‘NNPC/NPDC’s unremitted $4.98bn can wipe out budget deficit’ – Punch

By John Alechenu and Leke Bayeiwu

The Chairman, Senate Committee on Petroleum (Upstream), Senator Tayo Alasoadura, has said the $4.977bn unremitted fund by the Nigerian National Petroleum Corporation and its subsidiary, the Nigeria Petroleum Development Company, is capable of wiping off the 2016 budget deficit of N3tn. 

Alasoadura, who is also the co-Chairman of the Senate ad-hoc committee investigating the alleged non-remittance of over $4.977bn by the two bodies, said this at the opening of a public hearing on the unlawful misappropriation and wilful withholding of funds by the NNPC and NPDC from 2013 to date in Abuja, on Wednesday.

He said the amount being investigated was too huge to be ignored, adding that what the committee was investigating was the non-remittance of over N3tn.

“Now, the 2016 budget has a deficit of N3tn. If we had these unremitted fund, we probably would not be running a deficit,” the lawmaker lamented.

He said this just as the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, Mr. Waziri Adio, recommended that the two entities be made to settle the outstanding liabilities totalling $4.977bn and N68.2bn, which had yet to be remitted to the Federation Account.

Adio, had in his presentation before the committee, said the NPDC was a 100 per cent owned subsidiary of the NNPC involved in upstream operations and that it was currently involved in the operations of three categories of Oil Mining Licences.

According to him, some are acquired and others are transferred fields, which are being operated on behalf of the NNPC by the NPDC.

He said issues identified from the NEITI audits with regard to the NPDC were broadly categorised into arrears of liabilities of taxes, royalties and levies; and lifting on behalf of the federation from the NPDC operatorship of OPL (49, 51, 20&13); SPDC Joint Ventures and NAOC Joint Ventures.

Adio said, “A total of N68.2bn was outstanding liabilities for PAYE, WHT, EDT,VAT and NDDC Levy, while $3.3bn is the outstanding liabilities for royalty oil, royalty gas, PPT and gas flare penalty. There were unremitted funds to the Federation by NPDC as at December 31, 2014.”

While recommending what should be done, he said, “Prompt settlement of all outstanding liabilities by the NPDC, i.e. $4.977bn ($3.277bn plus $1.7bn) and N68.2bn. The NPDC should as a matter of urgency settle the consideration of the divested assets.”

NEITI also called for an investigation to unravel all issues surrounding the transactions involving the transfer of OMLs to the NPDC, and overdue period taken to remit all liabilities.

Earlier, the President of the Senate, Bukola Saraki, who was represented at the occasion by Senator Magnus Abe, said the Senate under his leadership would ensure that public funds were properly accounted for.

He charged the committee to give the assignment the seriousness it deserved, noting that all those found culpable of diverting public funds should not go scot free.

Naira hits N495/dollar as forex scarcity lingers – Punch

The Naira on Thursday depreciated further at the parallel market, ebbing close to the projection of speculators, the News Agency of Nigeria reports.

NAN reports that at the twilight of 2016, speculators forecasted that the Naira would exchange at N500 to a dollar.

The Nigerian currency lost N3 to trade at N495 to the dollar at the parallel market, from N492 posted on Wednesday, while the Pound Sterling and the Euro closed at N597 and N515 respectively.

At the official interbank window, the Naira closed at N305 to a dollar.

Trading at Bureau De Change (BDC) window saw the Naira close at N399 to a dollar, while the Pound Sterling and the Euro exchanged at N600 and N510, respectively.

Traders blamed acute forex scarcity for the spike in the exchange rate.

NAN

UPDATE 1-Nigerian central bank tells FX traders it won’t devalue naira – Reuters

(Adds quote, details)

LAGOS Jan 12 (Reuters) – Nigeria’s central bank has told Bureau de Change operators it does not intend to devalue the naira and will support it at current levels, especially with a recent rise in oil prices, the head of their association said on Thursday. 

Aminu Gwadabe, president of Bureau de Change operators, said central bank governor Godwin Emefiele told the group in a meeting it was looking at ways to boost dollar liquidity on the official market to eliminate the spread to the parallel market.

The government has been pressing retail operators to narrow what it says is a damaging gulf between the naira’s official rate – currently 305 to the dollar – and the parallel rate, which has been as weak as 490 in recent days.

On Tuesday the operators set their first ever reference exchange rate for the naira at 399 per dollar ahead of the central bank meeting.

