Nigeria loses N94bn to gas flaring in four months – Punch

By ’Femi Asu

The country lost at least N94bn in four months as oil and gas companies flared a total of 87.03 billion standard cubic feet of natural gas in that period.

The latest monthly report from the Nigerian National Petroleum Corporation showed that 22.60 billion scf of gas was flared in October; 21.50 billion scf in September; 21.14 billion scf in August; and 21.79 billion scf in July, this year.

It stated that out of the 215.43 billion scf of gas produced in October, a total of 121.63 billion scf was commercialised, comprising of 29.29 billion scf and 92.34 billion scf for the domestic and export markets, respectively.

The gas flare rate in the month was 10.49 per cent, compared with the average flare rate of 9.36 per cent for the period of November 2015 to October 2016.

With the price of natural gas put at $3.54 per 1,000 scf as of December 22, the 87.03 billion scf flared translates to a loss of $308m or N94bn (using the official exchange rate of N305.25/dollar).

According to the draft National Gas Policy recently released by the Ministry of Petroleum Resources, the flaring of natural gas that is produced in association with oil is one of the most egregious environmental and energy waste practices in the Nigerian petroleum industry.

The draft policy states, “While gas flaring levels have declined in recent years, it is still a prevailing practice in the petroleum industry. Billions of cubic metres of natural gas are flared annually at oil production locations resulting in atmospheric pollution severely affecting host communities.

“Gas flaring affects the environment and human health, produces economic loss, deprives the government of tax revenues and trade opportunities, and deprives consumers of a clean and cheaper energy source.”

The ministry said under the gas policy, the government intended to maximise utilisation of associated gas to be treated for supply to power generation or industry.

“To ensure that flared gas is put to use in markets, the government will take measures to ensure that flare capture and utilisation projects are developed and will work collaboratively with industry, development partners, providers of flare-capture technologies and third-party investors to this end,” it added.

According to the gas policy, the current gas flare penalty of N10 per 1,000 scf of associated gas flared is too low, having been eroded in value over time, and is not acting as intended, as a disincentive.

“Consequently, the low penalty has made gas flaring a much cheaper option for operators compared to the alternatives of marketing or re-injection. The intention of government is to increase the gas flaring penalty to an appropriate level sufficient to de-incentivise the practice of gas flaring, whilst introducing other measures to encourage efficient gas utilisation,” it added.

 

Revive Naira to revitalise economy, expert advises CBN – The Nigerian Observer

Lagos – An Economist, Prof. Sheriffadeen Tella, on Tuesday said that the Central Bank of Nigeria (CBN) must pursue monetary or quantitative easing approach in 2017 to revitalise the economy and solve the country’s lingering foreign exchange crisis.

Tella, Professor of Economics, Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, made the assertion in an interview with the News Agency of Nigeria (NAN) in Lagos.

He spoke on ways to tackle the country’s lingering foreign exchange crisis in 2017.

According to him, the CBN must adopt monetary or quantitative easing
whereby it buys financial assets from the private sector to stimulate the economy through private sector spending.

Tella noted that adoption of quantitative easing would return inflation to its target level.

He added that the apex bank should bring down monetary policy rates and lending rates to bring the economy back on track.

Tella said there was a need for temporary restrictive policy on some imports until domestic production improves towards the end of the second quarter of the year if the 2017 budget implementation commenced in time.

He also called for early passage and commencement of the capital aspects of the 2017 budget to create employment and production.

“There is still a large amount of Naira in the economy to fund speculative activities and those who have such money can buy foreign currency at any rate since it does not cost them anything.

“If the EFCC checks transactions on the accounts of those big politicians, it will see that the accounts have not been quite active but they are spending money for daily transactions.

“So, where are they getting the money they are spending on daily needs, acquiring property, refurbishing existing property or paying their workers?

“On the exchange rate, I predicted before that the Naira will reach N500 to a dollar by the end of this year and we are there now,’’ Tella said.

