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Independent Marketers May Divest Fuel Retail Assets

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Gas Exports Drop as Shell Declares Force Majeure
  • Independent Marketers May Divest Fuel Retail Assets

Propetrol Limited, an indigenous oil and gas company, has said there will be a lot of divestment of assets within the fuel retail market by independent players who do not have the supporting infrastructure and financial capacity to cope with the current challenges.

The Managing Director and Chief Executive Officer, Propetrol, Mr. Harry Ebohon, said foreign exchange challenge and increasing cost of financing product importation would put so much pressure on marketers’ bottom line.

He said at a press briefing in Lagos that major marketers started the trend of divestment last year when Oando sold a stake in its marketing subsidiary to the trading company, Vitol; Forte sold a part of its business to Mecuria, and Nipco acquired 60 per cent interest in Mobil Oil.

“Propetrol will be positioning to acquire any of these assets that become available in the market,” Ebohon said.

He said the company commenced operations 15 years ago by providing logistic services to downstream petroleum marketers who relied on their trucks to move products to every part of the country.

“But we decided to play a more prominent role in the industry and increase our footprints and investments across the oil and gas value chain,” he said, adding that they later went into retail marketing franchise with Oando.

He said the company invested in the maritime logistic end of the business to ensure efficiency and reliability in supply and distribution of petroleum products.

Ebohon said, “Our vessels are a key indication of tangible investment in this regard. Plans are also on the way to construct a storage facility in Port Harcourt.

“We expect to see some divestments in distribution assets this year. There are over 129 storage facilities in Nigeria today with over 70 in Lagos alone. A lot of them are presently idle and with the financial sector weakness we see in the economy, there will be pressure on some marketers to divest.”

According to him, 90 per cent of the nation’s pipelines are currently non-operational and as such the Nigerian National Petroleum Corporation should be concluding plans for the concession of these pipelines.

“Propetrol will be positioned to take advantage of these opportunities as they play out. Propetrol is also in the forefront of the companies that will move from road transportation of products to rail transportation as our rail infrastructure improves,” he said.

The Propetrol MD said growth would be achieved by entering markets with good growth curves such as the Liquefied Petroleum Gas market where consumption was expected to grow by 60 per cent to one million metric tonnes per annum.

He said, “Today, we are one of the leading indigenous players in the bunker supply sector in Nigeria, providing services to international oil companies, national oil companies, marginal field players, rigs, platforms, and dredging companies, among others.“In consolidation of our market leadership in this niche, we have entered into partnership with international companies to offer even more robust services to our customers in markets where we are not present.

Ebohon said the company would announce some partnerships in the next few weeks, adding, “We are partnering a major international player in the bunkering industry to provide the quality of products and services that the Propel brand has become known for to our international customers in markets where we are not physically present.”

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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