Oil Exporters Lead Currency Gains as Crude Rises on OPEC Reports – Reuters

By  Maciej Onoszko and Charlotte Ryan
  • Colombian peso, ruble post biggest gains in emerging markets
  • Among developed economies, best performer is Norway’s krone

Oil-linked currencies were the day’s biggest gainers as crude surged on reports OPEC had clinched a deal to limit supply.

Colombia’s peso and Russia’s ruble were the best emerging-market performers, while Norway’s krone climbed as other Group-of-10 currencies fell. Oil jumped the most since February as the Organization of the Petroleum Exporting Countries was said to have reached an agreement to implement its first production cuts in eight years.

Currencies of oil-exporting nations were whipsawed in recent weeks amid concern that OPEC’s three biggest producers — Saudi Arabia, Iraq and Iran — would fail to resolve their differences over sharing the burden of clearing a record crude glut. Donald Trump’s election to the U.S. presidency and a a string of better-than-expected data from the world’s largest economy boosted the dollar, heaping further pressure on the currencies.

“Norway’s krone, the ruble and the Colombian peso are all up as you would expect them to be given the move in oil, but they’re not up nearly as much as they could be,” said Brad Bechtel, a currency strategist at Jefferies Group LLC in New York. “The reaction is being muted by the strength of the U.S. dollar.”

The Colombian peso, which until Wednesday had been little changed on the year, jumped 3.5 percent to 3,054.1 per dollar as of 11 a.m. in New York.

Norway’s krone gained 0.2 percent to 8.5131 to the greenback and 0.6 percent to 9.03 per euro, after touching the strongest level in a month. Canada’s loonie was little changed at C$1.3441 per U.S. dollar, heading for a fifth straight monthly loss.

Dollar Rallies on U.S. Economic News – WSJ

Strong data on hiring, consumer spending bolsters case for the Federal Reserve to take a more hawkish view on monetary policy in coming months

The dollar rallied against its peers Wednesday, lifted by solid economic data from the U.S.

The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.5% at 91.78 on gains against the euro, yen and other currencies.

Americans’ incomes and household spending advanced at a solid pace for the second straight month in October, data showed Wednesday, suggesting that consumers can support economic growth in the year’s final months.

The euro was down 0.6% at $1.0588 on Wednesday. 

A separate report released Wednesday showed that private-sector hiring continued at a strong pace in November, offering more evidence of a robust economy.

The strong data has bolstered the case for the Federal Reserve to take a more hawkish view on monetary policy in coming months. Higher rates tend to benefit the dollar, as they make the currency more attractive to investors seeking yield.

“The data this morning was certainly good,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange. “These are the types of figures that lead you to believe that the Fed may be inclined to raise rates at a faster pace in 2017.”

Federal-funds futures, used to bet on central-bank policy, on Wednesday showed that investors assigned a 98.6% likelihood of a rate increase at the Federal Reserve’s meeting in December. The chances for a follow-up increase in March stood at 13.1%, compared with 12.2% a day ago.

Investors are awaiting several key U.S. data releases this week, including manufacturing numbers on Thursday and Friday’s nonfarm payrolls report for November.

The dollar was up 1.1% against the yen at ¥113.61. The euro was down 0.6% at $1.0588.

Reports that OPEC has reached a deal to cut production boosted oil prices and sent the currencies of oil-producing countries higher.

The dollar was down 1% against the Russian ruble to 64.43. It fell 0.3% against the Mexican peso to 20.57, and lost 0.2% against the Norwegian krone to 8.51.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com

Naira appreaciates marginally at interbank market – NAN

The Naira on Wednesday appreciated marginally against the dollar at the interbank market, gaining 25k to exchange at N305.

The Nigerian currency closed at N305.25 on Tuesday.

Trading on the floor of the Bureau De Change saw the Naira sold at N399 to a dollar, CBN controlled price, while the Pound Sterling and the Euro closed at N585 and N506 respectively.

The Naira continued to nosedive at the parallel market, closing at N480 to a dollar, while the Pound Sterling and the Euro traded at N580 and N505 respectively.

Traders at the market said they have been trading under acute Forex shortage.

A BDC operator, Mr. Harrison Owoh, said there had been sustained fall in the sale of foreign
currencies to BDCs for two weeks running.

