Nigeria Liquefied and Natural Gas (NLNG) declared a force majeure to its partners due to widespread flooding that has disrupted supply.
This declaration could worsen Nigeria’s revenue and foreign exchange scarcity which is already at an abysmal situation.
Force majeure is a clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties happens.
Such events or circumstances could be war, strike, riot, crime, epidemic or sudden legal changes which could prevent one or both parties from fulfilling their obligations under the contract.
Investors King had earlier reported that the production capacity of the Nigerian Liquified Natural Gas Limited (NLNG) has dropped by 40 percent. The drop was a result of overwhelming theft and the vandalism of oil and gas pipelines.
No doubt, the subsequent cease of operation will further worsen the gas situation in Europe. Nigeria is a major supplier to some European countries, particularly Portugal.
It will be recalled that Portugal Energy Minister, Duarte Cordeiro stated that his country could face supply problems this winter if Nigeria did not deliver all its supplies.
Europe has been in the middle of gas shortage since the European Union put an embargo on the importation of Russian gas due to its invasion of Ukraine.
Several countries in Europe including the UK are already at serious risk of gas shortage.
According to the chief executive of Shell, Ben van Beurden, he noted that the shortage of gas in Europe could last for several winters.
“It may well be that we will have a number of winters where we have to somehow find solutions,” he said.
According to the spokesperson of NLNG, Andy Odeh, “The notice by the gas suppliers was a result of high floodwater levels in the operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG,”
Odeh however stated that NLNG is in process of examining the extent of the disruption and would try to mitigate the impact of the force majeure.
Meanwhile, before the force majeure, Investors King understands that production from NLNG’s six-train Bonny plant had dropped to 16.8 million tonnes in 2021, from 20.7 million tonnes capacity in 2020. This has caused the company to lose more than $7 billion in revenue.
Federal Government Revokes 1,633 Mineral Titles Over Non-payment
In a significant move to enforce compliance and revitalize the solid minerals sector, the Federal Government through the Ministry of Solid Minerals Development has taken decisive action by revoking 1,633 mineral titles previously granted to non-compliant mining companies.
The announcement was made by the Minister of Solid Minerals Development, Dele Alake, during a press briefing in Abuja.
The revocation of these mineral titles was a result of the mining companies’ failure to fulfill their mandatory annual service fees of N1,500 per cadastral unit.
Alake emphasized that the move aligns with Sections 10, 11, and 12 of the Mining Act, and it is aimed at creating opportunities for potential investors willing to contribute to the sector.
Expressing disappointment at the non-compliance of mining firms, Alake stated, “It is indeed very unconscionable for corporate bodies making huge profits from mining to refuse to give the government its due by failing to pay their annual service fee.”
The minister stressed that the mining companies, despite reaping significant profits from mining activities, failed to meet their financial obligations to the government.
He further highlighted the nominal nature of the annual service fee, emphasizing that it pales in comparison to the revenue projections of these companies.
The revocation process, initiated by the Mining Cadastral Office on October 4, 2023, targeted a total of 2,213 titles, including Exploration titles, Small Scale Mining Licences, Quarry licenses, and Mining Leases.
The notice of revocation was published in the Federal Government Gazette on October 10, 2023.
Alake cautioned those whose licenses had been revoked to vacate mining sites promptly to avoid potential legal actions by security agencies.
The ministry’s commitment to cleaning up the sector for international competitiveness was underscored, signaling a new era for responsible and compliant mining practices in Nigeria.
Rising Rice Consumption Spurs 37% Price Surge, Reveals AFEX Report
A recent report by AFEX, the agricultural commodity trading firm, has brought to light the surge in rice consumption in Nigeria.
The AFEX Wet Season Crop Production Report for 2023 indicates that the country’s rice consumption has been steadily increasing, contributing to a consistent growth in the rice market.
The report highlights a 37% year-to-date increase in the price of rice in 2023.
According to AFEX, despite Nigeria’s potential to be a net rice exporter, it has spent over $15 billion in the past decade to meet the expanding demand for rice.
Globally, rice prices have reached their highest point in nearly 12 years due to factors such as India’s ban on rice exports and potential production disruptions from El Nino in key regions.
In Nigeria, the 37% price surge is attributed to reduced production in 2022 caused by flooding during the wet season.
The report anticipates a 4% increase in rice production and expects the price of paddy rice to rise by around 32%.
While the Northwest region accounts for 72% of the total rice production in Nigeria, the report underscores the need for strategies to bridge the supply gap and ensure sustainable rice production to meet the growing demand in the country.
AFEX Predicts Surge in Commodity Prices as Crop Production Declines
Africa’s leading commodities player, AFEX, unveiled its 2023 Crop Production report in Abuja on Thursday, predicting a surge in commodity prices attributed to declining production and rising demand for processing and exports.
The comprehensive report, which focused on six key commodities (Maize, Paddy Rice, Soybean, Sorghum, Cocoa, and Sesame), utilized farmer surveys and transaction-level data measurements to provide crucial insights into crop production, price trends, and market dynamics.
AFEX anticipates an increase in prices across all commodities, with Paddy Rice experiencing a notable upswing of 34% in the 2022/2023 season. Factors contributing to this surge include increased flooding and the India rice ban.
The baseline pricing of N353,000/mt (per metric ton) is expected to rise to N400,000/mt and stabilize at N480,000 to N500,000/mt by Q3 2023, the report noted.
Highlighting food insecurity and a historic high food inflation rate of 30.64%, the report identifies a 5.7 million metric ton shortage in Nigeria across human consumption and agro-processing.
Nigeria’s Global Hunger Index score remains at 109th out of 125 countries, underscoring a severe food security crisis.
AFEX Nigeria’s President/CEO, Akinyinka Akintunde, emphasized the need for substantial investment in the agricultural sector, addressing infrastructure, logistics, and technology gaps.
The report suggests that the surge in food prices witnessed in the 2023 season will exacerbate these challenges, hindering progress towards achieving Zero Hunger by 2030.
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