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Airline Operators Get 6 Million Jet A1, While ASUU Case Lingers

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In a bid to appease airline operators after plans to ground operations, the House of Representatives has informed the Nigerian National Petroleum Corporation (NNPC) to supply six million litres of aviation fuel to airline operators’ marketers.

This decision was contained in a statement released after the roundtable discussion held between the members of the lower chamber, Airline Operators of Nigeria, Group Managing Director, NNPC, and Governor of the Central Bank of Nigeria (CBN) on Monday, the media reported.

The Airline Operators of Nigeria (AON) had announced plans to ground business operations over the persistent increase in aviation fuel, known as Jet A1, to N700/litre.

At the meeting, Mele Kyari, GMD, NNPC, attributed the over 300% jump in the price of aviation fuel to the deregulation of the product.

Governor of CBN, Godwin Emefiele, while speaking said the apex bank does not influence how the dollar flows.

His words: “We do not have FX to sell. It would be difficult for us to grant any concession. It means we would be taking a hit or we would be providing some sort of subsidy for the industry.”

“We are at the precipice today in Nigeria. There is a crisis at hand. The shutdown of airline operations has the potential of shutting down this government. We cannot sit here as stakeholders and fold our arms and watch this happen,” said the speaker of the house of reps, Femi Gbajabiamila,

“I hope that the outcome of this meeting will usher in a lasting solution to these challenges of Jet A1 bearing in mind that there is a laissez-faire economy of demand and supply,” he submitted.

Meanwhile, on Monday the Academic Staff Union of Universities entered another phase of its strike action for another 12 weeks.

After putting work on hold for over two months the union has threatened that “No work, no pay policy can’t break us,” it stated.

Appointments

CBN Replaces Nigerian Security Printing and Minting Plc Management Team

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The Central Bank of Nigeria (CBN) has dismissed the top management team of the Nigerian Security Printing and Minting Plc (NSPM), appointing Abubakar Sule Minjibir as the acting Managing Director.

This development was disclosed in an internal memo titled “House Notice No. 2083 – Executive Management Changes,” signed by Soji Ogungbesan, General Manager of Corporate Services at NSPM.

The newly appointed interim executive management includes Abubakar Sule Minjibir as the Acting Managing Director, Mohammed Mustapha as General Manager of Finance and Strategy, and Adesoji Ogungbesan as General Manager of Corporate Services.

Minjibir succeeds Ahmed Halilu, the former MD and CEO of NSPM, who had been appointed by the former President Muhammadu Buhari in 2022.

Halilu’s appointment had sparked controversy due to his reported familial ties with Aisha Buhari, the former President’s wife.

The memo, dated July 10, 2024, stated: “The board has announced the immediate dissolution of the present executive management team of the NSPM and has approved the immediate constitution of an interim executive management team.”

The memo also assured staff of the new management’s commitment to their welfare and the strategic initiatives and organizational transformation developed by the board.

Staff members were encouraged to cooperate with the new management team to achieve the board’s strategic vision for the company.

Alongside Halilu, the other executives dismissed include Ado Danjuma, Executive Director of Corporate Services; Tunji Kazeem, Executive Director of Security Documents; Chris Orewa, Executive Director of the Lagos factory; and Victoria Lucky Irabor, Company Secretary and Legal Adviser.

The dismissal and appointment of new management come amid concerns raised by various groups about the previous leadership’s connections and the potential implications for the security and integrity of sensitive materials produced by the NSPM.

The Gravitas Group, an international advocacy organization, had previously condemned Halilu’s appointment, calling it a “family affair” and expressing concerns about the concentration of such sensitive responsibilities within a familial relationship to the President.

As the CBN moves forward with the new interim leadership, it aims to steer NSPM towards achieving its strategic goals and ensuring the integrity and efficiency of its operations.

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Dangote Refinery Buys 11 Million Barrels of American Crude Due to Domestic Shortages

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The Dangote Refinery has announced plans to acquire an additional 11 million barrels of crude oil from the United States.

In a tender viewed by Bloomberg, Dangote Refinery purchased five million barrels of West Texas Intermediate (WTI) Midland crude for delivery next month and in September.

The company has also initiated a tender process to buy another six million barrels of American crude for September.

