"We said that unless fundamental changes are made to this document, it's extremely difficult for us to sign it," Tugod said.
He was speaking just after the JEM leaders gave diplomats and AU mediators their reaction to the draft, the result of two years of negotiations in the Nigerian capital, Abuja, aimed at ending the conflict in Sudan's western Darfur region.
The JEM is the smallest of the three rebel factions involved in the peace talks.
The other factions, arms of the Sudan Liberation Army (SLA), earlier emerged from their own meetings with the diplomats and initially gave no reaction. However, one faction said later that it would also reject the plan.
Abdelwahid Al-Nur, an SLA leader, said: "We need the document to be improved upon. We are not going to sign it."
The rebels took up arms in early 2003 in ethnically mixed Darfur, a region the size of France, over what they saw as neglect by the Arab-dominated central government.
Khartoum used militias known as the Janjawid, drawn from Arab tribes, to crush the rebellion. Tens of thousands of people have been killed, while a campaign of arson, looting and rape has driven more than two million people from their homes into refugee camps in Darfur and neighbouring Chad.
Tugod said the JEM wanted the peace deal to give it a Darfur regional government, a post of Sudanese vice-president, greater representation in national institutions, compensation for victims of the conflict and the allocation of 6.5% of Sudan's national income to a Darfur development fund.
"We want those amendments, otherwise we won't be able to sign," Tugod said. His demands have been known for months and mediators have said it will be impossible to meet them in full.
Mediators had pressured the rebels in late-night talks to reach a deal with the Sudanese government.
The government had said it would accept the original AU draft but the rebel factions rejected it, citing objections in all three areas covered - security, and wealth- and power- sharing.
Robert Zoellick, the US deputy secretary of state, had arrived in Abuja on Tuesday and spent two days trying to wring concessions from both sides to break the deadlock.
AU mediators had twice put back a deadline for an agreement to allow more diplomatic efforts, but the final deadline elapsed at midnight (2300 GMT) on Thursday
Noureddine Mezni, an AU spokesman, said: "It's decision time. We are not reopening discussions."
Sudan bulletin, April 18, 2006: Precarious situation for the people of Jebel Marra [in Darfur] - International Committee of the Red Cross