The proposed oil revenue in the 2016 budget presented by President Muhammadu Buhari to the National Assembly about three weeks ago is facing a setback as the nation’s crude exports begin to fall amid further slide in global oil prices.
Industry analysts also say crude oil production in the country will continue its decline this year, meaning lower revenue for the government.
Nigeria, Africa’s top oil producer, relies on crude oil for most of its export earnings and government revenue.
Buhari had in the 2016 to 2018 Medium Term Expenditure Framework and Fiscal Strategy Paper sent to the National Assembly for this year’s budget said oil-related revenues were expected to contribute N820bn.
But the total exports of Nigerian crude oil are expected to slide in February after reaching a three-month high in January, Reuters reported, citing a compilation of loading programmes.
The export programme for Brass River crude, which was under force majeure, had not yet been issued as of Friday, leaving just 56 cargos for a total of 53 million barrels planned for February loading.
While a Brass River programme is expected once the force majeure is lifted, it will not enable February exports to reach the 61.7 million barrels initially planned for January.
The Atlantic Basin was said to be still oversupplied with oil and there were at least a dozen January loading Nigerian cargos looking for outlets.
The country’s output declined by 50,000 barrels per day in December due to disruptions to exports from the Brass River and Bonny production streams, a Reuters survey found out.
The President projected crude oil production of 2.2 million bpd and a benchmark price of $38 per barrel for this year’s budget, down from 2.2782 million bpd in 2015 budget.
The Head, Energy Research, Ecobank Capital, Mr. Dolapo Oni, who noted that the country’s oil production declined significantly last year, said, “Our production is really having issues, and I think it might be worse in 2016. Our production is likely to reduce this year.
“There are not as many fields likely to come on stream this year. Most companies just want to focus on their existing production. So, it is possible we won’t see as much new production come on stream to reverse the trend of decline in major fields we have. That might make production go down.”
He predicted that he nation’s oil production might fall to 1.9 million bpd on the average this year, compared to 2.2 million bpd and 2.1 million bpd in 2014 and 2015, respectively.
“This is worrisome for the government revenue because the budget is benchmarked on 2.2 million bpd production,” Oni said.
The global benchmark Brent crude on Wednesday dropped below $35 per barrel for the first time since July 2004 amid the ongoing row between key producers, Iran and Saudi Arabia, and after a sharp rise in United States’ gasoline inventories.
With the further slide on Wednesday, Brent was more than $3 per barrel lower than Nigeria’s proposed crude oil benchmark price for this year’s budget.
Brent fell to $34.52 per barrel from $36.42 per barrel the previous day amid growing global supply glut of crude.
The supply glut in the world oil market, which is said to be oversupplied to the tune of two million bpd, is expected to be exacerbated by the full return of Iran to the market after the expected lifting of Western sanctions.
There have been calls in some quarters for a downward review of the $38 per barrel oil benchmark price.
The Chairman, Trade Union Congress of Nigeria, Rivers State Chapter, Mr. Chika Onuegbu, said, “More worrisome is that some analysts, including the International Monetary Fund, have projected that crude oil will fall to $20 per barrel in 2016. Also, Goldman Sachs insists that the fall in crude oil price will be sustained and oil price will fall to $20 per barrel.
“Anyone who is a keen observer of the events that are shaping the crude oil price will recognise that we are in for a sustained low crude oil price regime. Accordingly, it is doubtful if the budgeted oil revenue of N820bn will be realised in 2016. If the budgeted oil revenue is not realised, this will negatively impact on the 2016 budget performance.
“It is, therefore, important that the government begins to make contingency arrangements should crude oil price fall below the benchmark price, or better still, review the benchmark oil price downwards.”
Otedola Moves to Sell Part of Geregu Power Plc to FEDA
Afreximbank to acquire part of Geregu Power plant
Billionaire Femi Otedola-owned energy company, Geregu Power Plc is in talks with the Fund for Export Development in Africa (FEDA) for the acquisition of part of the energy company.
The company stated in a statement signed by Akinleye Olagbende, Company Secretary and made available on the Nigerian Exchange Limited (NGX).
Geregu Power hereby notifies “Nigerian Exchange Limited (the Exchange) and the investing public of its discussions with the Fund for Export Development in Africa (FEDA) for the acquisition of a portion of Geregu Power Plc shares. FEDA is the impact development arm of the Africa Export and Import Bank (Afreximbank),” the company stated.
