementation

Detailed information regarding oil revenue and its distribution for the 2007 year is not available. According to a news report, Southern Sudan netted $1.5 billion in 2007 as its share of $4.3 billion in oil revenues.6

The proposed National Land Commission was not established in 2007.

  • 6. "Briefing: Sudan Rising," Energy Compass, May 2, 2008.
2008

Intermediate Implementation

The provisions related to oil sharing were implemented. In 2008, the Ministry of Finance & National Economy indicated that the total oil revenue for GoSS in 2008 was $2,888.20 million and in December of 2008 the oil revenue of GoSS stood at $265.66 million.7 The national government continuously transferred oil revenue to the government of southern Sudan.

The proposed National Land Commission was not established in 2006.

  • 7. "The CPA Monitor-Monthly report on the Implementation of the CPA," UNMIS, December 2009.
2009

Intermediate Implementation

According to a GoSS Ministry of Finance and Economic Planning report, Sudan’s total oil revenue in 2009 from oil resources in the Southern Sudan was $2,566.16 million, of which the GoSS’s share was $1,067.7 million. Also, approximately $666.14 million had been transferred to the GoSS between July and October 2009.8

The National Assembly adopted the National Land Commission Bill on 20 April 2009. The National Land Commission and the Southern Sudan Land Commission were independent commissions and as such had been mandated by the CPA to arbitrate between contending parties regarding claims over lands without prejudice to the jurisdiction of the courts.9 Nevertheless, members of the commission were not appointed in 2009.

2010

Intermediate Implementation

Regarding their share of the oil revenue, the national government had transferred approximately $669.92 million to the GoSS in the first quarter of 2010. The total oil revenue of the Sudan in 2010 was $ 4,423 million, of which the Government of Southern Sudan’s share was $1,802 million. The government of southern Sudan received $1,553 million from the national government in 2010.10

Although the National Legislature passed the National Land Commission Bill in 2009, members of the commission were not appointed in 2010. The South Sudan Land Commission was working to expose land use problems in South Sudan. The commission, however, was seeking financial assistance to undertake a thorough verification of land use and ownership in all ten states of Southern Sudan.11

  • 10. "The CPA Monitor-Monthly report on the Implementation of the CPA," UNMIS, December 2010.
  • 11. "South Sudan Land Commission Seeks Financial Assistance to Clean Up Land Ownership Issues," Sudan Tribune, July 21, 2010.
2011

Intermediate Implementation

Detailed information regarding oil revenue distribution between the north and the south is not available.

Although the National Legislature passed the National Land Commission Bill in 2009, members of the commission were not appointed in 2011. The South Sudan Land Commission, however, was quite effective. It worked on land draft policy and handed it over to the government of South Sudan in February 2011.12

Once southern Sudan became an independent state on 9 July 2011, provisions related to the natural resource management became obsolete.

  • 12. "Sudan; South Draft Land Policy Under Consideration," Africa News, February 19, 2011.