Home | News    Wednesday 16 February 2011

South Sudan rules out sharing oil revenue with North

February 15, 2011 (JUBA) – The new state of South Sudan that is expected to officially become the world’s newest state in July, has no intention of continuing to split the proceeds from oil revenue, an official in the South’s ruling party said on Tuesday.

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Pagan Amum, Secretary General of the Sudan’s People Liberation Movement (Reuters)

The secretary general of the Sudan People Liberation Movement (SPLM) Pagan Amum told reporters today that the South will only pay a fee for using the pipelines that transport the oil to Port Sudan.

"The notion of sharing wealth will not be there. There is no continuation, whether 50 percent or anything," Amum said according to Reuters.

Most of Sudan’s proven daily output of 500,000 oil barrel is extracted from oilfields in the South whereas the pipelines infrastructure and refineries are based in the North. Both sides need to maintain cooperation on oil after secession to sustain their economies which depend greatly on oil revenues.

"There’s going to be an agreement on the South continuing exporting its oil through the pipeline in Northern Sudan and to Port Sudan, and the South will be paying pipeline fees for transportation," said Amum.

"We may be paying a transit fee because now Northern Sudan is going to be a different independent state from the south," he added.

Amum’s statements run contrary to those made last year by Southern officials in which they suggested that sharing oil revenue will continue even after the South secedes.

“Our concern is the economic viability ... and the unity of the North, which, I think, will make us even see whether we can continue with the same arrangement that we have,” SPLM leading figure Luka Biong told the Financial Times in an interview.

“For the time being, it is true oil can be used for a soft landing and making economic stability and co-operating with the North,” he said. “But in the long run, this one may not be viable.”

“It is in the interest of the south not to see the Northern economy collapsing,” he added.

Even U.S. Secretary of state Hillary Clinton hinted that the North and South should continue the oil-sharing formula put in place by the 2005 Comprehensive Peace Agreement (CPA).

"What happens to the oil revenues?" Clinton said. "And if you’re in the North and all of a sudden you think a line’s going to be drawn and you’re going to lose 80 percent of the oil revenues, you’re not a very enthusiastic participant. What are the deals that can possibly be made that will limit the potential of violence?"

North Sudan is currently in economic crisis that manifests itself in soaring inflation and hard currency shortage, which forced the government to implement unpopular austerity measures such as cutting subsidies on sugar and petroleum products.

While officials in the North said that they have alternatives such as new oil discoveries and gold mining to compensate for lost revenue, analysts are skeptical whether this would constitute an immediate remedy.