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Banks Clarify Positions on Forex Sanction by CBN

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CBN

Some banks on Wednesday clarified their positions on the alleged suspension from the foreign exchange market transaction by the Central Bank of Nigeria over alleged non-remittance of the NNPC dollar deposits.

The affected banks expressed their stance in statements and e-mails to customers on Wednesday in Lagos.

The banks include the First Bank of Nigeria Ltd., Fidelity, Keystone and Heritage.

FirstBank in a statement, said that the referenced NNPC dollar accounts were fully disclosed to the CBN.

It said that accounts were being operated in line with the regulatory requirements.

The bank also said that tripartite documented discussions had been ongoing between the CBN, NNPC and the bank on the need for domestic retention of those balances.

It said that was as part of measures to ameliorate challenges posed by the lack of FX availability and customers’ inability to source FX to fund their trade finance obligations to the bank.

The bank reassured all its stakeholders that the issue was not a function of concealment or willful non-compliance by the bank.

The bank said, “We are confident in our ability to meet and honour all our obligations as at when due and are currently in talks with the CBN and other relevant bodies and are positive of an amicable resolution soonest.”

Also, Fidelity Bank said it had repaid over 288 million dollars of those funds in line with the advised repayment schedule.

It said, “We will like to clarify that these deposits were duly reported to the CBN by Fidelity Bank in line with the extant TSA requirements contrary to the erroneous view in certain media reports that the funds were concealed from the regulators.

“At the commencement of the Treasury Single Account in 2015, Fidelity bank advised NNPC and the regulators with a schedule of repayment for the NNPC/NLNG dividend dollar deposits.

“Please note that you can continue to operate your domiciliary account with Fidelity and this development will not affect your deposits/loans (local and foreign currency), remittances, transactional services and electronic banking services.

“Although the market condition remains quite challenging, we will continue to honour our obligations and operate with the highest level of corporate governance.”

The bank said in the interim that it was engaging with the other eight banks involved, stakeholders and the regulators to resolve the issue quickly and ensure its return to the FX market.

Keystone Bank, in a statement signed by the management, said it had engaged in efforts that were geared towards very timely resolution.

It said the bank understood the importance of sourcing foreign exchange for its customers’ needs to support economic growth.

The bank said that the development did not adversely affect customers’ existing transactions with it except that there would be constraints in establishing new letters of credit until the issue was resolved.

Meanwhile, Heritage Bank said that the CBN’s announcement of temporary suspension was a systemic challenge to the banking industry that cut across most banks.

It said that the bank would continue to treat forex transfer, remittance from domiciliary accounts, establishment of non-valid for FX form Ms and establishment of Letter of Credit on the bank’s offshore lines.

The CBN barred the banks from the foreign exchange market.

The banks were United Bank for Africa, 530 million dollars and First Bank of Nigeria, 469 million dollars.

Others are Diamond Bank Plc, 287 million dollars; Sterling Bank Plc, 269 million dollars; Sky Bank Plc, 221 million dollars; Fidelity Bank 209 million dollars; Keystone Bank, 139 million dollars; First City Monument Bank, 125 million dollars and Heritage Bank, 85 million dollars.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

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Farm input

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Economy

Petrol Landing Cost Jumps to N186, Oil Hits $64

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Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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Economy

FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

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Gas Plant

FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

The Federal Government has said about 100 million Nigerians will be lifted out of poverty through the National Gas Expansion Programme (NGEP).

The Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed this on Monday during the inauguration of the NGEP in Ado Ekiti, Southwest.

Sylva said the project was “a practical demonstration of President Muhammadu Buhari’s commitment to lift 100 million Nigerians out of poverty by using gas value chain as catalyst for social and economic development in Nigeria”.

The minister said, “The programme has its main objective to reinforce and expand gas supply as well as stimulate demand in Nigeria through effective and efficient mobilisation and utilisation of all available assets, resources and infrastructure in the country.

“The programme is geared towards the implementation of Mr President June 12, 2019 promise to take hundred million Nigerians out of poverty within the current decade by ensuring that locally produced, available, accessible and affordable fuel is sufficiently supplied across the country”.

Sylva added that Nigeria was richly endowed with mineral resources, specifically, hydrocarbons, crude oil and natural gas with proven gas reserves of over 200 trillion cubic feet of natural gas, which he said had presented the country with opportunity to use gas as a catalyst for social economy renaissance.

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