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Why Nigeria’ll Resist Oil Cut, by Kachikwu

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  • Why Nigeria’ll Resist Oil Cut, by Kachikwu

In another 10 days, Nigeria’s exemption from production quota will be reviewed by the Organisation of Petroleum Exporting Countries (OPEC) in Vienna, Austria. The Federal Government plans to plead with the cartel to grant it a seven-month grace to stabilise its oil production.

Nigeria will resist any attempt to curb its oil production, the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has said.

The minister spoke ahead of the countries meeting with the Organisation of Petroleum Exporting Countries (OPEC) and Russia before the end of the month.

Nigeria and Libya, two members of the oil cartel enjoying exemption from oil production cut deal have been invited to an OPEC Committee meeting scheduled for September 22 in Vienna, Austria.

But 10 days ahead of the meeting where the latest developments in the oil sectors of both countries would be reviewed, Kachikwu gave reasons Nigeria must not be told to cap its oil production quota.

Kuwait’s Oil Governor Haitham al-Ghais told Al-Rai newspaper penultimate week that the oil cartel will be consulting with Nigeria and Libya to review the latest development in their oil sectors.

He said the group will hold a technical committee meeting on September 20, looking at the continued effects of the United States (U.S.) shale oil on the global market and the impact of Hurricane Harvey.

Ghais said: “The amount of production affected by the hurricane is estimated at 700,000bpd, which may strengthen the status of the market.”

He added that U.S. production had increased by 500,000bpd so far this year, compared to last year’s.

It was learnt that the September 20 meeting will be followed by another meeting on September 22, where a committee overseeing the deal, composed of oil ministers from Kuwait, Russia, Venezuela, Algeria, Oman and Saudi Arabia, would be in attendance.

The Nigerian position may pose a threat to the cartel’s effort to cut global supplies and boost crude prices towards $60 a barrel. The price prices hovered around $54.42 yesterday.

Kachikwu told the Financial Times that Nigeria’s energy sector was still suffering from years of violent disruptions and needed more “recovery time” before joining a supply deal agreed last year between some of the world’s biggest oil producers.

The minister, who was at OPEC meetings, said in an interview, that Nigeria would not consider sealing its production until at least March next year.

According to him, there has been no proof that the country’s rebound in production would last.

“We have a nine-month exemption period within which to come back to the table,” Kachikwu said, referring to the decision to extend the near two million barrel a day supply cut deal from June.

“You need that timeframe to see if any recovery is sustainable,” the minister explained.

His stance puts Nigeria on a potential collision course with other OPEC members as the country’s output has rebounded strongly in the past 12 months, blunting the effectiveness of a deal between 24 countries to shave almost two per cent of global oil output.

Nigeria and Libya were exempted from the cuts due to disruptions of oil production by militants in the Niger Delta. The agitations of the restive militants and the internal crisis in Libya, led to serious drop in oil output in both countries.

However, productions have improved following negotiations with leaders from the region. The Pan Niger Delta Development Foundation (PANDEF) has been negotiating with the Federal Government as part of efforts to restore peace to the oil producing region.

Nigeria’s production rose by 50,000 barrels a day in June, according to a Bloomberg survey.

Abdulsamad Al-Awadhi, a London-based analyst and Kuwait’s former representative to OPEC, said capping Libya and Nigeria might help but would not cut the supply by much.

Al-Awadhi said: “OPEC needs to have better compliance, and it must respect the right of Libya and Nigeria to go back to the market.

“Other countries that raised output while Libya and Nigeria are out should do more and give space to these two countries to go back to the market.”

The decision to grant Libya and Nigeria exemptions to production cuts was a collective decision, and any proposal to include them in OPEC’s plans will also require a joint decision, Secretary-General Mohammed Barkindo told reporters at an event in Istanbul.

OPEC and non-OPEC members agreed to cut oil production at its meeting in Austria on November 30 last year. The decision followed an agreement by OPEC members at a meeting in Algiers, Algeria on September 28 to limit supply with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars and sanctions.

The agreement was tagged ‘Algiers Accord.’ The production cut agreement, which began January 1, compelled OPEC’s 14 members and 10 non-OPEC countries, led by Russia, to cut a combined 1.8 million bpd in output through March.

Militants rescind threat

A coalition of militants in the Niger Delta, who had previously vowed to attack oil and gas pipelines if their demands were not met by October 1, has agreed to rescind their threats on the fossil fuel infrastructure in the oil-bearing region.

The Presidency held talks with the coalition last week, after which the group declared its loyalty to the PANDEF, which is negotiating with the Federal Government to increase the proportion of oil revenues used to develop the oil-rich delta.

