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NNPC Loses N255bn in One Year

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NNPC

The Nigerian National Petroleum Corporation recorded a total loss of N255.3bn at the close of last year, statistics from the January 2016 edition of its Energy in Brief bulletin have shown.

An analysis of the data indicated that the highest monthly loss by the corporation was recorded in September 2015 when it lost N46.5bn.

Further findings showed that the loss in September was reduced the following month (October 2015) with the firm losing N12.2bn.

A monthly loss of N14.3bn was recorded in November 2015, up by N2.1bn when compared to what it lost in October the same year.

The corporation attributed the losses to local operational challenges and persistent pipelines vandalism.

The corporation’s group financial report showed that between January and October 2015, the oil firm recorded a group total loss of N241bn.

The figure, however, increased when the firm’s losses from January to November 2015 were computed, losing N255.28bn during this period.

The NNPC specifically said it lost N58.68bn between January and November 2015 to the rupturing of its crude oil installations.

It said, “Local operational challenges such as refinery capacity below commercial threshold due to prolonged turnaround maintenance issues and pipeline vandalism and products losses have also continued to cost the NNPC a huge amount of money.

“A total of 2,447 vandalised points were recorded between January and November 2015, resulting in a total loss of 637,550 cubic metres of crude and products valued at N56.68bn. These developments have put the corporation in a disadvantaged market position.”

The NNPC, in the bulletin, also stated that it remitted a total of N1.003tn to the Federation Accounts Allocations Committee last year.

It said that the country’s three refining companies’ operations came to life in the mid December, thereby meeting the target set by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, for the plants to come on stream.

The oil firm said the refineries were producing about six million litres of petrol daily in December. This, however, was before the Kaduna and Warri refineries were shut down last week by the corporation due to breaches in their product supply pipelines.

On key business operations across the group value chain, the NNPC said its oil and gas exploration subsidiary, the Nigerian Petroleum Development Company Limited, posted a production increase of 23 per cent as against the previous month performance.

It said the Nigerian Gas Company, another subsidiary of the NNPC, also recorded an improvement in its year-to-date performance as reflected with revenue posting of N31.34bn.

The firm also explained the recent petrol price modulation embarked upon by the Petroleum Products Pricing Regulatory Agency.

Price modulation, according to the corporation, is a regulatory adjustment approach that allows changes to a pricing template that protects the interest of consumers and investors alike.

It said, “In Nigeria’s context, it is a quarterly price adjustment of the PPPRA’s current price template to reflect the import cost variables.

“The benefit of adopting a pricing modulation approach is that it addresses corruption and blocks leakages in current subsidy management methods, ensures appropriate planning to guarantee security of energy supply, logistics and distribution of petroleum products.

“In the long run, it will curb inflation growth and stimulate efficiency due to forward planning approach; it will support improvement in fiscal sustainability through the deployment of public funds to key infrastructural development, such as roads, health education, agriculture and other safety nets. It will also boost economic growth with impact on Gross Domestic Product, foreign direct investment and employment.”

But the NNPC stated that securing its product pipelines from vandals across the country had remained a major challenge to the effort at ensuring effective fuel distribution nationwide.

The firm had on Wednesday stated that the continued rupturing of pipelines had led to the shutdown of the Kaduna and Port Harcourt refineries.

It said the burst pipelines led to crude supply challenges, adding that the plants were shut simultaneously last Sunday after the Bonny-Okrika crude supply line to the Port Harcourt refinery and the Escravos-Warri crude supply line to the Kaduna refinery suffered breaches.

Quantifying the cost of the attack on the Nigerian economy, the Federal Ministry of Power, Works and Housing stated that the country was losing N470m daily as a result of the incident.

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.

Government

Coronavirus – Angola: Confronting the COVID-19 Pandemic and the Oil Price Shock

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COVID-19 Vaccine

The COVID-19 pandemic and the shock from the falling price of oil have put severe pressure on Angola since the country’s second review under the Extended Fund Facility (EFF) in December 2019.

Only months after the conclusion of the second review in December 2019, the COVID-19 pandemic reached Angola, ushering in economic and health crises. The decline in oil prices further strained the economy, which is heavily reliant on oil exports. The economic downturn and social distancing to contain the spread of the virus have been damaging, especially given the large informal sector.

A swift response to the crisis

The Angolan authorities adopted timely measures to tackle the challenges arising from the COVID-19 shock. Measures to protect public health included quarantine, social distancing, closing of borders with limited exceptions, closures of schools, restaurants, and public events, and limited transportation. The government recently approved a prudent supplementary budget for 2020 using a conservative oil reference price. It has also introduced a comprehensive set of fiscal and monetary measures to support economic activities.

Fiscal measures

On relief to help vulnerable people:

• Tax exemptions of value-added tax (VAT) and customs duties on goods imported under humanitarian aid and donations.

• VAT tax credit for imported capital goods and raw materials for producing essential consumption goods.

• Interest-free, deferred payment option for social security contributions.

• Regulation of prices for a list of medical goods.

On government spending:

• Freeze of 30 percent of purchases on nonessential goods and services.

• Reduction in the number of ministries from 28 to 21.

• Suspension of selected, nonessential capital expenditures.

• Decrease in travel and real estate investments.

Monetary measures

• Additional liquidity support to banks and a liquidity line to buy government securities from nonfinancial corporations.

• A credit-stimulus program.

• Temporary suspension for debt service payments.

• Requirement for banks to provide credit to importers of essential goods.

A proactive external debt management

The government needs to safeguard its ability to continue to service its debt on schedule, even under the current trying circumstances. The government has therefore availed itself of the G20 Debt Service Suspension Initiative. They have also secured selected debt reprofiling operations with some of their large creditors.