“With the recovery of oil prices, CBN (Central Bank of Nigeria) has no intention of devaluing the currency and intends to support the naira at the present level,” Gwadabe said, quoting the central bank governor.

Central bank data showed foreign exchange reserves rose 6.68 percent to $26.65 billion at Jan. 10 from a month before, the highest level since May, driven by a rise in crude prices.

The bank appealed to operators to follow the rules in order to avoid sanctions and curb speculation on the currency. (Reporting by Oludare Mayowa; Writing by Chijioke Ohuocha; Editing by Catherine Evans)

 

IMF says plans to meet new Ghana government over aid programme – Reuters

By Kwasi Kpodo

ACCRA Jan 12 (Reuters) – The International Monetary Fund (IMF) plans to visit Ghana to hear the new government’s plans for implementing the country’s $918 million aid deal, the Fund said on Thursday.

 
 

President Nana Akufo-Addo was sworn in on Saturday pledging to cut taxes, spend on development and boost annual growth to double digits as he seeks to return Ghana to its place as one of Africa’s most dynamic economies.

He also inherits a country following the Fund programme that aims to reduce inflation, public debt and the budget deficit and put Ghana, which produces gold, oil and cocoa, on a stable footing to facilitate long term growth.

Economists say it may be difficult for the government to maintain its commitment to fiscal discipline and at the same time satisfy popular expectations for spending and rapid change.

“An IMF staff team will be ready to visit Accra in the coming weeks to discuss recent economic developments and hear from the authorities about their plans for engaging with the Fund going forward,” said a spokesperson based in Washington.

The Fund contacted the government the programme and will renew contacts once the new finance minister’s appointment is confirmed by parliament, the spokesperson said. The vetting of ministers is expected to start next week.

Akufo-Addo on Tuesday named Ken Ofori-Atta, co-founder of investment bank Databank Group as finance minister.

Some economists say the New Patriotic Party government may seek to renegotiate elements of the three-year programme in a bid to free-up money for development. The government is yet to spell out how it plans to approach the IMF deal.

The objectives of the programme, signed in April 2015, are fixed but reviews held every few months can include renegotiation as new interim targets are set on the basis of prior financial performance. (Editing by Matthew Mpoke Bigg and Raissa Kasolowsky)

 

WEEKAHEAD-AFRICA-FX-Kenyan shilling to ease, Nigerian currency to strengthen – Reuters

(Adds Zambian kwacha report)

NAIROBI Jan 12 (Reuters) – Kenya’s shilling is seen weakening against the dollar in the coming week, while the Nigerian naira is expected to strengthen, traders said.

 
 

KENYA

The Kenyan shilling may weaken due to demand for dollars from oil importers and multinational companies who want to stock up on the currency and avoid being hit by a further decline, traders said.

Commercial banks quoted the shilling at 103.85/104.05 to the dollar on Thursday morning, compared with 103.55/75 at last Thursday’s close.

“Oil importers and corporates are ordering dollars to hold in case the shilling weakens further,” said a trader at a commercial bank.

UGANDA

The Ugandan shilling is expected to hold firm in the week ahead, supported by local firms who need the local currency to meet mid-month tax payments.

Commercial banks quoted the shilling at 3,613/3,623, stronger than last Thursday’s close of 3,625/3,635.

“Mid-month tax payments will be due next week which will likely subdue (dollar) demand by corporate buyers,” said Benon Okwenje, trader at Stanbic Bank Uganda, who added the shilling was likely to hover between 3,605 and 3,625 in coming days.

GHANA

Ghana’s cedi is expected to stay stable next week, with investors buoyed by pledges from new President Nana Akufo-Addo to fight corruption and cut taxes to boost private businesses.

The local unit, which has remained fairly stable since December, was trading at 4.2238 to the dollar at mid-morning Thursday, up from last Thursday’s close of 4.2800.

“In the week ahead the USD/GHS is expected to steady within the 4.24-4.26 band, pending any significant policy changes from the new government,” currency analyst Joseph Biggle Amponsah of Accra-based Dortis Research said.

NIGERIA

Nigeria’s naira is expected to strengthen a little next week after the central bank assured currency changers of its plans to improve dollar liquidity in the market.

The local currency traded at 492 per dollar on the black market on Thursday, slightly weaker than 490 last week amid thin dollar liquidity. The naira was quoted at 305 to the dollar at the official interbank window.

“The international money transfer organisations will commence dollar sales to bureau de change operators next week and this will help ease tight liquidity in the market and help the naira to gain some strength,” a currency changer said.

