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Nigeria Borrows $3.1bn for Railway, Airports Projects



Light Rail
  • Nigeria Borrows $3.1bn for Railway, Airports Projects

Nigeria, under the administrations President Muhammadu Buhari and that of former President Goodluck Jonathan, has borrowed about $3.1bn for railway and airport projects across the country.

It was learnt that $1.6bn was borrowed by the current government for the construction of a standard gauge Lagos-Ibadan rail line, while the previous government reportedly collected $500m and $800m loans for airport upgrade and Abuja-Kaduna new rail line, respectively.

In 2013, the Federal Government secured the $500m loan from China for the construction of four international airport terminals in Abuja, Kano, Lagos and Port Harcourt, after signing a Memorandum of Understanding with China Exim Bank. The MoU for the loan was signed in Beijing, China, and it was for the delivery of the four new International airport terminals to Nigerians and to be constructed by the China Civil Engineering Construction Corporation.

The Minister of Transportation, Rotimi Amaechi, while also confirming the loans, said a total of $1bn loan was taken to complete the Abuja-Kaduna standard gauge rail line whose operation was recently inaugurated by President Buhari.

The minister also said that the Federal Government was working out plans for the commencement of the proposed new Ibadan-Kaduna rail line.

Amaechi, who confirmed this in a recent interview with journalists, specifically stated that the Ibadan-Kaduna railway project would be constructed by the CCECC, adding that the contract had been signed.

The minister said, “We borrowed $1.6bn for the Lagos-Ibadan railway project. But if you add the ones we met in my ministry, I think they borrowed $500m for aviation, which is for the four international airports in Abuja, Lagos, Port Harcourt and Kano.

“They also borrowed $500m to do the Kaduna-Abuja rail and the total figure then was about $800m and the total work brought it to about $1bn.”

Amaechi, however, stated that the Federal Government was funding the re-construction of the Itakpe-Ajaokuta-Warri rail project and that the cost to the government was in excess of $100m.

“We are funding this (Itakpe-Ajaokuta-Warri) project and we funded the completion of the Abuja-Kaduna rail. So, you can see that the government is frugal,” Amaechi said.

On the proposed contract with the CCECC for the construction of the Ibadan-Kaduna rail, the minister stated that the government was pushing hard to secure about $6.7bn loan for the facility.

He said, “We’ve signed the contract but we’ve not got the loan. What is important is the loan, which is a bit difficult but we are pushing hard. If we get the loan, then they (CCECC) will start this year because we are pushing hard. Honestly, it is one of the items I’m putting before the President for consideration.

“The loan is supposed to be about $6.7bn. But when we met with the China Exim Bank, they wanted us to reduce it. However, we will put it before the President so that he too can make a case for it when he goes to China.”

When asked whether the ministry was not overwhelmed by the many multi-billion dollar rail and aviation projects being handled simultaneously across the country, Amaechi said, “How can it (ministry) be overwhelmed? Are we not completing the projects? For the Lagos-Ibadan project, that should be completed latest by December or maybe in January. I thought you should be praising the ministry because we are able to multi-task.

“We met the Itakpe-Ajaokuta-Warri rail line abandoned and we are completing it. Our initial target is that they (contractors) must leave site in June and now we’ve agreed and Julius Berger is leaving site in August.

“The CCECC is where we have some problems; they are trying to say that the contract is till 2019, but we are insisting that they must complete it much earlier. You can imagine the level of commercial activities that will take place when this is completed, the jobs it will create and how it will reduce the pressure on our roads.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Fitch Agency Revises Nigeria’s Growth Projection for 2021



Fitch Ratings

Fitch Agency Revises Nigeria’s Growth Projection for 2021

Fitch Ratings, one of the world’s leading agencies, has revised down Nigeria’s growth projection for 2021.

The global rating agency predicted that Nigeria will grow by 1.5 percent in 2021, down from the previous 2.3 percent projection.

Fitch based its latest prediction on weaker base effects coming out of a shallower contraction recorded by the country in 2020.

While the agency said oil exports would be the main growth driver for Nigeria in 2021, consumer spending and investment were expected to remain subdued because of the rising inflation and the slow distribution of the COVID-19 vaccine.

Fitch Ratings, however, said Africa’s largest economy could expand by 2.7 percent in 2022, adding that by then it “expect Nigeria’s vaccination programme to gather pace, which will result in private consumption and fixed investment accelerating.”

“We at Fitch Solutions have revised our estimate for Nigeria’s real Gross Domestic Product (GDP) to a contraction of 1.9 per cent in 2020, compared to our previous estimate of a 3.2 per cent fall. The revision follows the release of stronger than expected GDP data indicating that the economy exited recession in the fourth quarter of 2020, growing by 0.1 per cent year-on-year, after contracting by 3.6 per cent in the third quarter of 2020 and by 6.1 per cent in the second quarter of 2020.

“The agriculture and services sectors led the Q4 2020 rebound, expanding by 3.4 per cent and 1.3 per cent respectively, resulting in non-oil growth rising by 1.7 per cent compared to a 2.5 per cent fall in Q3 2020. The oil sector (around 8.0% of GDP) contracted by 19.8 per cent in Q4 2020 – its third consecutive quarterly contraction – because of falling oil production and weak prices.

“Crude production slowed to 1.56 million barrels per day (b/d) in Q4 2020 from 1.67 milion b/d in Q3 2020, partly because of Nigeria’s commitments under the OPEC+ deal, while the price of Brent fell to an average of $43.2 per barrel (/bbl) in 2020 compared to $64.2/bbl in 2019,” it stated.

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Stop Maize, Soybean Export to Reduce Scarcity – NIAL



Farm input

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Petrol Landing Cost Jumps to N186, Oil Hits $64




Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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