Nigeria’s Foreign Revenues Plunge With Fall in LNG Demand
The Federal Government may have to look for alternative sources of funds for the 2020 budget as global gas glut continued to weigh on demand.
Recent data showed that demand has collapsed in the LNG market just like in the oil market due to coronavirus pandemic.
Due to the pandemic, buyers who were under long contracts were said to be postponing the delivery of their products since they don’t have an immediate need for it. According to sources, this was also due to the extremely low prices that have forced many traders to keep their products in terminal tanks, thereby, creating the highest inventories at European import facilities.
Accordingly, this development is expected to further compound the government’s fiscal buffer woes and hurt foreign revenue generation.
To understand the size of NLNG revenue, the Federal Government generated an average of $700 million per year between 2015 and 2018 from its 49 stake in NLNG. In fact, Nigeria earned $3.102 billion in the four years that ended in 2018.
A break down of the government earning shows a sum of $356.126 million was generated in 2016, $698.149 million in 2017 and $904.498 million in 2018. While $1.043 billion was realised in 2015, the highest in recent years.
According to Nigeria’s Economic Sustainability Plan, “This means that dividends from LNG are also not forthcoming. In effect, our major sources of foreign exchange have dried up. This means that our external reserves get little or nothing by way of augmentation.”
The decline has come at a time Nigeria is looking to up revenue and revamp fall in economic activities due to COVID-19 lockdown.
Ademuyiwa Adegun, an Abuja-based gas commercial advisor, said “Due to the sharp fall in oil prices, spread between oil-indexed long-term LNG contracts and spot contracts has considerably reduced which will make it challenging for most LNG producers to meet revenue targets.”
“A rapid decline in gas demand is affecting the financing of capital-intensive new liquefaction projects, leading to inordinate delays and capex reductions,” Adegun added.
NNPC Supplies 1.44 Billion Litres of Petrol in January 2021
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.
NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021
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.
Nigeria’s Food Inflation Hits 22.95 Percent in March 2021
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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