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NLNG Revenue Hits Seven-year Low Amid Oil Slump

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  • NLNG Revenue Hits Seven-year Low Amid Oil Slump

The Nigeria LNG Limited, the biggest gas exporter in the country, said it earned a total of $4.723bn last year, the lowest in seven years.

The company, which was created to harness the nation’s vast natural gas resources and produce Liquefied Natural Gas and Natural Gas Liquids for export, saw its revenue peak at $11.592bn in 2012.

The NLNG is owned by the Federal Government, represented by the Nigerian National Petroleum Corporation (49 per cent), Shell (25 per cent), Total LNG Nigeria Limited (15 per cent) and Eni (10.4 per cent).

Following the sharp decline in crude oil prices, the NLNG’s revenue dropped from $10.791bn in 2014 to $6.843bn in 2015.

Dividends to the NNPC plunged from $1.044bn in 2015 to $356.127m last year, the lowest in 10 years, according to the ‘Facts and Figures on NLNG 2017’ released on Wednesday.

The international oil companies got $380.959m in dividends last year, down from $1.117bn in 2015.

The Managing Director and Chief Executive Officer, NLNG, Mr. Tony Attah, while presenting the document in Lagos, noted that the company took a beating from the fall in crude oil prices in the global markets.

The NLNG stated in the report that the Fukushima incident in Japan resulted in a high demand for the LNG in Asia, creating differences in the LNG prices between Asia and other regions.

Noting that the arbitrage necessitated the movement of gas trade from regions of lower prices to those higher prices, the NLNG said it partnered its buyers to “effectively optimise their volumes for the mutual benefit of the company and buyer.”

“This opportunity has nearly disappeared since late 2015 following the fall in oil price,” the company said.

With six trains currently operational, the NLNG is capable of producing 22 million tonnes per annum of the LNG, and 5mtpa of natural gas liquids from 3.5 billion standard cubic feet per day of natural gas intake.

It said, “Plans for building Train 7 that will lift the total production capacity to 30mtpa of the LNG are currently progressing with some preliminary early site preparation work initiated. Further work awaits an FID (final investment decision) by the stakeholders.”

According to the report, the company currently manages 16 long-term LNG sale and purchase agreements executed with 10 buyers on a delivered ex-ship basis.

It said, “The long-term LNG buyers take delivery of their volumes at receiving facilities spread across the Atlantic basin in countries such as Spain, France, Portugal and Italy in Europe, Turkey, Mexico and the United States of America.”

Nigeria is blessed with abundant reserves of associated and non-associated gas, estimated to be in excess of 180 trillion cubic feet.

The country is ranked ninth in terms of proven natural gas reserves in the world, estimated to be sufficient to sustain current production rates for over 60 years, according to the NLNG.

“Geologists believe that there is a lot more gas to be found (potentially up to 600Tcf), if companies deliberately explore for gas, as opposed to finding it while in search of oil,” Attah said.

According to him, the government aims to eliminate all flaring of gas associated with the production of oil, and the NLNG continues to play a significant part in this.

He said from 1999 to 2015, the NLNG converted 5.16Tcf of associated gas to export products, which otherwise would have been flared.

“With further improvement in the collection of associated gas, the NLNG with its six-train LNG/NGL complex will reduce upstream flaring in Nigeria even further,” he said, putting its current daily consumption at about 3.5 bcf.”

Attah said the NLNG would continue to consolidate its position as one of the major and reliable suppliers of the LNG in the world.

He said, “The NLNG’s expansion plan under the proposed Trains 7 and 8 projects, which will raise the liquefaction capacity to over 30mtpa, continues to make progress towards a Final Investment Decision.”

On domestic supply of Liquefied Petroleum Gas (cooking gas), the company said its intervention had helped stabilise the price of the commodity in the country.

Attah said the NLNG was determined to increasing its supply of the LPG into the Nigerian market to 350,000 tonnes per annum from 250,000 tonnes, adding that sale and purchase agreements had been signed with Nigerian companies for lifting.

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

Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months

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The National Bureau of Statistics (NBS) released a report that showed that Nigeria recorded a trade deficit of 8.9 Trillion Naira between January and September 2021. 

A trade deficit occurs when a country’s imports exceed its exports over a period. Within the period, foreign trade was 35.09 Trillion Naira which comprised imports of 22 Trillion Naira and exports of 13.1 Trillion which led to an 8.9 Trillion trade deficit.

A breakdown of the data by quarters shows that trade stood at 9.76 Trillion Naira in the first quarter, which represented imports of 6.85 Trillion Naira and exports of 2.91 Trillion Naira, this resulted in a trade deficit of 3.94 Trillion during the period.

The data went on to show that the majority of the goods imported in the first quarter were from China (valued at 2 Trillion), the Netherlands (valued at 726.09 Billion) the United States (valued at 608.12 Billion), India (valued at 589.1 Billion), and Belgium (valued at 238.5 Billion) while the majority of exports were to India (valued at 488.1 Billion), Spain (valued at 287.2 Billion), China (190.1 Billion), the Netherlands (160.0 Billion) and France (133 Billion).

In the third quarter, Crude oil dominated exports with 78.47% of exports, this was followed by natural gas with 9.5%. Imports were mainly motor spirit with 12.91% of imports, Durum wheat with 3.87%, gas oil with 2.77%, and used vehicles with 2.27%.

A renowned economist, Pat Utomi said the country’s huge appetite for imports was because of insufficient domestic production which is driven by worsening insecurity and stringent government regulations. He went on to say that although there were interventions introduced by the Government and the Central Bank of Nigeria to reduce imports and increase exports, the initiatives are fraught with inconsistencies and corrupt practices that prevent any real impact.

He went on to say that it was scandalous that Nigeria’s top imports were food products and motor spirits as those are products the country should be exporting because Nigeria is a food-producing nation and has oil in abundance.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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Value added tax - Investors King

In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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