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FG to Restructure Oil Sector, NNPC

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  • FG to Restructure Oil Sector, NNPC

The Federal Government has outlined a plan to overhaul the Nigerian National Petroleum Corporation and eventually list it on the stock exchange.

This is part of the government’s bid to modernise and streamline the oil sector, which has been known for corruption and mismanagement for many years.

The Ministry of Petroleum Resources released a draft late on Thursday to buttress the oil sector reform, Reuters reported on Friday.

Oil sector reform has been stalled for many years due to disagreements and political infighting over how best to manage the country’s oil resources.

In the proposal, the ministry is seeking to end the country’s reliance on oil exports and shift to a “gas-based industrial economy.”

The proposal posits that the country needs to reform the oil sector or risk output falling.

“Unless there are additions to reserves and those reserves are brought into production, Nigeria can expect to see absolute declines in production from around 2020,” the plan said.

As a key step to improve crude output of around two million barrels a day, the Federal Government is planning to transform the NNPC from a bureaucratic empire where little work gets done into an entity functioning like the private sector.

“The NNPC will be made autonomous from the state, it will relinquish all its policy making and regulatory activities, and it will be treated on an equal basis with private sector operators for projects,” the draft said.

Nigeria has been mulling a sale of oil assets to raise foreign exchange as a slump in vital oil revenues erodes the budget.

The proposal said a newly formed corporation could sell stakes “so long as the government shareholder retains effective control and ownership.”

The listing itself is unlikely to happen soon, as concerns over a new naira devaluation have made foreign investors to exit the Nigerian Stock Exchange.

The ministry said it would consult with lawmakers over the reform.

This may face some challenges as some members of the National Assembly, including from the Progressives Congress, have objected the government plans to sell oil and other assets to raise forex.

“It’s commendable that they have actually tried to make a petroleum sector policy,” a senior governance officer with the Natural Resources Governance Institute, Aaron Sayne, said.

But he said the lack of details, specific targets and the backing of a broad coalition would make it difficult to achieve many of the aims.

“Where this is short on details is where the vested political interests are the strongest,” he said. “It’s not clear that it has the political support.”

The ministry’s draft proposes a similar approach to spur investment in the nation’s sclerotic refineries, allowing the closure or privatisation of them unless they can become profitable. It would also eliminate any remaining fuel subsidies and aim to deregulate fuel prices.

It also included placing more responsibility for oil spills and pollution on the companies operating them, including criminal “prosecutions of company directors where necessary.”

The issue is sensitive for oil majors operating in the Niger Delta oil hub where militants and villagers fight for a greater share of oil revenues and higher compensation for oil spills.

Shell, one of the largest international companies operating in Nigeria, Chevron, and ExxonMobil declined to comment on the plan. ENI did not immediately respond to a request for comment.

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

Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020

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Naira Exchange Rates - Investors King

The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.

The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.

But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.

Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.

Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”

The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.

In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”

In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.

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Economy

EFCC Recovers $153m, 80 Assets from Diezani, Says Bawa EFCC Chairman

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Diezani Allison-Madueke - Investors King

The Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa has said the commission recovered $153 million and 80 properties from the former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.

Bawa said: “There are several cases surrounding that. As you may have read, I was part of that investigation, and we have done quite a lot. In one of the cases, we recovered $153 million; we have secured the final forfeiture of over 80 properties in Nigeria valued at about $80 million.

“We have done quite a bit on that. The other cases as it relates to the $115 million INEC bribery as the media has sensationalised it, is also ongoing across the federation.”

We are looking forward to the time when we will, maybe, have her in the country, and of course, review things and see what will happen going forward. The case has certainly not been abandoned.

Speaking on the trial of former Abia State Governor Orji Uzor Kalu, he said his trial will start soon in Lagos.

Bawa added: “The position is very clear. The EFCC succeeded in 12 years to get him convicted at the Federal High Court. Of course, he went to the Supreme Court, and because the judge that convicted him has been elevated, the ruling was made and the EFCC as a respecter of the rule of law, we have taken it as it is. The Supreme Court has ordered that we should go back to the Federal High Court in Lagos.

“Now, we are at the Federal High Court in Abuja, and we have applied to the court for the case to be transferred to Lagos as ordered by the Supreme Court to enable us start all over again.

“It, however, draws a precedence, and those are the issues; law as the lawyers will say, is a living thing; we had the ACJA in 2015, we have had this problem of elevation of judges from High Court to Court of Appeal, and we pushed that they should be given the opportunity to finish their cases, because some of these cases have taken a very long time.

“We thought we had succeeded in getting this in ACJA, The law was, however, not seen as such. Now, we may have to solve the problem from the constitution, and then, we will be home and dry.”

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Economy

Nigeria Consumes 93m Litres of Petrol Daily in April 2021

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Petrol - Investors King

Nigeria’s daily petrol consumption rose to a record-high of 93 million litres in April 2021, according to the latest data from the Nigerian National Petroleum Corporation (NNPC).

The amount represents 77 percent of the 120.80 million litres consumed daily in West Africa despite having just 52 percent of the region’s population.

In previous months, Nigeria consumed 61 million litres on average, therefore, the NNPC stated that the 93 million litres per day consumption is unsustainable.

The sudden surged in petrol consumption was a result of smuggling, according to experts.

There is no doubt that Nigeria’s present petrol consumption is embarrassing, due to smuggling which is currently a thriving business,” Mike Osatuyi, national operations controller, Independent Petroleum Marketers Association of Nigeria.

On the allegation that marketers illegally export petrol, Osatuyi asked why the five security agencies across the borders are unable to stop it.

Smuggling of petrol across the borders is becoming more intense as Nigeria inches closer to full deregulation, one stakeholder said. Despite over 95 million Nigerians in poverty, the country inadvertently pays for cheap petrol across West Africa.

It means Nigeria is financing the economies of neighbouring countries,” Osatuyi said. “Nigeria should not be consuming more than 50 million litres per day.

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