July 23, 2012 2:46 pm

South Sudan offers neighbour $3.2bn

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South Sudan is offering Sudan complete debt forgiveness and a $3.2bn compensation package in an effort to move forward stalled talks, as the pair near an August 2 deadline to reach a deal settling everything from security to finances.

The two countries came close to war when border fighting escalated in April, the worst violence since South Sudan seceded a year ago. Talks have been locked in a stalemate over issues including fees for Juba’s oil exports. The UN Security Council backs an African Union plan to impose sanctions or a binding solution if the two Sudans fail to agree on a deal by August 2.

At talks in Ethiopia, Juba raised its offer to cover Sudan’s fiscal deficit to $3.2bn from $2.6bn previously. It also said it would forgive all debt, which South Sudan says totals $4.9bn. Sudan disputes this figure.

“This is our last offer. We are left with nine days [before the UN deadline]. It’s time for the parties to conclude an agreement,” Pagan Amum, South Sudan’s chief negotiator, told reporters.

South Sudan, which took two-thirds of oil production with it when it seceded and shut down all oil output earlier this year after a dispute with Sudan, also raised its offer for oil transport fees.

It is now offering $9.1 and $7.26 per barrel for each of Sudan’s two pipelines, to cover transport, transit, processing and export fees, from less than $1 each previously. The gulf is still wide, however: Sudan has previously lowered its own demand from $36 to $32 per barrel.

Both sides have improved on their offers in the past year, only for deals to collapse at the last minute. The South’s shutdown in oil production has hit both countries hard. South Sudan relies on oil for 98 per cent of its revenues. The economy in Sudan is collapsing, prompting scattered protests, calling for the end of the regime.

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