- Reversing Nigeria’s Deferred $100bn Crude Oil Income
Recently, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, reiterated that on account of militancy in the Niger Delta, Nigeria could not earn about $100 billion oil revenue in 10 years as he also opened up on plans to reverse the loss. Chineme Okafor reports
Though not entirely new, Kachikwu in a podcast he released recently stated that between $50 and $100 billion was not earned by Nigeria in 10 years because of frequent attacks on oil and gas infrastructure by the Niger Delta militants.
Kachikwu explained that at the peak of militancy within these periods, oil revenue dropped drastically, and production particularly ebbed from 2.2 million barrels per day (mbpd) to one million barrels per day in 2016.
He said: “As at 2016 on the average and looking at it historically that Nigeria was losing $50 to $100 billion as a result of the disruption.”
He specifically added that the country’s oil and gas industry could not earn over $7 billion from January to October 2016, saying that over the last decade spanning through various administrations, the industry suffered critical disruptions to operations resulting in the unearned incomes.
According to Kachikwu, the unearned income also included that which international oil companies (IOCs), independent producers as well the Nigerian National Petroleum Corporation (NNPC) could not take from their operations in the fields.
“This is a problem that has consistently been there even before the government of President Obasanjo, and it went on into other governments. It is a problem that seems to be intractable. So, it is a difficult undertaking to try to embark on trying to resolve it once and for all, but we are very bullish about this,” Kachikwu said to buttress the longstanding existence of militancy and its impacts on Nigeria’s oil production.
Similarly, the Nigerian Petroleum Development Company (NPDC), a subsidiary of NNPC had from February 2015, consistently reported substantial deferred revenue averaging N25 billion per month from the a subsisting force majeure declared by Shell Petroleum Development Company (SPDC) following the destruction of 48-inch Forcados crude oil export line.
Plans to reverse the trend
While the NNPC has repeatedly said in its monthly operations report that comprehensive measures to limit the impacts of oil assets destructions on the financials of the corporation were being initiated but with some success from stopgap approaches, Kachikwu in the podcast disclosed some detailed plans he would adopt to end this.
According to the minister, a 20-point agenda which include periodic engagements with communities and stakeholders in town hall meetings, inter-agency collaboration, ring-fenced state approach to security of oil installations, as well as security hold-hands efforts to guarantee peace and investment on state basis would be adopted.
He also listed focused investments in gas-to-power, incentive for peace scheme, massive revamp of social infrastructure bases of the communities and establishment of a Niger Delta Development Fund Initiative, as the other approaches he hoped would end militancy in the Niger Delta.
Christened “Oil Sector Militancy Challenges…Roadmap to Closure,” Kachikwu explained that the new approach was aimed at instituting permanent peace in the oil-producing region.
According to him, the Niger Delta crisis, coupled with the 45 per cent drop in oil production, worsened the financial challenges of the President Muhammadu Buhari administration. He added that the new measures would address this financial challenge to the government.
Additionally, the minister emphasised that the crisis resulted in attacks on oil and gas facilities and the sub-optimal performance of the country’s refineries. He noted that Nigeria was unable to meet its international obligations as a result of the militancy.
Kachikwu explained that the new measure would build on existing efforts initiated by the government to end the crisis. According to him, a seven-point roadmap that included engaging the oil-producing communities and sustaining the Amnesty Programme for the repentant militants were in existence already.
Insisting that the administration was determined to tackle militancy and achieve peace in the region, Kachikwu noted that it would be bullish in its focus on remedying the environment of the Niger Delta, which he said was also rich enough for aqua tourism for revenue generation.
To clean up the environment, Kachikwu said Buhari would continue to implement the existing seven-point agenda and other behind-the-scenes engagements of relevant stakeholders.
According to him, the first point on the 20-point agenda he plans to launch would be for oil companies to engage the state governments and communities on issues affecting a particular state.
The second point, he noted, would focus on inter-agency collaborations between the Ministries of Petroleum Resources and the Niger Delta, as well as the NDDC on crosscutting development and operational issues of the region. The third point would be a ring-fenced approach to ending the militancy. On this, he stressed that the Federal Government would stop dealing with militancy as a national issue and adopt a state-by-state approach to ending it on the ground that each state in the region appeared to have peculiar challenges that prompt militancy in their areas.
Kachikwu said government would focus on creating 100,000 jobs in each of the oil-producing states in the Niger Delta in the next five years, while the Amnesty Programme would be decentralised because Federal Government can no longer fund the programme alone as a result of dwindling oil revenue.