Owoh attributed the shortage to the fall in inflow into the country.

He said, “For two weeks running, BDCs have been getting $8,000 instead of 15,000 weekly dollar sale from Travelex.”

(NAN)

UPDATE 1-Russia ready to cut oil output by 300,000 bpd in H1, as agreed with OPEC – Reuters

By Denis Pinchuk

 
 

MOSCOW Nov 30 (Reuters) – Russia is ready to cut oil production “gradually” by up to 300,000 barrels per day (bpd) in the first half of next year as part of an agreement with OPEC, Russian Energy Minister Alexander Novak said on Wednesday.

“Russia is ready to join the agreement … Based on our active talks over the last couple of months with key OPEC members and non-OPEC countries, Russia will gradually cut its output by up to 300,000 barrels per day in the first half of 2017,” Novak told reporters.

He added that it was technologically challenging for Russia to cut production sharply.

“Our talks with non-OPEC countries allow us to expect some countries to join the deal, cumulatively contributing approximately up to 300,000 bpd,” Novak said. He did not elaborate.

Kazakhstan and Azerbaijan are the second- and third-biggest oil producers among ex-Soviet countries after Russia. Russia, the leading global oil producer, saw its output hit post-Soviet highs in recent months.

Novak gave no indication from which level Russia was ready to cut output. The Kazakh energy ministry declined immediate comment. The Azeri energy ministry could not be reached for a comment on Wednesday.

“We are optimistic about the agreements reached and consider today’s agreement as historically important,” Novak said. He added that OPEC and non-OPEC nations were choosing the timing for a separate meeting to sign a memorandum on the deal.

“We think such a meeting will take place within the next 10 days,” Novak said.

The Organization of the Petroleum Exporting Countries agreed on Wednesday its first oil output cuts since 2008 after Saudi Arabia accepted “a big hit” on its production and dropped its demand on arch-rival Iran to slash output. (Reporting by Denis Pinchuk; Additional reporting by Mariya Gordeyeva in Almaty and Nailia Bagirova in Baku; Writing by Andrey Ostroukh/Katya Golubkova; Editing by Dale Hudson)

 

UPDATE 7-OPEC in first joint oil cut with Russia since 2001, Saudis take “big hit” – Reuters

* Saudis ready to cut output by 0.5 million bpd – source

* Saudi says Iran OK to freeze at pre-sanctions levels 

* Iran says Russia would cut once OPEC reaches deal

* Brent crude jumps 8 percent to above $50/barrel (Updates with deal details)

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA, Nov 30 (Reuters) – OPEC has agreed its first limit on oil output since 2008, sources in the producer group told Reuters, with Saudi Arabia accepting “a big hit” on its production and agreeing to arch-rival Iran freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel after Riyadh signalled it had finally reached a compromise with Iran after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed on a proposal by member Algeria to reduce production by around 4.5 percent, or about 1.2 million barrels per day.

Saudi Arabia would contribute around 0.5 million bpd by reducing output to 10.06 million bpd, the source said, while Iran would freeze output at close to current levels of 3.797 million bpd and other members would also cut production.

The source added that OPEC had also suspended Indonesia from OPEC and hence the exact combined reduction was yet to be calculated. The meeting was still ongoing after around six hours of debate.

“OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut,” said OPEC watcher Amrita Sen from Energy Aspects.

Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on significant cuts and hoped Russia and other non-OPEC producers would contribute a reduction of another 0.6 million bpd.

“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017,” Falih said.

Clashes between Saudi Arabia and Iran have dominated many previous OPEC meetings.

But the tone changed on Wednesday with Iranian Oil Minister Bijan Zanganeh saying he was positive since Iran had not been asked to cut output.

He also said Russia was ready to reduce production.

“Moscow have agreed to reduce their production and cut after our decision,” Zanganeh said.

NON-OPEC CONTRIBUTIONS

OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output in an effort to prop up oil prices, which have halved since mid-2014.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when Saudi Arabia increased output.

Sources said that out of additional non-OPEC cuts of 0.6 million bpd, OPEC expected Russia to cut by 0.4 million. A Russian ministry source said the figure was “a bit excessive”.

