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NNPC, Investors Disagree on Commercial Terms

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NNPC - Investors King
  • NNPC, Investors Disagree on Commercial Terms

After spending over one and half years negotiating with financiers for the revamp of Nigeria’s refineries, the Nigerian National Petroleum Corporation on Wednesday declared that it could not agree with the investors on the commercial terms of the transaction.

On November 12, 2018, media reported that the NNPC looked set to announce investors for the proposed rehabilitation of the nation’s refineries following the corporation’s talks with financiers abroad.

Top management officials of the national oil firm had told our correspondent in Abuja that they met with financiers abroad to further negotiate terms for the proposed rehabilitation of the nation’s refineries.

Nigeria has four refineries. The Port Harcourt Refining Company is made up of two refineries. The others are the Warri Refining and Petrochemical Company and the Kaduna Refining and Petrochemical Company.

The four refineries have an installed capacity of 445,000 barrels per day, but they have continued to operate far below the installed capacity for many years.

When confronted with questions on what the management of the corporation was doing about the abysmal performance of the facilities, during a session at the ongoing Nigeria International Petroleum Summit in Abuja on Wednesday, the Chief Operating Officer, Refineries, NNPC, Anibor Kragha, said a lot of issues were affecting the refineries.

This came as the Infrastructure Concession Regulatory Commission charged the Federal Government and the NNPC to concession the refineries in order to make them functional and profitable.

Kragha further stated that negotiations between the NNPC and financiers could not work due to the recent disagreement between the corporation and the investors as regards the commercial terms of the transaction.

On the need to concession the refineries, the Director-General, ICRC, Chidi Izuwah, who was also a panellist alongside Kragha at the session, urged the NNPC and the Federal Ministry of Petroleum Resources to appreciate the gains derivable from such concession.

Izuwah said, “For me, I’m looking into the future. Let’s look at our telecoms sector 16 years ago, imagine that we had Nitel up until now, what would it be like? Our lines will still be tossed, the incentives structure will promote corruption. The government must play a role to break the back of government dominance in the downstream sector and bring in the private sector. That’s the only way to go.

“When you bring in the private sector, you will change the incentive structure. People will be incentivised and make the right level of investments. And what do I mean? Very simple; we should concession the NNPC refineries to the private sector.

“The investments will come and, on a BOT (Build, Operate and Transfer) basis you concession them, they (investors) rehabilitate and upgrade them and recoup their money. There’s a huge opportunity in refining. It’s a profitable business. So, the role of government is to attract investments to change that sector.”

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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