- Complaints Hit East Africa’s Trade
The continuous introduction of tariff and non-tariff barriers are hampering intra-regional trade and putting integration at risk in East Africa.
Many manufacturers are complaining of encountering tariff and non-tariff barriers that blocked them from entering regional markets.
East African Community partner states that the manufacturers are largely in confectionery in Kenya, oil and fats in Uganda and a wheat and juice producer from Tanzania.
Yasin Billo, export manager of Tanzanian industrial conglomerate Bakhresa Group, said the company currently has 15 trucks stuck at the Tanzania-Kenya border because the Kenya Revenue Authority changed the rules and systems for exporting goods to the country.
However, Tanzanian Commissioner for Customs and Excise Ben Usaje said Bakhresa Group believed they were being mistreated because of the continued dispute over Kenyan confectionery.
Customs officials in Tanzania have blocked Kenyan confectionery products because they were allegedly manufactured using sugar that was imported at zero rate, instead of the EAC’s 100 per cent CET.
In 2017, Kenya faced a sugar crisis that prompted importation of sugar at a zero tariff.
Under the EAC regulations, this rate should have been 100 per cent, since sugar is a sensitive product that needs protection from dumping.
Mr Usaje said it is this sugar that the confectionery manufacturers are using and such products will not be allowed into the Tanzanian market unless a 25 per cent import duty is paid on them.
Mr Usaje added that Kenyan confectionery will not enjoy duty free rates in the Tanzanian market until the EAC forms another committee that declares their processes legitimate.
An earlier committee formed by the EAC to verify the origins of ingredients used in the process of manufacturing confectionery compiled a report that Mr Usaje says was “non-committal.”
“Products manufactured using industrial sugar when transferred to the EAC qualify for preferential tariff treatment provided they meet the criteria set under the EAC Rules of Origin, 2015, and other conditions set under the EAC Customs Management Act,” the report says.
The report adds that sugar for industrial use was not imported under the provisions of the Kenya Gazette notice announced in May 2017.
Mr Usaje questions the methodology used by the committee to come to the conclusion that confectionery makers used industrial and not ordinary sugar.
These tariff and non-tariff barriers coupled with what appear to be political manoeuvring are harming trade across the region.
The EAC Trade and Investment Report shows that intra-regional exports dropped by 42 per cent from $3.7 billion in 2013 to $2.6 billion in 2016.
The 2017 preliminary trade and investment report shows that intra-EAC exports recovered slightly to increase by nine per cent.
This is attributed to favourable weather conditions that contributed to a bumper harvest in the region.
The report also notes that intra-EAC exports increased from $2.6 billion in 2016 to $2.9 billion in 2017 on account of growth in manufactured goods such as cement, textiles, sugar, confectionery, pharmaceuticals, fats and oils moving freely in the region.
The report notes that in 2017, most East African partner states were able to resolve non-tariff barriers, facilitating increased trade in products like oils and fats and dairy products.
The states also discontinued policies that suspended the implementation of sections of the EAC Common External Tariff.
However, these non-tariff barriers are back, threatening the gains that were made last year.
In addition to the trade disputes between Tanzania and Kenya, Uganda has also been experiencing its own challenges.
For example, Uganda’s cooking oils and fats can’t enter the Tanzanian market because of alleged failure to meet the EAC Rules of Origin.
U.S. Crude Production Hits Another Record, Posing Challenges for OPEC
U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.
The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.
The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.
Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.
This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.
While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.
The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.
Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.
Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.
This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.
In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.
However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.
Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.
While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.
The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.
Nigeria Takes Bold Step to Energize Oil Sector: Plans to Revoke Dormant Exploration Leases
The Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) has announced that the Federal Government is considering revoking inactive oil exploration leases granted to companies unable to conduct exploration activities.
Gbenga Komolafe, CEO of NUPRC, conveyed that only companies demonstrating robust technical and financial capabilities would retain their leases under the guidelines of the Petroleum Industry Act (PIA).
“Based on PIA, the commission is focused on delivering value for the nation, so only firms that are technically and financially viable will keep their leases,” affirmed Komolafe in a statement to Reuters.
He outlined that the commission plans to review existing leases, and the allocation of new leases will be contingent upon specific terms and conditions.
Current data from NUPRC reveals that over 60% of prospecting licenses, comprising 53 exploration leases issued since 2003, have expired. Of these, 33 licenses, including four entangled in contract disputes, have not been renewed.
While automatic revocation has not been exercised, the regulator signals a departure from allowing companies to indefinitely retain leases without meaningful exploration activities.
The enactment of the PIA in 2021 empowers the regulator to assess the technical and financial capabilities of companies holding oil exploration leases.
The Nigerian oil and gas sector has faced challenges, witnessing dwindling investments as major players exit onshore and shallow water assets due to security concerns, infrastructure sabotage, and legal disputes in the Niger Delta.
The proposed move aims to incentivize active exploration, addressing the sector’s stagnation and fostering renewed investor confidence.
Nigeria Eyes Oil Production Surpassing OPEC Quota Amidst Positive Projections and Global Collaborations
In a strategic move to exceed the OPEC-imposed oil production quotas, Nigeria, led by the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, is on a trajectory to outperform expectations.
The recent 36th OPEC and non-OPEC ministerial meeting projected Nigeria’s oil production quota at 1.5 million barrels per day (bpd) in 2024.
However, Lokpobiri revealed in a Twitter post that Nigeria currently produces 1.5 million bpd for crude and 300,000 bpd for condensate.
Addressing concerns about Nigeria’s ability to meet these targets, Lokpobiri assured, “What we are producing is much more than what is projected in the 2024 budget estimate.”
Despite discrepancies between OPEC’s projections and Nigeria’s budget estimates, the minister expressed confidence that the country would surpass the outlined targets.
Furthermore, to fortify Nigeria’s position in the global energy landscape, Lokpobiri engaged in a pivotal meeting with Baker Hughes Chairman, Lorenzo Simonelli, on the sidelines of the ongoing 28th United Nations Climate Change Conference (COP28).
Baker Hughes, a global energy technology company, expressed keen interest in sustaining and enhancing its investment in Nigeria’s oil and gas industry. Simonelli emphasized the company’s commitment to contributing to Nigeria’s energy transformation agenda and collaborating on sustainable energy practices.
Lokpobiri commended Baker Hughes for its longstanding partnership with Nigeria and affirmed the government’s commitment to creating an enabling environment for investments in the refinery sector.
The meeting set the stage for a promising collaboration that aligns with Nigeria’s objectives and contributes to global sustainable energy goals.
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