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FG Considers Review of NNPC Appointments

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NNPC - Investors King
  • FG Considers Review of NNPC Appointments

The presidency is currently considering a review of the recent senior executive appointments of the Nigeria National Petroleum Corporation (NNPC) made by its Group Managing Director, Dr. Maikanti Baru.

The decision to consider a review of the appointments is predicated on the alleged breach of due process in the appointments and contract awards to the tune of $25 billion raised by the Minister of State for Petroleum, Dr. Ibe Kachikwu against the NNPC boss in his letter to President Muhammadu Buhari on August 30.

It has also come to light that the Senate ad hoc committee charged with probing the award of the $25 billion contracts by Baru without recourse to the governing board of the corporation would also focus on the preferential treatment accorded to Duke Oil, a subsidiary of NNPC, in oil lifting contracts and oil swaps, despite the charge that it was incapable of fulfilling the contracts.

But whilst NNPC and the presidency have separately responded to the allegation of the $25 billion contract awards in breach of due process, both institutions have remained silent on the appointments of senior executive officers of the corporation, despite the plea by Kachikwu in his letter that the appointments be suspended.

In their defence of the contract awards, the presidency and the corporation had claimed that the contracts had passed through the NNPC Tenders Board and got No Objections from the Bureau of Public Procurement (BPP), following which final approvals were granted by Buhari and Vice-President Yemi Osinbajo, in his capacity as acting president.

However, a top presidency official who confided, said the silence from the presidency on the appointments was not an endorsement on the action taken by Baru, adding that if after thorough examination the appointments were indeed found to be in breach of the extant laws or the federal character principle, they will duly be reviewed.

According to him, the president and his deputy are advocates and promoters of due process who would not hesitate to reverse themselves when cases of apparent breaches are established, instead of allowing their egos to get in the way and maintaining indifference to wrongful acts.

Buttressing the position, the presidential source said it is on record that the president had previously reversed himself on certain decisions when his attention was drawn to initial errors, adding that he would not fail to do so again.

Against this backdrop, he said the current situation would not be the exception, as the president will not hesitate to right the wrongs in the NNPC appointments even if they had his initial blessing.

“It is going to be reviewed. Extant laws would be checked to verify if NNPC did not comply with them. The appointments will be checked to see if they are not in line with federal character.

“Even if the president had approved them, if they are found not to be in accordance with the extant laws and federal character, this president and even the vice-president will review them and ensure that proper things are done.

“You know that on one or two occasions, some decisions had been taken in error in the past and the president did not hesitate to reverse them. If the same thing is established in this situation, it will be reviewed,” he stated.

When queried on the absence of governance raised by Kachikwu in the award of contracts, the presidency source doubled down, saying that the allegation was a hoax and maintained that the contracts were not procurement contracts.

Focusing solely on the joint financing loans approved by Osinbajo, he said what was important was the approval of the joint venture financing by the presidency and not necessarily the board, stating that it was the president that had put the board in place and its power could not have exceeded that of the president.

“This has been explained over and over that they were not procurement contracts. It was the president who put the board in place. That there is a board in place does not preclude the power of the president,” he stated.

Meanwhile, it has come to light that the Senate ad hoc committee charged with probing the award of contracts to the tune of $25 billion by Baru without recourse to the governing board of NNPC would also turn the spotlight on the preferential treatment accorded to Duke Oil in oil lifting contracts and oil swaps, despite charges that it was incapable of fulfilling the contracts.

Duke Oil is a wholly owned subsidiary of NNPC registered in Panama in 1989. It is engaged in direct oil trading activities in the spot market to achieve operating capability, downstream integration and additional profits from oil operations.

One of the allegations against the firm is that does not pay taxes in Nigeria.

It has also been named in several NNPC deals which are being investigated, including the oil swaps and unaccounted crude oil lifting worth $17 billion.

Baru again is being accused of giving preferential treatment to Duke Oil, as have successive heads of the oil corporation.

Despite the preferential treatment in contract awards, the company has been discovered to sublet several of its contracts since it cannot fulfill them.

The committee headed by Senator Aliyu Wamakko (Sokoto APC), which was set up to probe the allegations thrown by Kachikwu in his letter, the financial situation of NNPC and the operations of Duke Oil, would focus on Duke Oil, said a source on the committee.

Specifically, the spotlight will be turned on how Duke Oil continues to do massive business in the oil sector without meeting the requisite qualifications for contract awards.

Speaking yesterday, the source said the probe into Duke Oil would expose the corrupt practices in NNPC and the oil sector as a whole.

“The dealings in Duke Oil are known only to the management of the NNPC, not to the National Assembly, not to any other regulatory agency.

“The company makes billions, yet it does not pay tax here. We assumed that would changed when President Buhari came to power, but it has been business as usual,” the source said.

Continuing he added: “As Senator Anyanwu (Samuel) pointed out when he moved this motion, Duke Oil is a money spinner for NNPC and by extension, which ever government is in power.

“It is the sole importer of diesel for NNPC retail and PPMC, but it executes the contracts through third parties.

“Remember that during the oil swap probe in the House of Representatives, the same Duke Oil through its MD, Mr. Abdulkadir Seidu admitted earning $36.3 million in commissions after it had sub-contracted its swap contract to three other companies. Yet it did not pay a dime in Nigeria as tax, despite its physical presence here.”

The source said there are pertinent questions which the committee would address in the course of the investigation.

“Where did that commission and others go? If Duke Oil is a subsidiary of the NNPC, does that not translate that it is an agency of the Nigerian government? Are we going to continue this way?

