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India Loses Spot as Nigeria’s Biggest Oil Buyer

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  • India Loses Spot as Nigeria’s Biggest Oil Buyer

For the first time in at least two years, India’s monthly import of Nigerian crude oil has fallen below six million barrels, the latest monthly report from the Nigerian National Petroleum Corporation has shown.

The Asian country lost its spot as Nigeria’s top oil buyer in December, as its import tumbled to a record low of 5.82 million barrels from 14.42 million barrels in November. It bought 17.2 million barrels in January 2016.

India, which in 2013 replaced the United States as Nigeria’s biggest market, saw its import of Nigerian crude rise to a peak of 20.37 million barrels in April 2015.

Netherlands emerged the biggest importer of Nigerian crude in December 2016 as it bought 10.11 million barrels, up from 4.77 million barrels the previous month.

The United States was the third-largest buyer of Nigerian crude as its import fell to 5.63 million barrels from 11.22 million barrels in November.

India’s oil import from Iran has risen sharply in recent months after Western sanctions on the latter were lifted a year ago.

Reuters reported last week that India’s Iran oil import jumped to a record high in 2016/17, topping half-a-million barrels per day as refiners boosted purchases after lifting of some Western sanctions imposed on Tehran last year.

Indian refiners shipped in about 541,000 bpd of Iranian oil in the fiscal year to March, a growth of about 115 per cent over the previous year, ship tracking data obtained from sources and data compiled by Thomson Reuters Oil Research & Forecasts showed.

Iran was India’s second biggest oil supplier – a position now belonging to Iraq – before economic sanctions aimed at Iran’s nuclear programme hampered its trade relations, forcing the South Asian nation to tap alternative suppliers.

In the first quarter of this year, India’s oil import from Iran surged by about 92 per cent to 573,400 bpd as some members of the Organisation of Petroleum Exporting Countries had cut supplies, the data showed.

The NNPC said crude oil production in the country in December slowed down to 1.58mbpd, representing 18.23 per cent drop relative to November 2016 production and lagged behind December, 2015’s performance by 24.04 per cent.

It said the Federal Government’s engagement with the Niger Delta militants had continued to enhance production.

The corporation said, “Issues that overshadowed production during the period include shutdown of Trans Niger Pipeline and Nembe Creek Trunk Line due to pipeline leakages; shut down of Agbami Terminal for mini turnaround maintenance and the subsisting force majeure at Forcados and Brass Terminals.

“Areas much affected by the militant activities are the onshore and shallow water assets, where government’s share is high. Hence, sustained security of onshore and shallow water locations remains a priority to restore production to peak levels.”

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.

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Economy

World Bank Lauds Kogi’s 2020 Financial Statement

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The World Bank has heaped praise on the Government of Kogi State concerning the state’s audited financial statement for 2020. The financial institution was said to have described the financial report as a standard to look up to concerning transparency and accountability in the public sector.

In a statement which was dated November 21, 2021 it was said that the bank made the commendation in a letter which was sent to the Accountant General of the state.

As said in the statement, the letter which was taken by the Kogi State Accountant General on November 2025 was signed by Deborah Hannah Isser, the Task Team Leader of the States Fiscal Transparency, Accountability and Sustainability Programme (SFTAS), Nigeria Country Office, Western and Central African Region.

SFTAS is a $750 million programme which has been set up to reward states for meeting any or every one of the indicators which demonstrate improvements in fiscal transparency, sustainability and accountability.

The indicators, which are nine in number were a byproduct of the former Fiscal Sustainability Plan of the federal government where States would be rewarded for meeting up to 22 targets.

The World Bank had previously backed the federal government to give incentives to the states in order to properly execute the 22-point Fiscal Sustainability Plan, which has now gone under a revamp as the nine Disbursement Linked Indicators under SFTAS.

Some of the criteria on which judgement will be based on are: improvement in financial reporting and budget reliability, improved cash management, increased openness, citizen participation in the budget process, reduced revenue leakages through the execution of State Treasury Single Account (TSA), a strengthened Internally Generated Revenue (IGR) collection, biometric registration and Bank Verification Number (BVN) used to reduce payroll fraud.

