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Investors Shun NNPC’s Planned Pipeline Project from Kaduna Refinery to Niger Republic

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  • Investors Shun NNPC’s Planned Pipeline Project from Kaduna Refinery to Niger Republic

The plan by the Nigerian National Petroleum Corporation (NNPC) to build a crude oil pipeline from the Kaduna refinery to Niger Republic may have hit the rocks, as investors have shunned the project because it is commercially unviable.

As part of efforts to address frequent disruptions to the supply of crude oil to the Kaduna refinery, arising from the Niger Delta militancy, the Group Managing Director of NNPC, Dr. Maikanti Baru had after bilateral discussions with the Minister of Energy and Oil of the Republic of Niger, Hon. Foumakoye Gado, confirmed that the federal government was planning to begin the construction of about 1,000km of pipelines to convey crude from the Nigerien oil field in Agadem to the Kaduna refinery.

To actualise this plan, Baru said NNPC would hold discussions with the Chinese firm operating the Agadem oil field located in the East Niger Rift Basin.

Though the spokesman of the corporation, Mr. Ndu Ughamadu had said discussions on the proposed project were still ongoing, investigations revealed that the project was not commercially attractive to investors.

Investigation gathered that the idea of building the pipeline was originally mooted by Chinese National Petroleum Corporation (CNPC), which had approached the Bureau of Public Enterprises (BPE) to acquire the Kaduna refinery around 2005 with a commitment to pipe crude oil to the plant from Niger Republic.

An official of NNPC said at the weekend that when CNPC found oil in Niger Republic, it approached BPE and offered about $103 million to acquire the Kaduna refinery during the privatisation exercise carried out by the Olusegun Obasanjo administration but their offer was rejected.

“Their financial bid was low because they also offered to build about 700 kilometres of pipelines from the refinery to Niger Republic and also use their money to rehabilitate the refinery.

“But the federal government informed them that NNPC already had a pipeline from Escravos to Kaduna. But they preferred to build their own pipeline because of the constant vandalism of the Escravos-Warri pipeline, which feeds the Kaduna refinery.

“When they could not buy the Kaduna refinery, they went back to Niger to build a small refinery,” he explained.

The official added that CNPC left Nigeria in March 2016, noting the crude pipeline from Kaduna to Niger was no longer attractive because the crude reserves in Niger are very small, while the low oil price environment had made the project unattractive.

“Besides, other investors are not favourably disposed to partner NNPC in the project because the project is not viable.

“When they consider the price of crude oil and the low reserves in Niger, and juxtapose this against the capex of building the pipeline and opex of maintaining the pipeline, the project seems commercially unviable.

“For political and market integration, it may look attractive, but it is not commercially competitive. Once the crude oil coming from Niger Republic is not in excess of 100,000 barrels per day, no investor will be willing to partner NNPC.

“The command and control era is over; it was the past military administration that conceived the Kaduna refinery but that era is over. We are in an era of market competitiveness. So the pipeline project is dead on arrival,” said the NNPC official, who spoke off the record.

A former top official of the BPE, Mr. Dan Kunle also confirmed yesterday that the Chinese firm had actually approached the privatisation agency to acquire the 110,000 barrels per day Kaduna refinery and build a pipeline to Niger Republic but the bid was rejected because it was considered too low.

“They (CNPC) offered about $100 million but BPE rejected their bid because Nigerians will cry blue murder that the agency has given out the refinery for a pittance,” he said.

“Actually, they offered to build a pipeline to bring crude oil from Niger so that after refining in Kaduna, Niger will take their own share. But the bid was rejected and I doubt any investor will embark on the project today.

“It was viable in 2004-2005 but it is no longer viable in 2017,” Kunle added.

Investigation gathered that CNPC and Niger had in 2008 signed integrated upstream and downstream deals on the Agadem field involving oilfield exploration and development, construction and operation of a long-distance pipeline and a joint venture refinery.

By the terms of the contract, CNPC would complete the first phase of construction and bring the oilfield, pipeline, and refinery into operation within three years.

The project was completed on schedule.

A Nigerian delegation had in November 2011 represented former President Goodluck Jonathan when Niger inaugurated the 20,000 barrel-per-day Soraz refinery near Zinder, close to the Nigerian border.
The refinery is 60 per cent owned by CNPC and 40 per cent by the government of Niger.

