South Sudan Chief Negotiator with Sudan, Pagan Amum on February 15, issued a statement detailing the negotiations with Khartoum authorities. Here below is the statement in full:
The Government of South Sudan travelled to Addis Ababa at the invitation of the African Union High Implementation Panel (AUIHP) to negotiate in good faith with the Government of Sudan on security, citizenship, demarcation of borders and oil. Consistent with our commitment to fully brief the international community, we will provide a full update on all the negotiations.
The talk made a promising start when the Joint Political and Security Mechanism (JPSM) agreed on and signed an MoU on non-aggression on Friday 10th February, laying the foundations for peaceful co-existence. However the ink was not even dry and the Government of Sudan violated this pact by bombing Jau, Unity State on Sunday, 12 February 2012.
The Government of Sudan owes the Government of South Sudan, its institutions and its people in excess of $5.8bn. These arrears arise from the obligations arising from the secession of South Sudan - such as redemption of the currency in circulation and unfulfilled obligations under the Comprehensive Peace Agreement - in particular the wealth sharing protocol articles 5, 6 and 7. The Government of Sudan on its own has submitted a $7bn claim largely comprising bogus claims on South Sudan - such as $3bn for people of the Sudan from South Sudan, without any additional explanation.
The negotiations on the arrears settlement have not progressed and are stuck on the issue of information disclosure, which has previously dogged the oil and debts and assets negotiations. Khartoum is in possession of most of the documentation related to oil and non-oil income that should have been shared during the CPA period, and which constitute the evidence that substantiates the claims and arrears it owes the South Sudan. Sudan is unwilling to provide the information required to assess the validity of the claims to the AUHIP or the RSS. This is contrary to the guiding principles guiding the negotiations and an agreement reached in December 2011 on the principles of disclosure and transparency.
The parties have agreed to a nine-month transitional period - allowing citizens of each country to enjoy rights up to April 2012. However, throughout the period after the Referendum the GoS has engaged in a series of policies and actions to frustrate the enjoyment of rights by South Sudanese in Sudan:
(i) GoS has been obstructing the return of South Sudanese by closing the border and creating insecurity and increasing threats to South Sudanese returning from Sudan;
(ii) GoS has also delayed payment of pensions to South Sudanese who served in the Sudan army, police and civil service - and this is making them helpless and wait under duress for their dues, making many of them vulnerable to recruitment into militia groups to fight South Sudan;
(iii) (iii) GoS has taken measures to close down and confiscate private companies owned by South Sudanese, contrary to even the law of the Republic of Sudan. Foreigners can own and run businesses- such as Indians, Ethiopians, Turks, Egyptians and Chinese; and there is absolutely no reasons to target South Sudanese, including South Sudanese shareholders in joint companies , who have been forced to deregister their companies and whose shares have been confiscated;
(iv) South Sudanese youth are now forcibly being conscripted by the Bashir government, and they have gone to the extent that even university students are being recruited presumably to fight proxy war for Bashir against RSS, and;
(v) There is serious and grave outstanding issue of the 35,000 young people and women who are enslaved during the war and have not been freed. The organization to free these slaves has been dissolved by President Bashir. The freedom of South Sudan is not complete if there are South Sudanese who are still languishing in slavery in Sudan. GoS does not want to subscribe to the principle of avoiding statelessness - which is enshrined in multiple international treaties.
Borders A well defined, demarcated and agreed upon border is important for peace and stability between the two countries and ensures the territorial integrity of South Sudan. However, the border between South Sudan and Sudan is contested in 6 areas and remains to be demarcated. The RSS/SPLM negotiation team has consistently argued for a time bound process (completed within 2012) to delineate and demarcate the agreed upon border areas and for the Government of Sudan to cease any claim on the six disputed South Sudanese territory in the border as part of the package whereby RSS avails economic assistance to GoS, with the latter respecting the territorial integrity of South Sudan. Or refer the six disputed areas to binding international arbitration in the absence of a package agreement. Both of these reasonable viewpoints have been rejected by Sudan, causing an impasse in the border negotiations.
The RSS negotiators for borders and citizenship are still in Addis Ababa continuing to negotiate with Sudan to ensure freedom and human dignity for South Sudanese and territorial integrity of our country.
