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Financing of Renewable and Fossils Related Projects: A Critical Appraisal of Subsidies and Risks in South Sudan

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  • Jacob Dut Chol Riak

    (Department of Political Science, University of Juba, Juba, South Sudan.)

Abstract

The paper argues one of the greatest subjects in oil and gas industry known as project financing of renewable and fossils related projects. The importance of project financing is to assist in implementation of the projects related to renewable energy as well as fossil fuels. The paper appreciates the concept of subsidy and its various types. It argues impacts of implemented subsidies and related risks on the financing of new renewable energy projects amongst the developing countries. These impacts have been discussed on positive as well as negative wavelengths. Besides, the paper argues technical projects risks related with midstream and upstream oil and gas projects and found out that these risks are critical and must be identified and managed before commencing the projects. Moreover, the paper argues policy project risks related with downstream, midstream and upstream value-chain of oil and gas projects are imperative and must be addressed for successful project financing. While the paper notes various risks associated with projects financing of hydrocarbon resources, it analyses these risks, drawing similarities and variations between midstream and upstream oil and gas projects and offers ways of managing the risks. The paper dives on the importance of Joint Operating Agreements (JOAs) in projects financing. In addition, the paper assesses financing alternatives in stock to oil and gas upstream players and it discusses the financing of Liquid Natural Gas (LNG) product which is sold in South Sudan as Liquid Purified Gas (LPG) and known in other countries as Liquid Natural Gas (LNG). The successful model of financing LNG/LPG is through united single operation with financing separate parts of the entire value chain in oil and gas industry. The paper deploys a case study of South Sudan, process-tracing and empirical literature review as a methodology for this study. It concludes that project financing of renewable and fossils related projects must be urgently prioritized by the governments and private institutions. Risk’s analysis must be carried out prior to any project financing and all the associated risks must be avoided. The paper recommends that project financing for renewable and fossils related projects must be conducted by the governments in charge of hydrocarbon resources and Government of South Sudan should take responsibility to finance its projects in this capital and technological intensive oil and gas industry in addition to giving subsidies to relieve citizens and manage associated risks.

Suggested Citation

  • Jacob Dut Chol Riak, 2024. "Financing of Renewable and Fossils Related Projects: A Critical Appraisal of Subsidies and Risks in South Sudan," International Journal of Science and Business, IJSAB International, vol. 42(1), pages 84-101.
    • Handle: RePEc:aif:journl:v:42:y:2024:i:1:p:84-101
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    References listed on IDEAS

    as
    1. Stefanie Kleimeier & Roald Versteeg, 2010. "Project finance as a driver of economic growth in low‐income countries," Review of Financial Economics, John Wiley & Sons, vol. 19(2), pages 49-59, April.
    2. Wang, Zhen & Lam, Jasmine Siu Lee & Huo, Jiazhen, 2024. "The bidding strategy for renewable energy auctions under government subsidies," Applied Energy, Elsevier, vol. 353(PB).
    3. Nikita Belyak & Steven A. Gabriel & Nikolay Khabarov & Fabricio Oliveira, 2023. "Renewable Energy Expansion under Taxes and Subsidies: A Transmission Operator's Perspective," Papers 2302.10562, arXiv.org, revised Apr 2024.
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