South Sudan clears Sudan oil debts
The Minister of Petroleum Puot Kang Chol has said South Sudan has cleared the debts it owed Sudan under the Transitional Financial Arrangement (TFA) by 2021.
“We have cried over the years but we have finished paying it. As we speak today, we have paid all the money of TFA that belonged to Sudan,” said Puot.
“Today we are demanding 13 million dollars from Sudan,” he said.
South Sudan relies on Sudan to transport its crude oil to the Red Sea via a pipeline that runs via Khartoum.
In 2013, South Sudan agreed under the terms of the 2012 deal to pay Sudan $9.10 per barrel for oil in addition to a fee of $15 per barrel in fulfillment of a $3.028 billion package called Transitional Financial Arrangement (TFA).
Appearing before the Standing Specialised Committee on Finance and Planning in Parliament last Friday, Puot said the Ministry of Petroleum was expected to send a technical team to Sudan to reconcile the accounts.
“The ministry of petroleum plans to send a technical team to Sudan to complete reconciling all accounts,” he said, adding that he had written a letter showing that they have cleared the payment.
The minister said the 28,000 barrels that South Sudan has been giving Sudan would no longer be given.
Puot set up a data center in Jebel as part of the steps to ensure transparency and security for the country’s oil sector.
“Our data is managed from Khartoum, that is the reality and we cannot testify to you that we know everything about it,” he said.
“We are being tuned by others. Khartoum and China have a non-disclosure agreement between them and they disclose to us what they like.”
The ministry has planned to use a geophysical plane to remap the oil fields and other resources in the country.
“One of the problems that we have today is that when we are giving a block, it’s like selling a plot of land because we don’t know the value of what we have. Once we know the value, we will demand as much as we want depending on what we have in that particular area,” he explained.
The minister told the committee that “as a government of South Sudan if we want to make the best out of this oil, we must also invest in those who are in the field.”
The Undersecretary at the Ministry of Petroleum Awow Daniel Chuang, told the committee that the $3.028 billion had contributed to the decline of the county’s economy.
“This money is what had overburdened the economy of South Sudan over the last few years because when the agreement was signed in September 2012, it was tight to the oil production and it was an agreement signed with the intervention of the international community,” he said.
He was explaining to lawmakers to the question as to why Sudan has been paying all that amount of money.
Daniel said in the oil sector there is a difference between tariffs and fees that is commercial and fees that is political.
He said they conceded TFA as a political arrangement because it had nothing to do with oil production.
“What we can only recognize is the commercial tariffs being the transport agent fees, the processing fees, and the transit fee, these are the three fees that can be recognized as commercial tariffs,” he explained.
However, in addition to those three, Transitional Financial Arrangement (TFA) was added, Daniel said this had been destroying the business even to the oil companies in the country which became a big issue
“This is because per barrel produced TFA accounts for $15 and then the commercial tariffs basic on the production you have to pay $9.1 combined for the three fees which are transportation, processing and transit so when you add you get $24.1. So, for every barrel produced from South Sudan you have to pay commercial and political tariffs together and yet you’re doing business and that is what has ridden most of our income none economically,” he explained
Daniel said, “when the oil prices went down the country was hit very hard because it was not able to generate any money from the oil.”
