NNPC deficit rises to N18.7bn over oil search in Bauchi, Rivers – Vanguard

span style=”color: #ffffff;”>By Michael Eboh

 

THE Nigerian National Petroleum Corporation, NNPC, yesterday, stated that its ongoing search for crude oil in the Benue Trough in Bauchi State and in Rivers State contributed significantly to the trading deficit of N18.72 billion it recorded in November 2016. In its Monthly Financial and Operations Report for November, released, yesterday, NNPC disclosed that despite a 19.2 per cent increase in its operating revenue to N187.75 billion in November, it still recorded a deficit of N18.72 billion that month.

The November figure also indicated 11.1 per cent rise in deficit in November, as it recorded 16.85 billion deficit in October. The Corporation explained that the increase in its deficit was as a result of 18.4 per cent rise in its operating expenditure hitting N206.5 billion in November as against N174.4 billion in October 2016. Improved revenue generation It said, “The deficit in the month of November 2016 increased by N1.87 billion or 11.06 per cent due to upsurge in the group operating cost despite an improved revenue generation and enhanced cost control across the group. “In particular, Integrated Data Services Limited, IDSL, operating costs has increased as a result of the ongoing mobilisation activities in both Benue Trough seismic data project located in Bauchi and Party 05 in Elele, Rivers state.

Also, the strike action by Bristow Helicopters workers delayed the planned lay-time of Okono Blend resulting to nil NPDC offshore export sales for the month.” NNPC further stated that it recorded total export sale of $166.18 million in the month under review, an improvement of $60.44 million when compared with the amount recorded in October. According to the Report, crude oil export sales contributed $96.31 million, or 57.95 per cent of the dollar transactions compared with $21.40 million contribution in the previous month, while gas export amounted to $69.87 million in the month.

Of the total export sales, the Report stated that $162.40 million export proceeds were received in the month under review, compared with $97.29 million recorded in October 2016, while it added that contribution from crude oil amounted to $96.31 million after adjusting for $2.50 million lifting deposit utilized earlier. In addition, the Report noted that gas and other proceeds was $66.09 million, while the total receipt of $162.40 million was remitted to fund the JV cash call for the month of November 2016 to guarantee current and future production.

The NNPC report stated: “The domestic crude oil and gas receipt during the month amounted to N 121.06 billion, consisting of N2.43 billion from Domestic Gas and the sum of N118.63 billion from Domestic Crude Oil. Of the N118.63 billion receipt from Crude Oil, the sum of N75.30 billion ($382.23 million) was transferred to Joint Venture Cash Call (JVCC) being a first line charge and to guarantee continuous flow of revenue stream to Federation Account. “NNPC transferred the sum of N43.33 billion into Federation Account during the month under review from the net domestic crude oil receipt and N2.43 billion from Gas receipts.

Also, the 28th installment of the refund to FG of N6.33 billion was remitted to Federation Account.”

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Nigeria: Forex Scarcity Threatens Multi-Billion Naira Leather Factory in Delta State – The Guard

By Owen Akenzua
Asaba — Scarcity and lack of access to foreign exchange (forex) is threatening the survival of the multi-billion naira leather factory project in Delta State.This is even as plans are underway to sponsor a handful of Delta youths to Europe, to acquire professional expertise needed in enhance the smooth running of the multi-million Naira state-of-the-art Shoe/Leather Works Factory in the state.

The N1.23 billion (S820,000) counterpart funding) Factory, which was set up partnership with the United Nations Industrial Development Organisation (UNIDO), was commissioned in May 2015, but has not been fully operational.

Part of the vision was to make the factory one of the biggest in West Africa, as well as reducing the unemployment index of the state, as when completed, would employ about 2,000 youths both skilled and unskilled.

Reacting to the development in a telephone interview with The Guardian, the Executive Secretary, Delta State Micro, Small and Medium Enterprises, Development Agency (DSMSMEDA), Mrs. Shimite Bello, said the persistent rise in the exchange rate of the Dollar against the Naira has been a major setback in the commencement of the planned training exercise for the over 280 trainees (Deltans) proposed to be engaged at the centre.