ZAMBIA

The kwacha is expected to remain steady against the dollar next week, supported by demand for the local currency as companies prepare to pay taxes due on Jan. 14.

Commercial banks quoted the currency of Africa’s No.2 copper producer at at 10.025 to the dollar, slightly weaker than 9.9750 a week earlier.

“The FX market continues to experience an uptick in activity as dollar conversions are on the rise,” the Zambian branch of South Africa’s First National Bank (FNB) said in a note. (Reporting by John Ndiso, Elias Biryabarema, Kwasi Kpodo, Oludare Mayowa, Chris Mfula; Compiled by George Obulutsa; Editing by Edmund Blair and Catherine Evans)

 

Naira exchanges at N495/$ amidst N500/$ speculation – Premium Times

By Mohammed Lere

 

The Naira on Thursday depreciated further at the parallel market, ebbing close to the projection of speculators, the News Agency of Nigeria, NAN, reports.

At the twilight of 2016, speculators forecasted that the Naira would exchange at N500 to a dollar.

The Nigerian currency lost N3 to trade at N495 to the dollar at the parallel market, from N492 posted on Wednesday, while the Pound Sterling and the Euro closed at N597 and N515 respectively.

At the official interbank window, the Naira closed at N305 to a dollar.

Trading at Bureau De Change (BDC) window saw the Naira close at N399 to a dollar, while the Pound Sterling and the Euro exchanged at N600 and N510, respectively.

Traders blamed acute forex scarcity for the spike in the exchange rate.
(NAN)

Naira firms at interbank as CBN insists on improve dollar liquidity – Busisnessday

By HOPE MOSES-ASHIKE
Naira on Thursday strengthened against the US dollar at the interbank spot foreign exchange market, closing at a record high of N304.50/$. This, according to the data from the FMDQ, represents N0.50k or 0.16 percent gain compared with N305 it traded since over two weeks.
The Central Bank of Nigeria (CBN), after its meeting with Bureau De Change (BDC) operators, assured of its plans to improve dollar liquidity in the market.
Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON), had been conversing for the creation of more windows for dollar supply by registering more international money transfer operators by the CBN.
According to Gwadabe, this will help boost liquidity and bridge the gap between the official and parallel market.
However, the local currency traded at N492 per dollar on the parallel market on Thursday, slightly weaker than N492 the previous day due to dollar illiquidity.
The nation’s currency is expected to strengthen further as the international money transfer operators will commence dollar sales to BDCs next week, and this will help ease tight liquidity in the market.
The regulator had in July 22, 2016 opened foreign currency sales window from the proceeds of international money transfers to BDCs. This, according to the CBN, is to ensure stability of the exchange rate and encourage participation of all critical stakeholders in the foreign exchange market.
The foreign currency proceeds of international money transfers sold to BDC operators shall be retailed to end users in compliance with the provisions of anti-money laundering laws and observant of appropriate Know Your Customer (kYC) principles including the use of Bank Verification Number (BVN).

Taiwan says Nigeria wants it to move its trade office from Abuja – Reuters

TAIPEI Jan 12 (Reuters) – Taiwan objected on Thursday to a Nigerian request to the island to relocate its representative office in the African country, a request Taiwan sees as more pressure by China to isolate it.

Beijing regards Taiwan as a renegade province, ineligible for state-to-state relations, and to be taken back by force if necessary, especially if it makes moves toward independence. 

Taiwan has no diplomatic ties with Nigeria, but has an office for handling business affairs in Abuja.

But Taiwan’s foreign ministry said Nigeria has asked Taipei to move its office from Abuja to its former capital, Lagos.

Taiwan called on Nigeria to consider the issue as both sides have an understanding based on reciprocity, under which Nigeria runs a trade office in Taiwan’s capital, Taipei.

“The foreign ministry urges Nigeria to leave room for discussion,” Taiwan’s ministry said in a statement, referring to the request to move the trade office.

“The foreign ministry seriously objects and condemns the unreasonable actions by the Nigerian government,” it said.

Nigerian officials met their Chinese counterparts in Abuja on Wednesday and pledged to stick to Beijing’s “one China” policy, that Taiwan is a part of China, media reported.

Taiwan has 21 formal allies, only two in Africa. Last month, former African ally Sao Tome switched its diplomatic recognition from Taiwan to China.

In countries with which Taiwan has no formal diplomatic relations it often sets up trade and commerce offices, in capitals and major cities.