Despite its reliance on local crude supplies, the refinery near Lagos has been forced to seek imports to sustain its operations.

With the ability to source crude from offshore terminals in just a few days, the refinery took in over 41 million barrels of feedstock in the first half of the year.

Notably, about a quarter of this amount was sourced from the United States.

Aliko Dangote, Chairman of Dangote Group, explained the necessity of importing crude oil as the refinery scales up production and explores alternative supply contracts.

“It makes economic sense for us to tender for crude. If we could source 100 percent Nigerian crude, then fine, but we can’t wait,” Dangote stated at the Africa CEO Forum 2024.

He further said it is important for a mix of different crude types to optimize operations, given the current limitations in domestic production.

The refinery’s recent acquisition contrasts with its earlier deliveries, which included 11 WTI cargoes, or nine million barrels, between February and May, alongside approximately 18 million barrels of Nigerian crude.

This move to secure a longer-term offtake agreement indicates a commitment to diversifying crude sources, particularly during a period of weak demand for Nigerian supply.

The Nigerian National Petroleum Company (NNPC), which holds a 20 percent equity stake in the refinery, has faced difficulties meeting its 300,000 barrels per day (bpd) crude oil obligation.

In June, Nigeria’s crude output was around 1.28 million barrels per day, significantly below its estimated production capacity of 2.6 million barrels per day.

Factors such as crude theft, aging oil pipelines, low investment, and divestments by major oil companies have all contributed to declining production.

Despite various assurances from the federal government and the NNPC about meeting the country’s OPEC quota, Nigeria recorded an estimated 30 million barrels of underproduction in the first four months of 2024.

Efforts to curb insecurity in the Niger Delta, where Nigeria’s oil is extracted, have included a multi-billion-naira contract with local security groups and substantial spending on official security agencies. Nonetheless, oil theft, asset vandalism, and sabotage remain rampant in the region.

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NNPC Seeks $2 Billion Crude-Backed Loan Amid Mounting Debts

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The Nigerian National Petroleum Company (NNPC) is exploring the option of securing a $2 billion loan using crude oil pre-payments as collateral.

Mele Kyari, the group’s general manager, revealed that the company is seeking a loan against 30,000-35,000 barrels per day of crude production.

However, he did not disclose the exact amount of money NNPC aims to raise.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” Kyari told Reuters.

The funds raised from this loan are intended to support all of NNPC’s business activities, including boosting production growth.

Despite the assurance of financial stability, NNPC’s financial situation has raised eyebrows, with the company reportedly owing around $6 billion to international traders for imported petrol.

These traders have indicated that NNPC is taking longer to make payments, exceeding the typical 90-day window.

Further complicating matters, NNPC’s debt includes overdue payments ranging from $4 billion to $5 billion for January imports alone.

This has led several international petrol suppliers to withdraw from recent tenders.

Kyari remains optimistic, stating that the loan will be a syndication with regular partners who have longstanding business relationships with NNPC.

He anticipates concluding the deal within the next two months.

The identity of the lender remains uncertain, with sources indicating that the African Export-Import Bank (Afreximbank) may be unable to extend its exposure to Nigeria to the desired level.

Efforts to get confirmation from Olufemi Soneye, NNPC’s chief corporate communications officer, regarding the new oil-backed loan proved unsuccessful.

This potential $2 billion loan follows NNPC’s recent $3.3 billion emergency crude repayment loan secured on August 16, 2023.

Arranged by Afreximbank, the loan was aimed at supporting the naira and stabilizing the foreign exchange market. It also intended to back the federal government’s monetary and fiscal reforms.

NNPC’s pursuit of the new loan underscores the challenges facing Nigeria’s oil sector, which has been grappling with fluctuating oil prices, operational inefficiencies, and financial mismanagement.

As the company seeks to bolster its finances, the outcome of this loan negotiation could have significant implications for the country’s economic stability and its energy sector’s future.

The oil-backed loan strategy reflects NNPC’s broader efforts to leverage its crude production capacity to secure necessary funding.

However, the increasing debt levels and delayed payments to international traders highlight the pressing need for comprehensive reforms and efficient management within Nigeria’s oil industry.

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