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Operators Eye $600m Local Content Fund

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  • Operators Eye $600m Local Content Fund

With the Nigerian Content Development and Monitoring Board set to ease access to the $600m Nigerian Content Development Fund, industry operators have expressed interest in the fund.

The Chairman, Petroleum Technology Association of Nigeria, Mr. Bank-Anthony Okoroafor, told our correspondent that many members of the association had applied for the fund, but the modalities had been the challenge.

He spoke on Wednesday on the sidelines of the 6th Practical Nigerian Content Conference in Abuja.

He said, “I think what the board is trying to do is to make it easier to access. None of our members has really been able to access it because of the too many hurdles. But now, the new board is coming up with clear guidelines for accessing the fund.”

Okoroafor, who noted that it was difficult to borrow money from the banks because of the high interest rates, said, “If you have any fund whose interest rate is lower, and if you make it easy for people to access, a lot of people will be interested. But what matters is the conditionality attached to it.

“Whoever wants to access the fund, the people managing it must find out whether what the fund will be used for is in line with the objectives of the fund, which include building capacity and adding to your facilities.”

The Executive Secretary, NCDMB, Mr. Simbi Wabote, also said at the conference on Wednesday that the board was working to close skills, infrastructure and assets ownership gaps in the oil and gas industry.

The NCDF, which is funded from the one per cent deducted from the value of all upstream contracts, is underpinned by Section 104 of the Nigerian Oil and Gas Industry Content Development Act.

The fund was designed to provide partial guarantees and 50 per cent interest rebate to service companies that obtain facilities from commercial banks for asset acquisition and projects execution.

The Act provides that the funds be used for the development of capacity in the oil and gas industry.

The NCDMB executive director said, “Any time you assemble a gathering and you talk about the Nigerian Content Development Fund, everybody wants to know what will become of the fund. What this current board will assure you is that within the shortest time possible, we will come out with a clear blueprint on how that fund will be utilised to promote local content development in our industry.

“We will no longer have a situation where people continue to wonder what is happening to that fund, if it has been put into political use or into local content development. One thing I can assure you is that very soon, a transparent process of accessing that fund will be made known to all stakeholders.”

Noting that the fund had grown over the years, Wabote said six Nigerian companies had tapped it for capacity development.

He said, “I must say that it is not directly giving money to those six Nigerian contractors; it is about guaranteeing some of the loans that they got from the banks because we are not a funding institution.

“Not much has been expended from that fund for capacity development. Part of the strategy of this new board is to come out with a very transparent process through which genuine Nigerian contractors involved in the oil and gas sector will have access to the fund.

“While the people who are contributing worry about the fund they have contributed, there are a lot of Nigerian companies that are not making their contributions as enshrined in the Act. This board will look at strategies to make them comply with the provisions of the Act.”

The NOGICD Act seeks to develop Nigerian content across the oil and gas value chain – upstream, midstream and downstream sectors, according to Wabote.

He said, “There is an opportunity for demand-driven investments across the oil and gas industry value chain. Today, a lot of people ask me, why is Nigerian content not also focusing on the downstream and midstream activities? My response is simple: with the new board and the council, our focus will go beyond the operators in the upstream sector; our activities are all-encompassing as enshrined in the Act.”

The NCDMB boss said one of the interventions the board had put in place to attract investments and stimulate domiciliation of manufacturing activities was the Equipment, Components Manufacturing Initiative.

He said the ECMI was developed to promote the local manufacturing of equipment, components, spare parts and other accessories for the Nigerian oil and gas industry.

He said, “So far, we have issued 1,430 certificates as of October 31, 2016. This translates to investment commitment valued to about $2bn as of today. The board ensures that the commitments are complied with before reviewing or issuing certificates to companies.

“Some other initiatives that the board has put in place to stimulate domiciliation of manufacturing and other value-adding activities include the establishment of the oil and gas park that will serve as the manufacturing hub for equipment and the provision of funding support for local manufacturers of the LPG cylinders.”

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, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Economy

Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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Economy

UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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