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SOUTH SUDAN: Fuel Shortages Grip Country

JUBA , Jun 22 2011 (IPS) - South Sudan is facing severe fuel shortages less than three weeks before it gains independence from the rest of the country. Many gas stations have shut down and those that remain open have people lining up overnight for fuel.

The shortage has affected all aspects of life. For the last two weeks many offices in oil-rich South Sudan’s capital, Juba, have closed or only opened for half the day because they could not find fuel to power generators.

The transport industry has also been affected. Moses Kenyi, a taxi operator, said he could not find petrol for his vehicle. “I have searched everywhere and I cannot find any. I would like to buy fuel however expensive it is so I can continue to operate my business. The problem is I cannot find it.”

The fuel shortage has led to an increase in pump prices. A litre of petrol used to cost 1.10 dollars but now costs as much as two dollars. On the black-market a litre of oil costs as much as 10 dollars.

Government officials, humanitarian workers and local media have blamed North Sudan for the fuel and food shortages, which began in May.

Sharing the Oil Between North and South

South and North Sudan currently share revenue from oil pumped in the south on a 50-50 basis, as stipulated by the 2005 Comprehensive Peace Agreement that ended a two-decade civil war.

After independence in July, South Sudan will assume control of 75 percent of Sudan’s daily oil production of 490,000 barrels, the third-biggest supply in sub-Saharan Africa.

However, after South Sudan’s independence the two neighbouring states will need to cooperate on how they manage the oil sector, which both their economies heavily rely on. While much of Sudan’s oil is found in the south, production facilities, including Sudan’s refineries and only oil- export terminal, are all based in the north.

Officials from North Sudan and South Sudan are still discussing how they will manage the oil sector after South Sudan’s independence. North Sudan wants the two states to share oil revenues on a 50-50 basis. But South Sudanese officials say they will only pay a transit fee for the use of pipeline infrastructure and pay for the use of refineries in North Sudan.

“The government in Khartoum has closed the trade routes at the north-south border. The purpose of the blockade is to agitate the civilians in the south. They want the civilians in the south to say that the SPLM-led government has failed to even provide fuel in South Sudan,” said Yien Mathew Chol, spokesman of South Sudan’s ruling party, the Sudan Peoples’ Liberation Movement or SPLM.

North Sudan’s government has denied it imposed any blockade on the south. While sources in the industry blame the fuel shortage on South Sudan’s failure to prioritise the supply of this essential commodity and a battle with suppliers over price controls.

Sudan’s oil, which is mostly found in the south, is being pumped by international oil companies including China National Petroleum Corporation, India’s Oil and Natural Gas Corporation and Malaysia’s Petroliam Nasional Berhad.

In mid-May government imposed a price limit for both diesel and petrol at about 1.90 dollars per litre.

Petroleum companies, which include Imatongas, Hass Petroleum, and Global Petroleum among others, have said this is unfair and means they will sell fuel at a loss. They have complained they are already paying inflated prices for fuel from their Kenyan suppliers and face heavy taxation to import it.

The petroleum companies import diesel, petrol and kerosene from Kenya, which is closer than North Sudan’s capital Khartoum. Though some petrol is imported from North Sudan.

Sources speaking on condition of anonymity, for fear of government reprisal, said suppliers had stopped importing fuel from East Africa and would not start again until government ended price controls.

David Loro Gubek, the Undersecretary in South Sudan’s ministry of energy and mining, said government would not give in to this threat.

“It is difficult for us to agree to that because all over the world the government has an upper hand to control prices,” he said.

“So I think the government is not in a position to allow them to be free to charge (high prices) because there is a government that is in charge and it must control (prices),” he added.

In addition, petroleum suppliers want South Sudan’s government to allocate them foreign exchange from the Bank of Southern Sudan, which has a good dollar exchange rate.

But the government refused the demand saying it lacked sufficient foreign currency.

Majak Arop Bilkuei, chairman of the South Sudan Petroleum Dealers’, said the high dollar rate was hurting fuel importers and affecting their profit margins.

“If I change money in the black market definitely it will be at a high cost. The (official) bank rate now is at 2.70 to 2.80 (Sudanese pounds to the dollar) in the black-market the range is 3.20 to 3.30 Sudanese pounds to the dollar,” he said.

Bilkuei added: “So if the government can do something about this issue this can keep the prices low and we operate without any problem.”

There are reports that some of the petroleum companies are stockpiling fuel until the price controls ended. But Bilkuei denied this.

He added that since government was not subsidising petroleum importers, the latter should be allowed to increase fuel prices.

“The market is free when nobody helps you in solving problems. If the government is not helping you and you are struggling alone to bring this fuel (into the country) you have a right to sell it (at a price of your choice),” he said.

“But if the government helps you to bring the fuel then the government can say; I helped you why do you increase the price?”

Reliable sources told IPS that the fuel shortage has been made worse because what little fuel that is being imported from East Africa and North Sudan is being bought and stored by South Sudan’s government in anticipation of a war with the north.

Observers say even if the current crisis ends, shortages like this could be a recurring problem if relations between North Sudan and South Sudan remain as bad as they are now.

But Gubek said government had long-term plans to prevent this, including building storage facilities.

Representatives of the petroleum importers are scheduled to meet with government officials to discuss the matter. Both were hopeful that a solution to the fuel shortage would be found.

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