He attributed the development at the foreign exchange market to speculative attack on the nation’s currency.

Tella noted that colour swapping of the Naira was still an option to reduce speculative attack on the currency.

“The reasons are based on activities of speculators, largely those who have stockpiled Naira at home and converting same to foreign currency and for which I advocated change in or swapping of colour of N500 and N1,000 notes.

“It has never taken place, though India did it lately due to the same condition we have here,’’ Tella said.

He added that lack of production in the economy due to among others, high interest rates and continuous capital outflow through importation and over invoicing or capital flight contributed to development in the forex market.

External reserves rise further, now $25.4bn – Punch

By Oyetunji Abioye

The nation’s foreign exchange reserves have risen further to $25.4bn, according to the latest data obtained from the website of the Central Bank of Nigeria. 

In less than one week, the reserves rose by almost $300m from $25.084bn recorded on December 16, 2016 to $25.361 on December 22, 2016, the CBN data showed

This indicated that the foreign exchange reserves had risen to almost four-month high.

The last time the reserves recorded something close to this figure was on September 2 when it had the balance of $24.361bn.

The nation’s fast-depleting reserves had recorded $23.89bn low on October 19.

The reserves have dropped by 15.9 per cent from last year when they closed at $29.7bn.

At the end of November, the reserves stood at $24.77bn, up from $23.95bn on October 31.

The CBN data showed that the foreign exchange reserves declined to $24.92bn on September 14 from $25.11bn on September 9.

Currency and economic experts are not sure if the tiny upticks in the external reserves’ level are sustainable amid a falling naira and acute shortage of dollar in the foreign exchange markets and the economy.

“We are not sure the extent this can go. Currently, the FX market is not a free-float one where the interplay of demand and supply determines price and volume. The uptick is not as a result of supply over demand. It happens when there is a slowdown in the allocation of FX,” the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said.

A senior associate in investment banking at Afrinvest, a research and investment firm, Mr. Ayodeji Ebo, said the gradual increase might only be sustainable if the oil price maintained its current level and there was a continuous ramp up in oil production. The CBN had on June 20 lifted its 16-month-old currency peg and auctioned about $4bn on the spot and futures market to clear a backlog of dollar demand to help boost interbank market trading.

The reserves fell from $26bn on August 4, 2016 to $25.97bn on August 5 as the central bank stepped up dollar sales to boost liquidity at the interbank market and support the ailing naira.

The naira, which touched an all-time low of 365.25 per dollar on August 18 at the official market, has consistently closed around 305.5 in recent weeks.

Manual clearing raises cost of importation by 50% say importers – Businessday

Shippers and manufacturers say manual processes of clearing goods at the nation’s ports are causing long delays and raising their cost of operations by about 50 percent.

The slow clearing processes result in payment of demurrage and storage charges to shipping companies and terminal operators, an unnecessary addition to their cost of operations.

It takes between 14 and 21 days, instead of two days, to clear a container in Nigeria’s seaports, and this adds about 50 percent to the cost of importation and 61 percent of the total cost of exporting cargo, importers told BusinessDay.

Jonathan Nicole, president, Shippers Association of Lagos State, told BusinessDay that the nation’s maritime system is infested with rent-seekers, who have refused to adopt modern day technologies to fast-track cargo clearance and save cost for shippers.

“Government needs to encourage genuine manufacturers and importers to bring in critical raw materials by reducing the cost of clearing from the ports. This is because high cost of clearing transforms to high cost of production, which adds to the market prices of finished products,” Nicole said.

He advised that the cost of clearing can be reduced by the introduction of “e-payment of Customs duty; e-container loading list; electronic risk-based inspection; connecting all government agencies under one platform and e-permit exchange, among operators.”

Tony Anakebe, managing director of Gold-Link Investment Limited, a clearing and forwarding company, said in a telephone interview that the biggest bottleneck experienced by importers in Nigerian port is the delay in cargo clearing, and suggested the quick introduction of the Single Window Model of cargo clearance.

