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Chinese Firm Wins $1.85bn Kano Light Rail Contract

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Light Rail

Another light rail project is in the offing as a Chinese firm has received the approval to construct the line in Kano at a sum of $1.85bn (N589.8bn).

An online report by The Cable on Monday gave the construction firm as the China Railway Construction Corporation.

This is coming less than a year to the completion of the first light rail project being constructed in Lagos by the state government. Another Chinese firm, China Civil Engineering Construction Corporation is handling the project.

In a special announcement on Monday, the CRCC said its directors had received a provisional letter of award from Nigeria for the Kano light rail project.

The rail, with a total length of 74.3 kilometres, is expected to travel at a speed of 100 kilometres per hour.

In context, 100 kilometres per hour is as fast as moving from Lagos to Ibadan in 72 minutes.

The first phase of the project construction is billed to take two years, while the second phase of the four-line rail is expected to take another two years.

“The project contract amount is approximately $ 1.851bn, accounting for two per cent of the company’s 2015 revenue, under the China Accounting Standards,” the firm said.

The receipt of the contract is valid for three weeks from the day of award, after which “uncertainties” will prevail.

Nigeria is investing heavily in capital projects, building infrastructure, and replacing half-a-century old rail lines in the country.

With over N1tn budgeted for capital expenditure in the 2016 Appropriation Act, Nigeria is expected to invest the highest amount in capex in its 56-year history.

Rail transportation received a boost in Nigeria on July 26 this year when President Muhammadu Buhari inaugurated the Abuja-Kaduna commercial train operation after series of postponements.

The modernisation phase of the project had commenced with the signing of the contract for the construction of Abuja (Idu) to Kaduna (Rigasa) rail line in 2009.

Buhari had said the rail line would significantly enhance and provide affordable and safe movement of passengers and freight between the Federal Capital Territory and Kaduna State.

He said that the train operation would also serve as a major catalyst for industrialisation and generation of employment.

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.

Markets

OPEC Agrees to Increase Oil Supply by 500,000 Barrels Per Day Ahead of Surge in Demand

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Nigeria's economic Productivity

OPEC and allies finally agreed to ease their 7.7 million barrels per day production cut by 500,000 barrels per day starting from January 2021.

This will now bring the oil cartel’s total production cuts to 7.2 million barrels per day starting from next year.

Oil prices rose after the news as the market believed the approval of Pfizer COVID-19 in the United Kingdom will kick start a series of approvals and helped restore confidence, increase business activities and demand for the commodity across the globe.

After the outcome of the meeting was made public on Thursday, Brent Crude Oil against which Nigerian oil is priced gained 1.35 percent on Friday after gaining 1.4 percent on Thursday to $49.37 per barrel at 11.35 am Nigerian time on Friday.

The US West Texas Intermediate gained 1.29 percent to $46.23 barrel on Friday.

500,000 bpd from January is not the nightmare scenario that the market feared, but it is not what was really expected weeks ago,” said Rystad Energy senior oil markets analyst Paola Rodriguez Masiu. “Markets are now reacting positively and prices are recording a small increase as 500,000 of extra supply is not deadly for balances,” she added.

Investors King increased business sentiment in the energy sector to boost investment, increase activity in the sector and most important improve crude oil demand enough to accommodate the 500,000 barrels per day extra that would be hitting the global market starting from January.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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Oil

The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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