Another plan under the agenda Kachikwu launched would be to adopt the “Security Hold Hands Approach”, which according to him, was aimed at strengthening security in the region through the collaboration of all the relevant agencies.
He also identified peace and investment initiatives as another focus in the new agenda, and stressed that peace encourages investment while crisis serves as a disincentive to investment. He noted that the agenda would encourage states in the region to continue to pursue peace in exchange for improved investment.
The minister equally added that there would be a core business focus wherein the Federal Government will continue to attract business opportunities to the Niger Delta, stressing that at the core of the militancy was the lack of economic opportunities for inhabitants of the region to earn decent lives for themselves and their families.
He said the setting up of cottage industries and business startups in the region will encourage violent agitators to shun militancy and engage in business activities that will earn them good incomes.
Kachikwu said that oil companies would be encouraged to embark on the revamp of oil and gas infrastructure in the Niger Delta, in addition to focusing on the “clean-up of our mess”. He noted in this respect, that the government had launched the Ogoni clean-up exercise which should restore the environment of Ogoni land.
Other aspects of the 20-point plan included the domestication of oil and gas business opportunities to achieve greater participation of the people of the oil-producing region without excluding other Nigerians.
He said the government would also encourage education programmes in the Niger Delta to make the people embrace education and shun militancy. He stated that the Amnesty Programme would be launched on a state-by-state basis to create opportunities for 5,000 to 10,000 youths in each states of the region.
Further on security and peace, Kachikwu explained that ensuring justice for all the stakeholders in the region would be the major plank of the agenda, while the government would continue to strengthen the military and other security agencies to maintain peace as it would no longer accept instances of militants holding the country to ransom.
NNPC To Resume Oil Exploration In Sokoto Basin
The Nigerian National Petroleum Corporation on Thursday announced plans to resume active oil exploration in Sokoto Basin.
A statement issued in Abuja on Thursday by NNPC spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.
The statement read in part, “Kyari also hinted of plans for the corporation to resume active exploration activities in the Sokoto Basin.”
The NNPC boss disclosed this while receiving the Governor of Kebbi State, Atiku Bagudu, who paid Kyari a courtesy visit in his office on Thursday.
In October 2019, the President, Major General Muhammadu Buhari (retd.), had during the spud-in ceremony of Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-East, said the government would explore for oil and gas in the frontier basins across the country.
He outlined the basins to include the Benue Trough, Chad Basin, Sokoto and Bida Basins.
Buhari had also stated that attention would be given to the Dahomey and Anambra Basins which had already witnessed oil and gas discoveries.
Kyari restated NNPC’s commitment to the partnership with Kebbi State for the production of biofuels, describing the project as viable and in tandem with the global transition to renewable energy.
He said the rice production programme in the state was a definite boost to the biofuels project.
Kyari said the linkage of the agricultural sector with the energy sector would facilitate economic growth and bring prosperity to the citizens.
He was quoted as saying, “We will go ahead and renew the Memorandum of Understanding and bring in any necessary amendment that is required to make this business run faster.”
The Kebbi State governor expressed appreciation to the NNPC for its cooperation on the biofuel project.
Bagudu said the cassava programme was well on course but the same could not be said of the sugarcane programme as the targeted milestone was yet to be attained.
Kebbi state is one of the states that the NNPC is in partnership with for the development of renewable energy.
Nigeria To Benefit As G-20 Approves Extension Of Debt Relief Till December
Finance ministers of G-20 countries have approved an extension of debt relief for the world’s poorest nations till December 2021.
David Malpass, World Bank president, made the announcement at the virtual spring meeting, on Wednesday.
TheCable had earlier reported that the G-20 countries will meet this week to consider an extension of the debt freeze.
The G-20, is a group of finance ministers and central bank governors from 19 of the world’s largest economies, including those of many developing nations, along with the European Union.
G-20 countries had established a debt service suspension initiative (DSSI) which took effect in May 2020.
Nigeria had benefited from the initiative which delivered about $5 billion in relief to more than 40 eligible countries.
The suspension period which was originally set to end on December 31, 2020 was extended to June 2021.
Malpass said the extension to December 2021 will boost economic recovery and promote job creation in low income countries.
He urged countries to be transparent in their approach to the debt service payment extension.
