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TSA Inflows Cover Government’s Borrowings, CBN Tells Sanusi

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  • TSA Inflows Cover Government’s Borrowings, CBN Tells Sanusi

Central Bank of Nigeria (CBN) yesterday debunked its former Governor and now Emir of Kano, Muhammadu Sanusi’s II claim last week that the Federal Government, under the President Muhammadu Buhari’s administration had overdrawn on its account with the apex Bank to the tune of N4.7 trillion.

Supporting its defence with data, the CBN, also the banker to the government, insisted that government still had a net balance of over N1.19 trillion in its Treasury Single Account (TSA) and declared Sanusi’s claims as “totally false and wholly fabricated.”

TSA is a financial policy introduced by the federal government in 2012, to consolidate all inflows from the country’s ministries, departments and agencies (MDAs) by way of deposit into commercial banks, traceable into a single account at the CBN.

Quoting Section 38.2 of the CBN Act 2007, Sanusi had maintained that the Central Bank, a lender of last resort, had exceeded its lending limit to the government, a development he noted had weakened the credit worthiness of the country by the international community.

Speaking at a policy monitoring dialogue hosted by Savannah Centre for Diplomacy, Democracy and Development, at in Abuja last week, Sanusi said the CBN’s lending to the government since Buhari came in had spiked from about N1.5 trillion to over N4.5 trillion.

Sanusi also said: “The CBN-FGN relationship is no longer independent. In fact, one could argue their relationship has become unhealthy. CBN claims on the FGN now top N4.7 trillion equal to almost 50% of the FGN’s total domestic debt. This is a clear violation of the Central Bank Act of 2007 (Section 38.2), which caps advances to the FGN at 5% of last year’s revenues. Has CBN become the government’s lender of last or first resort?”

In his opinion, no one was willing to lend to the Nigerian government, noting, “If the Senate approved, I want to see who will lend you $30billion when you have five exchange rates.”

But in defence of its transaction with the government, in a statement made available to The Guardian in Lagos, the CBN said: “Contrary to his claims, the Federal Government’s Treasury Single Account (TSA) balance with the CBN as of 2nd December 2016 was N2.66 trillion (credit). In line with practices that even Emir Sanusi presided over, the FG has overdrawn another account at the CBN by about N1.47 trillion (debit) as of 2nd December 2016.

“In effect, therefore, the net balance of the FG at the CBN is over N1.19 trillion (credit), as shown in Table.

Despite the Emir’s seeming knowledge of these situations, the CBN wondered how “could Sanusi have reached the conclusion that the CBN’s claims on the FG are over N4.7 trillion? Where did he get this number?”

But Sanusi had argued that “the problem of the current government is not having the right policies to fix the current economic woes,” adding that the country is enmeshed in heavy debts, as out of every N1 Nigeria makes, 40 kobo goes to debt and 60 kobo is left for salaries, health, education, power, infrastructure.

He had argued that oil revenue is merely a working capital that cannot make the country rich, noting that while Nigeria produces one barrel for 80 Nigerians; Saudi Arabia produces one for three Saudis.

Besides, he noted that in every economic growth is driven by “consumption, investment and net export”, adding that “our exports cannot grow, without regulatory certainty or an increase in the price of oil.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns

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Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.

Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.

The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.

This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.

While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.

Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.

Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.

Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.

Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.

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Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm

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The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.

Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.

The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.

However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.

Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.

He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.

Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.

The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.

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Energy

NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade

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Mele Kyari - Investors King

The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.

Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.

Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.

In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.

Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.

He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.

Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.

In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.

Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.

The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.

As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.

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