Bloomberg News

South Sudan Has Foreign Exchange Reserves for 18 Months

March 09, 2012

South Sudan, which shut down its oil industry in January, has enough foreign exchange reserves to last 18 months and is exploring new ways to raise cash including issuing bonds, Vice President Riek Machar said.

The African nation will post a budget deficit next year as a result of lost oil revenue, Machar predicted in an interview in New York today after visiting investors. To close the gap, the country may seek commercial loans, sell bonds overseas and truck at least a third of its oil production to ports in other nations, he said.

South Sudan, which gained control of about 75 percent of the previously united Sudan’s 490,000 barrels a day of output at independence in July, completed a shutdown of production Jan. 28. It took the action after accusing Sudan of stealing its oil. Sudan said it confiscated the crude to make up for unpaid fees.

The dispute over the fees South Sudan pays the neighboring country to ship the crude via a pipeline to the Red Sea shows few signs of being resolved anytime soon. Oil accounts for more than 95 percent of the economy of South Sudan, according to the government.

“We are not yet agreed,” Machar said. “There is no time limit. We are still negotiating on this. We can’t pay $32 per barrel as transit fees. That is one-third of the price of oil.”

The largest customer for the oil is China, according to the International Energy Agency.

Peace Deal

A peace deal that ended a two-decade civil war required the north and south to split oil revenue equally prior to the south’s independence. Machar said that in spite of the spat over oil and violence at the borders, he saw no reason for the two nations to return to war.

‘Yes, there is war across our borders, in Southern Kordofan and Blue Nile and Darfur, but this is a matter of the North,’’ he said. “We have no involvement in it.”

The former head of the UN in Sudan, Mukesh Kapila, this week called for international intervention to prevent “genocide” in the Nuba mountains region where the Sudanese government is fighting insurgents.

The Nuba Mountains are in Southern Kordofan, an oil-rich state where fighting broke out in June between the government and the rebel Sudan People’s Liberation Movement-North. The conflict has spread to neighboring Blue Nile state and forced tens of thousands of people to flee into South Sudan.

Cattle Rustlers

Machar also downplayed unrest in South Sudan’s Jonglei state and attributed violence there to cattle rustlers.

The violence there “is not directed against investors or the government,” he said. “We are correcting that. We are disarming the civilian population so the security situation is stabilized.”

That contradicts the February assessment of the UN, whose emergency relief coordinator, Valerie Amos, told reporters Feb. 2 that she had seen a “terrible situation” on visiting the area.

Lul Pout Riek, a Sudanese physician who oversees community and public health in South Sudan, told a group in Los Angeles March 8 that the average lifespan in the country is 40, the Los Angeles Times reported.

To contact the reporter on this story: Flavia Krause-Jackson in United Nations at fjackson@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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