Connect with us

Markets

Nigeria Requires Urgent Structural Reforms, Says Citibank Boss

Published

on

citibank
  • Nigeria Requires Urgent Structural Reforms, Says Citibank Boss

The Citi Country Officer for Nigeria, Mr. Akin Dawodu has stressed the need for structural reforms in Nigeria.

Dawodu said this during a panellist session on the theme: “Citi in Frontier and Emerging Markets,” at a Middle East and Africa Media and Community Summit organised by the bank in Dubai recently.

According to the Citi Nigeria boss, structural reforms would be very critical in finding the right balance for the Nigeria

“There is need for greater transparency in the oil and gas sector. Some work has been done there and there is a lot work that needs to be done,” he said.

Dawodu viewed how policymakers in the country responded to the shock that the country felt when crude oil price declined few years ago, from three dimensions.

This he listed to include fiscal responsibility; trade balance and exchange rate response and structural reforms.

“The oil price drop was a major shock for Nigeria because the government earns about 70 per cent of its revenue from oil and that meant that it was a big blow on the budget. “The reality also is that Nigeria’s tax to Gross Domestic Product (GDP) is one of the lowest in the entire world, at about six per cent. That is about a quarter of what you find in the world, even in emerging countries.

“So, it is extremely low and there is this constant contradiction that the Nigerian government is very active in economic activity, but in reality, the Nigerian government is quite small in terms of its share of GDP,” he said.

Dawodu acknowledged efforts by the government to increase tax collections, despite the challenges of revenue collection.

“But what we have seen in the short-term is that while spending has quite increased, because of the oil price drop, revenue shrank and attempts at diversifying revenue has not paid off and so the deficit is larger.

“So, the revenue challenge is the first part. The fiscal part meant more borrowings and debt to GDP, which now up to about 19 per cent, which is very low.

“But because of the low revenue base of the government, debt service to revenue is much higher at about 60 per cent, which is not sustainable.

“So, the revenue has to come up. And there are attempts at diversifying the revenue source through better tax collection, whether in terms of income tax, personnel tax or Customs Duties,” he added.

In terms of exchange rate, he noted that the country has in place a managed float exchange rate system.

“People have argued that devaluation does not automatically bring about export competitiveness and that was a major argument as far the issue of devaluation in Nigeria.

“The truth is that devaluation is a necessary and not sufficient condition for competitiveness. So, devaluation was necessary and it happened, but it is not sufficient to get the right balance in terms of competitiveness.

“In Nigeria, we are obsessed about imports. We talk about importation a lot and that we are import-dependent. But I never believed that is true. Nigeria’s import to GDP is about 10 per cent and one of the lowest in the world.

“But there is the perception in the country that Nigeria is import-dependent. The real balance has to be on exports. We have to find a way to diversify our export base away from oil and that is where we can find the right balance.

“We need a certain amount of import and a certain amount of trade to grow and you need to import the right things and we need to diversify,” he said.

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.

Continue Reading
Comments

Crude Oil

Aradel Holdings Reports 36% Increase in Crude Oil Production in Q1 2024

Published

on

markets energies crude oil

Aradel Holdings Plc, a prominent player in Nigeria’s energy sector, has announced a significant upswing in its crude oil production, a notable milestone in its operational performance for the first quarter of 2024.

During their 29th Annual General Meeting held in Lagos, Aradel Holdings unveiled that their crude oil production surged by 36% to 13,250 barrels per day compared to the average figures recorded in the previous fiscal year.

This increase underscores the company’s strategic efforts to enhance its production capabilities and optimize operational efficiencies.

Accompanying this impressive growth in crude oil output, Aradel Holdings also reported a substantial rise in gas production, reaching 36.8 million standard cubic feet per day, which reflects a parallel 36% increase from the previous year’s averages.

Despite a slight decrease of 1.6% in refined petroleum products, the overall operational metrics for the first quarter of 2024 showcased robust performance across key production segments.

Chairman of Aradel Holdings, Ladi Jadesimi, emphasized the pivotal role of strategic initiatives implemented in preceding years, which contributed to the company’s exceptional growth trajectory.

“We are pleased with the strides made in Q1 2024, driven by enhanced production volumes and improved operational efficiencies,” stated Jadesimi during the AGM.

He highlighted the successful implementation of the Alternative Crude Evacuation system introduced in 2022, which significantly minimized crude losses and bolstered overall production stability.

In financial terms, Aradel Holdings reported a remarkable 90% increase in revenues for Q1 2024 compared to the same period last year, signaling strong market demand and effective resource utilization strategies.

Moreover, the company achieved a commendable 62% growth in Profit Before Tax (PBT), reinforcing its position as a leading player in Nigeria’s energy landscape.

Commenting on the company’s outlook, CEO and Managing Director Adegbite Falade expressed optimism about Aradel Holdings’ future prospects.

“Our performance in Q1 2024 underscores our commitment to sustained growth and operational excellence,” Falade remarked. “We remain focused on leveraging our strategic advantages and advancing our capabilities to meet evolving market dynamics.”

Aradel Holdings’ stellar performance in Q1 2024 also propelled the company’s market capitalization to exceed N1 trillion, a significant milestone in its corporate history.

This achievement underscores investor confidence and reflects Aradel Holdings’ robust position in the Nigerian stock market.

Looking ahead, Aradel Holdings aims to build upon its Q1 success by further enhancing production capacities, exploring new growth opportunities, and maintaining a steadfast commitment to operational efficiency and sustainability.

