By Alexander Dziadosz and Hereward Holland

JUBA (Reuters) - South Sudan plans to build five new university campuses with $2.5 billion in oil-backed loans from China, a minister said on Thursday, to boost education in a country where just over a quarter of adults can read.

The African nation seceded from Sudan last year under a 2005 peace deal after decades of civil war that left South Sudan one of the world's least developed countries.

Despite netting billions of dollars in oil revenues between 2005 and 2011, the government has struggled to build up state institutions and provide basic services.

The country is now planning to move its five public universities to new, modern campuses with the Chinese loans backed by oil, Higher Education, Science and Technology Minister Peter Adwok Nyaba said.

The project was due to start this year and was scheduled to finish in 2017, but has been delayed since South Sudan closed off its oil output in January in a dispute with Khartoum over how much it should pay to export crude through pipelines in Sudanese territory.

The South depended on oil for 98 percent of state revenues.

"Last year we presented a plan to the government to provide funds to establish five campuses, university campuses, new campuses, world-class campuses," Nyaba said in an interview in his Juba offices.

"But then of course other problems came in - the shutdown of oil - so our plans are kind of put on hold until there is the money for that."

Chinese companies had already been selected to build the campuses, he said, but added it was too early to give a new timeline for the project. "They have made the designs already. They're just waiting for the implementation."

In addition to Juba University in the capital, South Sudan has universities in Upper Nile state, Western Bahr al-Ghazal, Jonglei and Lakes state.

Authorities want to move them out of their current, cramped lodgings, many of which were designed to house secondary schools rather than universities, Nyaba said.

"In terms of lecture halls, in terms of laboratories, in terms of offices for the staff, it's not appropriate, that kind of structure. The university must have its own campus with a proper university environment," he said.

He said upgrading the universities to new campuses would help young South Sudanese learn the skills needed to develop a country with almost no industry outside oil.

Part of the problem the ministry faces is a legacy of neglect inherited from Sudan, Nyaba said.

After a 1989 bloodless coup that brought Sudan's President Omar Hassan al-Bashir to power, the new government expanded the number of Sudan's universities but did not provide enough resources to develop them, he said.

"Two decades after that revolution, the system has really decayed. You have quantity without quality, and this is what we have just inherited here in South Sudan."

(Writing by Alexander Dziadosz; Editing by Alison Williams)