According to the energy firm, talks are presently ongoing and “where these talks progress to a more advanced stage, the company will notify the Exchange and the investing public in line with the rules of the Exchange.”
In October, Geregu Power listed 2.5 billion shares at N100 a unit on the Main Board of the NGX. This puts the company’s market value at N250 billion and also in a better position it to raise capital to bid for Geregu II as it is presently doing.
Speaking on the listing, the Chairman, Board of Directors, Mr. Femi Otedola, CON, said “the listing of the company was the actualization of a vision to bring world-class standards in governance sustainability, and business processes to the Company and the Nigerian electricity sector.”
He added that “listing on the Main Board of the Exchange will ensure that the long-term growth of the company is assured and its benefits will be passed on to our esteemed shareholders”.
Otedola is the largest shareholder in FirstBank and also holds a 99% stake in Amperion Power, the owner of the Geregu Power Plant.
Access Bank Acquires Indirect Stake in Sigma Pensions
Access Holdings on Friday announced it has completed the acquisition of an indirect equity stake in Sigma and the merger of its subsidiary, First Guarantee Pension Limited (FGPL) with Sigma.
According to the bank, following the sanction of the Scheme of Merger between Sigma and FGPL by the Federal High Court on December 1, 2022, FGPL has been dissolved without winding up leaving Sigma as the surviving entity, according to Access Holdings.
Commenting on the transaction, Dr Herbert Wigwe, Group Chief Executive of the Corporation, said “Following the successful completion of the merger, our plan is to leverage the synergies of these entities, as well as the Corporation’s expansive distribution network, strong risk management culture and best-in-class governance standards to create a formidable pension funds administration business.”
Dangote Group Dismisses Rumours of Plan to Rise Cement Price
Dangote Cement says no price increase
Africa’s leading cement producer, Dangote Cement Plc has dismissed the rumor that it plans to increase the price of its products.
The clarification became necessary following a recent publication that Dangote Cement plans a fresh increase.
Recently, there has been some publication (Not Investors King) about a potential increase in the price of cement. The publications noted that the increase will be a result of the high cost of fuel among other prevailing issues.
According to the Senior Manager, branding and communication, Dangote Industries Limited, Mr Sunday Esan, “Dangote Cement is not embarking on a price increase”, stating that the increase is mere speculation.
Meanwhile, Dangote Cement in the third quarter of 2022, recorded an increase in the overall volume of cement sales by 6.2 percent to 20.8 metric tons in the third quarter of 2022.
According to the company’s Chief Executive Officer, Michel Puchercos, this was achieved, despite the elevated inflation caused by a very volatile global environment.
Similarly, while speaking on the increase in the price of fuel, Puchercos said “to mitigate the impact of the significant increase in energy and AGO costs, we are strengthening our efforts to ramp up the usage of alternative fuels”.
“We are on track to commission our Alternative Fuel feed system at Obajana lines I and V, and Ibese line II in November. In addition, we are ramping up our investment in Compressed Natural Gas (CNG), to reduce our AGO usage,” he added.
Investors King understands that Dangote Cement is Africa’s leading cement producer with nearly 51.6Mta capacity across Africa. Although it has a few competitors which include BUA Cement, the company supplies most parts of Nigeria.
In addition, Dangote Cement has operations in 10 African countries.
Its production plant in Obajana, Kogi state, is the largest in Africa with 16.25Mta of capacity across five lines while the Ibese plant in Ogun state has four cement lines with a combined installed capacity of 12Mta.
FirstBank, Others Partner With Junior Achievement on Africa’s Largest High School Entrepreneurship Competition
Property Tech Company, VENCO Secures $670,000 Pre-Seed Funding
ASUU Strike: FG Moves to End Incessant University Strikes, to Review University Autonomy
News4 weeks ago
Npower News: What You Need to Know Before Taking ‘Work Nation’ Eligibility Test
News3 weeks ago
Npower News: NASIMS Announced “Work Nation’s” Minimum Cut-Off Mark
Travel2 weeks ago
Nigerians Eligible For Residence Permit in Norway
News2 weeks ago
Npower News: Latest Update On Npower Payment for Beneficiaries
News4 weeks ago
Npower News: NASIM Provides Requirements Resolution For Failed August Stipend
Blockchain4 weeks ago
FG to Train 30,000 Nigerians on Blockchain Technology; Released Link For Registration
Travel1 week ago
Passengers Groan as Air Tickets Increase by More than 100%
News3 weeks ago
Npower Clarifies “Work Nation” Programme, State It is Optional