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FG to Collaborate With Saudi Arabia on Refineries Revamp

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Kachikwu
  • FG to Collaborate With Saudi Arabia on Refineries Revamp

The Federal Government on Wednesday said that it would collaborate with Saudi Arabia for the revamp of Nigeria’s refineries in Warri, Port Harcourt and Kaduna.

Minister of State for Petroleum Resources, Ibe Kachikwu, said that Nigeria was currently tapping from the vast experience of Saudi Arabia, adding that both countries would take strong business decisions on the matter in due course.

Kachikwu spoke at the Abuja headquarters of the Federal Ministry of Petroleum Resources while playing host to the Minister of Oil and Energy for Saudi Arabia, Khalid Al Falih.

Commenting on some of the discussions which the Federal Government had with the delegation from Saudi Arabia with respect to refineries during a press conference at the FMPR, Kachikwu said they looked at what the experience had been for the two countries.

He said, “As you know, the refineries have been very close to my heart. So, I did bring up the issues of experiences that we’ve had so far and he shared his own experiences in terms of successes that they’ve had.

“We’ve got an understanding to come look deeper into how they’ve done their own trajectory to get to where they are today and what experiences we can pick from there. No formal things agreed yet, but there is the willingness to collaborate and learn from one another. These are usually very strong business decisions and at the appropriate time, we will nosedive into the details of that.”

Kachikwu further stated that the meeting with the Saudi delegation was with respect to the current outlook in the global crude oil market, adding that Nigeria and Saudi Arabia, as members of the Organisation of Petroleum Exporting Countries, need to look at the prevalent dynamics in the crude market.

The minister added, “OPEC is a very strong voice in the oil sector, not just in terms of satisfying the needs of members but also in stabilising the market fundamentals for the rest of the world. Quite frankly, working together is some of the fundamentals to what has been the resurgent OPEC and what we have done with pricing.”

On whether Nigeria would seek an exception if OPEC should ask its members to reduce the volume of crude production, following the fall in crude oil prices, Kachikwu replied, “It’s too early to answer that. All I will say is that Nigeria is very committed to working with OPEC and has always been.”

On his part, Al Falih stated that his country was willing to share experiences with Nigeria on how to help Nigeria revamp its refineries, adding that Saudi Arabia’s oil firm had been very successful in the global oil sector.

He said, “Saudi Aramco has become successful to a large degree by building a number of large world scale refineries through joint ventures and finding very attractive financing schemes with foreign direct investments.

“There is technical, project management and financing success and Saudi Arabia is becoming a major exporter of value added products integrated with petrochemicals, which improves the profitability of manufacturing companies.”

Al Falih said he had invited Kachikwu to come and see how the Saudi Arabian oil giant operates, adding that this would further help to improve the operations of Nigerian refineries.

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

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Economy

Nigeria Allotted $3.35bn From IMF’s Special Drawing Rights(SDRs)

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Nigeria has secured about $3.35 billion as part of a historic general allocation of Special Drawing Rights (SDRs) of the International Monetary Fund (IMF).

This is part of the general allocation of about SDR456 billion – an equivalent of $650 billion – by the IMF Board of Governors.

This will help to boost liquidity in Nigeria that is currently battling declining revenue.

The allocation which was approved on Monday aims to boost global liquidity at a time when the world is grappling with the coronavirus (COVID-19) pandemic.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis,” said IMF Managing Director, Kristalina Georgieva.

Although it is not a currency, the SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

It is a potential claim on the freely usable currencies of IMF members and can provide a country with liquidity. The SDR is defined by the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

The amount allocated to Nigeria is as a result of the exchange rate of reference which is 0.702283 SDR to a dollar as of July 1, 2021, and Nigeria has 2.4545 billion SDRs.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy,” the IMF managing director added.

“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

According to the IMF, the general allocation of SDRs will become effective on August 23 and the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

It stated that about $275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

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UN Chief Welcomes Historic’ IMF Liquidity Boost for Governments in Need

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As the COVID-19 crisis continues to exacerbate restrictions on government spending throughout the world, the UN chief on Tuesday welcomed the decision by the International Monetary Fund (IMF) to approve a $650 billion allocation of Special Drawing Rights to “boost liquidity”.

Secretary-General António Guterres issued a statement on the policy change towards Special Drawing Rights or SDRs, a type of foreign reserve asset that is IMF defined and maintained, as additional funding that could help to pay down debts.

He also underscored that economies not in need of access to cash should “consider channeling these resources to vulnerable low and middle-income countries that need a liquidity injection by replenishing the IMF’s Poverty Reduction and Growth Trust Fund”.

‘Historic decision’

Yesterday’s IMF’s allocation makes new borrowing available to the fund’s 190 member countries, roughly in proportion to their share of the global economy.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis”, said IMF Managing Director Kristalina Georgieva.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

Halting debt default

The Secretary-General stressed that it is also “critical to quickly establish the proposed Resilience and Sustainability Trust at the IMF…[for] a comprehensive response and recovery, including providing more support for vaccinations and debt management and to support the efforts of developing economies in restructuring for inclusive growth”.

Last month, he urged the world’s largest economies to spearhead a global COVID-19 vaccination plan and expand debt relief to developing countries battered by the pandemic.

Bulwark against default

He also advised supporting a new $50 billion IMF investment roadmap aimed at ending the pandemic and driving a fast recovery.

As many developing countries are “teetering on the verge of debt default”, the UN chief encouraged the G20 leading industrialized nations to channel unused SDRs to the Fund’s new resilience and sustainability plan, for these nations.

“Special Drawing Rights also need to be considered as additional funding, not deducted from Official Development Assistance”, he reminded.

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Economy

IMF Approves Largest SDR Allocation In History to Boost Global Liquidity

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IMF - Investors King

The Board of Governors of the International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion (about SDR 456 billion) on August 2, 2021, to boost global liquidity.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis. The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” IMF Managing Director Kristalina Georgieva said.

The general allocation of SDRs will become effective on August 23, 2021. The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

According to the IMF, about US$275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

“We will also continue to engage actively with our membership to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth”, Ms. Georgieva said.

One key option is for members that have strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT). Concessional support through the PRGT is currently interest-free.

The IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts. A new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.

In April last year, Nigeria collected $3.4 billion—equivalent to 100 percent of its quota— under the IMF’s Rapid Financing Instrument, RFI, to tackle the funding gaps created by COVID-19, especially when the crude oil market stagnated.

The financial support, approved by the IMF Executive Board on April 28, 2020, provided critical support to shore up Nigeria’s healthcare sector and shielded jobs and businesses from the shock of the COVID-19 crisis while helping to limit the decline in the nation’s external reserves.

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