Anakebe said the Single Window system enables shippers to submit regulatory documents at a single location, where the relevant authorities involved in cargo clearance can access them. “This helps to increase efficiency, through time and cost savings for traders in their dealings with government agencies during cargo clearance.”

He gave example of neighbouring Ghanaian ports, where he said automation is deployed seamlessly, resulting in greater efficiency and savings in time and cost.

A recent survey titled ‘Nigeria: Reforming the Maritime Ports,’ carried out by the Lagos Chamber of Commerce and Industry (LCCI) pointed out that manual inspection of cargo by the Nigeria Customs Service (NCS) consumes time and increases cost of moving containers. The survey suggests the need for the Customs to allow terminal operators carry out container scanning (as is done globally) and electronically transmit the information to Customs for analysis, to save time.

The LCCI survey further observed that late resumption of daily operations and failure to work at weekends and public holidays were significantly slowing down economic activity and growth in the economy.

“Services such as invoicing and issuing of payment receipts, as well as booking of examination of cargo, also contribute to man-hour losses, due to late commencement of operations that could easily be done electronically. Positioning cargo for examination should be effected 24-hours after booking, to avoid delays,” the survey added.
The LCCI survey further suggested that there is a need to create a National Trade Data Centre, to integrate the various processes and value chain management in the ports. “This would help Nigerian seaports increase efficiency and attain global best business practice.”

Emma Nwabunwanne, a Lagos-based importer, said in an interview, that it is disheartening that agencies like the Customs and the Standards Organisation Nigeria (SON) still generate payment receipts manually, when computers are accessible. He observed that this creates room for corruption and collection of illegal charges.

 

AMAKA ANAGOR-EWUZIE

Wood Mackenzie Forecasts Positive Cash Flow at Oil Price Above $55 – Thisday

By Ejiofor Alike

A new report by Wood Mackenzie has predicted that the oil and gas industry will turn cash flow positive for the first time since the downturn in 2014, if the production cuts by the Organisation of Petroleum Exporting Countries (OPEC) drive oil prices above $55 per barrel.

Wood Mackenzie’s global corporate outlook for 2017, forecasts 2017 to be a year of “stability and opportunity” for global oil and gas

Senior Vice President of Corporate Analysis Research at Wood Mackenzie, Tom Ellacott, noted in the report that: “most oil and gas companies will start 2017 on a firmer footing, having halved cash flow breakevens to survive the past two years. Further evidence of a cautious, U-shaped recovery in investment should emerge.”

The corporate outlook report titled: “Corporate themes: 5 things to look for in 2017,” assesses the 2017 prospects for the oil majors, independents and national oil companies (NOCs), focusing on five themes, with strengthening finances as the top priority

Wood Mackenzie forecasts production from the 60 companies covered in its Corporate Service to grow by an average of two per cent, which is impressive given development spend was slashed by over 40 per cent between 2014 and 2016.
The report highlights that while portfolios will adapt, and down the cost curve into new energy, there will be modest growth in production despite past capex cuts.

The report also predicted improved value proposition for exploration and mergers and acquisitions, with US independents leading the sector into a new investment cycle

“Overall 2017 will be a year of stability and opportunity for oil and gas companies in positions of financial strength. More players will look at opportunities to adapt and grow their portfolios,” Ellacott said.

“Strengthening finances will still be a top priority. Capital discipline, cost reduction and deleveraging will frame corporate strategies in 2017. But 2016 will prove to be the low point in the investment cycle, with confidence boosted by OPEC’s decision to cut production,” said the report.

Wood Mackenzie expects the trend of improving exploration success rates and full-cycle returns to continue in 2017, with more majors and National Oil Companies stepping up new ventures activity.

“Mergers and acquisitions will also offer an attractive value proposition for the financially strong prepared to take a bullish view on long-term prices,” said Ellacott.