“On debt, we welcome a decision by the G20 to extend the DSSI through 2021. The World Bank is also working closely with the IMF to support the implementation of the G20 Common Framework,” he said.
“In both these debt efforts, greater transparency is an important element: I urge all G20 countries to disclose the terms of their financing contracts, including rescheduling, and to support the World Bank’s efforts to reconcile borrower’s debt data more fully with that of creditors.
“Participation by commercial creditors and fuller participation by official bilateral creditors will be vital. I urge all G20 countries to instruct and create incentives for all their public bilateral creditors to participate in debt relief efforts, including national policy banks. I also urge G20 countries to act decisively to incentivize the private creditors under their jurisdiction to participate fully in sovereign debt relief efforts for low-income countries.
“Debt relief efforts are providing some welcome fiscal space, but IDA countries need major new resources too, including grants and highly concessional resources. From April to December 2020, the first DSSI period, our net transfers to IDA and LDC countries were close to $17 billion, of which $5.8 billion were on grant terms.
“Our new commitments were almost $30 billion, making IDA19 the single largest source of concessional resources for the poorest countries and the key multilateral platform for support. To recover from COVID, much more is needed, and we welcome the G20’s support for advancing IDA20 by one year.”
IMF / Fiscal Monitor Report April 2021 Forecast
Unprecedented fiscal support by governments during the pandemic has prevented more severe economic contractions and larger job losses, but risks remain of long-term scarring the International Monetary Fund says in its Fiscal Monitor report released on Wednesday (April 7) in Washington, DC.
Meanwhile, such support, along with drops in revenues, has raised government deficits and debt to unprecedented levels across all country income groups, said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.
“The first lesson one year into COVID-19 is that fiscal policy can act timely and decisively. The fiscal policy response was unprecedented in speed and size looking across countries. We also learned that countries with easier access to finance or stronger buffers were able to give more fiscal support. They’re also projected to recover faster,” said Gaspar.
Average overall deficits as a share of GDP in 2020 reached 11.7 percent for advanced economies, 9.8 percent for emerging market economies, and 5.5 percent for low-income developing countries. Countries’ ability to scale up spending has diverged.
“So, what have we learned? We’ve learned that fiscal policy is powerful and that sound public finances are crucial in order to enable that power to be used to the fullest,” stressed Gaspar.
Gaspar urged policy makers to balance the risks from large and growing public and private debt with the risks from premature withdrawal of fiscal support, which could slow the recovery.
“In the spring 2021, we emphasize differentiation across countries. Moreover, COVID-19 is fast evolving, as are the consequences from COVID-19. The fiscal policy must stay agile and flexible to respond to this fast-evolving situation.” Said Gaspar.
He also warned that the targeting of measures must be improved and tailored to countries’ administrative capacity so that fiscal support can be maintained for the duration of the crisis—considering an uncertain and uneven recovery
“Moreover, countries are very different in their structures, in their institutions, in their financial capacity and much else. Therefore, policies and policy advice have to be tailored to fit.” Said Gaspar
Gaspar concluded his remarks by emphasizing that global vaccination is urgently needed, and that global inoculation would pay for itself with stronger employment and economic activity, leading to increased tax revenues and sizable savings in fiscal support.
“A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever. But the Fiscal Monitor also emphasizes the importance of giving a fair shot at life success for everyone. It documents that preexisting inequalities made COVID-19 worse and that COVID-19 in turn made inequalities worse. There is here a vicious cycle that threatens trust and social cohesion. Therefore, we recommend stronger redistributive policies and universal access to basic public services like health, education, and social security,” said Gaspar.
Finance2 weeks ago
List of Microfinance Banks’ USSD Codes In Nigeria
Cryptocurrency4 weeks ago
Zugacoin that Plunges Over 99 Percent in 6 Days Partners Innoson, Buy Innoson Products With Zugacoin
Government4 weeks ago
Telcos To Begin Disconnection of Banks’ USSD Services Monday Over N42B Debt
Government4 weeks ago
FEC Approves $1.5 Billion For Repair of Port Harcourt Refinery
News4 weeks ago
Focus on bank MDs, Others, Workers Reply EFCC Over Asset Declaration
Government3 weeks ago
US Intelligence Says ISIS and Al-Qaeda Are Planning to Attack Southern Nigeria
Government4 weeks ago
Customers TO Pay N6.98 Per USSD Transaction – CBN, NCC
News4 weeks ago
EFCC Directs Bankers to Declare Assets by June 1