JUBA, May 11 (Reuters) - South Sudan has rescinded subsidies on fuel after they failed to benefit intended recipients, the government said on Friday, raising the spectre of even higher pump prices amid already rampant inflation.
Oil accounts for almost 100 percent of the country's export revenue but hard currency reserves have been gutted by a fall in oil prices and output since civil war broke out in 2013.
Galloping inflation and fuel shortages plague the capital Juba, partly due to a lack of dollar reserves to buy imports and to flooding on the main road to Uganda that fuel tankers from the Kenyan port of Mombasa use to enter landlocked South Sudan.
"The Council of Ministers noticed and acknowledged that the citizens of South Sudan are indeed suffering, and the fuel subsidy which was meant to alleviate the economic conditions of most of our citizens is not happening," Lily Albino Akol Akol, deputy Minister of Information, told reporters.
"Lifting fuel subsidy will start immediately. The ministers of finance and petroleum as well as Nilepet have been directed to start lifting fuel subsidies with immediate effect," she added, referring to the state petroleum company.
At present, a litre of petrol in Juba costs 290 South Sudan pounds ($0.97), while that of diesel costs 280 pounds in privately run stations.
Nilepet is meant to sell its petrol and diesel at 22 pounds a litre but does not produce enough to meet demand, prompting private distributors to import petrol and diesel and sell it at their present prices.
In addition to transport, fuel is used in power generators.
According to 2017/2018 budget estimates, Nilepet was allocated $183 million to import subsidised fuel for domestic consumption.
Former finance minister Stephen Dhieu Dau proposed that the subsidies be lifted to save the money for other government expenditures including payment of salaries.
($1 = 300 South Sudan pounds) (Reporting by Denis Dumo; Editing by George Obulutsa and Mark Heinrich)
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