She said the training is being organised in partnership between the Delta State Government and the United Nations Industrial Development Organisation, UNIDO, which is scheduled to commence in May, this year.

She however explained that given the continued scarcity of forex, the training may not hold anytime soon, except the high exchange rate, now at unprecedented highs is resolved.

Bello, in a telephone interview, hinted that aside the approval of the over N81 million for the proposed training, the State Government and UNIDO, had perfected all other necessary arrangements required for the smooth take-off of the training exercise.

While describing the market forces as circumstances currently beyond the control of the partners, she expressed confidence that once the current high exchange rate challenge normalises, the training exercise, which she described as critical to the SMART agenda of the government will commence.

She added: “We got the exchange at N324 to $1 (but) by the time the money came, the exchange rate was N385. Now, it has come down to N345; we have to watch the rate. But, as I speak with you right now, we are on queue at the Central Bank of Nigeria (CBN). You know that a lot of people are waiting for exchange currently, (but) it is not available. Until the money that we have currently can make transaction, we will still wait.”

She added, “I have spoken with UNIDO and have given them evidence that the money has been made available; anybody can go online and see that the exchange rate is really crazy; that is all that has been delaying it.

“Everything that the State Government needed to do have been done as well as that of the partnering agency, UNIDO, but the exchange rate, Naira to dollar is really crazy. We are waiting to ensure that we do good transaction.” 

It would be recalled that the proposed training exercise is targeted at artisans in the state particularly, fashion designers and cobblers, among others.

But investigation revealed that the factory premises have been taken over by weeds and rodents with billions of Naira equipment rotting away, one security man at the gate who pleaded anonymity, decried government’s neglect of the factory.

He said: “I’m just here suffering in the midst of rodents and overgrown weeds, the place is completely moribund, the equipment locked inside the rooms are rotting away.”

In a swift reaction, the State Commissioner for Industry, Mrs. Mary Iyashere, who expressed regrets over the state of the factory, however assured of the Government’s commitment to reviving the factory, adding, “it is unfortunate that the factory had not lived up to its expectations, but the State Government will do something about it.”

 

African Markets – Factors to watch on Jan 10 – Reuters

NAIROBI, Jan 10 (Reuters) - The following company announcements, scheduled economic
indicators, debt and currency market moves and political events may affect African markets on
Tuesday.
    - - - - -
 EVENTS:
 *Rwanda releases consumer inflation data for December.
 
 GLOBAL MARKETS
 Asian stock markets steadied on Tuesday and crude prices
 inched up from Monday's three-week low, with investors
 uncertain whether output cuts by major exporters, led by
 Saudi Arabia and Russia, will be enough to support the oil
 market as other producers have increased supplies.
                        
 
 WORLD OIL PRICES
 Oil markets edged higher on Tuesday on expectations that at
 least some planned production cuts would be implemented,
 making a slight recovery from big losses the previous day
 over doubts the agreed reductions would rebalance an
 oversupplied market.                 
 
 EMERGING MARKETS
 For the top emerging markets news, double click on
            
 
 AFRICA STOCKS
 For the latest news on African stocks, click on     
 
 SOUTH AFRICA MARKETS
 South Africa's rand          put in modest gains on Monday,
 supported by higher gold and platinum prices but constrained
 by a broadly dollar strength.            
 
 NIGERIA MARKETS
 Nigeria's central bank officials will meet bureau de change
 operators on Tuesday to try to find ways to eliminate the
 gap between the official and black market dollar rates, the
 association president told Reuters.            
 
 NIGERIA PETROLEUM
 A Nigerian oil labour union will stage a three-day strike at
 Chevron         and Exxon Mobil         fuel depots from
 Wednesday in a protest over sackings if talks with the
 government fail, union officials said on Monday.
             