The oil negotiations took place in light of the shutdown of the oil operations in South Sudan - which is now complete, as a result of Sudan Government stealing and imposing blockade on RSS oil export. The negotiations started with the Government of Sudan presenting again a proposal attempting to charge $36 per barrel in transportation fees. The delegation of South Sudan carefully analyzed the GoS proposal and provided a well-argued critique. The RSS presentation concluded that
(i) the GoS presentation was littered with false statements and incorrect figures,
(ii) (ii) that these charges are discriminatory, a violation of international law and existing contracts and
(iii) (iii) the $36/barrel reflects what they want not what they are entitled to - in fact it is 10 times what will be passed on to the operators to cover the cost.
1. RSS has been paying in full for the use of infrastructure located in Sudan. The Government of Sudan has consistently made false claims that the Government of South Sudan is not paying for the use of infrastructure located in Sudan. However, the oil companies have affirmed orally and in writing to Sudan and to AUHIP that the RSS has in fact been paying all of its processing and transportation fees since July 9, 2011. In fact GoS has written to the oil companies in August 2011 to instruct them to charge the rates that RSS has subsequently been paying.
2. The Government of Sudan does not own all the infrastructure. The Government of Sudan claims it has ownership of all the oil infrastructure located in the territory of Sudan. The pipeline that transports 80% of South Sudan's crude is the Petrodar pipeline, and the oil companies have confirmed in writing that this pipeline and the companying Jabalyn CPF are not owned by the Sudan but by the Consortium. Therefore, Sudan cannot charge for the use of these assets. In addition the Government of Sudan presentation contained a large number of factual inaccuracies, as a result of confusing Metric Tonne with barrel, mixing up transit fees with pipeline tariffs.
3. The value of the transit fees is the only outstanding issue. The Government of South Sudan has repeatedly committed itself to pay a transit fee to the GoS in accordance with state practice. According to international law and state practice transit fees should be cost based and non-discriminatory. Sudan itself is a signatory to treaties that embody the principle of free transit, like COMESA, and indeed it is the AU's aim to make Africa a free trade continent. Usually therefore transit fees are simply a small nominal fee. For example the Azerbaijan-Geogia transit fee is $0.18 per barrel and for the Azerbaijan-Georgia-Turkey route $0.25 per barrel is paid. Both parties have decided to use the Chad - Cameroon pipeline as a reference point: The transit fee for that pipeline is $0.41/barrel. If this is adjusted for the lengths of the GNPOC and Petrodar pipelines, this would be at $0.69 and $0.63 per barrel respectively, which the Government of South Sudan is willing to pay.
4. The $36 charge is undeniably discriminatory. Since these pipelines were built, and since the transportation agreements were concluded, RSS is not the only new shipper. PetroEnergy (operating in the North and WNPOC (operating in the South) subsequently secured the right to ship through the pipeline. Neither have been charged $36 barrel. Both are paying tariffs consistent with the transportation agreements. At the end of the presentation the GoS representative stated that the difference between the $32.2 GoS as invoiced RSS & the $36 in the GoS’ current proposal is $3.8; and that GoS plans to send that $3.8 to the shareholders for the cost and use of the infrastructure. Therefore GoS attempts to charge South Sudan 10x the actual cost.
5. GoS’ Proposal is a clear violation of international law. RSS proved and demonstrated that their claims have no basis in international law and state practice. The only defence that Sudan is offering is that GoS is a sovereign state - and that its sovereignty overrides everything- including international law. This defence does not cut mustard – the international community is consistently denouncing its behaviour, including its theft and bombings (this was seen recently at the AU Peace and Security Council meeting this week). Sudan’s purchasers are questioning them about whether the oil they bought from GoS was stolen; and the foreign oil companies themselves are observing Sudan undermine the very rights they contracted for and calling Sudan’s acts unilateral and conducted by force. Sovereign power comes with a solemn responsibility to uphold international law and norms –Sudan has gone far astray and the South hopes its leaders will see this before it’s too late.