A statement by the group reads: “Niger Delta Forum (PANDEF), the coalition of Niger Delta agitators, which comprises over 250 groups with their leaders and representatives present at yesterday’s (last week) meeting, officially withdraw our quit notice issued to the Northerners and Yorubas living in Niger Delta region; call off planned resumption of attacks on oil and gas installations across the Niger Delta region and beyond from September 10, 2017; suspend the October 1, 2017 declaration of the Niger Delta Republic; declare support for the Pan Niger Delta Forum.

“We have also resolved to work with PANDEF and give it our maximum support and we urge the federal government to continue a dialogue and implement the 16-point demand presented by PANDEF on behalf of the Niger Delta region.”

The news of the rescinded threat came as foreign companies start reinvesting in Nigeria after a year of high militant activity in 2016.

Shell has begun pumping natural gas from the second phase of development at the Gbaran-Ubie Niger Delta project at the end of last month. The gas from the expanded project will go to both the local market and export markets and will be transported via a new pipeline connecting the central processing facility at Gbaran-Ubie to a non-associated gas plant.

Hurricane concerns

Oil prices rose yesterday after OPEC forecast higher demand in 2018 and said its output fell in August.

The cartel has agreed that its production-cutting deal with non-member countries could help reduce the global crude glut.

In its monthly report, the OPEC also said the two hurricanes that hit the U.S. in recent weeks would have a “negligible” impact on demand.

The market was assessing Hurricane Irma’s effect on demand, even as key refinery restarts in the wake of Hurricane Harvey boosted expectations for crude oil consumption.

Weekly U.S. inventories data will shed light on the hurricanes’ impact. Analysts forecast crude inventories last week rose while products drew down.

The American Petroleum Institute’s (API’s) data report was due last night and the U.S. Department of Energy’s Energy Information Administration (EIA) reports expected today.

This week’s numbers might be incomplete indicators of the longer-term supply and demand outlook, said Mark Watkins, regional investment manager at U.S. Bank.

“Over the next two to three weeks, the EIA inventory numbers will be rather sloppy because you have production disrupted, refineries going offline and online,” he said, adding that OPEC figures are a better signal. “That’s why you have to look out further.”

Brent crude LCOc1 rose 43 cents or 0.8 percent to $54.27 per barrel by 1:14 p.m. (1556 GMT). During the session it traded as low as $53.42.

U.S. West Texas Intermediate (WTI) CLc1 was up 21 cents or 0.2 percent to $48.40 a barrel. It hit a session low of $47.73.

Output by OPEC’s 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd.

Should OPEC keep pumping at August’s rate, the market would see a small supply deficit next year, versus a 450,000-bpd surplus implied by last month’s report.

OPEC said inventories were falling and an increased premium of Brent crude for immediate delivery over that for later supplies raised hopes that the market was rebalancing.

The U.S. Energy Information Administration said it expects U.S. crude oil production in 2018 to rise by more than previously expected.

The agency forecast that 2018 crude oil output will rise 590,000 barrels per day to 9.84 million bpd. Last month, it expected a 560,000 bpd year-over-year increase to 9.91 million bpd.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Economy

Gov Aiyedatiwa Signs ₦96 Billion Supplementary Budget Into Law, Hails Ondo House of Assembly For Swift Passage

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The Governor of Ondo State, Lucky Aiyedatiwa, has expressed gratitude to the State House of Assembly for the swift passage of the Supplementary Budget as he signs the ₦96 billion budget into law.

Governor Aiyedatiwa spoke on Tuesday, November 15, during the signing of the supplementary budget in Akure.

The governor explained that the supplementary budget is necessary to help his administration address the economic challenges in the state.

According to him, the new budget signed into law is also essential for the state government to implement the new ₦73,000 minimum wage for civil servants and new employees, as well as for the recruitment of workers in the state.

Aiyedatiwa said, “The supplementary budget is necessary because of the time we are in and the trends of what is happening in the state and country in general; the new minimum wage, subsidy removal, and the recent recruitment of workers.”

Aiyedatiwa stated that his administration was grateful to the leadership and members of the House of Assembly for passing the bill.

He highlighted the harmonious relations between the two arms of the state and reaffirmed that his administration will continue to work with the House of Assembly for the betterment of the Ondo people.

The Speaker of the House of Assembly, Olamide Oladiji, thanked the Governor, stating that the steps taken by his administration have not only transformed the state but also proven the governor’s ability and capacity to deliver on the job ahead.

He expressed optimism that the bill signed into law would positively impact the lives of the citizens.

“These giant strides have not only transformed the state in all facets but have clearly demonstrated your vision, capacity, intellectual ability, zeal, passion, direction, and a clear understanding of the enormous job ahead.

“It is therefore hoped that the implementation of these laws will meaningfully impact the lives of the good people of the state.”

