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NNPC’s Input to Economy Hampered by Operational Secrecy

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  • NNPC’s Input to Economy Hampered by Operational Secrecy

The capacity of the Nigerian National Petroleum Corporation (NNPC) to contribute to Nigeria’s economic development is still being hampered by the level of operational secrecy it practices, the Nigerian Natural Resource Charter (NNRC) has said.

According to the NNRC, when truly assessed, the operational costs of the NNPC which, are deducted at source before payment into the Federation Account have not been transparent.

Speaking at a workshop titled: ‘Assessing petroleum sector wealth: NNPC’s contributions to the economy,’ in Lagos, the Chairman of the Expert Advisory Panel of NNRC, and a former Minister of State for Petroleum, Mr. Odein Ajumogobia stated that when compared with other national oil companies such as Petronas of Malaysia, Sontrach of Algeria and Sonangol of Angola, the contributions of the NNPC to the economic growth of Nigeria was impacted by the lack of transparency in its operations.

Ajumogobia questioned the authenticity of data provided in the country’s oil sector especially of production levels and reserves.

“Nigeria’s economic growth and diversification in order to reduce our dependence on crude oil exports, is still however crucially dependent on the growth and efficiency of the oil and gas sector which is to partially fund and drive the diversification. We literally have to drill our way out of our current economic predicament. Thus NNPC if the existing structure remains, has a critical role to play in furthering a sustainable economic growth trajectory for Nigeria,” said Ajumogobia.

He added: “It is therefore appropriate to inquire into how the corporation’s stated vision of becoming a world-class oil and gas company is to be achieved if it is being undermined by external rather than internal factors of competence and commitment. Can such a vision indeed be achieved if NNPC is not insulated from political interference, as the NLNG incorporated joint venture appears to have been?”

“As the NNRC benchmarking exercise recorded, the observed muddling of the corporations business roles with its non-commercial and auxiliary regulatory roles continues. Further, that ‘commercial decisions and operational activities are still subject to political interference. It is in this context that we can properly question the extent of NNPC’s purposeful contribution to the nation’s economic growth as it is currently structured. Certainly no organisation can optimise its performance in contributing to a 21st century economy if its activities and decisions are not open and transparent,” Ajumogobia explained.

On the consistency and reliability of data in the industry, Ajumogobia stated that Nigeria had for a very long time bandied projected oil production figures that have never been attained.

He said: “In the meantime, is the existing uneconomic process even transparent? Can we rely on the figures we routinely reel out about reserves or about fuel consumption that once went from 30 million litres a day to 45 million litres a day within a period of one year between 2011 and 2012? As we speak another almost $2 billion is claimed to be owed to marketers.

“In its (yet to be excised) role as policy maker and regulator, it has been NNPC’s aspiration for close to 20 years – since the inauguration in 2000 of the Oil and Gas Implementation Committee [OGIC], to grow the country’s crude oil reserves to at least 40 billion barrels and to increase production to 4 million barrels per day (mbpd), in order to sustain the economic contribution of the petroleum sector, as energy demand inevitably increases with population growth. Yet by 1974, Nigeria had already attained production of 2.4mbpd from onshore and shallow water fields exclusively. In contrast, of the just over 2mbpd said to be produced today, close to 1mbpd is from deep offshore fields developed more than twenty years later, highlighting the massive decline in JV production over the years. By way of contrast, Angola doubled its oil production within the last fifteen years – from 750,000bpd in 2004 to a peak of 2mbpd in 2014,” he added.

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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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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