* Foreign reserve levels may be dangerously low
* Currency slides on black market
* Government restricts imports of spare parts
* Officials insist gold, farm exports can offset oil loss
* But auto, air transport being hit
By Ulf Laessing
KHARTOUM, March 14 (Reuters) - In Sudan’s only shopping mall, in the capital Khartoum, customers need to walk up to the shops from the underground car park because the escalators have broken down. It is unclear when they might be fixed.
“The escalators are out of order and we are trying to find spare parts that are not available on the local market,” a notice at the entrance of the Turkish-funded Afra Mall says.
In the international departure hall of Khartoum’s international airport nearby, two escalators are out of service.
Importing foreign technology and spare parts to Sudan has never been easy; most Western firms shun the country because of a U.S. trade embargo imposed about 15 years ago over charges that the government hosted terrorists.
But the situation has been worsening since Sudan lost three-quarters of its oil production when its former civil war foe South Sudan became independent last July under a peace deal.
Struggling to find other sources of state income and hard currency, the central bank is trying to stop a slide of the Sudanese pound in the black market, where it is trading more than 80 percent below its official rate against the U.S. dollar.
Worried about depleting its foreign reserves, which are needed to buy basic food items abroad, the government is restricting imports of spare parts for much basic machinery, local businessmen say.
It is not clear exactly how critical the reserve situation is because the central bank does not publish foreign reserve levels. Last October, deputy central bank governor Badr al-Deen Abbas told the local press that Sudan had enough reserves to cover three months of basic imports; no update has been given since then.
In many countries, three months of import cover would be considered on the verge of being dangerously low. Some estimates suggest Sudan’s plight is worse; the International Monetary Fund estimated late last year that Sudan’s gross official reserves would total $800 million at the end of 2011, which would be under one month of its imports of goods and services.
The government’s measures certainly suggest the situation is serious. Staff at several car repair garages said they had staged a strike for several days this month after the government asked them to stop importing second-hand spare parts.
“Prices have gone up by 30 percent since then. It’s a big problem for customers and traders,” said Mohammed El-Tayyeb, who runs a Khartoum garage packed with second-hand engines, gear boxes and car doors for Japanese, Korean and European cars.
“This second-hand Mitsubishi engine now costs 15,000 pounds (around $3,200 on the black market). Before the ban it was only 12,000,” he said. “Customers come to us, ask about the price and leave immediately.”
Several garage owners in the area said they had organised themselves into a committee to protest to the government against import restrictions.
“If they really implement the ban, we will protest and start legal action,” said Mohamed Osman. Outside his workshop, an angry customer shouted at dealers over the price of a used gearbox for his minibus.
“I have been searching for six days and only found a Chinese copy of the gearbox,” the customer complained.
Traders say the situation may worsen. Much of Sudan’s car market uses only second-hand spare parts, since few people can afford new parts; the Mitsubishi engine in El-Tayyeb’s garage would cost at least 45,000 pounds if bought new. Even government and army cars visit repair garages to obtain second-hand parts.
The government insists it will overcome the economic crisis by boosting gold and agricultural exports to replace oil.
“The situation is under control,” said Ishaq Adam Gamaa, state minister of petroleum, shrugging off the loss of about $5 billion in annual oil revenues because of the loss of oil fields with the South’s secession.
Sudan has made $500 million from gold exports since the start of this year and expects livestock exports to hit record levels in 2012, he said.
“We came into the oil business only ten years ago so we have our system of taxing. We have of system of agricultural products, we have our system of livestock,” Gamaa said.
But the economic crisis is being exacerbated by low productivity, the result of poor planning and corruption, private analysts say. Despite being rich in farmland, Sudan needs to import even basic food items such as sugar and fruit juices.
Since there is only one major sea port, in Port Sudan some 1,100 kilometers (700 miles) east of Khartoum, imports are expensive; they are trucked for days across the vast country, using a transport system that is likely to be slowed further by the shortage of parts.
Because of the U.S. embargo, plane makers Airbus and Boeing among others do not sell to Sudan, leaving state airline Sudan Airways and other local carriers struggling to get their hands on spare parts. Sudan Airways, one of the oldest African carriers, founded during British colonial rule over five decades ago, is down to around six ageing Airbus and Fokker planes, many bought in 1996.
“Sanctions are hell for everything, for maintenance, for spare parts,” Sudan Airways General Manager al-Obeid Fadhl al-Moula said in a recent interview. “All the time there is a problem. I do get (spare parts) through friends and companies.”
As spare parts become more difficult to find, some luxury consumer goods are vanishing almost entirely from shelves, businessmen say. Staff at three flower shops in Khartoum said they were finding it almost impossible to obtain new supplies as the central bank limited letters of credit for importers.
“We can’t import flowers now,” said one employee at an empty boutique.