“Can the executive just have an agency where it takes money from without appropriation? Unravelling Duke Oil would go a long way in investigating the finances of the NNPC,” the source added.

Media had earlier reported that the Senate committee was under pressure from the presidency to give Baru a soft landing and clear him of the allegations levelled against him in Kachikwu’s letter.

It was gathered that committee is mindful of the attention that Kachikwu’s letter has generated and the allegations that it is being lobbied to soft-pedal on the probe.

When asked what had become of the mandate to probe the contract awards raised by Kachikwu, he said: “That aspect of the probe will happen. The members are aware that the eyes of Nigerians are on them.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Seme Border Sees 90% Decline in Trade Activity Due to CFA Fluctuations

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The Seme Border, a vital trade link between Nigeria and its neighboring countries, has reported a 90% decline in trade activity due to the volatile fluctuations in the CFA franc against the Nigerian naira.

Licensed customs agents operating at the border have voiced concerns over the adverse impact of currency instability on cross-border trade.

In a conversation with the media in Lagos, Mr. Godon Ogonnanya, the Special Adviser to the President of the National Association of Government Approved Freight Forwarders, Seme Chapter, shed light on the drastic reduction in trade activities at the border post.

Ogonnanya explained the pivotal role of the CFA franc in facilitating trade transactions, saying the border’s bustling activities were closely tied to the relative strength of the CFA against the naira.

According to Ogonnanya, trade activities thrived at the Seme Border when the CFA franc was weaker compared to the naira.

However, the fluctuating nature of the CFA exchange rate has led to uncertainty and instability in trade transactions, causing a significant downturn in business operations at the border.

“The CFA rate is the reason activities are low here. In those days when the CFA was a little bit down, activities were much there but now that the rate has gone up, it is affecting the business,” Ogonnanya explained.

The unpredictability of the CFA exchange rate has added complexity to trade operations, with importers facing challenges in budgeting and planning due to sudden shifts in currency values.

Ogonnanya highlighted the cascading effects of currency fluctuations, wherein importers incur additional costs as the value of the CFA rises against the naira during the clearance process.

Despite the significant drop in trade activity, Ogonnanya expressed optimism that the situation would gradually improve at the border.

He attributed his optimism to the recent policy interventions by the Central Bank of Nigeria, which have led to the stabilization of the naira and restored confidence among traders.

In addition to currency-related challenges, customs agents cited discrepancies in clearance procedures between Cotonou Port and the Seme Border as a contributing factor to the decline in trade.

Importers face additional costs and complexities in clearing goods at both locations, discouraging trade activities and leading to a substantial decrease in business volume.

The decline in trade activity at the Seme Border underscores the urgent need for policy measures to address currency volatility and streamline trade processes.

As stakeholders navigate these challenges, there is a collective call for collaborative efforts between government agencies and industry players to revive cross-border trade and foster economic growth in the region.

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CBN Worries as Nigeria’s Economic Activities Decline

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.

The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.

According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.

The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.

Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.

Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.

Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.

The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.

The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.

While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.

It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.

As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.

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Economy

Sub-Saharan Africa to Double Nickel, Triple Cobalt, and Tenfold Lithium by 2050, says IMF

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In a recent report by the International Monetary Fund (IMF), Sub-Saharan Africa emerges as a pivotal player in the global market for critical minerals.

The IMF forecasts a significant uptick in the production of essential minerals like nickel, cobalt, and lithium in the region by the year 2050.

According to the report titled ‘Harnessing Sub-Saharan Africa’s Critical Mineral Wealth,’ Sub-Saharan Africa stands to double its nickel production, triple its cobalt output, and witness a tenfold increase in lithium extraction over the next three decades.

This surge is attributed to the global transition towards clean energy, which is driving the demand for these minerals used in electric vehicles, solar panels, and other renewable energy technologies.

The IMF projects that the revenues generated from the extraction of key minerals, including copper, nickel, cobalt, and lithium, could exceed $16 trillion over the next 25 years.

Sub-Saharan Africa is expected to capture over 10 percent of these revenues, potentially leading to a GDP increase of 12 percent or more by 2050.

The report underscores the transformative potential of this mineral wealth, emphasizing that if managed effectively, it could catalyze economic growth and development across the region.

With Sub-Saharan Africa holding about 30 percent of the world’s proven critical mineral reserves, the IMF highlights the opportunity for the region to become a major player in the global supply chain for these essential resources.

Key countries in Sub-Saharan Africa are already significant contributors to global mineral production. For instance, the Democratic Republic of Congo (DRC) accounts for over 70 percent of global cobalt output and approximately half of the world’s proven reserves.

Other countries like South Africa, Gabon, Ghana, Zimbabwe, and Mali also possess significant reserves of critical minerals.

However, the report also raises concerns about the need for local processing of these minerals to capture more value and create higher-skilled jobs within the region.

While raw mineral exports contribute to revenue, processing these minerals locally could significantly increase their value and contribute to sustainable development.

The IMF calls for policymakers to focus on developing local processing industries to maximize the economic benefits of the region’s mineral wealth.

By diversifying economies and moving up the value chain, countries can reduce their vulnerability to commodity price fluctuations and enhance their resilience to external shocks.

The report concludes by advocating for regional collaboration and integration to create a more attractive market for investment in mineral processing industries.

By working together across borders, Sub-Saharan African countries can unlock the full potential of their critical mineral wealth and pave the way for sustainable economic growth and development.

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