Kenyan trade to benefit from oil transit pact between S Sudan and Khartoum

Trade between Kenya and South Sudan could improve after Juba officials said oil exports will resume before year end, ending a biting dollar shortage.

South Sudan’s chief negotiator Pagan Amum said exports could begin in two or three weeks after he met Sudan’s defence minister Abdel Raheem Mohammed Hussein and other senior officials in Khartoum.

“By the end of this year it is possible to load the first ship of oil, especially after the agreement in the meetings today and yesterday. We have been able to overcome all obstacles, more so than I was expecting personally,” Mr Amum told Reuters news agency.

The two countries had agreed to end the stalemate on November 15 after reaching an agreement over fees payable for the use of the pipeline that transports the oil to Port Sudan for export.

But the agreement collapsed after Sudan raised a new condition, demanding that the South stops supporting Sudan People’s Liberation Movement (SPLM) rebels in Abyei.

The Kenyan ambassador in Juba, Cleveland Leshore, said resumption of oil exports would offer a welcome relief for Kenyan firms in South Sudan, but added that it may take longer to repair some of the wells that were damaged.

Mr Leshore last month told the Business Daily that the Central Bank of South Sudan was negotiating with the Central Bank of Kenya for the setting up of an exchange rate between the two countries to facilitate trade.

Some Kenyan companies that have been hit hard by the currency crisis include Devki Steel Mills, East African Breweries, Hass Petroleum, Crown Paints, and Mabati Rolling Mills.

“This will be good news because it will make people in Southern Sudan to regularise their orders, at the moment we only sell to them on condition they pay in advance,” said Mr Raval Narendra, the managing director of Devki Group of Companies which exports roofing materials and cement to South Sudan.

Kenya exports a wide range of goods to the country, including cement, roofing materials, food, petroleum products and electricity cables, making it one of Juba’s key trading partners.

“They get many of their products from Kenya, so it will be a good development for Kenyan companies,” said Mr Raval.

Kenya’s exports  to both Sudan and South Sudan increased by 86 per cent to Sh18.8 billion between 2006 and 2010, while imports almost doubled from Sh86 million to Sh167 million, according to the Economic Survey 2012.

Kenya National Bureau of Statistics is yet to separate data for the two countries after the South seceded from the North.

Mr Gideon Mungai, the chairman of the Association of Kenyans in the Diaspora of Southern Sudan, said that several businesses had stopped operations and were waiting to see action taken by the government of South Sudan to solve the problem.

Mr Amum said that both sides had agreed not to support armed rebel groups on either side of the border, one of the biggest points of contention. Kenyan businesses with operations in South Sudan say their money is stuck there as they cannot convert it from Sudanese pounds to US dollars to replenish their stocks.

Decades of civil war

South Sudan seceded from Sudan last year after decades of civil war, but unresolved issues continue to fuel conflict.

The world’s newest country inherited three-quarters of oil production when it broke away, but it shut down its output of 350,000 barrels a day in January after tension with the north over pipeline fees escalated. Khartoum has repeatedly accused South Sudan of supporting rebels of the Sudan People’s Liberation Movement North (SPLM-N) who operate in two states on the border with South Sudan. Juba has denied the charge.

The SPLM-N rebels were part of the southern rebel army during the civil war but were left in Sudanese territory at partition.

“Stability in Sudan is in our interest, and the presence of armed groups on the border is not in South Sudan’s interest,” said Mr Amum.

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