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ATCON Faults CBN Over $8.1b Refund Order to MTN

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  • ATCON Faults CBN Over $8.1b Refund Order to MTN

The Association of Telecoms Companies of Nigeria (ATCON) has faulted the order to refund $8.1billion handed to MTN Nigeria by the Central Bank of Nigeria (CBN), saying the apex bank has no power to do so.

Its President, Oulsola Teniola, in an email report, said the cash in question belongs to MTN in the first place, wondering what the CBN wants to achieve by its order.

The CBN has accused MTN of untidy business transactions involving alleged repatriation of $8.1billion which it ordered the carrier to refund, while the Office of the Attorney General of the Federation has also issued demand notice of $2billion unpaid taxes over a 10-year period to the telco.

Four local lenders alleged to have facilitated the repatriation were also sanctioned by the apex bank but MTN has strongly denied both allegations, adding that it had the clearance of the apex bank and a clean bill of record with the tax authorities.

Teniola said the industry does not understand what the CBN intends to achieve by the directive to an operator on which it has no regulatory oversight.

He said: “It is very important to note that the figure referred to has almost been fully paid by MTN and that the $8.1billion doesn’t belong to CBN but belongs to MTN. So, on this basis, it is hard to understand what CBN seeks (to achieve) by its demands on MTN that it doesn’t have regulatory oversight over.”

On how the logjam could be resolved, he said dialogue and transparency would do the magic.

“Clarity, transparency and continued dialogue among CBN, the banks and MTN to amicably resolve this matter in the interest of the wider stakeholder community, especially, potential investors closely watching developments on this issue.

“At the moment, processing of CCIs (Certificate of Capital Importation) is shrouded in confusion in what should be a relatively straight forward process in between the banks and CBN their regulator.

According to him, there is no likelihood that MTN refund such huge cash because of its timing.

He said: “A refund is very unlikely. The size of the demand and timing is unreasonable and not in the interest of the country. After all, the Naira equivalent will have to be returned to MTN Nigeria. It is then an interesting situation that this seeks to redress events that occurred when CBN had full oversight and approved the transactions. How do they intend to do that?”

According to Teniola, the matter should be between the banks and the apex bank and not necessarily the banks’ customers (MTN).

“This I believe is a matter that should be in between the banks and CBN and not the client of the banks. NCC may decide to intervene if events unfold that threaten the survival of MTN and the telecom industry that they regulate. For now, it is too early to see which way this will take,” he said, adding, however, that he is not in an official capacity or position to quantify or qualify the impact of the development to corporate brand of the telco.

“I fully believe MTN will continue to engage with the relevant authorities to resolve this latest setback,” Teniola said.

CBN, had in a letter to MTN, said its investigation revealed that the shareholders of the telco invested $402,590,261.03 in the company from 2001 to 2006, which was carried out through the inflow of foreign currency cash transfers and equipment importation, as evidenced by the CCIs issued by Standard Chartered Bank (SCB), Citi Bank (CB) and Diamond Bank (DB); and the CCIs issued at the time of the investment by the above banks to MTN for $402,590,261.03 showed that $59,436,923.44 was invested as shareholders’ loan and $343,153,339.56 as equity.

“However, a review of your organisation’s financial statements for the year ended December 31, 2007 revealed that $399,594,146.00 was recorded/invested as shareholders’ loan and $2,996,117 as equity investment, in accordance with the shareholder’s agreement but contrary to the CCIs issued by the banks.

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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Crude Oil

Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Crude Oil

Oil Prices Steady Amid Mixed Signals on Crude Demand

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Crude oil

Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Crude Oil

Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73

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Crude Oil - Investors King

Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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