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Oil Price Drop Below Nigeria’s 2019 Benchmark

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Oil Jump Jack
  • Oil Price Drop Below Nigeria’s 2019 Benchmark

Oil price dropped below Federal Government’s $60 per barrel benchmark for the 2019 budget.

Brent crude, against which Nigeria’s crude oil is priced, rose from $60.77 a barrel it closed in the week ended September 11, 2019 to $69.64 a barrel on September 16 after Saudi Aramco was attacked by Yemeni rebels.

The Iran-backed Houthi erased about 5.7 million barrels per day (mbpd) in Saudi Arabia’s crude oil production, leading to oil experts projecting a continuous increase in oil price as they doubted Saudi’s ability to resume full production in the near-term.

The world’s largest crude oil exporter, however, assured the market of its ability to restore production back to full capacity as early as the end of September and promised to increase it from the preattack level of 9.8 mbpd to about 11 mbpd in October, none of which has happened.

On Tuesday, during the Asian trading session, Brent crude declined to $58.83 a barrel, below Federal Government’s $60 per day stipulated in 2019 budget.

Oil has now erased the almost 20 per cent jump in price recorded in September as global growth continues to weigh on commodity prices despite Saudi Arabia reassurance.

While lower prices would help consumer spending and savings in most economies, analysts said weak global growth would offset some of those gains.

In Nigeria, the case is different as budget deficit would surge, compelling Federal Government to take more loan to fund its over N8 trillion 2019 budget.

Accordingly, foreign revenue generation would drop and subsequently impact the central bank’s ability to intervene in the foreign exchange section of the economy or support the struggling local currency.

Still, the cost of subsidizing fuel for the Nigerian people would drop with a fall in oil price.

According to the former Minister of State for Petroleum, Dr Ibe Kachikwu, Nigeria spends N1.86 billion on fuel subsidy per day.

While the Petroleum Products Pricing Regulatory Agency (PPPRA) disclosed that the nation’s daily consumption rose by 2 million litres in 2019 to 56 million. A number disputed by most experts and of recent, Mr Femi Falan, a human rights lawyer, had requested for details of fuel imports.

Falana, in letter to the Nigerian National Petroleum Corporation last year, stated that the corporation had put the nation’s daily consumption at 28 million litres and subsidy cost at N726 million per day (N261.4 billion per annum) in 2017 but barely a year later the corporation claimed daily consumption had surged to over 50 million litres and that $5.8 billion or N1.7 trillion was spent on fuel importation between January and February 2018.

He said a few months later, Kachikwu claimed it has jumped again to almost 60 million litres.

“In December 2017, the management of the NNPC disclosed that the nation’s consumption rate of fuel was 28 million litres per day and that subsidy cost was N726m per day, i.e., N261.4bn per annum. But on March 5, 2018, the Group Managing Director of the NNPC, Dr Maikanti Baru, claimed that the figure had metamorphosed to 50 million litres per day and that the NNPC had spent $5.8bn (N1.7tn) on fuel importation in January and February 2018,” Falana stated.

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

Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020

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Naira Exchange Rates - Investors King

The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.

The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.

But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.

Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.

Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”

The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.

In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”

In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.

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Economy

EFCC Recovers $153m, 80 Assets from Diezani, Says Bawa EFCC Chairman

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Diezani Allison-Madueke - Investors King

The Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa has said the commission recovered $153 million and 80 properties from the former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.

Bawa said: “There are several cases surrounding that. As you may have read, I was part of that investigation, and we have done quite a lot. In one of the cases, we recovered $153 million; we have secured the final forfeiture of over 80 properties in Nigeria valued at about $80 million.

“We have done quite a bit on that. The other cases as it relates to the $115 million INEC bribery as the media has sensationalised it, is also ongoing across the federation.”

We are looking forward to the time when we will, maybe, have her in the country, and of course, review things and see what will happen going forward. The case has certainly not been abandoned.

Speaking on the trial of former Abia State Governor Orji Uzor Kalu, he said his trial will start soon in Lagos.

Bawa added: “The position is very clear. The EFCC succeeded in 12 years to get him convicted at the Federal High Court. Of course, he went to the Supreme Court, and because the judge that convicted him has been elevated, the ruling was made and the EFCC as a respecter of the rule of law, we have taken it as it is. The Supreme Court has ordered that we should go back to the Federal High Court in Lagos.

“Now, we are at the Federal High Court in Abuja, and we have applied to the court for the case to be transferred to Lagos as ordered by the Supreme Court to enable us start all over again.

“It, however, draws a precedence, and those are the issues; law as the lawyers will say, is a living thing; we had the ACJA in 2015, we have had this problem of elevation of judges from High Court to Court of Appeal, and we pushed that they should be given the opportunity to finish their cases, because some of these cases have taken a very long time.

“We thought we had succeeded in getting this in ACJA, The law was, however, not seen as such. Now, we may have to solve the problem from the constitution, and then, we will be home and dry.”

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Economy

Nigeria Consumes 93m Litres of Petrol Daily in April 2021

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Petrol - Investors King

Nigeria’s daily petrol consumption rose to a record-high of 93 million litres in April 2021, according to the latest data from the Nigerian National Petroleum Corporation (NNPC).

The amount represents 77 percent of the 120.80 million litres consumed daily in West Africa despite having just 52 percent of the region’s population.

In previous months, Nigeria consumed 61 million litres on average, therefore, the NNPC stated that the 93 million litres per day consumption is unsustainable.

The sudden surged in petrol consumption was a result of smuggling, according to experts.

There is no doubt that Nigeria’s present petrol consumption is embarrassing, due to smuggling which is currently a thriving business,” Mike Osatuyi, national operations controller, Independent Petroleum Marketers Association of Nigeria.

On the allegation that marketers illegally export petrol, Osatuyi asked why the five security agencies across the borders are unable to stop it.

Smuggling of petrol across the borders is becoming more intense as Nigeria inches closer to full deregulation, one stakeholder said. Despite over 95 million Nigerians in poverty, the country inadvertently pays for cheap petrol across West Africa.

It means Nigeria is financing the economies of neighbouring countries,” Osatuyi said. “Nigeria should not be consuming more than 50 million litres per day.

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