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With Local Content, Strong Economy is Possible

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yemi osinbajo
  • With Local Content, Strong Economy is Possible

The failure of the leadership to maximise Nigeria’s enormous potential has been making the country suffer different economic woes.

Right now, Nigeria is wrestling with recession. And not a few actual and perceived economists have employed different nomenclatures like compression and depression to illustrate the state of the economy, while also making projections on where the country will be if the current negative economic trend continues.

Therefore, Nigeria requires diverse activities that are well situated to fuel the economy for a quick recovery from the current quagmire it’s in.

And to address the myriads of problems it presently faces, suggestions from some tested experts both from within and outside of the country have largely been in favour of aggressive reform of institutions and provision of enabling grounds for suitable hands to deliver viable economic outputs.

Clearly, the need to accentuate and achieve these critical national objectives can be identified in the theme and structure of the just concluded Nigeria Oil and Gas Conference and Exhibition, famously called NOG, Africa’s leading oil and gas conference which for the past 16 years has been gathering influential operators and relevant stakeholders in the oil and gas sector for development and to deepen business opportunities.

Actually, today’s topic, Fuelling the Economy, was taken from one of NOG’s agenda for this year’s edition. It is a welcome coincidence, you will agree, given the nation’s pressing needs, and the necessity of charting a way forward. Listed under this agenda by the conference organisers are Nigerians whose operations in the oil and gas industry are deemed germane to the solutions that the Nigerian government seeks in moving quickly out of recession.

Dr. Ladi Bada, CEO of Shoreline Natural Resources, Mr. Demola Adeyemo-Bero, managing director of First E&P and Mr. Taofik Adegbite, chief executive officer of Marine Platforms to mention just a few of the top industry players in attendance, were on hand to offer wider perspectives for a good way forward for Nigeria.

Adegbite’s Marine Platforms is a fascinating case study on how well wholly-indigenous Nigerian companies can perform in demonstrating Nigeria’s local capacity and competence in the technical areas of the oil and gas industry; and at the same time, how difficult it is for most Nigerian companies to keep the momentum of success in a business environment that is full of confusing policies and overlapping regulations.

In the first panel discussion, Adegbite duly affirmed the benefit of the Nigerian Local Content law which he said had provided the legal framework that enabled his company and several others to participate fully in the industry and to help retain in Nigeria billions of dollars that were constantly being repatriated from the country by foreigners due to previous lack of acknowledgment of the capability of Nigerians to take the local jobs available in the sector.

Adegbite therefore attributed the tremendous success made by his company, and the massive contribution his firm is making to the Nigerian economy, to the enactment and operation of a law that serves to empower Nigerian people and the economy.

Conversely, the CEO also shared the pains his firm is facing and unusual resilience being put up by his organisation, and possibly other Nigerian companies to remain virile during this tough moment.

And he admonished the government to tidy up its policies and laws so as to create more opportunities than stumbling blocks.

Interestingly, almost all the speakers on the panel, who were carefully drawn to represent the regulators, legislature and the operators, seemed to agree on the major problems plaguing the industry, and slowing down its gains to the country.

Really, the many paradoxes and contradictions in the Nigerian system deserve an urgent elimination for the country to attain greater heights and for the injection of necessary energy into the economy. Contributions from other members especially from those on the side of the government were disturbing as they confirmed the fears of many on the disruptions and uncertainties in the business atmosphere that were perhaps unwittingly created by the government itself.

Representing the Department of Petroleum Resources (DPR), a major regulator of the industry, in the discussion, Ms. Patricia Maseli, expressed frustration on the different means of control of the sector and opined that the various regulatory agencies presently in place need to be streamlined.

Similarly, the head of the Nigerian Content Development and Monitoring Board (NCDMB), the government agency that oversees the local content policy, Mr. Simbi Wabote, raised concern on some of the policies affecting quick attainment of the goals of the NCDMB.

Wabote also cited the example of a ridiculous policy that allows foreign operators to bring vessels in on a Temporary Import Permit (TIP) at a low rate while indigenous vessel owners are made to cough out Full Duty Payment (FDP), a higher cost on their assets.

Strangely, and quite so often, it seems to be quite easy for us to locate the part where the shoe pinches. On the other hand, we are ever so reluctant to undertake the proper action of ditching the discomforting footwear and seeking better replacement.

Of course, we all know before this more difficult time that it takes someone with steely will to function well in Nigeria’s business climate. From appalling infrastructure to needless bureaucracy of company registration procedures, unabated insecurity, the demoralising rigour of accessing funds and to other encumbrances, many potentially viable business initiatives are dead even before starting off.

It is actually quite sickening to imagine that it took continuous intensification of the World Bank’s current poor ranking of Nigeria as 169th out of 190 countries on its ease of doing business index to make us sit tight to discuss serious business in all spheres of our development.

Even though Nigerians have seen, quite regularly, lots of sitting for critical national issues which ended as permanently quashing of transformative actions, we can see promise in the decision of the Acting President Yemi Osinbajo, who has been holding fort quite effectively for the President, to recently roll out a 60-day national action plan to strengthen Nigeria’s economy with focus on ease of business for both local and foreign enterprises.

In the same manner, the minister of State for Petroleum Resources, Dr. Ibe Kachikwu and the group managing director of Nigerian National Petroleum Corporation (NNPC) Dr. Maikanto Baru, who both spoke at the NOG, freshly promised to deliver on the rejuvenation of the perennially sickly Nigerian refineries.

For as long as I can recall, Nigerians have been groaning about the deplorable state of the country’s three existing refineries, and its attendant effects on the lives of the masses who are end users of different petroleum products.

But shamefully, despite several previous promises of revamp by the government, the refineries with combined installed capacity of 445, 000 barrels per day, still struggle to churn out just about 21, 000 barrels per day. Nonetheless, Nigerians are still counting on the renewed commitment of Buhari’s administration to deliver change in that aspect, and across all sectors of the economy.

Meanwhile, it should be consistently emphasised that there is actually need for sufficient fuel to power the thinking of the individual behind the country’s policies and regulatory agencies to conduct economic affairs in ways that will deepen more business activities in the country.

And this is because the country is indeed endowed with people with enormous capacity and resources to get the economy on a fast pace.

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 Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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