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Nigeria’s Foreign Reserves at 6-month Low

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  • Nigeria’s Foreign Reserves at 6-month Low

Falling foreign revenue generation amid weak oil prices continue to weigh on Nigeria’s foreign exchange reserves in the third quarter of the year despite producing above OPEC agreed quota.

According to the latest data from the Central Bank of Nigeria (CBN), Nigeria’s foreign reserves declined by $2.34 billion from $45.18 billion recorded on June 10, 2019, to $42.84 billion on September 12, 2019. The lowest level in 6 months.

Foreign revenues from crude oil and other sources are credited to the Central Bank of Nigeria on behalf of the Federal Government.

“Such proceeds are purchased by the bank and the naira equivalent credited to the federation account. These proceeds are shared each month, in accordance with the constitution and the existing revenue sharing formula. The monetised foreign exchange, thus, belongs to the CBN. It is from this portion of the reserves that the bank conducts its monetary policy and defends the value of the naira,” the apex bank stated on its website.

However, since global uncertainty started dictating the direction of commodity prices, commodity-dependent nations like Nigeria has struggled to up revenue generation.

A situation experts think could worsen the nation’s economic position, especially after the P&ID judgement and second-quarter GDP showed the economy is growing at a mere 1.94 per cent.

Bismarck Rewane, the Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, said: “The price of oil in August was below $60 per barrel and the external reserves are sliding towards $43bn. The last thing Nigeria needs at this time is any threat to its hard-earned reserves, especially with the P&ID judgement of $9.6bn against the country,” he said earlier in the month.

The foreign reserves is now below $43 billion predicted by Bismarck Rewane. Suggesting that the central bank’s ability to intervene in the foreign exchange may start waning following last week declaration by OPEC that Nigeria and Iraq need to cut oil production as agreed in December 2018.

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.

Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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