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From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Mon Jul 25 2011 - 15:06:03 EDT
S.Sudan says North wages economic war with oil fee
Mon Jul 25, 2011 6:04pm GMT
* South Sudan says North wants $22.8 a barrel in transit fee
* South Sudan says the fee is "daylight robbery"
* South depends on North to sell oil
(Adds more quotes, currency conflict, background)
By Jeremy Clarke
JUBA, July 25 (Reuters) - South Sudan said its former civil war foe
Khartoum, which controls the pipelines for its oil exports, had declared
economic war against the new African nation by demanding a transit fee of
almost $23 a barrel.
This charge would take up about 20 percent of the value of oil sold by South
Sudan. The dispute could threaten to disrupt the flow of crude from the
country, a significant exporter notably to China and Japan.
Pagan Amum, secretary general of the southern ruling Sudan People's
Liberation Movement (SPLM), said on Monday Khartoum had demanded a pipeline
usage fee of $22.8 a barrel.
"Khartoum has all of a sudden written to oil companies and the Republic of
South Sudan that they are imposing $22.8 in every barrel we export," Amum
told reporters in the southern capital of Juba.
"For Khartoum to try to impose nearly $23 (per barrel on oil), this is just
nothing but broad daylight robbery," he said.
"...It is a hostile act, an attempt to loot ... a landlocked country," he
said.
"The government of Sudan has declared and is engaged in economic war on the
newborn Republic of South Sudan," he said.
South Sudan became independent on July 9 after an independence referendum in
January agreed under a 2005 peace deal that ended decades of civil war with
the North.
The South took 75 percent of the country's 500,000 barrels a day of oil
production but depends on the North to use the only cross-border pipeline to
the Red Sea port of Port Sudan to sell the oil. Refineries also only exist
in the north.
Experts say southern plans to connect to a pipeline in east African
neighbour of Kenya are years away.
Both sides have been unable to agree yet on how to divide oil revenues that
are the lifeblood for both economies. Analysts expect the South to pay
gradually less in transit fees than the 50-50 percent revenue split agreed
under the peace deal.
Amum did not say how much the South was willing to pay but said a typical
transit fee would be between 60 cents and $2 a barrel. Such a fee usually
depends on the length and pumping performance of a pipeline.
The fee sought by Khartoum would amount to a fifth of the June price of
around $114.50 for Nile Blend sold by state-owned Sudapet to trading house
Arcadia.
Analysts say there has been little transparency for years about how oil
revenues are booked in Sudan, hit by years of conflicts, inflation,
corruption and U.S. trade sanctions.
There was no immediate reaction from Khartoum which last week unveiled an
alternative 2011 budget that lawmakers said included an annual income of
$2.6 billion for transit fees -- the same amount expected for the loss of
southern oil production.
CURRENCY CONFLICT
Amun also said the launch of a new currency in the north on Sunday -- days
after a similar southern step -- would cost Juba $700 million because
Khartoum had made its old currency circulating there worthless.
On Sunday, north Sudan said it had started issuing a new currency to
gradually replace the old Sudanese pound as precautionary measure after the
south started its own currency.
Since both sides have failed so far to coordinate their moves the estimated
1-1.5 billion old notes circulating in the south become effectively
worthless. Khartoum says it is open for more talks but has banned the import
of old notes.
Amun said the south would now lose $700 million for old pounds it had bought
in the interim period before the independence from Khartoum for dollars.
"Their first act in receiving the newborn nation is to destroy the economy
of South Sudan and to make South Sudan lose nearly $700 million," he said.
Khartoum says it has complied with all parts of the 2005 peace agreement.
Apart from sharing oil revenues both sides also need to end violence in some
parts of the joint border and divide other assets and debt.
(Additional reporting by Ikuko Kurahone in London, writing by Ulf Laessing,
editing by Anthony Barker)
C Thomson Reuters 2011 All rights reserved
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