While economic ties between the mainland and Taiwan have grown considerably in recent years, their relations have worsened since Tsai Ing-wen, who heads a pro-independence party, was elected president of the island last year.

Beijing has been stepping up pressure on her to concede to its “one China” principle.

(Reporting by Damon Lin and J.R. Wu; Editing by Robert Birsel)

 

#OccupyCBN: Group condemns alleged sharp practices at CBN’s Forex tradings – Vanguard

A Civil Society Group, The Wailing Wailers, has condemned in what it termed, “conflicting and unclear monetary policies,” the Federal Government and especially the Central Bank Of Nigeria, CBN’s alleged sharp practices and anti-masses policies which it said have brought severe hardship and misery on the people.

It said, the policy which involves sharp practices in Forex tradings sees the apex bank selling the Dollar at a cheaper rate to the Federal government, some few politicians and some rich cabals who in turn sell at the black market at highly exorbitant rates, a development among others, it said have led to inflation in the country. Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele In a statement signed by both its Conveyor, Adeyanju Deji and Co-Conveyor, Adeoye Adelaja, it said that its members and other well-meaning Nigerians would be embarking on a peaceful protest tagged, #OCCUPYCBN, on Friday the 13th of January 2017 to condemn the illegalities at the apex bank that have further impoverished especially the poor citizens of this country. “It is no news that Nigeria currently faces the worst currency crises in its history.

Since the inception of the administration of President Muhammadu Buhari, a number of conflicting and unclear monetary policies have been implemented that have greatly eroded the value of the Naira and exacerbated the current economic crises.” “These policies have been implemented against the backdrop of the lofty and commendable ideal to spur local production and consumption of goods and services, as well as efforts to boost the foreign reserves balance of the Nation.” “However, the implementation of these command and control policies has achieved the complete opposite.

These policies have eroded the value of the Naira to its lowest point in our history, while defeating the very objectives for which they were designed in the first place.” “As a result of the implementation of these policies, Nigeria is suffering all the negative consequences of devaluation while enjoying none of its benefits. The data available to measure the relevant indices indicate that the policies are destroying the Nigerian economy.” “For instance, these indices formed the basis for the recent comment by Frank Udemba Jacobs, President of the Manufacturing Association of Nigeria (MAN), to the effect that 2016 was the worst year for the manufacturing sector in Nigerian history.” “Available data shows that more than 12000 manufacturing sector jobs were lost in 2016 alone with more than 50 factories closing down. Unsold goods inventory for the sector exceeds N100billion.” “The effect is not just on the manufacturing sector.

The pharmaceutical sector is shedding thousands of jobs and the prices of life saving medication have doubled and in many cases tripled. An attached list of medication shows a minimum of 100% increase in most cases.” “The aviation sector is currently plagued by high prices occasioned by scarcity of aviation fuel, Nigerians are currently suffering under the effects of kerosene scarcity and virtually any line of business that requires access to Forex is experiencing difficulty in accessing Forex for its operations.

For the sake of brevity, we will not continue to repeat our woes economic woes here.” “The policies of the Central Bank of Nigeria (CBN) and the Buhari administration have created an opportunity for arbitrage. As a result, a certain group of people access Forex at dubious prices from CBN and sell at black market rates for a profit.” “HRH Sanusi Lamido Sanusi, the Emir of Kano and former Governor of CBN, alluded to these sharp practices in August 2016 while speaking at the 15th Joint Planning Board & National Council on Development Planning conference where he strongly condemned these policies and how their effect of creating emergency billionaires.” “It is against this backdrop that we have planned a peaceful procession to the CBN headquarters in Abuja to speak against these harmful policies which have been designed to favour a few people while destroying the businesses of the majority of Nigerians.” “The procession is solely to register the displeasure of the vast majority of Nigerians regarding these policies that cause severe pain and hardship across all sectors of the Nigerian economy.” “It is not sponsored by any politicians.

