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Recession: Dangote sacks 36 Expatriates, 12 Nigerians

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  • Dangote sacks 36 Expatriates, 12 Nigerians

The current recession rocking the Nigerian economy has hit one of the biggest employers of labour in the country outside of the government as the Dangote Group, belonging to Africa’s richest man, Aliko Dangote, has fired 48 members of staff.

Our correspondents gathered that those sacked were made up of 36 expatriate and 12 Nigerian workers from the group’s headquarters and one of the subsidiaries, Dangote Cement Plc.

Though no official of the group was willing to speak on the matter on Sunday, one of our correspondents gathered from highly placed sources that the decision to sack the workers was not unconnected with the current high cost of running business in the country occasioned by the unavailability of foreign exchange and the unprecedented hike in the naira to dollar exchange rate.

It was further gathered that the huge amounts in foreign currencies being paid to the expatriate workers had become a burden on Dangote due to the steady depreciation in the value of the naira and the difficulties of raising enough dollars.

Consequently, the industrialist, according to sources, has decided to replace the expatriates with Nigerians, who have acquired the requisite experience on the job, as paying them in naira will be less problematic.

For the affected Nigerians, it was gathered that most of them had disciplinary issues, which made it easy for the group to do away with their services.

When contacted on Sunday, the Group Head, Corporate Communications, Dangote Group, Tony Chiejina, said he could not speak on the development.

However, in a letter signed by the President/Chief Executive Officer, Dangote Group, Aliko Dangote, dated Thursday, October 20, 2016,the firm stated that it was constrained to take the “tough” decision as economic factors had affected the cost of production.

The letter, which was titled: ‘Recent Retirement Exercise’, however, appreciated those affected for their contributions to the growth of the group.

The letter read in part, “This year has been a very challenging year for us as a business. The unavailability of foreign exchange coupled with an unprecedented hike in the exchange rate has resulted in increased costs across the organisation.

“This called for a proper review and adjustment of our costs across board to ensure efficiency and effectiveness in the deployment of our factors of production in a bid to eliminate redundancies that we know exist, which resulted in some tough decisions, which means losing staff, including some of our colleagues.

“On Friday, October 14, 2016, we began the process of staff cutbacks as it is imperative to review our human capital deployment for the required cutbacks that would ensure efficiency and eliminate redundancies in the allocation of human resources.

“This first phase of this exercise involved the cutback of 36 expatriate staff across the Dangote Cement Plc and Dangote Industries Limited, and 12 local staff members in Dangote Industries Limited.”

As an organisation with international operations, the group promised that it would continue to review and restructure its human capital deployment to ensure “optimal allocation of skill sets and size of the workforce each function requires.”

The group urged the workers to shun lateness, improper dressing and other unsavoury behaviours in the workplace.

Bloomberg had in its latest ‘Billionaire Index’ reported that Dangote had lost $5.4bn of his fortune this year due to the fall in the value of the naira and the decision of the Central Bank of Nigeria to ration dollars to stem huge capital outflows in the wake of Nigeria’s worst economic crisis.

Dangote had recently urged the Federal Government to sell off the Nigerian Liquefied Natural Gas Company and other dormant but huge capital-generating enterprises and reinvest the proceeds in the economy to bring the country out of the current economic recession before the end of the fourth quarter.

Dansa Foods Nigeria Limited, which claims to be a member of the Dangote Group, has reportedly been unable to pay its workers for the past six months.

The company is being run by Alhaji Sani Dangote, a brother of Aliko, who is the Executive Chairman, with Aliko’s shares embedded in the firm.

Multiple sources in the Dangote Group claimed that Dansa Foods was not part of the group but was an independent company owned and run by Aliko’s brother.

However, in a statement announcing its participation at the just concluded Lagos International Trade Fair, the group listed some of its subsidiaries as Dangote Sugar Refinery, Dangote Agrosacks, NASCON Allied Industries Plc (Dangote Salt), Dangote Rice Limited, Dangote Cement Plc and Dansa Foods Limited.

It was reported that the company, which produces Dansa Juice and other goods, had laid off more than half of the workforce following dwindling sales and high cost of production caused by high exchange rate of the naira.

It was gathered that the company had suspended the production of Dansa Juice and other products, and was only producing Mowa Bottle Water.

As a result, the workers have reportedly embarked on a strike to press home their demand.

 

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.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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