The World Bank commended the Kogi State government for preparing its audited financial statements in line with the basis of the International Public Sector Accounting Standards.

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Nigeria’s Rigid Forex Policy Discouraging Investors, Fueling Inflation – World Bank

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The World Bank has blamed the Central Bank of Nigeria’s rigid forex policy for the drop in Nigeria’s capital importation and rising inflation rate.

The bank disclosed in its November report, Nigeria Development Update.

Explaining modalities for its position, the World Bank stated that there had been constant pressure on the Nigerian Naira with the current forex policy, forcing the central bank to consistently increase its nominal official exchange rate in an effort to ease some of the pressure.

This, it blamed on the rigid foreign exchange management system of the Central Bank of Nigeria, saying the system has also been responsible for the rising inflation rate in Nigeria.

The report read in part, “The government’s exchange rate management policies continue to discourage investment and fuel inflation. Exchange rate stability is a key CBN policy objective, and to preserve its external reserves the CBN continues to manage FX demand and limit the supply of FX to the market.

“Pressure on the naira remains intense, and while the CBN has raised the nominal official exchange rate three times since the start of the pandemic (by 15 per cent in March 2020, five per cent in August 2020, and seven per cent in May 2021), FX management remains too rigid to respond to external shocks. Meanwhile, exchange-rate management has emerged as one of the key drivers of inflation.”

The World Bank further stated that the central bank foreign exchange system needs to be more flexible to withstand external shocks, especially given Nigeria’s mono-product nature. It added that the NAFEX rate does not reflect the true market rate but the central bank managed rate.

It read in part, “While the CBN supplied an average of $2.5bn to the Investors and Exporters forex window in the months just prior to the COVID-19 crisis, it only supplied an average of $0.5bn in the months thereafter.

“The NAFEX rate, which is now the guiding exchange rate for the economy, continues to be managed and is not fully reflective of market conditions. The parallel market premium over the NAFEX rate reached 29 per cent in August 2021 after the CBN cut off its weekly supply of $20,000 per bureau de change. The CBN has intermittently supplied forex to BDCs since 2005, providing ample opportunities for currency round-tripping.”

The institution however advised that Nigeria adopt a more predictable, transparent and flexible foreign exchange management system in order to attract and sustain private investment flows.

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Nigeria’s Non-oil Revenue Now N1.15 Trillion – Minister of Finance

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Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, has said that Nigeria’s non-oil revenue is now N1.15 trillion, representing 15.7 percent above the country’s target. This, she claimed, was a result of the federal government’s efforts at diversifying the nation’s economy.

Mrs. Ahmed disclosed this at the Institute of Directors (IoD) 2021 Annual Directors Conference which was held on Wednesday in Abuja.

According to the News Agency of Nigeria (NAN) the event with the theme: “Creating the Future: Deepening the Corporate Governance Practice through Multi-Sectoral and Multi-Generational Collaborations,” was meant to discuss economic development.

Mrs Ahmed added that the recent development was in line with President’s commitment to further diversifying the Nigerian economy which is heavily dependent on oil. She observed that Nigeria was showing resilience in recovery from recession from coronavirus (COVID-19) pandemic which intensely affected global economies.

The minister said the federal government alongside the private sector had implemented a wide range of monetary measures to stimulate economic recovery, growth and development, job creation and improved standards of living.

She also explained that the government was doing everything to improve and diversify Nigeria’s revenue generation.

Nigeria was quickly able to exit recession and is on her way to path of sustainable growth and we are intensifying efforts to grow and diversify our revenue sources to grow revenue from the current 8 per cent.”

“Our non-oil revenues have grown to N1.15 trillion, representing 15.7 per cent above set target. We are working on the 2021 finance bill and it’s nearing completion. Also, the recent approval of the medium-term national development plan is an important milestone of Buhari’s commitment to delivering sustainable growth and we require strong support and monitoring during implementation,” she said.

Mrs Ahmed reinforced the government’s decision to do something about infrastructure and reduce the cost of production for businesses in the country.

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