- 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.
COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday
Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.
Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.
The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.
OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.
This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.
Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.
“The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.
“President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.
Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021
The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.
The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.
Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.
According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.
The administration aimed to implement at least 70 percent of the proposed budget if approved.
He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”
He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”
World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020
The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.
The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.
According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.
Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.
“Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.
He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’
“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”
Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.
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