 
 KENYA MARKETS
 Kenya's shilling        was stable on Monday but traders
 said they expected it to weaken in the days ahead due to
 importer dollar demand and low inflows of the U.S. currency.
             
 
 KENYA POLITICS
 Kenyan President Uhuru Kenyatta approved a law on Monday
 requiring back up plans for an August election if electronic
 voting systems fail, despite fierce opposition from rivals
 who say any manual arrangements will open the ballot to
 rigging.                    
 
 ETHIOPIA INVESTMENT
 Ethiopia aims to offer foreign firms stakes in some
 state-owned companies to help modernise the businesses, the
 prime minister said on Monday in a shift from stressing
 state investment to drive growth.            
 
 UGANDA PETROLEUM
 French oil major Total           has expanded its stake in
 Uganda's Lake Albert oil project by snapping up most of
 Tullow Oil's TLW.L stake for $900 million, the companies
 said on Monday.            
 
 GHANA COCOA
 Cocoa purchases declared to Ghana's industry regulator,
 Cocobod, stood at 547,223 tonnes by Dec. 29 since the start
 of the 2016/17 season on Oct. 1, little changed from a year
 earlier, Cocobod data seen by Reuters showed on
 Monday.            
 
 IVORY COAST POLITICS
 Ivory Coast President Alassane Ouattara dismissed the heads
 of the army, police and gendarmes on Monday after a two-day
 military mutiny that spread unrest across the West African
 nation, according to a presidency statement.

Customs generated N898bn as revenue in 2016 – Punch

The Nigeria Customs Service has generated N898bn as revenue in 2016, including VAT.

The NCS spokesman, Mr. Joseph Attah, on Monday said that the figure was however less than the N904bn collected in 2015.

He attributed the shortfall to the difficulty in accessing foreign exchange and removal of the 41 items.

According to him, the service was given a target of N937bn as revenue in 2016.

He said, “The strict insistence of the Comptroller General on application of instant laws enabled the service to generate a total that is inclusive of VAT of N898bn.

“If VAT is removed, duty collection only is N720bn, our performance represents a percentage of 76.90 per cent.

“Hopefully we will do better in 2017.”

According to him, the comptroller General in recent time had taken steps to effect some redeployment in a bid to strengthen operations and reposition the service for improved delivery.

(NAN)

$1b debt: Save us, oil marketers beg Fed Govt – The Nation

By: Olukorede Yishau

Independent Petroleum Products Importers (IPPIs) yesterday raised the alarm over their $1billion indebtedness to banks as a result of the Federal Government’s failure to pay them for fuel imported into the country.
The oil marketers include members of Major Oil Marketers of Nigeria (MOMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN) and Depot and Petroleum Products Marketers Association (DAPPMA).
A N160billion interest has accrued on this debt, the marketers said.

A communiqué in Lagos by their legal adviser, Patrick Etim, said the inability to pay or service the loans had stalled further importation and “is threatening the operation of the affected banks and the nation’s financial industry”.
Many of their members, the communiqué said, have begun to close shop due to the debt.
The government’s debt, according to the communique, arose from Petrol Subsidy Scheme, which saw the Federal Government entering into a contract with IPPIs to import and supply petrol to the market on the condition that it would refund the difference between the landing cost and the selling price of petrol.
The government approved the landing cost, which fluctuated as it depended mainly on the international price of petrol and exchange rate of naira/dollar.
“A key term of the government’s contract with IPPIs is that the subsidy payments shall be paid to IPPIs within 45days of discharge of petrol cargo. It was also agreed that after 45 days the government shall pay the interest charges on the loans taken by the IPPIs to finance the importation of cargoes of petrol. The outstanding interest payments owed to IPPIs is currently over N160 billion,” it added.
The communiqué added: “Petrol cargoes were supplied and sold by the IPPIs at the selling prices approved and subsidised by government and the subsidy payments were calculated using the above exchange rate. Now at the beginning of 2017, the banks have not liquidated the Letters of Credit from 2014 because of lack of foreign exchange from the government.  The outstanding mature Letters of Credit are currently over $1billion. The Nigerian banks involved and the entire Nigerian banking system is at risk on account of these transactions.

