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Surcharge: Clearing Agents Threaten to Boycott CMA CGM Services

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Seaport
  • Surcharge: Clearing Agents Threaten to Boycott CMA CGM Services

The plans by a foreign shipping line, CMA CGM, to impose congestion surcharge on Lagos ports as a result of what it describes as high operational cost incurred due to the recent strike embarked upon by the Nigeria Labour Congress have attracted threats of a boycott by clearing agents.

On Friday, the shipping line indicated that it planned to impose the congestion surcharge on Lagos ports.

It wrote on its website, “Port congestion at Lagos ports, Nigeria, is currently increasing our operational costs and generating severe service disruption for several weeks.

The firm said with effect from October 15, all importers would prepay $400 for 20-foot container of dry, reefer OOG and bulk cargoes coming to Apapa and Tin Can Island ports.

This, the firm announced, would be in addition to their ocean freight.

The National Publicity Secretary, Association of Nigerian Licensed Customs Agents, Dr Obicee Okonkwo, maintained that the shipping line was not expected to impose arbitrary charges on anybody without due consultation with the authorities involved.

He said, “The people that are going to be directly affected by the charge are the importers, the clearing agents and the final consumers. The charge will make cargo delivery expensive. They can either reverse it or go ahead and risk people boycotting their services.”

In a statement, the Vice president of ANLCA, Kayode Farinto, advised all Nigerian importers to stop shipping their cargoes through the company.

He argued that already, shipping companies were collecting N60,000 administrative charge on all 40-foot containers, despite the contract of affreightment entered into by the importer and the shipping lines abroad and payment of freight.

He said, “We have carefully looked at the proposed congestion surcharge being planned on Nigeria-bound cargo by CMA CGM, which will commence on October 15 and we want to say that, we don’t know why it is being proposed because we don’t have congestion at our ports. There are questions that need to be asked when you talk about placing surcharge on a cargo.

“The first one is contract of affreightment, which has been entered into by the importer and the shipping lines. If you now slam a charge on them called congestion surcharge, the question is: do we have congestion at our ports? The answer is no.”

He said, “Even if there are operational challenges in the port that attract additional cost, does this warrant slamming congestion surcharge on Nigerian-bound cargo? But because they have been doing it and nobody has challenged them, this time around, we are challenging them and we are saying that it is illegal; it negates the Federal Government’s policy on ease of doing business. And we are advising importers not to ship their cargoes through CMA CGM from October 15; they should look for any other shipping line that is not collecting such money.

“This is obtaining money under false pretence, which is a criminal offence, and if CMA CGM goes ahead to collect this charge, we would arrest the managing director of CMA CGM and drag ourselves to the EFCC. Whatever is collected from Nigerian importers would be paid back to them.”

The Coordinator, Save Nigeria Freight Forwarders, Dr Osita Chukwu, also described the surcharge as illegal.

He said, “Any charge without following due process is illegal and people that pay it do not know what they are doing.

“The offence attracts a three-year prison sentence. There is maritime law that regards that as stealing. That is how Ports and Cargo imposed N127,000 royalty on importers but the Nigerian Shippers’ Council directed them to refund the money to people that had paid.

“The process of getting such fee is by applying to government and explaining the reason for the surcharge and until the government approves, they cannot go ahead and charge.”

The NSC has said it is not notified officially of the planned surcharge.

The Executive Secretary of the council, Hassan Bello, said until the council gave a go-ahead, the surcharge remained illegal.

“There is no such charge. There is nothing like that and if there is an intention to do that, it is null and void until they have negotiated with the NSC and until the council gives them the go-ahead, it will be illegal.”

The Director, Monitoring, Enforcement and Compliance, NSC, Mr Cajetan Agu, told our correspondent in a telephone interview that if the charge must be imposed on Nigerians, there was a process for it.

“But we have not received any official correspondent to that effect,” 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.

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Crude Oil

IEA Cuts 2024 Oil Demand Growth Forecast by 100,000 Barrels per Day

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Crude Oil

The International Energy Agency (IEA) has reduced its forecast for global oil demand growth in 2024 by 100,000 barrels per day (bpd).

The agency cited a sluggish start to the year in developed economies as a key factor contributing to the downward revision.

According to the latest Oil Market Report released by the IEA, global oil consumption has continued to experience a slowdown in growth momentum with first-quarter growth estimated at 1.6 million bpd.

This figure falls short of the IEA’s previous forecast by 120,000 bpd, indicating a more sluggish demand recovery than anticipated.

With much of the post-Covid rebound already realized, the IEA now projects global oil demand to grow by 1.2 million bpd in 2024.

Furthermore, growth is expected to decelerate further to 1.1 million bpd in the following year, reflecting ongoing challenges in the market.

This revision comes just a month after the IEA had raised its outlook for 2024 oil demand growth by 110,000 bpd from its February report.

At that time, the agency had expected demand growth to reach 1.3 million bpd for 2024, indicating a more optimistic outlook compared to the current revision.

The IEA’s latest demand growth estimates diverge significantly from those of the Organization of the Petroleum Exporting Countries (OPEC). While the IEA projects modest growth, OPEC maintains its forecast of robust global oil demand growth of 2.2 million bpd for 2024, consistent with its previous assessment.

However, uncertainties loom over the global oil market, particularly due to geopolitical tensions and supply disruptions.

The IEA has highlighted the impact of drone attacks from Ukraine on Russian refineries, which could potentially disrupt fuel markets globally.

Up to 600,000 bpd of Russia’s refinery capacity could be offline in the second quarter due to these attacks, according to the IEA’s assessment.