Financial support from the IMF

On September 16, 2020, the IMF’s Executive Board approved the third review under the EFF and additional financial support to Angola to help mitigate the impact of the crises. Accordingly, the IMF has provided $1 billion to Angola, bringing its total expected financial support to about $4.5 billion under the three-year program. The authorities are strengthening their public financial management to improve accountability for the funds received from the IMF and debt relief from creditors.

The path to recovery

It is important for Angola to continue to stabilize the economy, control inflation, keep the reform momentum, and safeguard financial stability. It is also crucial to persevere with structural reforms, such as privatization, improvement in governance in state-owned enterprises, and strengthened legal frameworks. These reforms will help improve the business environment and pave the way for foreign direct investment and growth-enhancing economic diversification.

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Republic of Korea Contributes Rice and Cash to Assist Ugandans threatened by locusts

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The United Nations World Food Programme (WFP) today welcomed 5,000 metric tons of rice and US$300,000 in cash from the Republic of Korea to provide much-needed relief assistance to 781,000 people including refugees and Ugandans threatened by locusts.

“WFP is extremely grateful for the continued generosity of the Republic of Korea since 2018 and its appreciation of the immense humanitarian needs in Uganda, which were suddenly made even more complicated by COVID-19,” said WFP Officer in Charge Ryan Anderson.

”This contribution of 5,000 metric tons of rice found us at a crossroads when we were considering whether to make deeper ration cuts for refugees because of a shortage of funding, even as we have evidence that they already face high food insecurity,” he added.

Combined with other contributions, the rice may allow WFP to maintain rations for 1.26 million refugees at the current 70 percent of a full ration for a while. Valued at US$4.3 million, it will also meet cereal needs of 614,000 refugees in seven settlements towards the end of the year.

The additional US$300,000 in cash will enable WFP to meet the relief needs of 167,000 people in the northeastern region of Karamoja, which is the most food-insecure region in the country and is threatened by a combination of malnutrition among its residents, locusts, floods and animal diseases.

“The Republic of Korea is committed to supporting vulnerable groups of people in Uganda, especially refugees fleeing conflict and nationals faced by chronic food shortages and malnutrition,” said Ambassador Ha Byung-Kyoo.

“We also are very pleased to continue making contributions of rice, which we have heard is appreciated by the refugees and contributes to much needed dietary diversity,” he added.

WFP was forced to reduce rations for refugees in April to 70 percent of a full ration because of funding shortages. The economic pressures that COVID-19 has brought on donor capitals has further complicated funding to feed refugees. WFP is putting in place safety measures in 13 refugee settlements to prevent the spread of COVID-19 during food and cash distributions.

The Republic of Korea has contributed rice to WFP in Uganda annually since 2018 in support of 1.43 million refugees – the highest number of refugees hosted by any country in Africa.

The US$300,000 contribution will also contribute to supporting WFP assistance in Karamoja. Even though families in the region were able to harvest some crops in August, despite repeated sightings of locusts between February and July, the very presence of the pests in the region threatens both agriculture and vegetation needed for animals. Relief food helps to cushion families as the government and UN partners work to control the impact of locusts.

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UAE May Reverse Visa Restriction on Nigerians Today Amid Airlines Ban

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Nigerian Government Pressures UAE to Revisit Visa Restrictions

Barring any last-minute hitches, the United Arab Emirates (UAE), will today, review the visa restriction placed on Nigerian travellers, following the ban of Emirates Airlines from the most populous black nation.

Sources at the company’s his office in Lagos confirmed that the issue was being reviewed, and the “right” diplomatic approach taken.

This came as aviation stakeholders commended the Federal Government for going “tough and playing tit-for-tat with countries that would not accept Nigerian travellers into their domains.”

The Federal Government, following pressure from some quarters, banned Emirates Airlines from Lagos and Abuja airports, effective today, over refusal to grant fresh visa applications submitted by Nigerians.

The government earlier banned European carriers, with the exception of British Airways, over travel restrictions.
Emirates officials said: “We have met with the Nigerian government on this issue, and we assured them that we will resolve it. We are presently working on it.”
“I hope this issue will be resolved before Monday. One thing I will assure you is that the issue will be resolved earlier than expected,” a manager said.

The Chief Executive Officer of Finchglow Travels, Bankole Bernard, said assurances had been given on the matter.

He noted that Nigeria was third-biggest market to Emirates, adding that the UAE would do everything to sustain their operations.

“UAE should have resolved this matter long ago. The ban means that they will lose the market, and they know the implication.

A market lost is never easily regained. Right now, we are certain that the ban will only affect Monday flights, and hoping that things will be normal by Tuesday,” he added.

The Minister of Aviation, Hadi Sirika, at the weekend, via his twitter handle, announced the suspension of Emirates Airlines from Nigeria, saying the ban would take effect from today.

Emirates Airlines’ situation was reviewed, and they are consequently included in the list of those not approved, with effect from Monday, September 21, 2020,” he said.

The President Muhammadu Buhari administration had in August warned that Nigeria would activate the principle of reciprocity in granting permission to airlines to resume operations in the country as it reopens its airspace.

It said the decision was informed by the embargoing on flights from Nigeria by some nations.

Air France, KLM, Lufthansa, Etihad Airways, Angolan TAG, Air Namibia and Royal Air Maroc were not approved to operate flights into the country.

Aviation stakeholder, Julius Akintunde, said the measures were in the best interest of the economy.

Also speaking, Secretary-General of the Aviation Safety Round Table Initiative (ASRTI), Group Capt. John Ojikutu (rtd), urged that the reciprocity should be done with caution in order for the Nigerian market not to be undermined by neighbours.

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