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.

Investment

Afreximbank, AAAM to Drive Automotive Investment

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Afreximbank

Afreximbank, AAAM to Drive Automotive Investment

The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.

President of Afreximbank, Prof. Benedict Oramah and President of AAAM/Managing Director of Nissan Africa, Mike Whitfield, signed the MoU in early February, according to a statement yesterday.

The deal formalised the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance, and capacity building initiatives.

Oramah, said, “the strategic partnership with AAAM will facilitate the implementation of the Bank’s Automotive programme which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).”

Under the terms of the MoU, Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers, and local partners.

The two organisations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.

“To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain. The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, amongst others.

“The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional and continental automotive policies, and strategies.

“With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.

“Therefore, the collaboration between Afreximbank and AAAM will be an opportunity to empower the aspirations of African countries towards re-focusing their economies on industrialisation and export manufacturing and fostering the emergence of regional value chains,” the statement added.

“The signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa. At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game changer and a hugely positive development,” CEO of AAAM, David Coffey said.

“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure genuine progress for our industry in Africa,” Coffey added.

Other areas covered by the MoU include working with the African Union and the African Organisation for Standardisation to harmonise automotive standards across the continent and developing an automotive focused training program for both the public and private sector.

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FG Warns Foreign Investors Against Enslaving Nigerians

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Immigration

FG Warns Foreign Investors Against Enslaving Nigerians

The Federal Government on Monday warned foreign investors against subjecting Nigerians working in their companies to industrial slavery.

The government said the warning became necessary following several complaints against foreign companies maltreating some of their staff.

The Chief Commissioner, Public Complaints Commission, Chile Igbawua, issued the warning during a courtesy call on him by a delegation of Pan Africa United Youth Developments Network who came to lay complaint against some foreign companies allegedly maltreating Nigerians working under them.

The PCC said that it would not allow only its state commissioners to handle the issues due to their magnitude as there had been so many complaints about the ways some of the foreign companies were treating their staff.

At the event, the leader of the delegation, Habib Muhammed, expressed concern over alleged injustice and irregularities perpetrated by some company on Nigeria youths whom they engaged as factory workers.

He called on the Federal Government to look into the alleged slavery and injustice meted on Nigerian youths.

While calling on the foreigners to obey the labour laws of Nigeria, Igbawua said, “Our resources cannot be used to enslave us again.”

He said, “We have labour laws in Nigeria for goodness sake and we also have industrial standards; people working in various industries are entitled to good working conditions and minimum conditions of service.”

He added that the law was clear on the issue of casualisation and should be implemented.

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Investment

Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

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Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

China had the highest inflow of Foreign Direct Investments (FDI) globally in 2020, surpassing the US which took the lead in 2019.

According to the research data analyzed and published by Comprar Acciones, China’s inflow shot up by 9% to $163 billion up from $140 billion the previous year. Meanwhile, the US had a 49% drop from $251 billion in 2019 to $134 billion.

Based on data from the National Bureau of Statistics, China reported a 2.3% growth in GDP in 2020. It was the only major economy to record a positive growth rate during the year.

Chinese Stock Market Saw 18 Million New Investors in 2020

Global FDI took a hit in 2020, falling by 42% year-over-year (YoY) from $1.49 trillion in 2019 to $859 billion. The figure was 30% lower than the one reported during the 2009 financial crisis.

Developed countries saw the worst performance, sinking by a cumulative 69% YoY to $229 billion. For developing economies, there was a 12% decline of $616 billion. By the end of 2020, developing countries accounted for a 72% share of global FDI, the highest on record. India had the highest growth among top-rated economies, shooting up by 13%.

China bore the brunt of the pandemic much better than its peers, posting a 6.5% GDP growth in Q4 2020. During the year, there were 18.02 million new investors in its mainland stock market, raising the total to 177.77 million. Driving the surge in interest was the stellar performance of Chinese stocks in 2020.

The Shenzen Component grew by 38.7% in 2020, and the CSI 300 increased by 27.2%, compared to the S&P 500’s 16.26% growth. IPO activity also soared, with China and Hong Kong accounting for 40% of global IPO volume in 2020 according to Ernst & Young.

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