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Baru Outlines Over $8bn Ongoing NNPC Financing Deals

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  • Baru Outlines Over $8bn Ongoing NNPC Financing Deals

The Group Managing Director of the Nigerian National Petroleum Corporation, Maikanti Baru, on Tuesday, reeled out the over $8bn worth of deals currently being handled and pursued by the NNPC since the beginning of 2019, as he faces retirement in a couple of days.

Baru is due for retirement on July 7 this year, as he would have attained the mandatory civil service retirement age of 60.

The NNPC boss, who delivered the keynote address at the official opening of the 2019 Nigeria Oil and Gas conference in Abuja, stated that the oil firm was involved in financing deals and had signed Memorandum of Understanding worth several billions of dollars since 2019.

He said, “This year, we have significantly progressed new third- party financings for the NNPC/SPDC JV (Shell Petroleum Development Company Joint Venture) and NNPC/MPNU JV (Mobil Producing Nigeria Unlimited). Both transactions were substantially over-subscribed.

“NNPC/SPDC Santolina III Project has an estimated cost of circa $500m and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3bn (NNPC to raise circa $700m in third-party financing).”

Baru added, “Furthermore, we have initiated third-party financing for the NNPC/NAOC (Nigeria Agip Oil Company) Okpai II Independent Power Plant project, with estimated cost of circa $658.42m and the NNPC/TEPNG (Total Exploration and Production Nigeria) Ikike development project, with estimated cost of circa $473.4m to be funded through prepayment for gas by NLNG. The price balance is to flow to the Federation Account.”

He said the corporation had successfully initiated the Memorandum of Understanding (framework agreement) between NNPC and the Nigeria Liquified Natural Gas company for the provision of about $2.5bn funding for NNPC’s portion of cash call payable on upstream gas supply projects for SPDC, TEPNG and NAOC JVs.

Baru added that the NNPC had also initiated negotiations for the Financing and Technical Services Agreements for identified Nigeria Petroleum Development Company assets – OMLs 13, 65 and 111.

He said, “As you may be aware, NPDC currently contributes about eight per cent of current national daily production. Further developments from these assets and NPDC JV assets are expected to move NPDC to over 300 barrels per day equity.

“We have progressed negotiations with EPC contractors and potential Chinese lenders on the third-party financing for the Ajaokuta-Kaduna-Kano Gas Pipeline Project of $2.89bn.”

He noted that the NNPC had also been active in the frontier basins as exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River-2 well in the Benue Trough.

Baru stated that between 2015 and 2017, the corporation was involved in various project financings of over $3bn in new investment capital.

He said, “These include the $1.2bn multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49; 90 and 95 under the NNPC/Chevron JV, termed, Project Cheetah; NNPC/SPDC JV ($1bn) – Project Santolina; NNPC/CNL JV ($780m) – Project Falcon; NNPC/First E and P JV; and Schlumberger ($700m).”

The NNPC boss, however, noted that promoting investment required stability in the regulatory framework, clarity in terms of fiscal direction and reforms, access to capital and more importantly, effective and efficient deployment of both capital and human resources.

He also told participants at the conference that Nigeria held about 2.2 per cent of global oil reserves.

Baru explained that the country’s crude oil reserves had grown steadily from about 22 billion barrels in 1999 to 37.5 billion barrels in 2018.

“Nigeria is home to the second largest crude oil reserves in Africa after Libya. Our crude oil production currently hovers around 2.2-2.3 million bocpd. This was bolstered by the coming onstream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd,” he stated.

On the gas side, he said Nigeria had the 9th largest gas reserves in the world with gas reserves of 201 trillion cubic feet and upside potential of about of 600Tcf.

He added, “It is also significant to state that out of about $194bn surge in the capital expenditure coming into upcoming oil and gas developments on the African continent from 2018 to 2025, Nigeria today accounts for $48.04bn (over 24.8 per cent) with other African countries sharing the rest.”

