Fuel prices skyrocket in oil-rich South Sudan

AP, Wednesday 8 Jun 2011

Shortages bite as Juba mayor accuses Khartoum of attempting to strangle the economy ahead of July independence

south Sudanese woman
A south Sudanese woman carrying her child stands at her home in south Kordofan, located in the country's north-south border (Photo; Reuters)

Southern Sudan wants to control its oil supply after becoming the world's newest nation in only a month's time, but already an apparent dispute with the north has sent fuel prices skyrocketing here and prompted fist fights at gas stations.

Aid groups are decamping from their offices in the capital to the few restaurants and hotels that have stockpiled fuel for their generators, and it's unclear how long even the Southern Sudanese government can now keep its air-conditioning units blowing.

The mayor of Juba is accusing the Khartoum-based northern government of attempting to strangle the south's economy ahead of its independence declaration. While the south is rich in oil, all pipelines run through the north and the south does not have any refineries of its own.

"It has worsened very quickly and that is what the Khartoum government wants -- they want to support instability," Mayor Mohamed el Haj Baballa told The Associated Press.

The north categorically denies involvement in any such blockade, though UN officials and residents say otherwise.

"We are planning to cooperate and coordinate with the south, to transport their oil, to help them refine their oil," said Rabie A. Atti, spokesman for the ruling National Congress Party in Sudan. "Such actions [like a blockade] will harm the south and they will also harm the north."

Oil-rich Southern Sudan overwhelmingly voted to secede from Sudan in a January referendum but critical issues remain unresolved, including negotiations over how oil wealth will be shared between the north and the south.

A 2005 peace deal calls for a 50-50 split, but that deal expires on 9 July when Southern Sudan becomes its own country.

Residents, local media reports and even the head of the UN World Food Program in Southern Sudan said the Sudanese government began enforcing a blockade of the main north-south oil routes in early May.

The price of fuel at gas stations and other small shops in Juba has increased by two-thirds since the weekend alone. A liter that typically sells for just over US$1 was selling this week for $1.67. Several motorbike drivers told the AP it was difficult to find fuel for sale, even at the higher rate.

The normally traffic-clogged streets have emptied of the usually omnipresent motorbike taxi traffic, leaving residents to walk in the rainy season instead of zipping to their destination by motorcycle taxi.

"There is not fuel -- that is why you don't see any motorbikes," said Chaplain Kenyi, 30, a motorcycle taxi driver. "Everyone is parked at home," he said, adding that the litre of fuel he bought last week was almost finished.

Southern Sudan's government is trying to negotiate with authorities in neighboring countries to import fuel, Baballa said. That's despite the fact roughly 75 per cent of Sudan's daily oil production of 490,000 barrels originates in southern territory.

While Sudanese President Omar al-Bashir said he would support the outcome of the January vote, tensions have spiked over the future of the disputed border region of Abyei.

The clashes have threatened to unravel the 2005 peace deal that ended more than two decades of civil war that left at least 2 million dead. The UN refugee agency said Tuesday that some 100,000 people have fled tension around the disputed town of Abyei.

In one of the biggest towns near the north-south border, only one station in town still had fuel more than a week ago.

Bol Ahol Ngor, the manager of Nile Petroleum station, said in late May that his reserves would soon run out. And transporting fuel from Kenya takes twice as long and costs roughly three times as much as bringing fuel from Khartoum.

The fuel crunch is also causing headaches for aid organizations. The head of the U.N. World Food Program in Southern Sudan said the agency is now paying "more or less double" to obtain diesel supplies from other UN bodies.

"In the end, we will have to tell the donors that our very expensive operations in Southern Sudan are now even more expensive," said Leo van der Velden.

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