Furthermore, unplanned outages in Europe and tepid Chinese activity have contributed to a lowered forecast of global refinery throughputs for 2024.

The IEA now anticipates refinery throughputs to rise by 1 million bpd to 83.3 million bpd, reflecting the challenges facing the refining sector.

The situation has raised concerns among policymakers, with the United States expressing worries over the impact of Ukrainian drone strikes on Russian oil refineries.

There are fears that these attacks could lead to retaliatory measures from Russia and result in higher international oil prices.

As the global oil market navigates through these challenges, stakeholders will closely monitor developments and adjust their strategies accordingly to adapt to the evolving landscape.

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Crude Oil

Federal Government Allows Indigenous Refineries to Purchase Crude Oil in Naira or Dollars

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Dangote Refinery

The Federal Government of Nigeria has announced that domestic crude oil refiners and other operators in the sector are now permitted to buy crude oil in either naira or dollars.

This move comes as a response to longstanding demands from stakeholders in the industry and is poised to reshape the dynamics of the nation’s oil market.

The announcement was made on Monday through the Nigerian Upstream Petroleum Regulatory Commission during a briefing in Abuja.

According to the commission, the decision to allow the purchase of crude oil in naira or dollars aligns with the provisions of Section 109(2) of the Petroleum Industry Act 2021.

The development of the new template involved collaboration with key stakeholders, including representatives from NNPC Upstream Investment Management Services, Crude Oil/Condensate Producers, Crude Oil Refinery-Owners Association of Nigeria, and Dangote Petroleum Refinery.

Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, said the new template will ensure a seamless implementation of the Domestic Crude Oil Supply Obligation (DCSO) and maintain a consistent supply of crude oil to domestic refineries.

He highlighted that the flexibility to transact in either naira or dollars would alleviate pressure on the country’s foreign exchange rate, potentially benefiting the overall economy.

Responding to inquiries regarding the currency of transaction, Komolafe reiterated that payments could be made in either United States dollars or naira, or a combination of both, as agreed upon in the Sales and Purchase Agreement (SPA) between the producer and the refiner.

This flexibility is expected to ease the financial burden on indigenous refineries and support their sustainability in the face of economic challenges.

The decision comes after modular refineries in Nigeria faced threats of shutdown due to difficulties in accessing foreign exchange for crude oil purchases.

These refineries with a combined capacity of producing 200,000 barrels of crude oil daily, struggled to secure dollars for purchasing crude, which is priced in US dollars.

The Crude Oil Refinery Owners Association of Nigeria had previously expressed concerns over the impact of the foreign exchange crisis on their operations.

Furthermore, alongside the announcement regarding crude oil purchases, the government revealed an increase in the country’s crude oil and condensate reserves to 37.5 billion barrels as of January 1, 2024.

Gas reserves also saw an uptick, reaching 209.26 trillion cubic feet during the same period, signifying substantial potential for future exploration and production activities.

As Nigeria navigates its oil and gas landscape, the decision to allow indigenous refineries to purchase crude oil in naira or dollars marks a significant step towards supporting local industry players and promoting economic stability in the sector.

With the potential to enhance operational efficiency and mitigate financial challenges, this policy shift holds promise for the growth and sustainability of Nigeria’s oil refining sector.

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Commodities

Citigroup Predicts $3,000 Value Amidst Investor Surge

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gold bars - Investors King

Citigroup Inc. has predicted that the world’s leading safe haven asset, gold will reach $3,000 per ounce.

This announcement comes amidst a significant surge in investor interest in the precious metal, fueled by a myriad of factors ranging from geopolitical tensions to shifting monetary policies.

Analysts at Citigroup, led by Aakash Doshi, have upgraded their estimates for average gold prices in 2024 to $2,350, with a 40% upward revision in their 2025 prediction to $2,875.

They anticipate that trading will regularly test and surpass the $2,500 price level in the latter half of the year.

The rationale behind Citigroup’s optimistic outlook lies in several key factors. Firstly, the expectation of a Federal Reserve interest rate cut has spurred increased investor inflows into gold as historically low interest rates tend to make non-yielding assets like gold more attractive.

Also, ongoing conflicts in regions such as the Middle East and Ukraine have heightened geopolitical uncertainty, further bolstering gold’s appeal as a safe-haven asset.

Furthermore, central banks, particularly those in emerging markets, have been actively accumulating gold reserves, adding to the overall demand for the precious metal.

China, in particular, has demonstrated robust consumer demand for gold, further underpinning Citigroup’s bullish stance.

According to Citigroup analysts, the resurgence of inflows into gold-backed exchange-traded funds (ETFs) has played a significant role in supporting the climb towards the $3,000 mark.

This trend marks a departure from recent years, where such inflows were relatively subdued.

While Citigroup acknowledges the possibility of a pullback in prices around May or June, they anticipate strong buying support at the $2,200 per ounce threshold, suggesting that any dips in price may be short-lived.

The bank’s forecast aligns with sentiments expressed by other major financial institutions. Goldman Sachs Group Inc., for instance, has raised its year-end forecast for gold to $2,700, citing similar factors driving the commodity’s upward trajectory.

UBS Group AG also sees gold reaching $2,500 by the year’s end, further corroborating the bullish outlook shared by Citigroup.

As investors brace for what could be a historic rally in gold prices, Citigroup’s projection serves as a testament to the growing optimism surrounding the precious metal.

With geopolitical tensions simmering and central banks poised to enact accommodative monetary policies, gold appears poised to shine brightly in the months ahead, potentially realizing Citigroup’s ambitious target of $3,000 per ounce.

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