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Photograph: Photo by Ryan Lackey, used under CC BY

War-torn South Sudan has scrapped fuel subsidies to help close its 200-million-dollar budget deficit, Finance Minister Stephen Dhieu Dau said Monday.

“We’ve agreed that the issue of subsidies must come to an end so that we save more money for the government,” Dhieu told dpa.

The national oil operator Nile Petroleum Corporation imports fuel at 2 dollars per litre and resells it at 0.22 dollars to retailers, according to the minister.

He did not say how much the government spends on oil imports annually.

South Sudan has to import its oil despite having some of Africa’s largest oil reserves because it has no refinery.

Its oil exports have meanwhile plunged due to a three-year civil conflict that has killed tens of thousands and displaced 3.4 million people.

Dhieu said that scrapping the subsidies was expected to create floating fuel prices and thus help bring the booming black market under control.

Fuel could become about five times more expensive after the subsidies are scrapped, the Sudan Tribune newspaper estimated earlier this month.

But the measure will also increase economic hardship for the population already struggling with three-digit inflation in the war-ravaged economy, analysts said.

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