Baru stated that to encourage the existing players in the industry, particularly the traditional JV partners, NNPC undertook to settle all outstanding cash call arrears amounting to $5bn in 2015.

“Till date, we have defrayed over $2bn. All these efforts are geared towards sustaining investment and renewing investor confidence,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Lagos Loses N1 Trillion to #EndSARS Protest, a Year Budget – Gov

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Lagos Needs N1 Trillion to Fix Vandalised Infrastructure, a Year Budget – Gov

The Governor of Lagos State, Babajide Sanwo-Olu, has puts the total economic cost of past week destruction and vandalism in the state at about N1 trillion.

Sanwo-olu, who spoke with the speaker of the House of Representatives, Hon. Femi Gbajabiamila, that was on a fact-finding visit to Lagos on Sunday, said the state may spend up to N1 trillion to fix damages done to infrastructure.

Speaking on the situation, Femi Gbajabiamila, said “The House of Representatives will do all it can to compensate all those who suffered brutality including policemen that lost their lives in the process.

“Also whatever the house can do in rebuilding Lagos and other states it will do. We are now in a state of reconstruction. What must be done will be done.

“I learnt from the governor of Lagos State that it will take N1.0 trillion to rebuild what had been lost and I asked him what is the budget size of the state he said about N1.0 trillion. You can see we are moving backward.

Rotimi Akeredolu, Chairman of the South West Governors, who was part of the visit, stated, “We are indeed surprised at the extent of damage to lives and properties in Lagos. We will be right to say Lagos was turned into a war zone.

“We are deeply concerned with the ease with which public buildings, utilities, police stations and investments of our people have been burnt despite the proximity of security agencies to those areas. However, while responding to the total number of government’s buildings burnt among others,” Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotoso, stated.

We are still counting. The state is still taking inventories of all that happened and not until all that is concluded we can’t not ascertained for now the total number of burnt structures. But I can tell you it’s very huge.

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Economy

Experts Recount Nigeria Losses Ahead Possible Rebuilding, Recovery

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Economic Experts Recount Losses Incurred from the #EndSARS Protest Ahead Possible Rebuilding, Recovery

Economic experts have started releasing reports on the size of the damage done to the nation’s economy following the #EndSARS protest that was hijacked by hoodlums and criminals.

The most affected state, Lagos State, will need about $1 trillion, an equivalent to its annual budget, to recoup the economic value of what was lost to the destruction and looting perpetrated by thieves masquerading as protesters.

A Senior Economist/Head, Research & Strategy, Greenwich Merchant Bank, Ayodeji Ebu, said the unrest and the 24 hours curfew that was later imposed by Lagos State to restore order could cost the state at least N54 billion per day.

He explained that the protest would hurt the nation’s foreign direct investment in the remaining part of the year and as well as the first quarter of 2021.

His words: “While it may be difficult to estimate the exact loss so far, based on the significant contribution of Lagos State (approximately 30%) to Nigeria’s total Gross Domestic Product (GDP) and as over 50 percent of Nigeria’s non-oil industrial capacity is located in Lagos, the impact of the crisis will be enormous.

“This was further compounded with the 24hours curfew that lasted for about four days. Estimating using the Q2’2020 GDP data and assuming there was a total shut down, each day will cost Lagos alone about N54 billon.

Speaking further, Ebu said: “With Lagos the centre of the civil unrest, which account for 70 percent or $1.1 billion of total capital importation in Q2’2020, we expect this to further impact on direct investment in Q4’2020 and Q1’2021.

He expects that insurance claims to also rise in line with the damages done on lives and properties.

Similarly, analysts at Cordros Capital, a Lagos based investment banking firm, reacted to the negative impact of the unrest on the nation’s economy.

The analysts said the nation’s economy could contract by as much as 6.91 percent year-on-year in the final quarter of the year due to the unrest. Therefore, they projected a negative growth rate of 4.15 percent year-on-year for the 2020 fiscal year.

