The South Sudanese government is struggling to stay afloat as months of fighting with rebels loyal to former vice president Riek Machar have halted oil production, the lifeline of the country’s economy.

Currently, the country is not in position to pay its debts, amounting to hundreds of billions of dollars borrowed from the oil companies, and yet it plans to borrow another $1 billion to fund the budget for 2014/2015, read last week.

The current oil output is half of what South Sudan was producing before the war broke out in December last year. Its revenues are thus expected to drop by more than 60 per cent to about $200 million.

“All oil fields, except one, have been shut down. And as you know, 98 per cent of funding for government budget comes from oil revenues,” South Sudan’s acting ambassador to Uganda Micheal Amanamoi told The EastAfrican.

He confirmed that oil production had decreased to 15,000 barrels per day from 30,000. The biggest oil production wells in northern Upper Nile and Malakal have shut down, and only the Faloch oil well in Unity State is producing oil, Mr Amanamoi said.

“We were caught off guard; even the non-oil revenue sources are not generating enough revenue. The government is now selling the oil before it is pumped out. We are getting the funds to run the country through promises to oil companies,” Mr Amanamoi revealed. “This has gone on since the war broke out, especially revenue to pay civil servants’ salaries and provide social services.”

Earlier in the year, rebel leader Riek Machar said that the oil fields were targets for his forces and that revenues generated from oil sales should be placed in independent coffers. He accused the government, which he served till July 2013, of corruption and mismanagement of oil money.

READ: South Sudan rebel leader vows to take key oil fields, capital

President Salva Kiir’s government, however, rejected Dr Machar’s proposals of an independent body to monitor oil revenues and said that if allowed, it would amount to a violation of the country’s sovereignty.

Media reports and the UN Security Council indicate that the money borrowed from oil firms, especially Chinese firms, being used to purchase arms, a claim President Kiir’s government denies.

The economic crisis, and the government’s inability to pay some of its civil servants and the army, has led to shootings in military barracks among South Sudanese soldiers, and also between South Sudanese soldiers and Ugandan troops over what the former claim is special treatment of the latter, at their expense. This has prompted fears of a mutiny.

The South Sudan government is not only afraid oil companies will soon run out of patience, but regional governments as well.

READ: South Sudan chaos halts refinery

Joint regional infrastructure projects such as the Lamu Port South Sudan-Ethiopia Transport corridor and the standard gauge railway are halted. The construction of several major roads linking South Sudan to the region have also stalled.