“Low-cost, low-risk discovered resource opportunities will look attractive again. And the larger players will need these to ensure long-term portfolio renewal as part of a more balanced growth strategy,” Ellacott added.
According to Wood Mackenzie’s analysis, the US independents could increase investment by over 25 per cent if oil prices average above $50 per barrel.

The report added that the spend for the bigger players will continue to trend down – total investment by the majors will fall by around eight per cent as recent capital-intensive projects wind down.

FIRS to support Nigerians in Diaspora willing to invest in Nigeria- Fowler – Businessday

The Federal Inland Revenue Services (FIRS) says it will provide the required information, guide and answer the questions on tax matters of Nigerians in the Diaspora interested in investing in the country.

The Acting Chairman of FIRS, Babatunde Fowler, said this while receiving the Senior Special Assistant to President Muhammadu Buhari on Foreign Affairs and Diaspora, Abike Dabiri , in Abuja.
Fowler said there were existing tax laws in the country designed to promote investment of Nigerians in the Diaspora willing to invest in the country.
“If they decide to come as investors, we do have tax duties, and also not believe in double taxation.
“So if they pay their taxes on their income abroad, they will not have to pay taxes when they invest in Nigeria. “
He said many Nigerians living in the country were not complying with payment of taxes.
He, however, said that 99 per cent of Nigerians living abroad were compliant to the payment of taxes in the countries of residence.
In terms of issues of giving tax incentive, pioneer status, or waivers to diasporas who want to invest in Nigeria, he said the responsibility was with the Federal Ministry of Finance.
“For pioneer status, once they make application, it will be looked by a new committee set up by the Minister of Finance.
“And if it is an area where they require pioneer status, I am sure it will be granted.“
Fowler said FIRS would collaborate with the Ministry of Trade and Investment and the office responsible for Diaspora matters to promote inflow of investment in the country.
He said that the only way out of recession was for government to spend money, noting that government can have money to spend when everybody pays their taxes.
“ It is right that Nigerians who are making money in the country to pay tax for government to raise money to deliver the required services.“
He said that the repatriation of Diasporas fund would trigger investment, adding that the availability of investments in the country would lead to creation of jobs and payment of taxes.
Responding, Dabiri said that the contribution of Nigerians living in Diaspora to the development of the economy could not be ignored.
She said that Nigerians in Diaspora had so far formally remitted 35 billion dollars into the country in 2016.
Dabiri said many of the Diasporas were eager to invest in Nigeria, but needed to get the right information on investment and tax related matters.
“A lot of them have come back and they are paying their taxes and there is also a lot of them that want to come back to set up businesses and they want to know whether there will be tax incentives .
“For those who want to go into agriculture, industry and various sectors, what will happen in the revenue service, what are the plans and projects for them?
“So we need to communicate with them, we want to know how can we partner with FIRS in terms of tax incentives for real and genuine Diasporas.
“People who want to do business, what are the plans for them so we can disseminate the information to them.”
She said it was cheering that there were incentives for Nigerians in Diaspora and other foreigners who want to invest.
She called for more incentives for Nigerians abroad interested in investing, noting that their investments would impact positively to the economy.
“At this time of recession in Nigeria, Nigerians in disapora have a critical role to play. So we are looking for them; we are meeting them and it is good news about Nigerians abroad.
“As we speak with you now, about 20 investors are in the country looking for various areas to invest in.
Dabiri said that the Disapora bond would soon be floated to support foreign investors.(NAN)

Nigeria’s Crude Oil Reserves Rise to 37bbls – Businessday

Eight major issues shaped the oil and gas sector in 2016 that impacted on the performance of the sector, which by the third quarter of 2016 had contracted by 22%.

The major issue for 2016 was the price of crude oil, which plunged to $27 per barrel, its lowest level since 2013, crashing an incredible 75 percent from its June 2014 peak of almost $108. This had a significant impact on all players in the sector.

The steady decline in the oil prices created a widespread headache for financial markets, causing energy companies’ profits to plunge, raising worries about the prospect of bankruptcies in the oil sector and spooking investors about global growth.

