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Economy

Recover $22bn, N316bn From NNPC, NEITI Tells FG

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  • Recover $22bn, N316bn From NNPC, NEITI Tells FG

The Nigeria Extractive Industries Transparency Initiative on Tuesday called on the Federal Government to urgently recover the over $21.778bn and N316bn unremitted funds meant for the federation but allegedly held up by the Nigerian National Petroleum Corporation and its subsidiaries.

It stated that if recovered, the funds could be used to finance the country’s Economic Recovery and Growth Plan, adding that a summary of its independent reports of the extractive industry showed that outstanding remittances meant for the Federation Account running into several billions of dollars were sitting at the national oil firm.

In a policy brief, which focused on unremitted funds, economic recovery and oil sector reform, NEITI said the recovery of the unremitted funds was more than enough to jump-start the economy.

“It is not right for government agencies to withhold funds meant for everybody, no matter the excuse they provide,” the Executive Secretary of NEITI, Mr. Waziri Adio, said during a briefing at the agency’s office in Abuja.

The agency in its policy brief, stated, “Findings from a series of audits of the oil and gas sector carried out by NEITI show that the NNPC and its upstream arm, Nigerian Petroleum Development Company, have failed to remit $21.778bn and N316.074bn to the Federation Account.

“These are amounts due from three main sources: Federation assets divested to the NPDC and NPDC’s legacy liabilities; payments for domestic crude allocation to the NNPC; and dividends from investment in Nigerian Liquefied Natural Gas Company paid to but withheld by the NNPC. Recovery of these funds will significantly enhance government’s fiscal position in the short term.”

NEITI said the Federal Government should go beyond recovery of the funds to putting in place adequate measures to ensure the revaluation of the assets divested to the NPDC to determine the actual market prices, with a view to recovering the full value of the assets and securing optimal benefits from them.

It said the government should review the relationship between the NPDC, NNPC and the federation to determine and establish effective lines of accountability of the corporation’s subsidiaries, and determine optimal mode of operation in line with global best practices.

It added that the government should review the process of acquisition of Oil Mining Licences by the NNPC and NPDC to ensure that long-term net positive value was realised given the availability of alternative economic options.

A breakdown of the unremitted funds of the oil and gas industry over the years include outstanding payment of $1.7bn arising from the transfer of eight OMLs from Shell Petroleum Development Corporation and the sum of $2.2m from four OMLs by Nigeria Agip Oil Company to the NPDC.

NEITI said the NPDC had yet to pay for these major national assets that were transferred to it for its commercial operations.

Also contained in the breakdown of unremitted funds was the cash call paid on the transferred OMLs amounting to about $148.28m.

The agency stated that this was in addition to legacy liabilities amounting to $1.5bn and the sum of $15.8bn unremitted to the Federation Account from accrued NLNG dividends between 2000 and 2014.

The agency recommended a comprehensive review of the transactions to conform to EITI’s accountability principles.

It said, “NEITI’s review of transfer of the country’s oil assets to the NPDC also shows that these decisions were not underpinned by sound economic judgment. Although the NPDC was established to foster indigenous participation.” in the upstream sector, it is not really able to produce at substantial levels on its own.

“In mid-2006, total output from its wholly owned production was just 10,000 barrels per day. On the other hand, production from its service contract agreement with Agip was 65,000bpd. Reasons given for the NPDC’s disappointing performance include undue interference by the NNPC, inadequate financial structure, and inability to source project finances.”

On the NLNG dividends, NEITI stated that while there was evidence of payment of dividends from the NLNG to the NNPC, there was no similar evidence to show that the corporation remitted the dividends to the Federation Account as required by Sections 80(1) and 162(1) of the Constitution.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN

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Steel Manufacture At Evraz Plc West-Siberian Metallurgical Plant

Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.

Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.

The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.

“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.

MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.

The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”

It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.

The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.

“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”

The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.

It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.

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Economy

Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel

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Buhari

FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel

The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.

Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.

In March, it rose to $67 per barrel.

According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.

However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.

“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.

Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.

Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.

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Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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