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FG Increases Local Content Fund to $200m

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  • FG Increases Local Content Fund to $200m

The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, Monday said the agency had obtained all necessary approvals to relaunch the Nigerian Content Intervention Fund (NCI Fund) and had increased the pool available for lending to qualified oil and gas players from $100 million to $200 million.

This, he said, was to increase the opportunities for more deserving companies to benefit from the fund.

He spoke in Lagos just as Dangote Refinery said it would select competent Nigerian vendors that would participate in the construction of its plant from the Nigerian Oil and Gas Industry Joint Qualification System (NOGICJQS), the database of available capacities in the oil and gas industry managed by the NCDMB.

The Chief Operating Officer of Dangote Refinery, Mr. Giuseppe Surace, made this commitment at a recent technical meeting held between top officials of the company and the NCDMB at the refinery project site in Lekki, Lagos State.

According to a statement Monday by the NCDMB, Surace said there were many advantages in patronising the local market, adding that Nigerian companies would get the first right of refusal.

“We will procure anything that is available in Nigeria,” Surace said. He added that there were several Nigerian Content opportunities in the company’s refinery and gas gathering projects, stressing that interested companies must submit competitive bids and have technical capabilities.

He explained that the project was a private investment, hence the strategy to get the best quality anywhere in the world at the most competitive price.

Surace urged local vendors to quote reasonable prices when bidding for industry projects, rather than believe that they would win jobs because of the Nigerian Content Act, irrespective of the cost in their quotations.

He noted that the Dangote Group engaged the services of some Nigerian companies on its fertiliser project, which had reached an advanced stage of development and was committed to do the same on the 650,000 barrels per day refinery project, which would be completed in October 2019.

In his comments, Wabote promised that the agency would assist the company in the utilisation of the NOGICJQS database to ensure that it maximises the utilisation of local personnel, goods and services in the construction and operations phase of the project.

“The Nigerian Content Act applies to every player in the Nigerian oil and gas industry and not just international companies. If Nigerian companies and investors procure everything from abroad then the essence of the Act will be defeated,” Wabote said.

Wabote maintained that slight cost differentials between Nigerian and foreign vendors should not be an excuse to export jobs, stressing that the opportunity cost of creating employment for Nigerians, developing local capacity, retaining spending in the economy and engendering a safe operating environment for companies justifies any marginal cost of execution charged by Nigerian vendors.

He explained that Nigerian companies were affected by the high costs of funds and powering their operations with diesel generators, assuring them however that investments and initiatives by the federal government was already improving the power situation in the country.

He disclosed that the board had obtained all necessary approval to relaunch the Nigerian Content Intervention Fund (NCI Fund), adding that the pool available for lending to qualified oil and gas players had been increased from $100 million to $200 million to ensure that more deserving companies benefit at the same time.

He reiterated that NCI Fund would be disbursed directly by the Bank of Industry (BOI) at eight per cent interest rate and repaid within five years.

Meanwhile, oil prices fell Monday by nearly two per cent, pulling back from last week’s rally built on signs the global market is starting to rebalance from chronic oversupply.

Global benchmark, Brent crude futures lost two per cent, or $1.07, at $51.65 per barrel after surging more than three per cent on Friday.

US West Texas Intermediate crude futures fell 1.9 per cent, or 90 cents, to $47.63 per barrel. The contract had also risen three per cent in the previous session.

Reuters reported US hedge funds and money managers have already started reducing bets on rising prices, with Commodity Futures Trading Commission data showing on Friday that investors had cut bullish bets on U.S. crude for a second straight week.

Investors in Europe disagree on the outlook, however, as data from the InterContinental Exchange showed speculators raised bullish Brent crude bets last week.

The world remains awash with oil despite a deal struck by some of the world’s biggest producers to rein in output.

Rising US production has been a major factor keeping supply and demand from balancing.

There are indications that US output may soon slow, as energy companies cut rigs drilling for new oil for a second week in three, energy services firm Baker Hughes said on Friday.

Drillers cut five rigs in the week to August 18, decreasing the count to 763.

US commercial crude inventories have fallen almost 13 per cent from their March peaks to 466.5 million barrels.

The oil minister of Kuwait, which is participating in OPEC-led production cuts, said U.S. crude stocks were falling more than expected because output cuts were taking effect.

Azerbaijan, not an OPEC member but one of the countries which has committed to the production curbing deal, remains committed to cutting output, the head of state oil company SOCAR told Reuters yesterday.

A shutdown of Libya’s Sharara field due to a pipeline blockage provided some upside. Libya’s National Oil Corp declared force majeure on loadings of Sharara crude from the Zawiya oil terminal on Sunday.

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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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

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Nigeria Will Benefit Less From African Trade Deal – NESG

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Nigeria Will Benefit Less From African Trade Deal – NESG

Nigeria and other resource-based countries will benefit less from the African Continental Free Trade Area than economies that are more diversified, the Nigerian Economic Summit Group has said.

The NESG, a private sector-led think-tank, said in its 2021 Macroeconomic Outlook that Nigeria could reap more gains through export diversification away from crude oil.

It said trade in Africa remained dominated by raw materials and less processed products, adding that on average, minerals and agriculture accounted for 44 per cent and 16 per cent of intra-African trade respectively between 2007 and 2017.

The NESG said, “Evidence has shown that African economies that are more diversified and have improved transport infrastructure, would benefit more from the trade pact than others that are resource-based and agricultural dependent.

“Putting this in context, South Africa currently accounts for 40 per cent of intra-African manufacturing imports. On the other hand, resource-based countries, such as, Algeria, Egypt and Nigeria – which collectively account for approximately 50 per cent of Africa’s GDP – contribute only 11 per cent to intra-African trade.”

“Another bone of contention is the issue of ‘rules of origin’, which constitutes a significant risk factor. This implies that protectionism practices by some countries could constitute a setback for the establishment of the ambitious single market for Africa. But there are several reasons to be optimistic,” it added.

The group said the World Bank estimates revealed that the AfCFTA would promote manufacturing exports over natural resources, agricultural and services exports, and that manufacturing exports would account for one-third of the projected total exports of $2.5tn by 2035.

It said, “Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of nine per cent of the country’s total exports.

“This suggests that efforts should be directed at strengthening domestic value chains, particularly the agro-allied industrial base.

“To achieve this, there is a need to attract private capital, most especially, FDI, that would allow for knowledge and technological transfers.”

According to the NESG, for Nigeria to maximally benefit from the trade deal, there is an urgent need to also address transport infrastructure bottlenecks and provide improved logistics.

It said, “Finding a lasting solution to the Apapa gridlock by creating similar ports in other regions of the country, so as to ensure speedy clearance of consignments needs to be prioritised.

“Nigeria also needs to set standards for locally-made goods to enhance their attractiveness in the regional market.

“The Nigerian government as a matter of urgency needs to operate an efficient and corruption-free land border system, so as to guide against the importation of low-cost sub-standard products into the country.

“It is only when these and many more reforms are implemented that Nigeria can begin to reap the benefits of the trade deal.”

The group noted that owing to the outbreak of COVID-19, the implementation of the AfCFTA was postponed from July 1, 2020 to January 1, 2021.

It said, “The key goal of the free trade pact is to expand the volume of intra-African trade, which stood at 16 per cent in 2018 .“Till date, 36 countries, including Nigeria, have ratified the agreement. The trade deal is expected to create a single market with a combined GDP of $2.5tn and total population or market size of 1.2 billion.”

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