South Sudan facing a demand to pay fee for north’s oil pipelines

Jul 22, 2011 12:00 AM

Sudan had approved a law imposing fees on the use of its oil infrastructure by South Sudan, in an effort to offset the loss of oil revenues following South Sudan’s secession, said finance minister Ali Mahmud.
“We are imposing these fees to get back what we lost from oil revenues, and we will reach the figure with the south through negotiations,” said Ali Mahmud. “They have no way to export their oil, except through the north,” the minister added.

Mahmud expected Khartoum to receive about $ 2.6 bn (R 18 bn) from the oil-producing south in annual transit fees. But negotiations on this, and other key outstanding issues that the north and south have failed to resolve, such as debt and borders, have yet to resume.

South Sudan’s President Salva Kiir said that his government accepted the proposal of renting the north’s oil infrastructure, but he hinted that Khartoum would have to make an acceptable offer or his country would pursue other export options.
“We have agreed on one thing, that the oil issue should not be disrupted. They (north Sudan) need oil. But we fought for 21 years without oil, and we can still go for 3 years until we build our own oil infrastructure,” said Kiir.

The secession of the south, where 75 % of Sudan’s 470 000 bpd is produced, has aggravated the mounting economic difficulties facing Khartoum, by cutting an estimated 36.5 % off its total revenues. Khartoum plans to launch a new currency, after the south did so earlier, with the Sudanese pound having plunged in value over the past 6 months, mainly due to a rise in commodity prices and weak state finances.

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