While its promoters may have their political affiliations, the processions itself is not being done for any political objective other than the improvement of the life and welfare of the average Nigerian.” “Should CBN be interested, several credible Nigerians with proven track records of expertise and results are willing to partner with it to chart a new course to immediately ameliorate the negative consequences of these challenges and put the Nigerian economy firmly of the path economic growth.” “In this light, we call on well meaning Nigerians to join us in front of the Women Development Centre on Friday 13th January, 2017 by 09:00am. This location is directly opposite the headquarters of the Central Bank.” “We hope that this intervention would mark the beginning of the implementation of new plans and policies to uplift the lives of the Nigerian people.” “GOD BLESS NIGERIA”

Read more at:Vanguard

Standard Chartered says higher oil prices are no panacea to Nigeria slump – Businessday

Higher oil prices alone, is no solution to Nigeria’s economic growth slump, according to Razia Khan, the Regional Head of Economics, Africa, at Standard Chartered Bank, which forecasts oil prices will average $66 in 2017.Contrary to the benign picture painted of Nigeria’s economy by some economists on the back of a rallying oil price, Khan contends that “oil output and Nigeria’s ability to curb militancy in the Niger Delta, as well as the prospects of the non-oil economy, which accounts for 92 percent of Gross Domestic Product (GDP), will matter” just as much as oil prices. 

 
“Growth prospects will depend on how quickly unsustainable foreign exchange bottlenecks are resolved,” Khan stated in a Jan.9, 2017 note to clients.Although crude oil production rose to 1.78 million barrels per day (mbpd) in October 2016, from 1.65 mbpd, the average for January-October of 1.82 mbpd falls well short of the projection of 2.20 mbpd in the 2016 budget, which explains many of Nigeria’s macroeconomic woes, rather than low oil prices which averaged higher than the budgeted $38 per barrel, according to BusinessDay estimates.

Analysts at investment bank, FBN Quest are of the notion that “Diversification away from oil requires a healthy stream of oil revenues and that depends in turn on calm in the Niger Delta.”

The NNPC’s Financial and Operations Report for November notes that at least 300,000 b/d had been shut-in since February due to sabotage of the Forcados line by Niger-delta militant attacks.

“We understand that the Federal Government has restored monthly allowances to the former militants in the delta to the level under the previous administration. This step would have been taken reluctantly but cannot be faulted since it stands a reasonable chance of buying peace,” FBN Quest analysts, Gregory Kronsten, Olubunmi Asaolu and Chinwe Egwim stated in a note to clients on Jan 11.

Also more important than higher oil prices are prospects in the non-oil economy, according to Standard Chartered’s Khan.

Activity in the non-oil sector has been sluggish, hampered by poor policy choices, particularly a poorly functioning foreign exchange market.

The sector recorded an infinitesimal growth of 0.1 percent in the third quarter of 2016, according to data by the National Bureau of Statistics (NBS).

Despite several flawed attempts at currency flexibility, Nigeria has never fully embraced a liberalised foreign exchange regime.

The spread between the official and parallel market rate has ballooned to a record high of N185 per US dollar.

Khan observed that “The authorities are uncomfortable with allowing demand and supply to determine the value of the Nigerian naira,” which trades at N305/$ at the official window, but near N490/$ at the parallel market.

Because Nigeria has low levels of accumulated oil savings and its foreign exchange reserves have come under pressure, it has had to resort to curbing import demand in order to maintain a steady foreign exchange rate.

However, squeezing import demand has meant maintaining a severe squeeze on the real economy.

“Now, let’s be clear, imports themselves are not the problem, but a pegged naira,” said Olu Fasan, a political economy and international trade expert who is also a visiting fellow at the London School of Economics.

“The solution is not to ban or restrict imports, which is counterproductive, but to float your currency so that its value can adjust and regulate imports accordingly,” Fasan added.

Fasan observes that since the government partially floated the naira, imports have reduced, because the weak naira has made imports more expensive.

Yet, the government has refused to allow the full flotation of the naira.

“Indeed, recently, Buhari said: “I will resist the devaluation of the naira”. But the president can’t command the markets as he can order the military. Markets react to incentives, and one of them is a flexible, market-determined, exchange rate,” Fasan stated in a Jan.9 article in BusinessDay.

While the naira has plummeted almost 40 percent since central bank 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 likens devaluation to murder, and the Central Bank of Nigeria (CBN) have stood their ground for a very long time by not allowing the naira to float freely, according to Aminu Gwadabe, the president of Bureau De Change operators.

Gwadabe told reporters on Tuesday that the BDCs will now post an exchange rate each Monday on their website from Jan. 16 to “highlight positive rate development in the market” and counter domains such as abokifx.com, which publishes unofficial prices daily.
This is believed to be in a bid to help the central bank combat unregulated trading.

“It will bring transparency to the foreign exchange market which is good for investor confidence, but it is not going to increase the stock of dollars in the market which is the biggest problem,” said Ayo Akinwunmi, head of research at FSDH Merchant Bank by phone.