Oil Fees and old currency buy-back still major sticking points
ADDIS ABABA, Ethiopia (NSV) - The African Union-mediated rounds of economic talks between North and South Sudan appeared to have fallen apart on Sunday following disagreements over pipeline fees and economic issues centered around the recent unveiling of new currencies by both sides.
The collaspe is a major drawback to the little progress that was reached on Saturday when the North and South Sudan agreed to finish talks on fees and old currency buyback by September this year. There was even talk of the north scaling back its demand for excessive fees.
Following that progess, a committee was agreed on to oversee resolution of fees and buying back of billions of old Sudanese pounds.
That was not the case on Sunday as the South hit back at what it sees as unfair deals being imposed in terms of pipeline fees.
The North is also said to have contributed to the talks' collapse after rejecting the terms of negotiations put forth by Thabo Mbeki, the chief mediator in Addis Ababa.
According to IPS News, South Sudan shipped its first oil on July 23, two weeks after it declared independence from the north.
Last week, when negotiations were going on in Ethiopia, the north was said to have insisted on charging a fee of $33 per a barrel, but the South said , not so fast, calling such a fee 'unacceptable'.
Threats of excessive fees by the north for using pipeline to export oil have been weighng heavily on the new nation and its leadership more recently.
President Salva Kiir of South Sudan was even prompted to say last week that his country would even find it preferable to stop oil export if the north kept pressing for those unreasonable fees.
In the same vein, Taban Deng Gai, South Sudan Governor of Unity State painted even a more grim picture of the deal by the north during a talk he gave to foreign officials monitoring the whole debate around oil and pipeline.
"Can you imagine they are charging 33 dollars per barrel for processing and transiting oil from the oil fields in Unity State (in South Sudan) to Port Sudan (in Sudan)?", the governor asked, addding, "If you calculate these fees at the rate of 33 dollars per barrel, you find that we are still giving the north (Sudan) exactly 50 percent of the oil revenue."
Mr. Taban Deng Gai invoked pricing standards used on the global marketing stage, using the example of the neighboring country of Chad.
"Because for Chad, they pay only 0.4 dollars per barrel for their oil to go to the international market. In the whole world the highest you can pay is two dollars per barrel for the whole process," Gai said.
"We cannot pay 33 dollars and we cannot even pay five dollars per barrel. The highest we can pay is two dollars per barrel because this is the highest fee that can be paid according to international practices," the governor asserted.
Sudanese Finance Minister said, "South Sudan has no alternative other than exporting the oil through the north (Sudan). What (Kiir) says doesn’t make any sense because he doesn’t have any other options than to use our pipelines."
"For airplanes flying over our skies they pay us a fee, so if South Sudan is using our pipelines on the ground, should they not also pay? This moment, as I am speaking to you, there is oil (from South Sudan) in the northern (Sudan’s) pipelines going to Port Sudan," he added.
South Sudan eyes building own pipeline and refineries in near future
Governor Taban Deng Gai added: "We will ask the people of South Sudan not to receive salaries for two years, not eat for two years so that we can build our pipelines to go through Kenya or Djibouti."
"It will cost us between 1.5 and three billion dollars to build a pipeline, but it is an option we might have to go for given the conditions being imposed by our brothers in the north (Sudan)," said Gai.
There is fear if the South agrees to pay the high fees for usage of pipeline, it would put both sides back to CPA levels of 50-50 wealth sharing, something South Sudanese find totally impossible given the independence of their homeland.
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