”The banks are in a quandary on account of their financing importation of petrol cargoes by the IPPIs and so far, there is little evidence that the government has seen the risks in further delaying the payments under the subsidy scheme.  The exposed situation of the banks is exacerbated by the current trends in the petrol market. When the fixed pump selling price of petrol was increased from N97.00 to N145 per litre in May 2016, it was based on an exchange rate of N285/$1.00 resulting in a 45 per cent increase.  On June 20, 2016 the naira was devalued from N285/$1.00 to N305/$1.00 which is an increase of seven per cent but the fixed pump selling price of petrol has not been increased. This means that petrol must be subsidised. “The banks are worried that financing new petrol imports when outstanding loans, interests and charges have not been paid will be foolish especially when it is clear that the imports will represent an unmitigated loss to the importers based on the landing costs.
“The IPPIs claims arise largely from importation of petroleum cargoes authorised by President Jonathan’s government under the Petrol Subsidy Scheme. Government is a continuum, therefore, the contracts of the President Jonathan government with the IPPIs will remain binding on successive governments. There is a need for President Muhammadu Buhari’s government to keep improving governance especially by correcting wrongs of previous governments and making government responsible to its contracts and responsibilities.

”Government through the Central Bank of Nigeria (CBN) has initiated Intervention Programmes for strategic sectors, such as agriculture, manufacturing, petroleum products importation, and aviation. The CBN’s intervention programmes are primarily to stimulate growth in Nigeria’s foreign exchange (forex) earning capacity, and to prevent collapse of the banking system due to the huge exposure of the banks. The CBN has also offered foreign exchange to IPPIs under a special window aimed at liquidating outstanding matured Letters of Credit at an exchange rate of N305/$1.00. However, the exchange rate of N197/$1.00 when Letters of Credit were initially opened for IPPIs and transactions concluded and the current CBN offer rate of N305/$1.00 is an increase of 55 per cent and a significant rate differential.

“This means that for every 15,000MT of petrol imported by the IPPIs at a rate of $500 per MT and whose foreign exchange differential claims has not been paid then it means that the cargo of 15,000MT imported at the N197/$1.00 rate will now be given foreign exchange at the rate of N305/$1.00 by implication a cargo of 15,000MT at $500 per MT is S$7,500,000 or N1,477,500,000 at N197/US$1.00 rate or N2,287,500,000 at N305/US$1.00 rate. If these outstanding payments to IPPIs are made at N305/$1.00 they would suffer a loss of N810,000,000 per 15,000MT cargo of petrol.

Government’s delay in paying debts to IPPIs and the difficulty they face in procuring forex at equitable rates will likely see the extinction of many of the IPPIs in 2017 thereby creating petroleum products shortages and attendant insecurity. “The inability of the banks to receive repayments of their outstanding loans to IPPIs means they are hampered from providing loans for future petrol imports and even to other sectors of the economy. it is very scary to consider consequences of bank failure in Nigeria. Apart from the impact on individuals and businesses some economists project that it would cost the government more than N2 trillion to revive Nigerian banks in the event of failure. The sums owed to banks by the IPPIs and aviation operators threaten the safety of these banks and the government must take timely action.”

The marketers praised Buhari’s war against corruption, improvement of electricity supply, and sufficient fuel supply.

Naira rebounds against dollar – Punch

The Naira on Monday appreciated at the parallel market after about two weeks of posting losses.

The currency gained 3 points to exchange at N490, from N493 it posted last Friday, while the Pound Sterling and the Euro traded at N600 and N506, respectively.

At the Bureau De Change window, the Naira closed at N399, CBN rate, while the Pound Sterling and the Euro traded at N599 and N510, respectively.