OPEC member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

Iran and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

“If you get this deal done, it would be huge. You remove a lot of oil from the market and you get the Russian participation,” said veteran OPEC watcher and founder of Pira consultancy Gary Ross.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: “In deals with Russia, OPEC is like (the late U.S.) President (Ronald) Reagan used to say: ‘Trust but verify’.”

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

 

CBN warns banks against circumventing foreign exchange forward margin – Businessday

The Central Bank of Nigeria (CBN) has warned the deposit money banks that are trying to circumvent its effort at bolstering the local currency.

Specifically, the CBN has observed that banks are laying a bet with the allowable spread in the recently introduced foreign exchange forwards.

The guidelines for foreign exchange derivatives and modalities for CBN FX Forwards stated that the maximum spread of 50 kobo is allowed on the sale of forwards with less than three months tenor whilst 75 kobo is allowed for tenors above 3 months.

But the banks according to Tokunbo Martins, director banking supervision, rather than adhere to a spread that is reasonable, chose to enact short-tenure forwards for two days, five days with N30 spread. They do this 10 times and make N300 spread.

“Risk managers please let us be alive to our responsibilities”, Martins said on the side line of South West risk roundtable organised by Risk Managers Association of Nigeria (RIMAN) in conjunction with Promeiteia. 

The CBN director also told lenders to gear up for the implementation of for the International Financial Reporting Standard (IFRS 9) and the use of advance approaches of Basel II, while warning banks against regulation arbitrage.

Banks that report under IFRSs must apply IFRS 9 Financial Instruments in their 2018 financial statements. Analysts are of the view that the effective implementation of the new standard has the potential to benefit stakeholders including investors, auditors, among others.

“We have identified that what is required to comply with IFRS9 is the same thing with IRB approach of credit risks under Basel II. For banks that are doing IRP already are at advantage but are saying that if we are going to be doing IFRS 9, we might as well introduce the IRB for credit risks under Basel II”, Martins added.

She noted that banks are always in the habit of, looking ways of arbitraging the rules, adding that the CBN can no longer tolerate that. “We said there will be ECO who will take personal responsibility for any infraction discovered. It is the responsibility of Executive Compliance Officer (ECO) to make sure chief compliance office and chief risk officer do what they are expected to do”, she said.

In its effort to enhance the minimum qualifications for the position of the Chief Compliance Officers (CCOs) of the Deposit Money Banks the CBN on October 1, 2016 introduced the appointment of ECO.

Martins advised the risk managers to identify their risks, measure, and monitor and control them in other to mitigate crisis in the industry.

HOPE MOSES-ASHIKE

UPDATE 5-OPEC agrees first output cut since 2008, details unclear – Reuters

* OPEC reaches deal in line with Algiers accord – source

* Saudi says Iran OK to freeze output at pre-sanctions levels

 
 

* Iran says Russia would cut if OPEC reaches deal

* Brent crude jumps 8 percent to above $50/barrel (Updates with deal reached)

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA, Nov 30 (Reuters) – OPEC has agreed its first limit on oil output since 2008, an OPEC source told Reuters after Saudi Arabia said it was prepared to accept “a big hit” on production and agree to arch-rival Iran freezing output at pre-sanctions levels.

Brent crude futures jumped 8 percent to more than $50 a barrel on hopes Riyadh had finally reached a compromise with Iran after insisting in recent weeks that Tehran fully participate in any cut.

The source said the Organization of the Petroleum Exporting Countries had on Wednesday agreed a deal in line with an accord the group reached in Algiers in September.

OPEC member Algeria was proposing to set a new production ceiling at 32.5 million barrels per day, down from current levels of 33.6 million.

The source gave no further details as two other OPEC sources said debates were continuing on the size of each member country’s cut.

Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on reducing output to a ceiling of 32.5 million bpd and hoped Russia and other non-OPEC producers would contribute a cut of another 0.6 million bpd.

“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles,” Falih said.

But he added that even if OPEC failed to reach a deal, the market would slowly recover: “We believe that non-OPEC growth has reversed and also most of the OPEC growth we’ve seen is already behind us,” he told reporters.

“If we can’t come to an agreement, then the other scenario of rolling over and waiting for the market to recover on its own is not a bad outcome.”

Clashes between Saudi Arabia and Iran have dominated many previous OPEC meetings.

