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$2.3bn NNPC funds: CBN Bars 9 Banks From Forex Market

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NNPC - Investors King

The Central Bank of Nigeria on Tuesday wielded the big stick as it barred nine Deposit Money Banks from the nation’s foreign exchange market for failing to remit the sum of $2.334bn belonging to the Nigerian National Petroleum Corporation to the Treasury Single Account.

President Muhammad Buhari had last September ordered all the DMBs in the country to remit all Federal Government funds to the TSA.

The banks are: First Bank of Nigeria Limited ($469m); Diamond Bank Plc ($287m); Sterling Bank Plc ($269m); Skye Bank Plc ($221m); Fidelity Bank ($209m); United Bank for Africa ($530m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).

Officials of the CBN officials told our correspondent that the sanction would remain until the DMBs could remit the funds to the CBN.

The officials further said the further disciplinary actions awaited the errant banks after remitting the funds in full to the Federal Government’s coffers.

As of time of filing this report, it was learnt that some bank executives were meeting with the CBN Governor, Mr. Godwin Emefiele, over the development.

However, the Head, Corporate Communications, UBA, Mr. Charles Aigbe, said the bank was not among the banks sanctioned by the CBN.

In a statement issued on Tuesday, Aigbe said, “Our attention has been drawn to report of the ban of UBA from the foreign exchange market by the CBN over the non-remittance of the NNPC/NLNG dollar deposits.

“We wish to state very categorically that UBA has completely remitted all the NNPC/NLNG dollar deposits. We thank all our numerous customers, business partners and other. stakeholders who have reached out to us on account of this report.”

The spokespersons for First Bank, Mr. Babatunde Lasaki, said the lender would issue a statement on the development.

But as of the time of filing this report, he had yet to do so.

Spokesperson for FCMC, Mr. Diran Olojo, in a terse response, said, “We are working with the CBN on an amicable resolution. This is really a function of the dire macroeconomic situation and illiquidity in the FX markets, rather than concealment or wilful non-compliance by banks.”

Spokesperson for Diamond Bank, Mr. Mike Omeife, did not respond to telephone calls and text messages seeking their reaction on the development.

The Skye Bank spokesperson, Mr. Ndumechi Ezurike, could not be reached for comments.

Spokespersons for Fidelity Bank, Sterling Bank and Heritage Bank could not comment immediately.

However, sources in the banks said their managements were working with the CBN to resolve the matter.

It was learnt that Fidelity Bank had been following a payment plan agreed with the CBN on the funds.

Following the President’s directive on the TSA last September, majority of the banks had complied by remitting all the Federal Government funds including that of the NNPC to the TSA.

However, the CBN reportedly fined First Bank, UBA and Skye Bank for failing some billions of naira to the Federal Government coffers in line with the TSA directive.

Further investigations by our correspondent revealed that following the presidential directive on the TSA, most of the DMBs remitted all naira-denominated funds in their possession including that of the NLNG/NNPC to the CBN.

However, the dollar components of the NLNG/NNPC funds in the banking system, estimated at about $5bn, could not be remitted immediately due to scarcity of forex in the country.

However, the banks reached an agreement with the CBN to start remitting the funds on monthly basis.

The monthly payment plan submitted by the banks to the CBN, it was learnt, was being followed by the some banks while other defaulted.

Following the compliance of some of the banks to the payment plan, the dollar component of the NLNG/NNPC funds was reduced to $2.3bn.

The failure of some banks to comply with the payment plans and the dire need for the CBN to shore up the nation’s fast-depleting external reserves, it was learnt, forced the regulator to adopt a measure.

This, findings revealed, forced the CBN to bar the banks from the forex market.

A top bank executive close to the development, who spoke under the condition of anonymity, said, “We need to admit we have a national problem. The NLNG deposit in the banking system was about $5bn. The banks have been paying and what is remaining now is just about $2bn. The banks have submitted a payment plan and they are following it. The banks have the naira equivalent of the outstanding amount. The challenge is that they cannot get dollar to buy to settle the money.”

Some top bankers said the approach the CBN was adopting was capable of compounding the problem.

“This could affect the banks image and their ability to get foreign investors; we need to admit we have a national problem and seek for ways to resolve it,” one of the bankers said.

The NLNG was paying dividends from the investment of the government in the company (NLNG) to the NNPC.

The dividends had accumulated to about $5bn; the

NNPC was investing this dividend payment in a dedicated account as fixed deposits with commercial banks.

It was learnt that when the Federal Government raised the issue that the dividends should have been paid into the Federation Account, the CBN governor invited the CEOs of all the banks that had the funds to Abuja for a reconciliation of the amount in each bank with the records of the CBN/NNPC, and agreed to a repayment time table of the funds with the banks

As of the time the TSA Implementation commenced in September 2015 some of the banks had paid back over 50 per cent of the funds based on the repayment timetable

This repayment by the banks was the bailout of $2.1bn (N414bn) that was shared by the FGN and state governments in July/August 2015.

When the TSA commenced, the banks reported these funds as part of government deposits they had but it was not remitted like other TSA funds because of the remittance timetable that had been agreed with the CBN.

The NNPC invited banks earlier this year to submit a revised repayment plan for the balance of the funds offers.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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