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NNPC Targets 80 Percent Refining Capacity by 2018

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NNPC Nigeria
  • NNPC Targets 80 Percent Refining Capacity by 2018

The Nigerian National Petroleum Corporation (NNPC) said it plans to increase the capacity utilisation of its refineries to 60 per cent this year, and to 80 percent by the end of 2018, without giving further details.

Nigeria has five refineries in two in Port Harcourt, Warri, Kaduna and Ogbelle, with combined capacity of 446,000 barrels daily. Four these refineries (445,000bpd combined capacity) are operated by NNPC subsidiaries, while the Ogbelle, a 1,000-barrel capacity private diesel topping refinery in Rivers State is run by the Niger Delta Petroleum Resources, NDPR.

Data from industry regulator, Department of Petroleum Resources (DPR), indicate that all the refineries combined had worked at an average of 20 percent since 2010. Therefore, any increase in capacity will be a big boost for petroleum products availability, which importation is estimated at over N10 billion monthly.

The capacity increase will also permanently put an end to the burden petroleum subsidy, which though not provided in 2017 budget, which many fear will resurrect given the rising price of crude at the international oil market.

The Group Managing Director, NNPC, Dr. Maikanti Baru, said in a statement on Sunday, that the Corporation is keen on ending products importation in a few years, and that concrete plans are on ground to achieve this.

He said: “it is the procedure or methodology that we are changing a little bit, we are focusing on the process licensors to come and audit our processes and they have already started auditing most of our process units in the various refineries.

“We hope if we do all these systematically, we should be able to get about 60 per cent level of capacity utilisation by the end of this year or at worst by the first quarter of 2018 and get to 80 per cent by the end of 2018 so that we could locally be able to supply half of our Premium Motor Spirit (PMS) requirements.

“Also, with other efforts in terms of other refineries coming in place, we should be able to quit importation in a few years,” the GMD said.The pronouncement comes as the country recorded a total of 2,978 vandalised pipeline points between November 2015 and October 2016, prompting the Corporation to propose the establishment of a Security Advisory Council.

This is aimed at bringing a lasting solution to the perennial problem of pipeline vandalism and sundry security challenges bedeviling the oil and gas industry.

Baru noted that there was need to evolve new measures to bring an end to pipeline vandalism which is a major threat to the nation’s economy, and that the security advisory council would involve critical stakeholders, including security agencies, community leaders from the Niger Delta, as well as IOCs, with a view to addressing all security and host community agitations.

“We want to passionately appeal to those behind indiscriminate acts of infrastructure vandalism to put an end forthwith to these despicable acts which are a great threat to the economy, the eco-system and energy security of the country,” the NNPC boss stated.

He explained that since coming on board, he has ensured that the NNPC was run as what he called “a FACTI-based corporation, meaning a Focused,Accountable, Competitive and Transparent organisation that conducts its business with Integrity.”

Stressing the need to be self-sufficient in petroleum refining, the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okorokwo, urged the Federal Government to work towards refining more of its crude oil rather than export.

This, he said, remained the only way to stem the effects of declining crude oil prices on the Nigerian economy.Okoronkwo said that the decline of price of crude oil at the international marketer should not bother Nigerians, adding that local refining would cushion other expenses and boost Gross Domestic Products (GDP).

Ecobank Head of Energy Research, Dolapo Oni, said: “Some of our buyers today will have self-sufficiency in crude or need lesser amounts from us and we’ll need to find new markets again; pretty much like what the U.S. did to us in 2010.

“We need to plan ahead for these eventualities and diversify away from oil exports. We can increase value production by more domestic refining and petrochemicals extraction from crude. We can also develop ways to channel earnings from crude oil into other vital areas of the economy in a more direct way.”

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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South Africa’s Inflation Rate Holds Steady in May

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South Africa's economy - Investors King

South Africa’s inflation rate remained unchanged in May, increasing the likelihood that the central bank will maintain current borrowing costs.

According to a statement released by Statistics South Africa on Wednesday, consumer prices rose by 5.2% year-on-year, the same rate as in April.

The consistent inflation rate is expected to influence the decision of the six-member monetary policy committee (MPC), which is set to meet in mid-July. The current benchmark rate stands at 8.25%, a 15-year high, and has been held steady for six consecutive meetings.