On Tuesday, Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by as much as 1 million bpd, more than Riyadh was willing to offer, OPEC sources who saw the letter told Reuters.

But the tone changed on Wednesday. “I’m optimistic,” Iranian Oil Minister Bijan Zanganeh said before the meeting, adding there had been no request for Iran to cut output. He also said Russia was ready to reduce production.

“Moscow have agreed to reduce their production and cut after our decision,” Zanganeh said.

BIGGER DEAL

The 14-country OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output to prop up oil prices, which have halved since mid-2014.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when Saudi Arabia increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to OPEC sources, while suggesting Iran limit production at around 3.8 million bpd – in line with or slightly above the country’s current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran’s letter to OPEC suggested Saudi Arabia should cut output to 9.5 million bpd.

Sources said that out of additional non-OPEC cuts of 0.6 million bpd, OPEC expected Russia to cut by 0.4 million. A Russian ministry source said the figure was “a bit excessive”.

OPEC member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

Iran and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and Saudi Arabia mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC’s experts.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

 

UPDATE 4-Saudis say to take “big hit” on oil output for OPEC deal, Iran can freeze – Reuters

* Saudi Falih says OPEC close to reaching deal

* Says Iran OK to freeze output at pre-sanctions levels 

* Iran says Russia would cut if OPEC reaches deal

* Brent crude futures jump by 7 percent (Updates with debate over bigger cuts, Venezuela)

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA, Nov 30 (Reuters) – Saudi Energy Minister Khalid al-Falih said on Wednesday OPEC was close to clinching a deal to limit oil output, adding Riyadh was prepared to accept “a big hit” on its own production and agree to arch-rival Iran freezing output at pre-sanctions levels.

The comments could be seen as a compromise by Riyadh, which in recent weeks insisted that Iran fully participate in any cut.

Brent crude futures jumped by 7 percent, reaching nearly $50 a barrel. The Organization of the Petroleum Exporting Countries started a closed-door session at around 1000 GMT with a news conference scheduled for 1500 GMT.

Falih also said OPEC was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-OPEC members would contribute a cut of another 0.6 million bpd.

“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles,” Falih said.

But he added that even if OPEC failed to reach a deal, the market would slowly recover: “We believe that non-OPEC growth has reversed and also most of the OPEC growth we’ve seen is already behind us,” he told reporters.

“If we can’t come to an agreement, then the other scenario of rolling over and waiting for the market to recover on its own is not a bad outcome.”

Clashes between Saudi Arabia and Iran have dominated many previous OPEC meetings.

On Tuesday, Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by as much as 1 million bpd, more than Riyadh was willing to offer, OPEC sources who saw the letter told Reuters.

But the tone changed on Wednesday. “I’m optimistic,” said Iranian Oil Minister Bijan Zanganeh, adding there had been no request for Iran to cut output. He also said Russia was ready to reduce output.

“Moscow have agreed to reduce their production and cut after our decision,” Zanganeh said.

BIGGER DEAL

The 14-country OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up oil prices, which have halved since mid-2014.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when Saudi Arabia increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to OPEC sources, while suggesting Iran limit production at around 3.8 million bpd – in line with or slightly above the country’s current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran’s letter to OPEC suggested Saudi Arabia should cut output to 9.5 million bpd.

Documents prepared for Wednesday’s meeting propose the group cut production by 1.2 million bpd from October levels, but an OPEC source said ministers had begun debating a cut as high as 1.4 million bpd.

The source said that out of additional non-OPEC cuts of 0.6 million bpd, OPEC expected Russia to cut by 0.4 million. A Russian ministry source said the figure was “a bit excessive”.

Venezuelan Oil Minister Eulogio Del Pino said on Wednesday he hoped an agreement between OPEC and non-OPEC would “take out of the market between 1.8 and 2.0 million bpd”.

OPEC member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State, but Del Pino said Iraq would contribute to cuts.

Iran and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and Saudi Arabia mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC’s experts.

“If you get this deal done, it would be huge. You remove a lot of oil from the market and you get the Russian participation,” said veteran OPEC watcher and founder of Pira consultancy Gary Ross.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

 

Nigeria’s $976mn monthly import bill unsustainable, CBN warns – Businessday

By Onyinye Nwachukwu, Abuja

 

…As local market boot government borrowing request

The Central Bank of Nigeria (CBN) has again warned  that the country’s import bill presently at $976 billion is not sustainable especially with depleting reserves and low foreign exchange earnings.