A negotiated solution is still possible, but this depends exclusively on Sudan: The shutdown is complete, but the RSS will still negotiate in god faith and consider a resumption of the operations, if the GoS first agrees to:
A. Full and immediate payment for the stolen oil
For negotiations to commence regarding a resumption of the flow of oil through existing pipelines and commercial oil deal, the Government of Sudan (GoS) must first commit and immediately implement the following three steps related to the repayment of stolen and diverted crude and any resulting damages:
1. Immediately release all the detained vessels that are loaded in Port Sudan with RSS crude oil entitlements and not to hinder any vessel from berthing in Port Sudan with the intention of taking possession of RSS sold crude entitlements;
2. Immediately pay to RSS the value of all confiscated and diverted crude oil at the sales price contracted for by the RSS and its purchasers and the market value for any RSS oil diverted by GoS for inland lifting at domestic refineries;
3. GoS to indemnify all direct, indirect and consequential damages resulting from its unilateral actions, including demurrage claims from buyers whose ships have been detained at Port Sudan;
For the avoidance of doubt, the payments by GoS to RSS for the stolen and diverted crude and any resulting damages shall be immediate and not part of the arrears reconciliation process.
But the theft of RSS oil has been continued: It is worth noting that whilst GoS has ordered the release of the detained vessels, at the same time GoS ordered the theft of yet another 600,000 barrels of RSS Dar Blend entitlement of 28 January 2012 – this was loaded on board of MT ETC ISIS on 31 January 2012. And the theft even continued during this round of negotiations: Government of Sudan ordered PDOC by force to redirect 120,000 barrels from the Petrodar pipeline to the Khartoum refinery. What is more it has also come to light that the valuable RSS entitlement of Nile Blend was delivered – contrary to the instructions of RSS – at the Khartoum Refinery, and thus also stolen.
The Ministry of Justice, the Ministry of Petroleum and Mining and our international legal advisors are pursuing all the stolen oil and will leave no stone unturned to recover the proceeds and bring those complicit in the theft of RSS property to justice.
B. Guarantee of non-interference with oil transport and export
The Government of Sudan must commit that it will never again take, divert or block the export of oil from South Sudan. This commitment must be accompanied by firm guarantees, such that South Sudan has complete confidence that its goods in transit through Sudan would be safe and secure.
C. Fair commercial terms
For a resumption of the export of South Sudan crude to be contemplated by the Government of South Sudan, the Government of Sudan will need to agree to a fair commercial oil deal, the cornerstones of which are the following:
4. Ensure access for crude oil originating from RSS to the transportation system based on the processing fees and tariffs stipulated in the terms of the EPSAs and transportation agreements respectively, for blocks 1,2,4 (as an “excess capacity user”) and for blocks 3 and 7 (which RSS has been paying since 9 July 2011); and
5. Impose no other fees, surcharges, custom duties, imposts or taxes other than a transit fee, which shall be $0.69 and $0.63 respectively in accordance with international law and state practice.
If all these 5 conditions are met, RSS tables the following proposal as a basis for a final comprehensive agreement:
1. RSS will give considerable financial assistance to the GoS
2. As it has been doing, the RSS will continue to pay the tarrifs and processing fees stipulated in the existing exploration, production and transportation agreements.
3. The RSS will be ready to pay a transit fee based on the adjusted Cha-Cameroon model ($0.69 and $0.63 per barrel respectively).
4. In return the Gos will recognize the PCA defined – Abyei Area as belonging to RSS.
5. GoS will withdraw all claims on RSS territory in the disputed border areas.
6. GoS will cooperate with RSS to complete all border demarcations this year.
7. All outstanding arreas and claims between the parties to be settled through a transparent, time-bound process that includes modalities to guarantee payment.
8. The final agreement to be monitored by an independent third party who shall provide regular reports and recommendations to this AU Peace and Security Council and UN.
This comprehensive agreement requires an intensification and prioritization of negotiations on matters of territorial integrity – specifically Abyei, border demarcation and disputed areas.
The Parties agreed to reconvene in Addis to continue negotiations on oil on 23 February 2012 – it will be the responsibility of the AUHIP to verify the international practice and facts on issues of oil transit fees, payment for the processing and transportation tariffs. At this round the RSS delegation shall priritise to make the Government of Sudan pay in full the cost of stolen and diverted oil, the cost of which is increasing due to the taking of additional oil that has come to light recently (more than $550million).
In conclusion, the Government of South Sudan is committed to apeaceful, negotiated solution to all outstanding issues. RSS has been constructive and generous in all negotiations in pursuit of a new chapter in its history with Sudan, not based on exploitation and threats but on mutual viability and enduring peace.
Secretary General SPLM
RSS/SPLM Chief Negotiator