Continue Reading

Crude Oil

Nigeria Adds 17 Deep Offshore Blocks to 2024 Oil Licensing Round

Published

on

Lekki Deep Seaport

The Federal Government of Nigeria announced on Tuesday the addition of 17 deep offshore oil blocks to the 2024 Licensing Round for oil fields.

This significant expansion is aimed at enhancing the nation’s crude oil production capacity and attracting more foreign and local investment.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, disclosed this development during a pre-bid conference held in Lagos.

Komolafe said the decision was part of the commission’s ongoing efforts to derive maximum value from Nigeria’s abundant oil and gas reserves.

“In pursuit of the commission’s commitment to derive value from the country’s abundant oil and gas reserves and increase production, the commission has been working assiduously with multi-client companies to undertake more exploratory activities to acquire more data to foster and encourage further investment in the Nigerian upstream sector,” Komolafe stated.

The new additions come on the heels of recent bids for 12 oil blocks and seven deep offshore assets in the 2024 marginal fields bid round.

This follows the earlier 2022/23 mini-bid round that saw some deep offshore blocks put up for offer.

The Federal Government’s proactive approach signals its determination to capitalize on the country’s hydrocarbon resources.

Komolafe noted that additional data acquired on deep offshore blocks facilitated this expansion. “As a result of additional data acquired in respect of deep offshore blocks, the commission has added 17 deep offshore blocks to the 2024 Licensing Round. Further details on the blocks can be found on the bid portal,” he added.

To accommodate the expanded opportunities, the NUPRC has adjusted the 2024 Licensing Round schedule. The registration and submission of pre-qualification documents, initially set to close on June 25, 2024, has been extended to July 5, 2024.

The data access, purchase, evaluation, and bid preparation phase will commence on July 8, 2024, and close on November 29, 2024, as initially planned.

Komolafe also highlighted the importance of ensuring equitable participation and transparency in the bidding process.

To this end, the commission has sought and received approval from President Bola Tinubu, who also serves as the petroleum minister, to implement attractive fiscal regimes and minimize entry fees for both licensing rounds.

A cap has been placed on the signature bonus payable for the award of the acreages to promote a level playing field for all bidders.

“Since the criteria for the award of the oil blocks are now much more attractive than they initially were during the 2022/23 Mini Bid Round, it is in the interest of equity and fair play to give all investors the same opportunity to bid for the assets,” Komolafe asserted.

Furthermore, the NUPRC announced that the pre-qualified applicants from the 2022/23 Mini Bid Round would not need to undergo a new pre-qualification process for the 2024 Licensing Round. Their technical submissions remain valid, and they are encouraged to re-submit new commercial bids to benefit from the revised, more attractive criteria.

These applicants are also free to bid for the newly offered blocks in the 2024 Licensing Round.

The Federal Government’s expanded licensing round presents a lucrative opportunity for investors to participate in Nigeria’s burgeoning oil and gas sector. With the introduction of these 17 new deep offshore blocks, Nigeria aims to solidify its position as a leading oil producer on the global stage and stimulate economic growth through strategic energy sector investments.

Continue Reading

Crude Oil

Brent Crude Falls to $84.12, WTI Rises to $80.19

Published

on

Brent crude oil - Investors King

In a cautious market, oil prices showed mixed movements in Asian trade on Tuesday.

Global benchmark Brent crude oil, against which Nigerian oil is priced, experienced a slight decline of 13 cents, or 0.15%, to settle at $84.12 per barrel.

Meanwhile, U.S. West Texas Intermediate (WTI) crude oil saw a modest increase of 14 cents, or 0.17% to $80.19 per barrel.

The recent fluctuations come after both benchmarks posted significant gains of around 2% on Monday, marking their highest closing prices since April.

The market’s attention has now shifted back to fundamental factors, which have exhibited signs of softness for some time.

Francisco Blanch, a commodity and derivatives strategist at Bank of America, noted in a client note that global crude oil inventories and refined product storage in key locations such as the United States and Singapore remain elevated.

“The oil market shifted its focus back to fundamentals, which have been soft for some time,” Blanch stated, highlighting the broader concerns about global demand growth.

Data from the first quarter of the year indicated a deceleration in global oil demand growth to 890,000 barrels per day year-on-year, with further slowing likely in the second quarter.

Also, according to the country’s statistics bureau, China’s oil refinery output fell by 1.8% year-on-year in May due to planned maintenance and higher crude costs.

Market participants are also keenly watching for further indications on interest rates and U.S. demand trends, with several U.S. Federal Reserve representatives scheduled to speak later on Tuesday.

Despite the mixed signals, some analysts remain optimistic about the impact of OPEC+ supply cuts.

Patricio Valdivieso, vice president and global lead of crude trading analysis at Rystad Energy, said, “The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025.”

Valdivieso further noted the disconnect between OPEC+’s demand outlook and those of other agencies, making it challenging to adopt a fully bearish stance on the market.

This sentiment has been reinforced by recent investor behavior, with hedge funds and other money managers purchasing the equivalent of 80 million barrels in key petroleum futures and options contracts over the week ending June 11.

Support for the market has also come from a rebound in refining margins, particularly in Europe and Asia.

Sparta Commodities analyst Neil Crosby pointed out that refining margins at a typical complex refinery in Singapore averaged $3.60 a barrel for June so far, up from $2.66 a barrel in May.

As the market navigates these dynamics, the cautious optimism among investors and analysts suggests a period of continued volatility and adjustment, with fundamental factors and policy decisions playing pivotal roles in shaping future price movements.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending