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Dangote, NNPC, Shell, Others Sign Multi-Million Naira Gas Supply Deal

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Aliko Dangote - Investors King

Plans to conclude operations at the Dangote Fertiliser Limited (DFL) are underway as the Dangote Group partners the Nigerian National Petroleum Company (NNPC) Limited, Shell, Nigerian Agip Oil Company (NAOC) Limited, Total Energies, as well as the Gas Aggregation Company of Nigeria (GACN) for the supply of gas.

The Gas Sale and Aggregation Agreement (GSAA) which was signed in Abuja will see to the adequate supply of 70 million standard cubic feet per day of natural gas to DFL.

Investors King gathered that the gas supply agreement will guarantee the availability of the major raw material needed to run the Dangote Fertiliser plant.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had earlier released the new Domestic Gas Demand Requirements (DGDR) for 2022, with gas supply to the power sector  pegged at 2.324 billion standard cubic feet per day.

Founder of the Dangote Group, Aliko Dangote, who spoke during the contract-signing event, noted that the deal would save the country the sum of $1.8 billion in foreign exchange. He reiterated the commitment of the Dangote group in ensuring that Nigeria retains a large chunk of its foreign exchange.

“This additional gas will help bring in more foreign exchange into the country, especially with the current energy crisis. With our fertiliser plant, Notore, and Indorama, we are second in Africa. Apart from Egypt, no other African country has our capacity.

“We will meet domestic market and also export and we are talking about $1.8 billion (savings) in terms of foreign exchange coming into the country,” he said.

While commending all partners for their efforts, Managing Director of the Shell Petroleum Development Company and Country Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor, revealed that the agreement is the fastest GSAA ever in the country.

Also speaking, Group Managing Director of NNPC, Mallam Mele Kyari said the initiative is the government’s drive to ensure that Nigeria becomes self-sufficient in the production of fertiliser, and as well, discourage the import of fertilizer into the country.

“As you are aware, Dangote fertilizer is one of the biggest producers of fertilizer and this deal, which is to offer 70m scuf per day to Dangote fertilizer by the JV, will contribute to the surge of Fertilizer production in Nigeria. Of course, it will tremendously be positive to our agro-economy”, he added.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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