South Sudan sets out conditions for Sudan deal

South Sudan set out Monday a proposed deal with rival Sudan, offering an increased oil transit fee offer, an $8.2 billion financial support package and demanding a referendum on disputed Abyei.

The offer comes just days ahead of an African Union and United Nations imposed deadline calling on both sides to reach agreements on outstanding issues -- including oil transit fees, border demarcation and security -- by August 2.

Pagan Amum, South Sudan's chief negotiator told reporters Juba was ready to resume oil exports stalled in January through Sudan if "reasonable" transport fees are agreed on.

Khartoum, whose officials met with Juba's top team late Sunday and are believed to be reviewing the offer, has so far not responded publically.

"In the interest of peace, South Sudan is offering generous financial transfers to Sudan," the proposed offer read.

The financial package, worth $8.2 billion over three years, includes a cash payment and debt forgiveness to help fill the massive financial gap Sudan reported after the South gained independence last July.

"This is a fair and balanced agreement where each nation will benefit," it added, noting the South was willing to pay up to $9.10 a barrel to transit its premium-quality oil through Sudan, with lower fees for poorer quality oil.

Khartoum had earlier demanded as much as $36 per barrel.

"We propose to immediately resume our exports of oil through Sudan in return for fair, reasonable transportation fees," Amum said.

Other key proposals include an international arbitration process with a strict time frame to determine where the border lies in contested -- and often oil-rich -- frontier regions.

However, the South demanded the disputed Abyei region must hold an AU-UN organised referendum before the year's end to decide if it belongs to the north or the south.

The referendum, provided for in a 2005 peace deal, was supposed to happen in 2011 but was stalled after disputes over eligibility for voting.

South Sudan said those eligible to vote would be the people of the Ngok Dinka ethnic group -- seen as Southern supporters -- as well as anyone living in the Lebanon-sized area for three continuous years prior to 2005.

The deal was a "last offer, not a negotiating position," Amum said.

"We are left with only nine days to August 2 (deadline)... we believe time is over for prolonging lengthy negotiations," he added.

When land-locked South Sudan gained independence from Sudan last July, it took with it two thirds of the region's oil, but the pipelines and processing facilities remained in the North.

In January, Juba cut off all oil production, crippling both economies.

The latest round of talks comes a week after Sudanese President Omar al-Bashir and his South Sudanese counterpart Salva Kiir exchanged a symbolic handshake at an AU summit.

Amum insisted talks between both sides would continue Monday with the AU mediating team.

On Saturday South Sudan said it was cancelling planned face-to-face peace talks with Sudan after accusing Khartoum of launching a new air raid on its territory.

Sudan denied bombing its southern neighbour, saying it had targeted Darfuri rebels inside its own territory.

The negotiations to settle disputes stemming from the South's independence in July last year stalled after fierce border battles broke out in March, but resumed in May.

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