- Ship Import Dips to N319b on Forex Scarcity
Importation of vessels to Nigeria has dropped from N774billion ($2.15billion) in the last two years to N319 billion ($885.9million) due to scarcity of foreign exchange (forex).
It was learnt that the Central Bank of Nigeria’s (CBN’s) forex policy has made it difficult to get more vessels into the country from China, United States (U.S.) and South Korea since last year.
Already, the government has reviewed import duties on luxury yachts, boats, tug boats, oil platforms, bulkers and barges from 20 per cent to 70 per cent of the value of the vessels.
Also, it was revealed that lack of forex has made it difficult to import spare parts, which could be used to maintain the old ones rusting on the sea.
Before the forex challenge, the country imported some vessels worth $2.04 billion from the Republic of Korea between 2013 and 2014.
Also, $266.6million worth of vessels were imported from U.S; $405.9million from China; $108million from Netherlands; and $19.45million from Turkey. Also, $28.49million ship were imported France; $14.04million from Indonesia; $12.56million from Romania; $23.4million from Singapore and $17.27million from the United Kingdom.
Investigation revealed that some of the vessels, which were acquired for cabotage, are idle on the Nigerian waters as coastal shipping is now exclusively in the hands of Indians, Greeks and Lebanese.
It was gathered that foreign shipping lines still dominate the country’s coastal trade, while their local counterparts, that acquired loans to purchase vessels had gone bankrupt.
Nigerian Ship Owners Association of Nigeria (NISA) President, Captain Niyi Labinjo, said the Nigerian National Petroleum Corporation (NNPC) had been reluctant to give the Nigerian shipping companies jobs because their ships were too old to safely transport petroleum products to and from larger tankers offshore.
He lamented that some of his ships have been idleas long as nine months without a job.
Labinjo said: “As the sixth largest oil producing and exporting country, with proven crude oil reserves at 37,070 million barrels; and proven natural gas reserves at 5.111 billion cubic metre, coastal shipping is exclusively in the hands of Indians, Greeks and Lebanese. Nigerians are completely out of it.
“Officials of NNPC give many excuses. They say, ‘your ships are leaking’. When it isn’t leaking, they will say, ‘your papers aren’t complete; you don’t have insurance’. When you have everything, ‘your ship is first class, your ship is insured’; they will tell you don’t have enough bollards.”
He stressed that some of the vessels, which could not work in Europe and Asia, where stiff enforcement of regulation of cabotage trade are found, find their way into Nigeria to do business.
“This can be calculated. Nigerians import about 1.8 billion litres of petroleum products every month and that gives you N5.4 billion every month, so, that is what Nigeria is losing monthly,’’ he added.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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