Nigeria, which depends largely on crude oil revenues for funding government budgets and also as the most significant source of foreign exchange earnings, had to adjust to lower revenues and foreign exchange earnings.
The country’s position was further weakened by militancy in the Niger Delta, which led to a sharp drop in crude oil production by about a million barrels per day. This led to significant loss of revenues for the country.

Faced with these huge drops in revenues and foreign exchange earnings, the Federal Government, which depends largely on imported refined petroleum products to run the economy, had to take the decision to remove subsidy on petroleum products to reduce government expenditure on importation of fuel and move Nigeria closer to a final deregulation of the downstream sector.

This development led to moving the pump price of petrol form N86 to N145 per litre.

There were however many positive developments in Nigeria’s oil and gas space, the biggest of which was that ExxonMobil announced a significant discovery of a new oil field with a potential recoverable resource of about one billion barrels of oil on the Owowo field, offshore Nigeria on October 27.

“It is a significant morale booster for the industry, especially as Nigeria’s reserve replacement ratio has been going down”, said Rolake Akinkugbe, head of Energy & Natural Resources for FBN Quest.

The Owowo Field spans portions of the contract areas of Oil Prospecting License 223 (OPL 223) and Oil Mining License 139 (OML 139). The well was drilled by ExxonMobil affiliate, Esso Exploration and Production Nigeria (Deepwater Ventures) Limited and proved an additional resource in deeper reservoirs.

“One billion barrels of oil reserve is about three percent of Nigeria’s current reserve and if the potential is realised, that will give the country an extra 100,000 to 200,000 barrels of oil per day”, said Wumi Iledare, professor of Energy Economics at Centre of Petroleum Institute, University of Port Harcourt.

Reserves also increased, as Lagos state became an oil producing state with the first export of crude from Aje field.

Within the year also, Nigeria exited joint venture cash call funding, as it signed off the joint venture arrangement, saving the country $8.4 billion yearly. This removes the burden of paying about $700m monthly as the NNPC announces plans for a self-funded joint venture arrangement to start January 1.

The agreement was signed by Maikanti Baru, NNPC group managing director, who was also in the course of the year, appointed the group managing director of the NNPC, and will see NNPC exploring alternative funding mechanism that allows the joint venture business finance itself by retaining its operating costs and capital allowances.

The implication of this move is that the Joint Ventures will relieve government of the cash call burden by sourcing funds for their operations. Cash call underfunding in 2016 alone amounted to $2.5billion, bringing total cash call areas to $8.5billion.

Significant deals were also witnessed in the sector, including the Nigerian Independent Petroleum Company (NIPCO) acquiring 60 per cent stake in the downstream operation of Mobil Oil Nigeria (MON).

In a message to the Nigerian Stock Exchange, NSE, after the deal was signed, the management of Mobil Oil Nigeria Plc said the Nigerian entity “has been informed by its majority shareholder, ExxonMobil Oil Corporation, that it has agreed, subject to regulatory approvals, to sell its shares representing 60 per cent of Mobil Oil Nigeria’s shares to Nipco Investments Limited, a wholly-owned subsidiary of Nipco Plc.”

Ibe Kachikwu also announced the signing of a Memorandums of Understanding (MoUs) with several Chinese firms for over $80 billion new investments, spanning five years, in the oil and gas industry, covering pipelines, refineries, gas and power, facility refurbishments and upstream financing. Kachikwu also announced plans to sign a US$15 billion advancement payment oil deal with India.

The world’s largest oil exporters finally agreed a deal to cut output for the first time in eight years, to erode a global supply overhang that has persisted for two years and halved the value of a barrel of crude on Novemember 30.

The Organisation of the Petroleum Exporting Countries (OPEC) confirmed its decision to implement a new production target of 32.5 MMb/d effective January 1, 2017 for six months to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The reduction agreed during the OPEC 171st meeting in Vienna, will cut output by some 1.2 MMb/d, from the current 33.64 MMb/d.

