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FG Forces Oil Firms to Pay N1.2tn Royalty Arrears

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Kachikwu

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said on Monday that the Federal Government had forced oil companies operating in the country to fork out N1.2tn in royalty arrears.

Kachikwu said this in Lagos while launching the Crude Oil and LNG Tracking command centre and other initiatives by the Department of Petroleum Resources.

“What COLT does for us is that we can tell every vessel that is loading crude and liquefied natural gas, and where it is going to; we can actually track today those vessels to the point of destination and discharge,” he said.

He said the country had grappled with the inability to ascertain the exact quantity of crude oil being produced as well as the leakages for decades.

The minister said, “Today, apart from tracking the production, we are also able to track the movement of the crude – the vessels that come in and go out of the country. Following those sorts of initiatives, we have launched a series of IT-based platforms and interventions. I am happy that now the DPR can give up-to-the-minute figures. We are also applying technology to the issue of gas flaring.”

Commenting on crude oil theft, he said the tracking would also help to address the gap between production and actual physical stock.

“Crude oil theft is still there; let’s not pretend about it. But under this government in the last few years, it has reduced significantly,” he added.

Kachikwu said the royalty indebtedness recovery initiative followed the President’s directive that all outstanding royalties must be recovered.

He said, “The process of determining royalties in the past was largely driven by the initiatives of oil companies, which determined what they produced, and we calculate royalties on the basis of that. Now, we are able to, using the systems we have, see what actual production volumes are to determine royalties.

“Under the rules, you will not get renewal unless you pay your outstanding royalties. What we have done is that for those who have shown the seriousness in mapping out how they intend to settle that, we will renew (their licences) but we won’t give them the final certificate until they have liquidated the outstanding royalties.”

Kachikwu added, “We have raised N1.2tn so far as a result of this aggressive royalty recovery. Clearly, when we finish, we will at least have a situation where everybody who is operating is current in terms of their payments.”

President Muhammadu Buhari, in his 2019 budget speech to the National Assembly in December, said the volatility in oil prices, and disruptions in oil production delayed the plans to recover past due oil licence and royalty charges as well as the restructuring of the joint venture oil assets.

“As we have returned to the path of growth, I have directed that action on all our revenue initiatives be expedited. I have already issued a number of Presidential directives on the disposal of recovered assets, deployment of the National Trade Window as well as the immediate recovery of past-due oil royalties including by crude seizures, if necessary,” he added.

Kachikwu said one of the key areas for the ministry was to ensure transparency in operations and speed.

He said, “Previously, it took almost forever for people to get licences for simple things like licensing of filling stations, plants and all that.”

“We have also launched the benchmarking system to track expenses and see how we can continue in our process to try and reduce the cost of producing oil in this country which has been a major challenge for us. And given the oscillating price of oil globally, unless we are able to do this, you will produce oil and not make money out of it. So, this is very helpful for us.”

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

UNGA 2021: The World has the Resources to End Hunger, African Development Bank Head tells UN Food Systems Summit

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Akinwumi Adesina - Investors King

“The world has the resources to end hunger,” African Development Bank President Dr. Akinwumi A. Adesina said in a message on the first day of the United Nations Food Systems Summit.

Convened by UN Secretary General António Guterres, the event is billed by its organisers as “a historic opportunity to empower all people to leverage the power of food systems to drive our recovery from the COVID-19 pandemic and get us back on track to achieve all 17 Sustainable Development Goals (SDGs) by 2030.”

The summit brings together thousands of youths, food producers, members of civil society, researchers, the private sector, women and indigenous people, all of whom are participating both physically and virtually in the summit. It is taking place on the sidelines of the 76th UN General Assembly in New York.

In his opening address, Guterres said the participants represented “energy, ideas and the willingness to create new partnerships,” and was a time to celebrate the dignity of those who produce and create the world’s food.

Decrying the 246 million people in Africa who go to bed daily without food and the continent’s 59 million stunted children as “morally and socially unacceptable,” Adesina said that delivering food security for Africa at greater scale called for prioritising technologies, climate and financing.

“The $33 billion per year required to free the world of hunger, is just 0.12% of $27 trillion that the world has deployed as stimulus to address the Covid-19 pandemic. I am confident that zero hunger can be achieved in Africa by 2030,“ Adesina said.

The African Development Bank’s Feed Africa Strategy, through its Technologies for African Agricultural Transformation program – widely known as TAAT – has provided 11 million farmers across 29 African countries with proven agricultural technologies for food security. Food production has expanded by 12 million metric tons while saving $814 million worth of food imports.

“We are well on our way to achieving our target of reaching 40 million farmers with modern and climate-resilient technologies in the next five years,” the African Development Bank chief added.