In their words, they said “The transportation, trade, and manufacturing sectors are expected to be the hardest hit.

“On transportation, we expect reduced domestic and international flight operations pending when normalcy is restored.

“Similarly, we expect compliance with curfew directives to hinder the free movement of people and goods across the country, further compounding the woes of the transport sector, which is yet to recover from the COVID-19 induced decline.

“While the manufacturing sector is currently being hampered by FX related issues and an unfriendly business environment, the imposition of curfews will further exacerbate the challenges of the sector.

“For the trade sector, the decline in household consumption brought about by higher food prices and shrinking consumers’ income will cascade into weak wholesale and retail trade in conjunction with the pre-existing supply chain constraints.”

Analysts at Fidelity Securities Limited also added their voices and said the protest may cost the nation more than the N700 billion estimation previously estimated by the Lagos Chamber of Commerce.

They said “The EndSARs protest and eventual escalation of the protest would cost the Nigerian economy way more than N700 billion initially estimated by the Lagos Chamber of Commerce. With the current level of destructions, it may take a while for business to run at full capacity as the government as well as the private sector will first have to channel funding into the destroyed infrastructure in a bid to restore things back to the way it was, before even thinking of further improving on the infrastructure.

“Given the level of destruction, more businesses have been affected, more jobs would be lost, and more families would further fall below the poverty line as a result of the looting and burning of business. This is expected to further worsen the economic situation of the country which was already suffering from the impact of Covid-19. The government at this point would need to think out of the box, if it aims to revitalise the economy in the shortest time, else our GDP growth rate may remain negative even into the new year.

Accordingly, the Electricity Distribution Companies of Nigeria (DISCOs), on Sunday said the destruction of equipment it uses to deliver power and service operations will hurt its revenue generation and service delivery in October and the rest of the fourth quarter.

The DISCOs said “I tell you, assets are been destroyed, which is a significant impact on the industry. The DISCOs are expected to give power and how will it be achieved when our facilities including cables, poles, buildings are destroyed.

“That, however, transcends to money because the DISCOs cannot collect money for bills due to the unrest. Who would want to pay when everybody is angry.

“This means the remittance will be low to the Government on power we have collected. The protest has empowered Nigerians to fight back and the threat to lynch officials collecting bill are high. The properties and cables would have to be fixed on whose account?

“Seriously we are at a crossroad but we have signed an agreement to deliver power and that we would do.”

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Economy

Nigeria Mulls Selling Electricity to Republic of Chad

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power

Nigeria Considers Selling Electricity to the Republic of Chad

The Federal Government is presently considering selling electricity to the Republic of Chad after a request was made by the neigbouring nation.

The federal government-owned Transmission Company of Nigeria disclosed this on Sunday, adding that a meeting was held last week to discuss the possibilities of plugging the Republic of Chad to the nation’s grid.

Nigeria presently exports electricity to three neighbouring nations, Benin, Togo and the Republic of Niger despite struggling with power supply at home and failed to up its power generation more than the current level of 3,000 -4,500 megawatts in recent years.

On Sunday, the total power generated declined to 3,474.5MW as of 6am, down from 3,776.5MW on Saturday, according to the latest data from the Nigerian Electricity System Operator.

The total number of idle plants rose from 8 on Saturday to 11 on Sunday. These idle plants were Geregu II, Sapele II, Alaoji, Olorunsogo II, Omotosho II, Ihovbor, Gbarain, Ibom Power, AES, ASCO and Trans-Amadi.

A total of twenty-seven plants were presently connected to the national grid, which is being managed by the TCN.

Meeting between Ministry of Power, TCN, and the Chadian Minister of Energy, Mrs Ramatou Mahamat Houtouin, to discuss the possibilities of connecting the Republic of Chad to the Nigerian national grid [was held] on Wednesday, October 21, 2020,” the TCN said on its Twitter handle on Sunday, alongside pictures of the meeting.

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