PARTICIPANTS GIVE SOUTHERN SUDAN INVESTMENT AND

UNCLAS SECTION 01 OF 02 KHARTOUM 000721 SIPDIS SIPDIS, SENSITIVE E.O. 12958: N/A TAGS: EINV ECON EPET PGOV SU SUBJECT: PARTICIPANTS GIVE SOUTHERN SUDAN INVESTMENT AND DEVELOPMENT CONFERENCE LOW MARKS ¶1. (SBU) Summary: A putative Southern Sudan investment conference in Nairobi March 14-16 scored well on quantity, but missed the qualitative mark. Most participants outside of the petroleum sector were there in search of contracts, not to invest, and those who had come to network with the top echelons of the Government of Southern Sudan (GoSS) were disappointed when the senior leadership did not show. GoSS presentations on investment possibilities were vague and full of unanswered questions about regulatory codes and requirements for Sudanese equity partnership. End Summary. -------------- No Shows and Few Investors -------------- ¶2. (SBU) The Investment/Development Conference attracted nearly 300 paying participants, who each paid a fee of USD 2,200 to attend. CWC Associates Ltd., the conference organizers, had advertised the following headliners from Sudan: GoSS President Salva Kiir, Government of National Unity (GNU) Energy Minister Al Jaz, GNU Minister of Investment Malik Agar, GoSS Vice President Riek Machar, and GNU State Minister for Energy Angelina Teny. None of them showed. In fact, no one from the GNU attended, North or South. GoSS speakers included lesser luminaries such as Energy, Mines and Industry Minister Albion Akol Akol, Agriculture and Forestry Minister Martin Elia, Minister of Commerce Trade and Supply Anthony Lino, GoSS Minister of Finance Chol, and Minister of Culture and Youth John Luk Jok, one of five GoSS members on the National Petroleum Commissi%n. ¶3. (SBU) The paid participants for the most part were construction, logistics, aviation, and oilfield service contractors looking for business opportunities. There were a handful of legitimate investors from Khartoum looking for possibilities, and a few representatives of the banking/financial sector, but the vast majority of serious investors were from the petroleum sector, and most represented companies already involved in Sudan: India's Reliance, Total, White Nile Ltd., Equator, Malaysia's Petronas, H Oil and Minerals Ltd., and South Africa's PetroSA. Chinese petroleum companies were notoriously absent, or at least low profile. -------------- Who Said What -------------- ¶4. (SBU) There were a number of speakers from the EU, DFID, the UN, the IBRD, and various NGOs and expert consultants. For the most part, the presentations were informational and academic in nature, more geared to development than investment. The need for transparency and a proper regulatory environment were underlying themes. ¶5. (SBU) The GoSS speakers fared less well. Jok was the most cogent in addressing the key area of interest -- petroleum -- but he publicly took the line that Super Block B contested between Total and White Nile Ltd. should be partitioned into smaller concessions. Ministers Lino and Makana called for investment in agriculture, forestry, and mining as well as petroleum, but none could offer specifics, including what the regulatory environment would look like. Makana said that there was a draft investment code ready for ratification by the Southern Legislative Assembly that required Sudanese participation in foreign investment schemes, although he could provide no details. -------------- No One Left Happy -------------- ¶6. (SBU) Paying participants who had come to make high- level contacts expressed displeasure with the proceedings, and some demanded their money back. Total, which (unlike White Nile Ltd.) had agreed to provide conference funding and an elaborate dinner for the participants, was reportedly put out that it gained no access to high-level GoSS officials to plead Total's case. Smaller participants, including a Dubai freight forwarder who paid USD 3,000 for a booth and was given a small folding table outside the front door (and demanded a refund),were also unhappy. Another participant said that Makana's statement that foreigners would need local KHARTOUM 00000721 002 OF 002 partners to help them move things through the GoSS bureaucracy was tantamount to saying that the investment climate was poor. -------------- Shoddy Organization and Money Making -------------- ¶7. (SBU) A senior official of the Southern Sudan Chamber of Commerce and Industry (SSCCI) blamed the organizers for the outcome. He said that Al Badr International Development Co. out of Kuwait was the chief culprit. In 2005, this company invited Riek Machar, Taban Ding, and two other senior GoSS members to Kuwait for a visit. Al Badr representatives had subsequently visited Juba, bestowing generous gifts on a number of prominent southerners, although to date no investments had followed. Al Badr had hired CWC Associate Ltd. to stage the conference, and Prime Resource Ltd., a consultant firm, to identify speakers. Neither the SSCCI nor most line ministers had been consulted - SSCCI suspected that invitations had gone to senior officials and their names used to advertise the conference before confirmation of attendance was received. ¶8. (SBU) The SSCCI official pointed out that the conference had been a significant money-spinner for CWC. In addition to participation and display fees, CWC had convinced various companies to fund representational events and had organized, for a fee, one on one meetings between GoSS officials and conference participants, although for the most part the latter did not show. He added that -- while it had not been announced -- the investment code would require foreign investors to take on southern Sudanese partners to the tune of 51 percent equity shares. -------------- Comment -------------- ¶9. (SBU) The conference missed the mark as far as investment was concerned. There were few serious investors around, few of the top GoSS officials, limited flirtation between the two sides, and certainly no consummation of deals. Networking was minimal. It was abundantly clear that until mining, forestry, and investment codes are in place, the GoSS will not able to showcase what it has to offer. If the investment code does indeed cede to investors the majority of the risk in joint ventures, but only a minority voice in ownership, the utility of future conferences of this nature remains in doubt. STEINFELD