Iran, Libya and Nigeria were all given special dispensation not to join in with the reduction, as the three are still fighting to boost their exports and regain market share lost to international sanctions, or civil unrest and violence.

Policy-wise, the Nigerian government came up with a petroleum industry roadmap that brings clarity to the operations of the industry tagged ‘7 Big Wins’. The document is the short and medium term priorities to grow the nation’s oil and gas industry from 2015 to 2019.

Within the year, a public hearing was conducted on the petroleum sector governance bill, the NNPC has backed plans on its own unbundling, which will see the corporation dissolve into two entities: Nigeria Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC), or national oil company. The PIGB is now expected to be passed in the first quarter of 2017.

The government also showed greater commitment towards the environment, by signing the Paris Climate Change Agreement and began efforts at cleaning oil spills from Ogoni land.

 

OLUSOLA BELLO, FRANK UZUEGBUNAM, ISAAC ANYAOGU

How eight major issues shaped Nigeria’s oil and gas sector in 2016 – Businessday

Eight major issues shaped the oil and gas sector in 2016 that impacted on the performance of the sector, which by the third quarter of 2016 had contracted by 22%.

The major issue for 2016 was the price of crude oil, which plunged to $27 per barrel, its lowest level since 2013, crashing an incredible 75 percent from its June 2014 peak of almost $108. This had a significant impact on all players in the sector.

The steady decline in the oil prices created a widespread headache for financial markets, causing energy companies’ profits to plunge, raising worries about the prospect of bankruptcies in the oil sector and spooking investors about global growth.

Nigeria, which depends largely on crude oil revenues for funding government budgets and also as the most significant source of foreign exchange earnings, had to adjust to lower revenues and foreign exchange earnings.
The country’s position was further weakened by militancy in the Niger Delta, which led to a sharp drop in crude oil production by about a million barrels per day. This led to significant loss of revenues for the country.

Faced with these huge drops in revenues and foreign exchange earnings, the Federal Government, which depends largely on imported refined petroleum products to run the economy, had to take the decision to remove subsidy on petroleum products to reduce government expenditure on importation of fuel and move Nigeria closer to a final deregulation of the downstream sector.

This development led to moving the pump price of petrol form N86 to N145 per litre.

There were however many positive developments in Nigeria’s oil and gas space, the biggest of which was that ExxonMobil announced a significant discovery of a new oil field with a potential recoverable resource of about one billion barrels of oil on the Owowo field, offshore Nigeria on October 27.

“It is a significant morale booster for the industry, especially as Nigeria’s reserve replacement ratio has been going down”, said Rolake Akinkugbe, head of Energy & Natural Resources for FBN Quest.

The Owowo Field spans portions of the contract areas of Oil Prospecting License 223 (OPL 223) and Oil Mining License 139 (OML 139). The well was drilled by ExxonMobil affiliate, Esso Exploration and Production Nigeria (Deepwater Ventures) Limited and proved an additional resource in deeper reservoirs.

“One billion barrels of oil reserve is about three percent of Nigeria’s current reserve and if the potential is realised, that will give the country an extra 100,000 to 200,000 barrels of oil per day”, said Wumi Iledare, professor of Energy Economics at Centre of Petroleum Institute, University of Port Harcourt.

Reserves also increased, as Lagos state became an oil producing state with the first export of crude from Aje field.

Within the year also, Nigeria exited joint venture cash call funding, as it signed off the joint venture arrangement, saving the country $8.4 billion yearly. This removes the burden of paying about $700m monthly as the NNPC announces plans for a self-funded joint venture arrangement to start January 1.

The agreement was signed by Maikanti Baru, NNPC group managing director, who was also in the course of the year, appointed the group managing director of the NNPC, and will see NNPC exploring alternative funding mechanism that allows the joint venture business finance itself by retaining its operating costs and capital allowances.

