Country Report Sudan March 2011

Economic policy: SPLM asserts that fees will replace oil revenue sharing

Speaking at a press conference in the southern capital, Juba, on February 15th, the SPLM secretary-general, Pagan Amum, said that oil revenue sharing would not continue after the secession of the south, saying that there would be ''no continuation, whether 50% or anything''. The claim is in effect only a bargaining position and an assertion, as the SPLM has yet to agree arrangements with the NCP. SPLM officials have previously suggested that the SPLM and the NCP might eventually agree to a tapering revenue-sharing arrangement, for example with the percentage share of net revenue from southern oil going to Khartoum reducing from its current level of 50% to 0% in steps over a number of years. However, it is perfectly possible that the SPLM may insist on ending the element of revenue sharing and switching to a fees-only arrangement. This may be administratively simpler, and it will doubtless be welcomed by Southern Sudanese wanting to believe that they are not sharing southern oil with the north. All the same, the SPLM may struggle to contain the fees demanded by the north, and as a result, discounting oil price changes, its net earnings from southern oil may change little. The NCP has not publicly asserted its negotiating position on the matter. However, as northern Sudan controls the two pipelines through which oil from the south is exported and will have to be exported in the future (there being no alternative route), the NCP has a strong bargaining position.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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