Moses Tule, CBN Director of Monetary Policy raised the concerns on Tuesday. He said that the increasing preference of Nigerians  for imported goods and an absence of export culture was helping push the economy deeper into economic crisis.

Speaking at the 12th business managers redoubtable of the Chartered Institute Bankers of Nigeria (CIBN) in Abuja, Tule said citizens’s consumption pattern can no longer be supported by the country’s earnings.

“We refused to realise that the economy is in dire shock and things are no longer normal,” he said, speaking at the event, titled, “The realities of the Nigerian economy: Recession and the way forward.”

“The moment we began to prefer imported goods to our domestically produced goods, we laid the foundation and built the superstructure to where we are now.  This is a conscious choice.  Every country makes the choice where it wants to be.  This is what we chose for ourselves as a country.

“When you don’t export…and the imposition of an external goods and services culture has put pressure on the currency, there is nothing the CBN can do about this.  We have got to produce, consume what we produce and export what we produce.  That is the way out.”

Explaining how the nation got into recession, Tule said, “Oil prices are down.  Not only are oil prices down, the Niger Delta Avengers have blown up oil producing facilities and export facilities, severally.

” So we have oil prices and production going down.  The implication is that foreign exchange earnings are going down, but unfortunately, our import expenditure is not going down.  It is still in the region of N976 billion, monthly.”

He however admitted that so many other countries are also going through some economic shocks but that Nigeria’s case is worsened by its huge population and high population growth rate of about 3.5 percent which he said would mean that Nigeria must grow economy at 5.5 percent to stay afloat. He said with the curent recession, the growth deficit is as high as 7.56 percent  which would be needed to just sustain the economy.

Emphasisng the need for government to quickly reflate the economy, he said Japan for example which has also been through recession has been injecting about 3.7 trillion yen monthly into its economy and having not seen commendable results, recently pumped whopping 352 trillion yen.

Explains Nigeria’s economic dire situation, Tule explained that due to the present recession, people’s purchasing power has dropped which has also impacted on consumption and output, profit margin, investments and ofcourse jobs.

He said Non-Performing Loans have equally risen from 3 percent to as high as 15 percent while government overall deficit has jumped from three to five percent.

He said unfortunately, “policy prescription has also not been right. We have not sat down to analyse the recession issue. People only pontificate about what should be done.”

Tule said the problem is even heightened by the fact that government can no longer borrow as the local market for lack of confidence.

“Last week they (government ) came back with only 25 per cent of what they wanted to borrow from the market- domestic market- saying we haven’t seen your fiscal policy, we haven’t seen the direction.  We will not lend.  We will not buy your instrument.  ‘That is market speaking. said no.   If you are offering to us at 20 per cent, we will not accept.”’

“What they are saying is ‘we have weighed the risks, they are higher and they said  give it to us at 22 per cent or higher, if not we will not take.’  So for every N100 , the government takes N78 to themselves and gives the public N22.”

Moreover, he said the on-going economic recession has persisted owing to application of wrong tools, advice and inadequate synergy between monetary and fiscal policies,

According to him, the Monetary Policy Committee ( MPC ) had, since early last year, consistently warned that the nation would slip into recession if urgent steps were not taken but were not heeded.

He said the only way out of the economic crisis is for the fiscal authorities to take the lead “There is no other way out because  fiscal policy provides the leadership for macro-economic management in every country .  Monetary policy only comes as a complementary policy.

“In all climes, fiscal policy provides the leadership and when monetary policy has reached its end, and it can no longer stimulate output growth, fiscal policy must come with huge injections.   This much is not a new recommendation.  The fiscal authorities are aware of this.  As you aware, government is looking for some external funding to do exactly this,” he added.

$1bn spent on kerosene subsidy in 2015 – Osinbajo – Punch

By Stanley Opara, Okechukwu Nnodim and ‘Femi Asu

Nigeria spent the sum of $1bn as subsidy on kerosene last year, Vice-President Yemi Osinbajo said on Tuesday.

 

According to him, the massive dependence on kerosene and firewood by millions of households across the country made the Federal Government to spend such an amount subsidising the commodity.