At a meeting on food security in Africa organized by the Bank and the International Fund for Agricultural Development (IFAD) earlier this year, 19 African heads of state called for the establishment of a facility for financing food security and nutrition in Africa.

“The Facility for Financing Food Security and Nutrition in Africa should be capitalized with at least $ 1 billion per year,” Adesina said.

The welfare of the 70% of Africa’s population working in agriculture and agribusiness is a barometer of the state of the continent’s health.  “If they aren’t doing well, then Africa isn’t doing well,” Rwandan president Paul Kagame said in a message at the official opening.

The many other heads of state and government who spoke on Thursday included, Prime Minister Mario Draghi of Italy, President Felix Antoine Tshisekedi of the Democratic Republic of Congo, Prime Minister Sheikh Hasina of Bangladesh and Prime Minister Jacinda Arden of New Zealand.

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Economy

AfCFTA: Nigeria-South Africa Chamber Advocate Single Africa Passport, Free Visa

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African Continental Free Trade Area (AfCFTA)- Investors King

The Nigeria-South Africa Chamber of Commerce (NSACC) has called for a single Africa passport and a free visa to ensure the success of the Africa Continental Free Trade Area (AfCFTA) agreement.

Speaking on Thursday in Lagos during the chamber’s September Breakfast Forum, with the theme: `Perspectives on the Africa Continental Free Trade Area in Relation to Nigeria’, its President, Mr. Osayande Giwa-Osagie noted that AfCFTA would boost intra-African trade by 22 percent, adding that its implementation would impact positively on the Nigerian economy.

AfCFTA is a single continental market that adopts free flow of goods, services, and capital, supported by the free movement of persons across Africa.

Giwa-Osagie however said Nigeria must diversify its economy in order to harness the gains of the agreement.

“Current intra-African trade rated at 15 to 17 percent is low and the AfCFTA is expected to boost intra-African by 22 percent. Challenges to its implementation are lack of infrastructure, political instability and lack of economic diversification.

“This gives rise to the need for Nigeria to diversify its economy to harness the gains of the agreement. Given the importance of the free movement of people, there is a need for a free visa for Africa and a single Africa passport.

“While the implementation would help boost the Nigerian economy, the impact would be limited if there are no free movement of people,” he said.

Mr Jesuseun Fatoyinbo, Head, Trade and Transactional Services, Stanbic IBTC Bank, said the business community needed more clarification on tariff reduction or elimination under the agreement.

According to him, the little information available to corporate organisations with regards to tariffs may lead to holding back on investments.

“We have noted increased interests from global multinationals and other corporates in setting up facilities in Africa aimed at serving the continent and exporting abroad.

“So more transparency around tariff reductions both in terms of timelines and details of goods could prompt companies to act,” he said.

Fatoyinbo also called for more attention to the digitisation of trade processes across the continent. “Currently, trade in Africa is largely reliant on physical documentation and this is a major impediment. Policymakers need to prioritize regulatory amendments that allow for the digital signatures, a digital certificate of origin, digital bills of lading, and other documentation,” he added.

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Nigeria Borrows $4 Billion Through Eurobonds as Order Book Peaked at $12.2 Billion

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Eurobonds - Investorsking

The Federal Government of Nigeria has raised a fresh $4 billion through Eurobonds, according to the latest statement from the Debt Management Office (DMO).

Nigeria had set out to raise $3 billion but investors oversubscription peaked at $12.2 billion, enabling the Federal Government to raise $1 billion more than the $3 billion it announced.

DMO said “This exceptional performance has been described as, “one of the biggest financial trades to come out of Africa in 2021” and “an excellent outcome”.

Bids were received from investors in Europe, America, Asia and several local investors. The statement noted that the quality of investors and the size of the Order Book demonstrated confidence in Nigeria.

The Eurobonds were issued in three tranches, details, namely seven years–,$1.25 billion at 6.125 per cent per annum; 12 years -$1.5 billion at 7.375 per cent per annum as well as 30 years -$1.25 billion at 8.25 per annum.

The DMO explained that the long tenors of the Eurobonds and the spread across different maturities are well aligned with Nigeria’s Debt Management Strategy, 2020 –2023.

The Eurobonds were issued as part of the New External Borrowing stipulated in the 2021 Appropriation Act. DMO noted that the $4 billion will help finance projects state in the 2021 budget.

Nigeria’s total debt stood at $87.239 billion as at March 31, 2021. However, with the $4 billion new borrowing, the nation’s debt is now $91.239 billion. A serious concern for most Nigerians given the nation’s weak foreign revenue generation and rising cost of servicing the debt.

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