China to loan South Sudan $10 billion

JUBA - China has agreed to loan oil-rich South Sudan eight billion dollars (S$10 billion) for infrastructure development, Juba government spokesman Barnaba Mariel Benjamin said on Saturday.

"It will fund roads, bridges, hydropower, agriculture and telecommunications projects... within the next two years," he said, giving details of a visit this week to China by South Sudan's President Salva Kiir.

"Details (of the projects) will be defined by the ministers of the two countries and by the Chinese firms in charge of the work," said the spokesman for the world's youngest nation.

Energy-hungry China is the largest purchaser of oil from South Sudan, which proclaimed independence last July, and is also a longstanding business partner of Sudan from which it also buys oil.

Kiir had to cut short his visit to China due to the current conflict between his country and Sudan.

South Sudan broke away from Sudan after a peace deal ended one of Africa's longest civil wars, which killed about two million people.

But tensions soon flared up again over a series of unresolved issues, including the border, the future of disputed territories and oil.

As a result of independence, the landlocked South Sudan took with it about 75 percent of the formerly united Sudan's oil production, worth billions of dollars.

In a key dispute, the two sides were unable to agree on how much the South should pay to export its crude through a northern pipeline and port, leading the Juba government in January to shut its production after Khartoum began seizing the oil in lieu of payment.

The poverty-stricken South said 98 percent of its pre-shutdown revenue came from oil.

Fighting broke out in March, with warplanes from the north hitting oil-producing regions in the southern state of Unity.

The South seized Sudan's Heglig oil field on April 10 from Khartoum's army after accusing Sudan of using it as a base to launch attacks on the South, pulling out 10 days later under international pressure.

Sudan declared on April 20 that its army had forced the Southern soldiers out of Heglig, but the South said it withdrew of its own accord.

Juba argues that Heglig - or part of the oil field - lies south of the 1956 border and therefore belongs to them.

Each side blames the other for damaging the oil facility, which provided about half of Sudan's oil output and is now shut down pending repairs.

Khartoum said Saturday that four foreigners investigating debris from recent fighting had been caught in the Heglig oilfield area, but the UN identified them as deminers.

Sudan on Saturday ruled out UN Security Council involvement in efforts to end a month of border clashes with South Sudan, which on Saturday said it had repelled an attack by Khartoum-backed rebels.

"Sudan confirms that it rejects any efforts to disturb the African Union role and take the situation between Sudan and South Sudan to the UN Security Council," Foreign Minister Ali Karti said.

The African Union itself last Tuesday asked the Security Council to endorse its demand that the two Sudans halt hostilities in 48 hours, start talks within two weeks and complete a peace accord in three months.

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