The implication of this move is that the Joint Ventures will relieve government of the cash call burden by sourcing funds for their operations. Cash call underfunding in 2016 alone amounted to $2.5billion, bringing total cash call areas to $8.5billion.

Significant deals were also witnessed in the sector, including the Nigerian Independent Petroleum Company (NIPCO) acquiring 60 per cent stake in the downstream operation of Mobil Oil Nigeria (MON).

In a message to the Nigerian Stock Exchange, NSE, after the deal was signed, the management of Mobil Oil Nigeria Plc said the Nigerian entity “has been informed by its majority shareholder, ExxonMobil Oil Corporation, that it has agreed, subject to regulatory approvals, to sell its shares representing 60 per cent of Mobil Oil Nigeria’s shares to Nipco Investments Limited, a wholly-owned subsidiary of Nipco Plc.”

Ibe Kachikwu also announced the signing of a Memorandums of Understanding (MoUs) with several Chinese firms for over $80 billion new investments, spanning five years, in the oil and gas industry, covering pipelines, refineries, gas and power, facility refurbishments and upstream financing. Kachikwu also announced plans to sign a US$15 billion advancement payment oil deal with India.

The world’s largest oil exporters finally agreed a deal to cut output for the first time in eight years, to erode a global supply overhang that has persisted for two years and halved the value of a barrel of crude on Novemember 30.

The Organisation of the Petroleum Exporting Countries (OPEC) confirmed its decision to implement a new production target of 32.5 MMb/d effective January 1, 2017 for six months to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The reduction agreed during the OPEC 171st meeting in Vienna, will cut output by some 1.2 MMb/d, from the current 33.64 MMb/d.

Iran, Libya and Nigeria were all given special dispensation not to join in with the reduction, as the three are still fighting to boost their exports and regain market share lost to international sanctions, or civil unrest and violence.

Policy-wise, the Nigerian government came up with a petroleum industry roadmap that brings clarity to the operations of the industry tagged ‘7 Big Wins’. The document is the short and medium term priorities to grow the nation’s oil and gas industry from 2015 to 2019.

Within the year, a public hearing was conducted on the petroleum sector governance bill, the NNPC has backed plans on its own unbundling, which will see the corporation dissolve into two entities: Nigeria Petroleum Assets Management Company (NPAMC) and Nigeria Petroleum Company (NPC), or national oil company. The PIGB is now expected to be passed in the first quarter of 2017.

The government also showed greater commitment towards the environment, by signing the Paris Climate Change Agreement and began efforts at cleaning oil spills from Ogoni land.

 

OLUSOLA BELLO, FRANK UZUEGBUNAM, ISAAC ANYAOGU

Manual clearing raises cost of importation by 50% say importers – Businessday

Shippers and manufacturers say manual processes of clearing goods at the nation’s ports are causing long delays and raising their cost of operations by about 50 percent.

The slow clearing processes result in payment of demurrage and storage charges to shipping companies and terminal operators, an unnecessary addition to their cost of operations.

It takes between 14 and 21 days, instead of two days, to clear a container in Nigeria’s seaports, and this adds about 50 percent to the cost of importation and 61 percent of the total cost of exporting cargo, importers told BusinessDay.

Jonathan Nicole, president, Shippers Association of Lagos State, told BusinessDay that the nation’s maritime system is infested with rent-seekers, who have refused to adopt modern day technologies to fast-track cargo clearance and save cost for shippers.

“Government needs to encourage genuine manufacturers and importers to bring in critical raw materials by reducing the cost of clearing from the ports. This is because high cost of clearing transforms to high cost of production, which adds to the market prices of finished products,” Nicole said.

He advised that the cost of clearing can be reduced by the introduction of “e-payment of Customs duty; e-container loading list; electronic risk-based inspection; connecting all government agencies under one platform and e-permit exchange, among operators.”

Tony Anakebe, managing director of Gold-Link Investment Limited, a clearing and forwarding company, said in a telephone interview that the biggest bottleneck experienced by importers in Nigerian port is the delay in cargo clearing, and suggested the quick introduction of the Single Window Model of cargo clearance.

