Heglig conflict hits the Sudanese pound
April 15, 2012 (KHARTOUM) – With the closure of the oil field producing the majority of Sudan’s oil revenue this week, due to clashes on the north-south border, Khartoum has seen long queues at petrol stations and now a rapid rise in the price of the Sudanese pound.
One US dollar now buys over 6 Sudanese pounds, over double the official rate which has remained at 3 Sudanese pounds. On hearing the news that Heglig had been taken by South Sudan’s army many people in the capital rushed to buy dollars fearing that the loss of a significant portion of Sudan’s oil revenue would severely damage the economy, Reuters reported on Saturday.
Khartoum has maintained that it has enough oil reserves for the Heglig shut down not to affect petrol availability at petrol stations.
With South Sudan’s secession last year Sudan lost 75% of the country’s oil production. Khartoum was hoping that transit fees on South Sudan’s estimated 350,000 barrels per day output would help ease the loss. However Juba refused to agree to paying above the international norm for transits fees and in January stopped production all together after it emerged Sudan had been confiscating southern oil.
The loss of Heglig on Tuesday, which is claimed by both nations but has been supplying Khartoum with a significant amount of its 110,000 barrels per day oil production, is a further set back for an economy that has struggled to adjust to South Sudan’s secession.
Sudan’s military has vowed to retake the area from the SPLA and claimed it had regained control of part of Heglig by Saturday evening. Juba denied this and says it repelled that attack.
The Khartoum government’s need for dollars has meant that Sudanese businesses have found it hard to get hold of the hard currency they need to import goods, forcing many to use black market traders.
Authorities have tried to clamp down on the trade which is common in the capital, offering much higher rates than those available in banks or foreign exchange bureaus.
If the government has to import more fuel then foreign currency may become even more scarce. Since the Sudanese pound was introduced in 2007 it had never gone as high as 6.1 to the US dollar until Saturday, having jumped from 5.6 last week.
(ST)