- Oil Price Rises to $64, Highest Since Mid-2015
Global oil benchmark, Brent crude, hit a 28-month high on Monday as Saudi Arabia’s crown prince cemented his power over the weekend with an anti-corruption crackdown.
Brent, against which Nigeria’s crude oil is priced, rose by $2 to $64.07 per barrel as of 8:03pm Nigerian time, more than $19 higher than the country’s oil price benchmark of $44.5 per barrel for this year’s budget.
The Excess Crude Account, into which the country saves the difference between the market price of oil and the budget benchmark to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure, has suffered declines since oil price slumped in 2014.
The account, which stood at about $4.11bn in October 2014, dropped to about $3.11bn in November and $2.45bn in December that year, and declined further into 2015.
The balance in the ECA stood at $2.309bn as of September 27, 2017, according to the Ministry of Finance, while the nation’s external reserves rose to $33.93bn as of November 3, 2017, latest data from the Central Bank of Nigeria showed on Monday.
“The price rise is a reaction to the uncertainty from Saudi Arabia,” the Chief Executive Officer, Sun Global Investments, Mihir Kapadi, told The Guardian.
Other factors have edged the oil price upwards. Saudi Arabia, Russia, Kazakhstan and Uzbekistan met over the weekend and said they were willing to maintain restrictions on oil production, to address a glut in supply and prop up prices.
The United Arab Emirates and Iraq have also said they would back an extension to production curbs, which were due to end in March 2018.
Meanwhile, Nigeria has expressed support for an extension of a deal between the Organisation of Petroleum Exporting Countries, Russia and other non-members to cut oil supply until the end of 2018 “as long as the right terms are on the table” regarding its own participation.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said there was growing agreement among other members of OPEC to extend the deal.
“There isn’t any reason to change what is a winning formula,” he told Reuters, adding, “There is a consensus to extend. The issue will be the duration.”
Nigeria itself, however, is exempt from the deal.
OPEC, along with Russia and nine other producers agreed to cut oil output by about 1.8 million barrels per day until March 2018 in an attempt to ease a global excess that weighed on prices.
Customs Realises N446.1 Billion Revenue in Q1 2021
The Nigeria Customs Service (NCS) realised N466.1 billion in revenue in the first quarter (Q1) of 2021, according to the latest data from the Public Relations Officer, NCS, Mr. Joseph Attah.
The data showed NCS realised N157.6 billion in January; N138.9 billion in February and N169.4 billion in March 2021.
A further breakdown showed the agency generated N216.9 billion of the total amount from import duty, while N105.2 billion was realised as Customs VAT and N55.5 billion was generated as a non-federation accounts levies.
Another N50.8 billion was generated from federation account levies while N34.5 billion was gotten from excise duty as well as N2.8 billion from fees.
Similarly, the data showed that within the period under review, the service made a seizure of different contraband goods valued at N1,996,145,258.
AfCFTA to Give Nigerian Businesses Access to $504.17 Billion African Market – CBN
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said the African Continental Free Trade Agreement (AfCFTA) could give Nigerian businesses access to African markets worth $504.17 billion in goods when fully implemented.
Emefiele, who spoke at the Zenith Bank’s 2021 Export Seminar held virtually in Lagos on Tuesday, said an extra $162 billion in services will also come to the country.
He, therefore, encourage Nigerian firms to seize the AfCFTA opportunity and ensure the nation becomes a significant hub for international and domestic manufacturing companies seeking to serve the country.
“I believe the AFCFTA will provide an opportunity for these young talented Nigerians to expand their services across the African region. Developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country,” he said.
The CBN Boss said financial institutions in Nigeria are already playing a significant role in expanding across the continent.
“I would like to encourage them to also leverage their presence in other parts of Africa, to support Nigerian businesses seeking to expand into new markets in Africa, by providing trade facilities to those with strong potentials for growth,” he said.
Emefiele added that the central bank has taken steps to improve productive capacity of businesses, which he said would enable them to take advantage of export opportunities in Africa.
“Our intervention programs in the agriculture and manufacturing sectors, are helping to enable businesses expand their scale of production, which is meeting growing domestic demand for goods, but also providing goods for the export market.”
FG to Borrow $1.5 Billion, €995 Million From World Bank, BNDES and Deutsche Bank of Germany
The Federal Government will yet again borrow another $1.5 billion and €995 million external loans following the Senate approval on Tuesday.
Senator Clifford Ordia, the Chairman of the committee on Local and Foreign Debts, presented the request for new loans at the plenary.
The committee recommended that “the Senate do approve the external borrowing of the sum of $1,500,000,000 and €995,000,000” from the World Bank, Export-Import Bank of Brazil (BNDES) and Deutsche Bank of Germany.
The Senate led by its President Ahmad Lawan approved the request for new loans.
Speaking on the loans, Senator Ordia said these were low-interest rates loans with a reasonable moratorium and payback period.
According to him, $750 million of the $1.5 billion to be sourced from the World Bank has a grace period of five years, 25 years tenor and an interest rate of 2.45 percent per annum while the balance of $750 also has similar terms with an interest rate of 2.5 percent per annum.
On the GIP component of the loan, Ordia said: “The Committee found that a total of six indigenous assembly plants, one in each geo-political zone have been identified and will be rehabilitated and retooled to assemble completely knocked down (CKD) mechanisation farm machinery and equipment to be imported from Brazil.
“The Committee observed the CKD mechanisation farm machinery and equipment to be imported from Brazil will be specifically adapted for local conditions with job creation opportunities for citizens.
“The Committee observed the loan is intended to be used to deliver technological package to the small holder farmers for a fee through the establishment of service centers in each of the 774 Local Governments of the Federation.
“The Committee further observed that the service centers will be owned and run by private business entities who will be supported to acquire various mechanization tools through favourable borrowing rates from participating commercial banks.”
On the SFTAS aspect of the loan, Chairman of the Committee said: “The Committee observed that there is an ongoing program called States Fiscal Transparency, Accountability and Sustainability (SFTAS) program facility in the sum of $750,000,000 funded by the World Bank currently running in all the States of the Federation and the FCT.
“The Committee notes that the said financing was approved by the National Assembly in June 2020 as part of the $1,500,000,000 Development Policy Financing to part finance FGN 2020 revised budget deficit.
“The Committee found that in October 2020, following the continuous economic disruptions occasioned by the pandemic and in view of the need to consolidate on and sustain the gains of the program and to increase States fiscal capacity to respond to the COVID-19 crises, the above program was restructured and expanded.
“The Committee found that the objective of the restructuring is to support States to introduce measures to further mitigate fiscal shocks by introducing COVID-19 responsive Disbursement Linked Indicators (DLI) at State Level, to match the fiscal measures at the Federal level and reallocating the undisbursed balance of the program funds towards the new DLI’s.
“The Committee notes that it is based on the above restructuring, the additional financing in the sum of $750,000,000 is now required for the Covid-19 response of Nigeria and same has now been tagged Nigeria SFTAS Additional Financing for Covid-19 response program for result (PforR).”
On the COVID-19 Action recovery and economic stimulus program (CARES), Ordia said: “The Committee notes that the Project Development Objectives (PDO) of the program (CARES) is to expand access to livelihood support and food security services, and grants for poor vulnerable households and firms.”
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