Central Bank Governor Lesetja Kganyago has repeatedly emphasized the need for inflation to fall firmly within the 3% to 6% target range before considering any reduction in borrowing costs.

“We will continue to deliver on our mandate, irrespective of how our post-election politics plays out,” Kganyago stated earlier this month in Soweto. “The only impact is what kind of policies any coalition will propose. If the policies are not sustainable, we might not have investment.”

While money markets are assigning a slim chance of a 25-basis point rate cut in July, they are fully pricing in a reduction by November.

Bloomberg Africa economist Yvonne Mhango anticipates the rate-cutting cycle to begin in the fourth quarter, supported by a sharp drop in gasoline prices in June and a rally in the rand.

The rand has appreciated more than 3% since Friday, following the ANC’s agreement to a power-sharing deal with business-friendly opposition parties and the re-election of President Cyril Ramaphosa.

In May, the annual inflation rates for four of the twelve product groups remained stable, including food and non-alcoholic beverages.

However, transport, alcoholic beverages and tobacco, and recreation and culture saw higher rates. Food prices increased by 4.3% in May, slightly down from 4.4% in April, while transport costs rose by 6.3%, up from 5.7% and marking the highest rate for this category since October 2023.

The central bank’s cautious stance on monetary policy reflects its ongoing concerns about inflation.

Governor Kganyago has consistently voiced worries that the inflation rate is not decreasing as quickly as desired. The MPC’s upcoming decision will hinge on sustained inflationary pressures and the need to balance economic stability with fostering growth.

As South Africa navigates its economic challenges, the steady inflation rate in May provides a measure of predictability for policymakers and investors alike.

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Ghana Reports Strong 4.7% GDP Growth in First Quarter of 2024

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Ghana one cedi - Investors King

Ghana’s economy showed impressive growth in the first quarter of 2024 with the Gross Domestic Product (GDP) expanding by 4.7% compared to the same period last year, according to Government Statistician Samuel Kobina Annim.

This represents an increase from the 3.8% growth recorded in the previous quarter and should provide a much-needed boost to the ruling New Patriotic Party (NPP) as the nation approaches the presidential elections scheduled for December 7.

The positive economic data comes amidst a challenging backdrop of fiscal consolidation efforts under a $3 billion International Monetary Fund (IMF) rescue program.

The government has been working to control debt through reduced spending and restructuring nearly all of its $44 billion debt.

This includes ongoing negotiations with private creditors to reorganize $13 billion worth of bonds.

The latest GDP figures are seen as a vindication of the NPP’s economic policies, which have been under fire from the main opposition party, the National Democratic Congress (NDC).

The opposition has criticized the government’s handling of the economy, particularly its fiscal policies and the terms of the IMF program, arguing that they have imposed undue hardship on ordinary Ghanaians.

However, the 4.7% growth rate suggests that the measures taken to stabilize the economy are beginning to yield positive results.

Analysts believe that the stronger-than-expected economic performance will bolster the NPP’s position as the country gears up for the presidential elections.

“The growth we are seeing is a testament to the resilience of the Ghanaian economy and the effectiveness of the government’s policies,” Annim stated at a press briefing in Accra. “Despite the constraints imposed by the debt restructuring and IMF program, we are seeing significant progress.”

The IMF program, which is designed to restore macroeconomic stability, has necessitated tough fiscal adjustments.

These include cutting government expenditure and implementing structural reforms aimed at boosting economic efficiency and growth.

The government’s commitment to these reforms has been crucial in securing the confidence of international lenders and investors.

In addition to the IMF support, the government has also been focused on diversifying the economy, reducing its reliance on commodities, and fostering sectors such as manufacturing, services, and technology.

These efforts have contributed to the robust growth figures reported for the first quarter.

Economic growth in Ghana has been uneven in recent years, with periods of rapid expansion often followed by slowdowns.

The current administration has emphasized sustainable and inclusive growth, seeking to ensure that the benefits of economic progress are widely shared across all segments of the population.

The next few months will be critical as the government continues its efforts to stabilize the economy while preparing for the upcoming elections.

The positive GDP growth figures provide a strong foundation, but challenges remain, including managing inflation, creating jobs, and ensuring the stability of the financial sector.

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World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms

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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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