Oladiji pledged the continuous support of the House to Aiyedatiwa’s administration, saying, “I want to, on behalf of my colleagues, assure you, Mr. Governor, of our continuous support and cooperation to ensure the success of this administration.”

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MEND Tackles Ex-Agitators For Threatening To Bomb Oil Installations In Rivers 

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A war of words has ensued between a militant group, the Movement for the Emancipation of the Niger Delta (MEND) and a coalition of ex-agitators over alleged plan to attack oil installations in the region by the latter group.

Following the political crisis rocking Rivers State, a coalition of ex-agitators and fighters in the region under the aegis of Niger Delta Development Force had last week threatened to blow-up oil facilities in the region over what it termed a plot to seize financial allocations meant for local government areas in Rivers State through the courts.

The former warlords dared the Federal Government and the Central Bank of Nigeria, saying if they proceeded in withholding the funds for the state, it would have grave consequences.

Kicking against the threat, MEND’s spokesman, Jomo Gbomo, in a statement on Friday, said it will support security operatives in safeguarding crude oil installations from any attack.

Gbomo also said MEND is not in support of the violence that Rivers State has been experiencing due to the lingering feud between the Minister of the Federal Capital Territory, Nyesom Wike, and his successor and estranged political godson, Siminalayi Fubara.

Describing the attack plan as threat to the economy of the country, Gbomo said it would be most unfortunate for a political dispute between two politicians to cost the state and Nigeria assets that are pivotal to nation’s survival.

Noting that the both feuding political gladiators are sons of the Niger Delta, the spokesman asked those making the threats not to allow themselves be tricked using the present circumstance into carrying arms against the Nigerian state on behalf of any of them, not even for any price.

He said as an Ijaw son, he knows the gains of having an Ijaw man as governor in Rivers, adding that it is an achievement which would not have been possible but for the collaboration of other ethnic groups.

According to him, the current healthy collaboration from the various ethnic groups which produced an Ijaw son as governor was spearheaded by the FCT Minister.

The statement said not only would MEND back the Federal Government in protecting oil facilities, but it would also ensure that the masterminds of the threats to attack oil installations are fished out and meant to face justice.

The MEND spokesman, however, urged the elders and traditional institutions in the region to intervene in the face-off between Governor Fubara and the FCT Minister.

He also urged parties in the festering political crisis to seek judicial redress if peaceful dialogue fails.

 

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Northern Governors Oppose New VAT Model as FG Defends Tax Reform Bills

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The Federal Government has addressed concerns raised by the Northern Governors’ Forum regarding the proposed tax reform bills before the National Assembly.

Investors King gathered that Governors of 19 Northern States of Nigeria, under the platform of the Northern Governors’ Forum met with the traditional rulers from the region to agree to disagree with the Federal Government’s new value-added tax model.

In a communiqué read by the chairman of the forum, Governor Muhammed Yahaya of Gombe State, the governors strongly opposed the new derivation-based model for Value-Added Tax (VAT) distribution in the new tax reform bills proposed by President Tinubu’s government.

Addressing the governors’ concern, the FG in a statement on Thursday by the President’s Special Adviser on Information and Strategy, Bayo Onanuga stated that the proposed bills will streamline Nigeria’s tax administration processes, enhance efficiency and eliminate redundancies across the country’s tax operations.

According to Onanuga, the bills which is currently before the National Assembly for consideration emerged after extensive review of existing tax laws.

The statement reads, “While we commend the Governors and traditional rulers for supporting President Bola Tinubu over the success recorded in addressing the country’s security challenges, we consider it necessary to address the misunderstandings and misgivings around the tax reform already embarked upon by the administration.

“President Tinubu and the Federal Executive Council recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes, enhancing efficiency and eliminating redundancies across the nation’s tax operations.

“These reforms emerged after an extensive review of existing tax laws. The National Assembly is considering four executive bills designed to transform and modernise Nigeria’s tax landscape.

“First is the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.

“Second, the Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country.

“Third, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.

“Fourth, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities.

“The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, which would serve as a complaint resolution body for taxpayers.

“It is instructive to note that these proposed laws will not increase the number of taxes currently in operation. Instead, they are designed to optimise and simplify existing tax frameworks.

“The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.

“The reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.

“Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry. Instead, they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.

“At the moment, tax administration lacks coordination among federal, state, and local tax authorities, often resulting in overlapping responsibilities, confusion, and inefficiency. Without reform, this inefficiency will persist.

“The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.

“Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.

“The proposed reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.

“On the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.

“The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.

“The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services. This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states.

“These reforms are critical to improving the lives of Nigerians and were not put forward by President Tinubu to undermine any part of the country. There is no better time than now for the National Assembly to give due consideration to these bills that will overhaul our tax systems and create the revenue all the tiers of government require to fund the development our country and people urgently need.”

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