Trading on the floor of the inter-bank market saw the Naira stable at N305.00.

Traders at the market linked the appreciation of the Naira to slow activities at the market.

The Naira had exchanged around N490 in spite of speculations that it would hit the N500 to a dollar mark.

(NAN)

Telcos seek access to forex, end to multiple taxation – The Nation

By Lucas Ajanaku

Nigeria’s carriers are seeking easier access to foreign exchange (forex) to expand infrastructure across the country and improve end user experience on the networks. They are also appealing to President Muhammadu Buhari to end the reign of multiple taxations and regulation that have inhibited the growth of the sector.

The telcos, through their umbrella body, the Association of Telecoms Companies of Nigeria (ATCON), warned that more workers in the telecoms industry may be axed if the issues and other obnoxious policies are not addressed.

In an email, its President, Olusola Teniola, said: “Our members seek easier access to USD$ and the removal of multiple taxes in order to further grow the sector and its contribution to the economy going forward.

“Any recovery in Nigeria will be slow and difficult, especially with uncertainty in the value of naira to the USD$. Threats to capital expenditure remain very high and even with the amount budgeted to stimulate infrastructure development, Government still needs to address the imbalances in the need for fiscal increases to support government spending and Foreign Direct Investment (FDI) required to continue to develop much needed infrastructure in ICT, which will remain predominately foreign dependent for the next three years at least.”

Speaking when he led the association’s Executive Council on a working visit to the General Manager, Lagos State Infrastructure Maintenance and Regulatory Authority (LASIMIRA), Babajide Odekunle, in Lagos, Teniola lamented that revenues from voice calls have declined sharply while data that was supposed to have provided alternative revenue stream is being challenged by a myriad of factors, including operating cost.

He lamented that the free fall in the value of the naira against the dollar has ensured that roll-out of new base transmission station (BTS) and expansion of existing capacity remained impossible.

Standard Chartered, Duet Asset Mgement renew call for naira devaluation – The Nation

Even as oil prices advance, Standard Chartered Plc and London-based Duet Asset Management say Nigeria needed to devalue the naira and loosen capital controls.The Nigerian naira’s recovery in the forwards market may be deceptive. The currency is destined to weaken, however long policy makers hold out.

Six-month contracts declined to their lowest level since September last week as crude oil, Nigeria’s top export, advanced about 20 percent after the Organisation of Petroleum Exporting Countries (OPEC) agreed a production cut in November. A drop in forwards would typically be a sign of growing confidence in a nation’s economy and currency, but not this time.

With dollars becoming scarcer and the economy on the brink of its first full-year recession since 1991, Nigerian businesses are being forced into the black market. There, each dollar costs 493 naira, almost 60 percent more than the official rate.

“Oil’s rise isn’t enough to eliminate the need for a change,” Ayodele Salami, who oversees around $450 million of African stocks as chief investment officer at Duet, said by telephone. Nigeria won’t attract inflows until it weakens its currency, he said.

While the naira has plummeted almost 40 percent since the Central Bank of Nigeria (CBN) Governor Godwin Emefiele in June ended a 15-month peg to the dollar, traders say it’s still being managed by the government. President Muhammadu Buhari, who has likened devaluation to “murder” in the past, said in a speech on Dec. 30 that he was still against floating the currency, Lagos-based Cable Newspaper reported.

“Eventually, they’ll have to revert to a more flexible currency regime. But for the time being, there’s no indication from policy makers that this will happen.” said Samir Gadio, the London-based head of Africa strategy at Standard Chartered, which forecasts the official exchange rate will be steady for at least the first half of this year.

Forward contracts maturing in one month rose 0.1 percent to 318.75 per dollar as of 1:54 p.m. in London, narrowing the their spread over the official spot rate of 314.25 to 4.5 naira from 34 naira in October. Six-month contracts traded at 363.5, suggesting the naira will depreciate 14 percent in that time.