A Review of the Nigerian Energy Industry

Austerity looms on Sudan oil loss

Sudan’s sudden loss of oil revenues is forcing the newly-annexed country into the introduction of economic austerity measures.

The loss of revenues from the oil rich South Sudan, which gained independence at the weekend, means a new three-year emergency programme will be implemented, Sudan’s President Omar Bashir has vowed.

The measures will include the introduction of a new currency as well as a revised tax regime while there is also the promise of increased freedom of speech, the BBC reported Bashir as telling Khartoum’s Parliament.

South Sudan holds three quarters of the oil in what was until last weekend Sudan but is reliant on refinery and port infrastructure in the north for export and, thus, oil sales. Under the terms of a 2005 peace deal that ended decades of civil war with the north, South Sudan kept half the revenues from oil drilled in its territory, but this agreement lapsed with independence.

“The package of the economic measures includes issuing a new currency in the coming days,” the BBC reported Bashir as saying.

“I reaffirm in front of you what I declared in Juba, that our relations with the newly born state of South Sudan will be based on respect of covenants and serious commitment to consolidate stability and establish a unique and positive neighbourly relationship.”

Bashir also commented: “Our government is keen not to curb freedom of speech. No-one from today will be arrested for expressing his political views.” This is despite promising in December that Islam would be the only religion of Sudan after the South became independent and Sharia Law would be imposed.

The South is exploring the possibility of building a pipeline to connect to the Indian Ocean with one linking to the Kenyan port of Mombasa appearing a frontrunner. Bashir recently threatened to block the South’s oil if Sudan was not given a large slice of oil revenues or sufficient payment for use of its pipelines and downstream infrastructure.

Yesterday London-listing commodities trading giant Glencore formed a joint venture with the South’s state oil company, Nilepet. Petro Nile will be 51% controlled by the state and 49% by Glencore.

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