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Nigeria Produced Above OPEC Oil Quota in Feb – Report

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  • Nigeria Produced Above OPEC Oil Quota in Feb – Report

Nigeria, Africa’s top oil producer, pumped more crude oil in February than the quota given by the Organisation of Petroleum Exporting Countries, a new survey has shown.

OPEC and 10 non-OPEC countries agreed in December to cut oil production by 1.2 million barrels per day effective from January for an initial period of six months to help balance the market and support prices.

Nigeria, which was exempted from the previous production cuts deal, agreed to a quota under the current accord. With a reference level of 1.738 million bpd, the country was given a new quota of 1.685 million bpd.

But Nigeria pumped 1.88 million bpd in February, 190,000 bpd above its cap, S&P Global Platts’ survey of industry officials, analysts and shipping data found.

The country has started production from a new deepwater field, Egina, though the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has suggested that he might seek to have those barrels classified by OPEC as condensates, which is not subject to the quotas.

Nigeria also considers Agbami grade as a condensate, while S&P Global Platts and some other secondary sources used by OPEC to monitor production classify it as crude.

The nation’s crude oil production including condensates fell to 1.999 million bpd in January from 2.081 million bpd in December, according to the Ministry of Petroleum Resources.

President Muhammadu Buhari said last month that the country could consider a reduction in crude oil production in support of efforts to shore up the price of the commodity.

He said, “As a responsible member of the Organisation of Petroleum Exporting Countries, Nigeria was willing to go along with the Saudi initiative in limiting output so that prices would go up.”

The 2019 budget proposal, presented to the National Assembly on December 19 by President Buhari, was based on oil production of 2.3 million bpd (including condensates), with an oil benchmark price of $60 per barrel.

OPEC’s crude oil production in February modestly declined to 30.80 million bpd in February, the survey showed.

The figure is a 60,000 bpd drop from January and is the group’s lowest output level since March 2015, when Gabon, Equatorial Guinea and Congo had yet to join the organisation but Qatar was still a member.

Despite the fall, OPEC still has more cutting to do to fully comply with its supply accord that went into force in January. The 11 members with quotas under the deal achieved 79 per cent of their committed cuts in February, and remain 170,000 bpd above their collective ceiling. This is a slight improvement on January’s 76 per cent, with Nigeria and Iraq producing far in excess of their cap, according to Platts calculations.

Iraq produced 4.67 million bpd in February, according to the survey, 160,000 bpd above its quota.

The country has consistently lagged in compliance with its committed cap, both under the current deal and under the previous accord, which ran from 2017 to 2018.

Iraqi officials have sought exemptions from the deal, saying their war-torn country needed oil revenues to rebuild from its devastating fight against the Islamic State. But other members have pressured the country -largely to no avail – to conform to its quota.

Libya, which this week lifted the force majeure at its 300,000 bpd Sharara field after almost three months, pumped 870,000 bpd in February, a slight rise from January, according to the survey.

The first cargoes of Sharara crude since production restarted are expected to be lifted this weekend.

Venezuela and Iran, both under US sanctions, and Libya, where instability continues to impact output, are exempt from the deal.

The February output figures will be reviewed by a six-country monitoring committee of the OPEC/non-OPEC coalition, which meets on March 18 in Azerbaijan to discuss market conditions and assess compliance with the deal. The committee is co-chaired by Saudi Arabia and Russia.

Saudi Arabia, OPEC’s largest producer, has made good on its pledge to lead the coalition by example, slashing its output to 10.15 million bpd in February, the survey found. That is 160,000 bpd below its quota of 10.31 million bpd and the kingdom’s lowest output level since May 2018.

Venezuela, whose oil production has been declining for years due to underinvestment, technical problems and labour issues, pumped 1.10 million bpd in February, down 60,000 bpd month-on-month, as it has struggled to sell its crude since US sanctions were imposed in late January.

Iran managed to keep production steady in February, at 2.72 million bpd, the survey found, as several buyers in the month took advantage of sanctions waivers the US granted to eight countries to purchase Iranian crude.

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

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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Value added tax - Investors King

In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Nigeria’s Economy to Close 2021 at 2.5% Growth Rate

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Trade - Investors King

The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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