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FBNQuest Report Puts Nigeria’s Q3 Growth at -1.7%



  • FBNQuest Report Puts Nigeria’s Q3 Growth at -1.7%

As Nigerians await the report of the Gross Domestic Product (GDP) for the third quarter (Q3) of the year, FBNQuest’s economic outlook has forecast a successive negative growth for the country.

But on the sidelines of the unveiling of the report titled: “A Quarter of Drifting Ahead” by FBNQuest, at its yearly investor conference in Lagos, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, harped on the need to develop the power sector. This, he said will industrialise economic activities.

Mr. Gregory Krinsten of FBNQuest, in his presentation on Nigeria’s economic outlook, said the growth pressure on the country is still high as there is a projected -1.7 per cent year-on-year contraction in third quarter, making it the third consecutive decline in the year.

He said that the authorities seem to have no choice but to reach a deal with the Niger Delta militants and ensure that its fiscal operations provide some boosts to the economy.

However, he noted that there has been a trend of increase in the federal allocations for the past three months, but mostly driven by the devaluation of the currency and stronger non-oil revenue collections, which would expectedly rub off on government’s capital releases.

He also noted that it has become a struggle to see foreign exchange inflows to complement the Central Bank of Nigeria (CBN’s) small daily offering, adding that the various suggestions to solve the problem are either not large enough to make impact or politically unacceptable.

Enelamah, noting that Nigerians are enterprising and must be supported to accelerate the growth of the economy, pointed out that they thrive as individuals outside the country, but not as a group for the nation. He said this borders on developing specific policies for small businesses.

According to him, with the foreign exchange crisis caused by volatile oil prices, the country’s investments need not be built around foreign investors, who are not always there for the economy, even when returns are always guaranteed by right policy.

Also, Mr. Olubunmi Asaolu, while presenting a report titled: “Nigerian Banks, Weathering the Storm”, stated that weaker growth and earnings’ trend among corporates, particularly banks, were driven by macroeconomic challenges.

He said the over-reliance on petrodollars has now created negative outcomes for the economy, especially with the uncertainty in the price of the commodity, affecting banks as well.

Consequently, the impact of the ongoing challenges has crystalised in another gloomy projection for the economy, as the company projects -1.2 per cent record for the GDP in 2016, against 2.8 per cent growth in 2015.

“Nigerian banks are experiencing their slowest year since the 2009 crisis. First half of 2016 headline growth rates are flattering because of the impact of Naira devaluation.

“Despite the macro headwinds, some key positives stand out. Banks have been more resilient than the market has been willing to give them credit for. The non-performing loan ratios of some banks are still below five per cent,” he said.

Asaolu noted that banks have capitalised on Naira devaluation to make substantial foreign exchange-related gains, which are likely to support their third quarter 2016 earnings profile.

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

Crude Oil

South Africa’s iGas, PetroSA and Strategic Fuel Fund Merge to Create South African National Petroleum Company



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The South African Department of Mineral Resources and Energy (DMRE) has announced the merger of Central Energy Fund (CEF) subsidiaries iGas, PetroSA and the Strategic Fuel Fund (SFF).

The merger will be effective from 1 April 2021 and the new company will be called the South African National Petroleum Company.

The merger, driven by the pursuit of implementing a new company that has a streamlined operating model via the development of a shared services system and a common information platform, comes a few months after cabinet approval and the confirmation that PetroSA had incurred losses of R20 billion since 2014.

Additional factors which prompted the move included the determination to strengthen PetroSA which had not had a permanent CEO in five years prior to the appointment of CEO Ishmael Poolo last and, had become majorly ungainful since its failure to secure gas for the gas-to-liquids refinery project in Mossel Bay.

While the merger deadline has been set, the portfolio committee expressed reservations to the department’s likelihood of meeting the deadline, considering the existing legislative regime, pending issues raised in the SFF and PetroSA forensic reports, as well as PetroSA’s current insolvency and liquidity challenges, the official press statement on the briefing revealed.

“South Africa’s energy sector is entering a new dawn,” said NJ Ayuk, Executive Chairman of the African Energy Chamber. “With gas discoveries off the coast and the announcement of the REIPPP programme bid window 5 and 6 on the horizon, now is the most opportune time for the merger of the CEF subsidiaries. Of course, it is not an easy task and delays may be anticipated but, this move signals a real change towards a meaningful strategy that will not only be beneficial to the DMRE but to potential investors and local development as well.”

The African Energy Chamber welcomes this move and acknowledges that this is yet another step supporting the country’s determination to restarting the engines of sustainable growth and the transformation of energy policy and infrastructure.

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Crude Oil

Crude Oil Hits $71.34 After Saudi Largest Oil Facilities Were Attacked




Brent Crude Oil Rises to $71.34 Following Missile Attack on Saudi Largest Oil Facilities

Brent crude, against which Nigerian oil is priced, jumped to $71.34 a barrel on Monday during the Asian trading session following a report that Saudi Arabia’s largest oil facilities were attacked by missiles and drones fired on Sunday by Houthi military in Yemen.

On Monday, the Saudi energy ministry said one of the world’s largest offshore oil loading facilities at Ras Tanura was attacked and a ballistic missile targeted Saudi Aramco facilities.

One of the petroleum tank areas at the Ras Tanura Port in the Eastern Region, one of the largest oil ports in the world, was attacked this morning by a drone, coming from the sea,” the ministry said in a statement released by the official Saudi Press Agency.

It also stated that shrapnel from a ballistic missile dropped near Aramco’s residential compound in Eastern Dhahran.

Such acts of sabotage do not only target the Kingdom of Saudi Arabia, but also the security and stability of energy supplies to the world, and therefore, the global economy,” a ministry spokesman said in a statement on state media.

Oil price surged because the market interpreted the occurrence as supply sabotage given Saudi is the largest OPEC producer. A decline in supply is positive for the oil industry.

However, Brent crude oil pulled back to $69.49 per barrel at 12:34 pm Nigerian time because of the $1.9 trillion stimulus packed passed in the U.S.

Market experts are projecting that the stimulus will boost the United States economy and support U.S crude oil producers in the near-term, this they expect to boost crude oil production from share and disrupt OPEC strategy.

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Crude Oil

A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site



Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.

Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.

A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.

One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.

However, Saudi authorities are yet to confirm or respond to the story.


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