Anakebe said the Single Window system enables shippers to submit regulatory documents at a single location, where the relevant authorities involved in cargo clearance can access them. “This helps to increase efficiency, through time and cost savings for traders in their dealings with government agencies during cargo clearance.”

He gave example of neighbouring Ghanaian ports, where he said automation is deployed seamlessly, resulting in greater efficiency and savings in time and cost.

A recent survey titled ‘Nigeria: Reforming the Maritime Ports,’ carried out by the Lagos Chamber of Commerce and Industry (LCCI) pointed out that manual inspection of cargo by the Nigeria Customs Service (NCS) consumes time and increases cost of moving containers. The survey suggests the need for the Customs to allow terminal operators carry out container scanning (as is done globally) and electronically transmit the information to Customs for analysis, to save time.

The LCCI survey further observed that late resumption of daily operations and failure to work at weekends and public holidays were significantly slowing down economic activity and growth in the economy.

“Services such as invoicing and issuing of payment receipts, as well as booking of examination of cargo, also contribute to man-hour losses, due to late commencement of operations that could easily be done electronically. Positioning cargo for examination should be effected 24-hours after booking, to avoid delays,” the survey added.
The LCCI survey further suggested that there is a need to create a National Trade Data Centre, to integrate the various processes and value chain management in the ports. “This would help Nigerian seaports increase efficiency and attain global best business practice.”

Emma Nwabunwanne, a Lagos-based importer, said in an interview, that it is disheartening that agencies like the Customs and the Standards Organisation Nigeria (SON) still generate payment receipts manually, when computers are accessible. He observed that this creates room for corruption and collection of illegal charges.

 

AMAKA ANAGOR-EWUZIE

Naira gains as rush for festive imports wanes – Businessday

The nation’s currency on Monday appreciated in value against the US dollar at the parallel market as the rush for festive imports diminishes.

Naira on Monday strengthened against the dollar by N10.00 as it closed to a record high of N485/$. This is 2.02 percent gain compared toN495/$ closed on Friday last week at the parallel market and Bureau De Change (BDC) segment of the foreign exchange market.

Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON) attributed the naira gain to end of rushing hour for festive imports and the expectation of increase in dollar liquidity by the Central Bank of Nigeria (CBN) in the coming year.

The CBN is seeking ways to bridge the gap between the official exchange rates and the parallel markets.

He told |BusinessDay that part of the reason for the firming of the naira was the resolve of the licenced BDCs and ABCON to ensure that genuine travellers get their foreign currency needs at the BDCs sub-sector.

The local currency remained stable at the inter-bank spot market, closing at N305.25 per dollar according to the data from FMDQ.

Last week, Nigerian Naira appreciated against the greenback at the interbank foreign exchange market by 0.04 percent to N315/USD.

However, the Naira depreciated at both the Bureau De Change and parallel market segments by 1.67 percent and 2.06 percent to N488/USD and N495/USD respectively amid persistent scarcity of the greenback.

According to analysts at Cowry Asset Management limited, the announcement by CBN spokesman revealing plans to ensure that the black market is totally eliminated may have led to the further scrambling for dollars during last week and the apparent depreciation of the Nigerian Naira against the US Dollars.

Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment implied marginal stability of the Naira relative to the US greenback amid an increase in the foreign exchange reserves – external reserves increased week-on-week by 0.84 percent to USD25.25 billion as at Thursday, 22 December 2016.

The 1 month, 3 months, 6 months and 12 months forward contracts were stable at N320.18/USD, N330.537/USD, N346.07/USD and N378/USD respectively. However, the spot rate depreciated week-on-week by 0.08 percent to N305.25/USD despite USD7.5 million intervention sales by CBN to banks during the week.

This week, the analysts expect some level of stability of the Naira as the markets observe the Christmas and New Year public holidays.

 

HOPE MOSES-ASHIKE