Osinbajo, who spoke at the Domestic Liquefied Petroleum Gas Stakeholders’ Forum organised by his office in collaboration with the Federal Ministry of Petroleum Resources in Abuja, explained that the low level consumption of  the LPG by Nigerians was a major reason for the high demand for kerosene and firewood.

“The low LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuel. The government has undertaken huge subsidy of over $1bn in 2015 on kerosene subsidy,” he stated.

This, he said, was not beneficial for the country economically and health wise, as data at the disposal of the government showed that thousands of women and children had died as a result of diseases caused by firewood and kerosene polluted air.

The vice-president emphasised the need to unlock the domestic LPG value chain, stressing that this was one policy that the current government was passionate about since Nigeria had one of the largest gas reserves in the world.

He stated that the gas sector had the potential to revolutionise Nigeria’s fuel consumption, adding that a gas policy was being developed to address the gas development issues.

Osinbajo also noted that in 2015, operators imported 40 per cent of the total volume of domestic LPG consumed in Nigeria, a development that impacted the country’s foreign exchange reserves adversely.

He stated that the country’s LPG consumption recorded a steady decline until 2007 when the Nigeria Liquefied and Natural Gas Company intervened, adding that since then, the demand for domestic gas had been on the increase.

He said, “In the gas policy, liquefied petroleum gas has been identified as a viable source of stimulation of the socio-economic health of our nation. Nigeria’s LPG consumption had been declining until the NLNG intervened and since then, our LPG consumption has grown from 50 metric tonnes per annum to 400MTPA.

“Though this signifies some improvement in domestic LPG consumption, it translates to a per capita consumption of less than 2.5kg when compared to higher per capita consumption of some African countries. Also, about 40 per cent of our domestic LPG consumption in 2015 was imported, this impacts on our foreign exchange.”

The Managing Director, NLNG, Mr. Tony Attah, stated that despite the progress recorded in the domestic LPG sub-sector, there were still bottlenecks frustrating the full-fledged development of the market.

Also on Tuesday, Osinbajo said the government hoped to conclude the sale of a $1bn Eurobond by the end of the first quarter of 2017 and would seek to make its foreign exchange market more flexible.

The country is in its deepest recession in 25 years and needs to find money to make up for shortfall in its budget. Its revenues from oil have plunged due to low international prices and militant attacks on the crude-producing heartland, the Niger Delta, cutting output.

To help cover its budget shortfalls, the government was keen to ensure it was collecting taxes efficiently, Osinbajo told Reuters in an interview.

“We will continue to consider the issue of raising tax and raising VAT. But at the moment, we are more concerned with ensuring that we really improve our coverage,” he said, referring to tax collection.

The government began the process of appointing banks for the sale of the Eurobond in September and had said it wanted to issue the bond by the end of the year. It has yet to announce a lender to lead the sale.

“At the very latest, between the end of the year and the first quarter of next year, we will begin to see all that process concluded,” Osinbajo said.

The vice-president said the severe loss of petro-dollars had caused serious foreign exchange shortages and had been worsened by attacks on oil pipelines and export terminals.

The government had wanted to issue the Eurobond to help plug a gap in its record N6.06tn budget this year, in addition to tapping concessionary loans from the World Bank and China as its oil revenues fell.

So far, only the African Development Bank has come to its aid, approving a $600m loan, the first tranche of a total $1bn package.

Osinbajo also said his office was working with the central bank to make the foreign exchange market more flexible and more reflective of actual demand and supply.

The regulator in June officially ended its policy of pegging, or fixing, the naira’s exchange rate at 197 per dollar to let the currency float freely. But the exchange rate has since been stuck at N305 to N315 on the official market due to dollar shortages, while on the black market, the naira is changing hands at 470 per dollar.

Nigeria’s crude production, which was 2.1 million bpd at the start of 2016, fell by around a third in the summer following a series of attacks by Niger Delta militants who want a greater share of the country’s energy wealth to go to the impoverished southern oil-producing region.

“At one point, we were losing almost one million barrels per day, which translated to 60 per cent of oil revenues…and that affects the availability of dollars,” Osinbajo said.

He also said  the government was prepared to talk with the militants but that maintaining security was essential for law enforcement.