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NNPC Trading Deficit Rises by 128%, Refineries Lose N8.5bn

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refineries
  • NNPC Trading Deficit Rises by 128%, Refineries Lose N8.5bn

The Nigerian National Petroleum Corporation saw its trading deficit rise by 128.5 per cent in July to N11.87bn, with the nation’s crude oil refineries responsible for most of the loss.

The NNPC, in its latest financial and operations report obtained by our correspondent on Friday, noted that the N11.87bn deficit was an additional loss of N6.68bn relative to the previous month’s deficit of N5.19bn.

The refineries lost a total of N8.52bn in July, as their combined capacity utilisation dropped to 11.94 per cent.

The country’s refineries are the Warri Refining and Petrochemical Company, Port Harcourt Refining Company, and Kaduna Refining and Petrochemical Company.

The Kaduna refinery, which did not process any crude in June and July, lost N3.6bn in July; Port Harcourt refinery lost N2.63bn; and the WRPC recorded a deficit of N2.28bn.

The corporation said, “The unimpressive performance of the downstream is mainly due to high crude oil inventory and the shutdowns of the KRPC and the WRPC during the period.

“Also, the unavailability of some of the major secondary units in the PHRC in July 2017 accounted for the non-production of some light end products with the corresponding increase in operational expenditure as a result of several maintenance interventions.”

Total crude processed by the three domestic refineries for July was put at 224,584 metric tonnes, which translates to a combined yield efficiency of 89.11 per cent compared to crude processed in June, which stood at 231,836MT, translating to a combined yield efficiency of 86.64 per cent, according to the report.

The refineries produced 160,642MT of finished petroleum products out of 224,584MT of crude processed at a combined capacity utilisation of 11.94 per cent compared to 12.73 per cent combined capacity utilisation achieved in June.

“The deprived operational performance is attributed to the WRPC and the PHRC downtime during the month under review. The ongoing revamping of the refineries will enhance capacity utilisation once completed,” the NNPC said.

The corporation said it had been adopting a merchant plant refineries business model since January 2017, taking cognisance of the products’ worth and crude costs.

It said the combined value of output by the three refineries (at import parity price) for July amounted to N24.83bn while the associated crude plus freight costs and operational expenses were N24.13bn and N9.21bn, respectively.

“This resulted in an operating deficit of N8.52bn by the refineries. Also, during the period under review, refineries combined capacity utilisation was 11.94 per cent with the PHRC, recording the highest capacity utilisation of 24.18 per cent,” the NNPC said.

It said the petroleum products (the Premium Motor Spirit and the Dual Purpose Kerosene only) produced by the domestic refineries in July amounted to 80.18 million litres, compared to 186.26 million litres in June.

The corporation said its operating revenue for June and July was N295.75bn and N269.30bn, respectively, representing 79.54 per cent and 73.23 per cent of the monthly budget.

Similarly, operating expenditures for the same periods were N300.98bn and N281.18bn, respectively, which also represented 94.74 per cent and 88.52 per cent of budget for June and July, respectively.

According to the report, other drags to the month’s performance include shutdown of Trans Niger Pipeline and production shut-in to Que Iboe Terminal and Bonga Terminal.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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