VP Dr. Machar: South Sudan Has 18-Month Foreign Exchange Reserve

Posted: March 9, 2012 by PaanLuel Wël in Economy

By Flavia Krause-Jackson – Mar 9, 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. South Sudan’s gross domestic product per capita is $2,981 a year, according to the International Monetary Fund.

“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.

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 on Feb. 2 that she had seen a ‘‘terrible situation’’ on visiting the area.

To contact the reporters on this story: Flavia Krause-Jackson at the United Nations atfjackson@bloomberg.net;


Machar urges Wall Street investors to work in South Sudan

March 9, 2012 (JUBA) – In an effort to promote South Sudan to the world’s largest investors, the Vice President of the Republic, Riek Machar Teny, visited the New York Stock Exchange in in the United States of America on Thursday and held a number of meetings with leading business people.

Machar told the investors that South Sudan is now a sovereign nation with business potentials and is free from the debts and sanctions attached to north Sudan, from which South Sudan seceded in July last year. The issue of debts is contested between the two nations, with Khartoum maintaining that South Sudan should share the burden but Juba has so far refused saying that debt was built up financing the military in its two-decade civil war with southern rebels.

As well as international debt the two sides are negotiating on a host of other issues including oil, borders, and the disputed Abyei region. Despite the tension along the north-south border and internal security issues a report by the London-based think tank Chatham House in February found that agricultural investment in South Sudan was higher then could be expected considering the risks.

Machar told the potential investors that eight month old South is has huge potentials in oil, agriculture, wildlife and tourism and urged them to do business in the region.

The Vice President while in New York also met with the American Ambassador to the United Nations, Susan Rice, and discussed a wide range of issues including the ongoing post-independence negotiations between Juba and Khartoum in Addis Ababa.

The main issue under discussion is the shutdown of South Sudan’s oil production in February over a dispute over transit fees. Khartoum began confiscating Southern oil claiming Juba owed it $1 billion for the use of its pipelines and refineries since July when the existing deal expired.

China, the main importer of South Sudanese oil has urged the two sides to find a new deal but is also among the countries mentioned in relation to Juba’s plan to build a new pipeline to Kenya to end their dependence on using Port Sudan on Red Sea.

Machar also met with the Chinese Ambassador to UN, Li Bidoang who expressed his country’s strong support to see Sudan and South Sudan share a harmonious relationship. Ambassador Bidoang described his country’s relations with South Sudan as “strong as stone.”

Machar will end his two days stay in New York on Friday.



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