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Kiir said he appointed General Taban Deng to the post of “first vice president of the republic of South Sudan”, according to a statement read on the country’s national broadcaster.
The appointment followed an earlier announcement that Machar’s own rebel group had replaced their leader with General Deng.
Machar fled Juba this month after Kiir’s forces bombed his house during the clashes that killed hundreds of people and has remained in hiding.
Deng, who acted as the rebels’ chief negotiator during peace talks last year, denied he was forcing out Machar and would readily step aside once Machar returned to the capital of Juba.
“I’m only filling a vacuum. If Riek Machar returns tomorrow, I will gladly step aside if it can help bring peace to South Sudan,” he told journalists during a press conference announcing his nomination.
A Machar spokesman described the replacement of Machar as a “conspiracy” to overthrow him and said that Machar fired Deng on Friday for holding unilateral negotiations with Kiir.
Machar and Kiir fell out in 2013, little more than two years after South Sudan became independent, when Kiir accused his vice president of plotting against him.
The result was a civil war that killed tens of thousands of people.
The latest in a series of peace agreements was sealed in August 2015. Kiir had given Machar a deadline of Saturday to return to Juba.
But Machar has refused to come back until the deployment of a neutral force of African troops — a plan approved by the African Union but rejected by Kiir.