NCDMB acquires equity in 12,000bpd modular refinery

The Nigerian Content Development and Monitoring Board says it has acquired equity in the 12,000 barrels per day modular refinery being constructed by Azikel Petroleum Limited in Bayelsa State.

The NCDMB said in a statement that when completed and operational in 2021, the refinery would produce about 1.3 million litres of petrol as well as diesel, kerosene, mixed liquefied petroleum gas (cooking gas) and a small percentage of heavy fuel oil.

The board’s Executive Secretary, Mr Simbi Wabote, described the modular refinery as the second and largest being supported by the NCDMB, noting that the partnership had huge prospects in job creation, value retention, petroleum products availability and in the development of in-country capability.

He said, “The project fits perfectly with our vision to serve as a catalyst for the development of Nigeria’s oil and gas sector.”

According to him, the NCDMB is in the final stages of commencing partnership in the development of another modular refinery in Calabar, Cross River State before the end of 2019.

Wabote said, “We are proud to be part of the journey to wean off our dear country from massive importation of petroleum products.

“Our data analytics show that we can more than double the contribution of the oil sector to the Gross Domestic Product if we achieve the current growth trajectory with the refurbishment of existing refineries, completion of the Dangote refinery, and ongoing modular refineries, to bring refining to about 50 per cent of our oil production capacity from the current level of below 20 per cent.

According to him, the board’s intervention extends to gas processing and utilisation and it has progressed discussions with partners on the establishment of LPG cylinders manufacturing plant, LPG depots, and gas processing facilities.

“One of the projects of interest is the establishment of an inland LPG depot in Abuja to complement Federal Government’s LPG penetration initiative. This project is part of the gas value chain as it utilises condensate, which is one of the by-products from gas processing.”

On his part, President, Azikel Petroleum, Dr Eruani Godbless, described NCDMB’s partnership in the modular refinery project as historic, saying the board had gone beyond its role as a regulatory agency to also serve as a catalytic agent to develop the infrastructure needed to address insufficiency of refined petroleum products in the country.

NCC awards N65m to 11 varsities for technology research

The Nigerian Communications Commission has awarded N65m grant to 11 universities to carry out technology research that would lead to technology products.

The Executive Vice-Chairman, Prof Umar Danbatta, who made the presentation to the researchers whose proposals were accepted by the regulatory agency in Abuja on Tuesday, said that the commission was expecting prototypes to be commercialised from the exercise. Our correspondent also learnt that the process of commercialising electronic walking stick which resulted from the past research grants had reached advanced stages.

In an interview with our correspondent on the sidelines of the award ceremony, Danbatta vowed that the products from the research efforts would not be allowed to suffer in the shelf as had been the lot of many research endeavours in the country.

Danbatta said that any prototype emanating from the effort that was rated high would be translated to a product through necessary collaborations.

According to the NCC boss, the commission’s objective is to tap the capacity in the universities to solve some problems in the telecommunications industry as well as life challenges that can be tackled through new technologies.

He said, “We hope that working together, these proposals will bring about prototypes that we will be able to commercialise not in the too-distant future in order to revitalise the manufacturing sector of the economy.”

Ogun Customs intercept 7,030 bags of smuggled rice, others

The Ogun State Area Command of the Nigeria Customs Service, says it intercepted 7,030 bags of smuggled foreign rice, and 38 used vehicles popularly known as Tokunbo, among other seizures within the month of May 2019.

The Controller of the command, Michael Agbara, disclosed this on Tuesday at the Idiroko border office of the command in Ipokia Local Government Area of the state.

He said the seizure of over 7,000 bags of smuggled rice (50kg) was the highest monthly seizure so far made in 2019 by his operatives.

Agbara, who said the command recorded revenue totalling N1, 131,800,165.10 within the period under review, added that other seizures made were 411 kegs of Premium Motor Spirit (petrol), 372 kegs of vegetable oil, and one sack of used clothes.

Others were 1,835 pairs of new shoes, 264 pairs of used ones, motorcycles and bags of sugar.

Agbara said Customs operatives in the command made the seizures across the state, majorly in the creeks of Ipokia, Imeko Afon, Ilase, and Ihunbo, among others.

He said the command overshot its monthly target by the difference of N488, 328,401.11.

He said, “The command has really intensified its efforts at curbing all manner of smuggling in Ogun State.

“The seizure of over 7,000 bags of rice for the month of May 2019 is the highest monthly seizure of rice made by the command during the 2019 fiscal year. It is unprecedented.”

NIRSAL secures fresh N4.5bn from three banks for farmers

The Nigerian Incentive-Based Risk Sharing System for Agricultural Lending has secured a total of N4.5bn from four Deposit Money Banks for the cultivation of maize and soybeans in three states.

The banks are Stanbic IBTC with the sum of N2bn; Sterling Bank Plc, N1.5bn; and Union Bank Plc, N1bn.

The funding is a fallout of two-day stakeholders’ meeting, which was attended by key actors in the maize and soybean value chains, banks and financial institutions, value chain support actors and other stakeholders.

The states where farmers will benefit from the funding are Niger, Ekiti and Benue.

The Managing Director, NIRSAL, Aliyu Abdulhameed,  who gave the figure shortly after the meeting, which was held at the headquarters of NIRSAL in Abuja, said that 3,750 farmers would be supported across the three states.

He said 107.5 metric tonnes of seeds worth about N65.5m would be supplied by Seed companies in Nigeria.

He added that under the arrangement,      2,062 metric tonnes of fertilizer worth about N290m would be made available by the fertilizer companies, adding that  33,250 litres of crop protection products worth N54.6m would be committed to the project.

The NIRSAL boss explained that 8,750 metric tonnes of maize with a market value of N744m and 2,000 metric tonnes of soybean worth N208m would be produced and off taken under this pilot phase.

He said with commitments from various off-takers, the revenue of N425, 000 and N2.26m would be generated by each farmer under this arrangement for maize and soybean respectively.

In terms of economic benefit to the country, Abdulhameed said that the pilot scheme would save the country about N1bn through import substitution.

He said, “This is in no way a small feat as the ripple effects on economic growth, employment and standard of living would be immense.

“This is the type of positive impact that NIRSAL was established to create, and we are determined to make it happen.

“NIRSAL will deploy its credit risk guarantees on the financing tickets generated to provide comfort to financiers for loan disbursement.

“We will also deploy other robust risk management instruments including the Area Yield Index Insurance to safeguard yields at harvest, our boots-on-ground project monitoring, reporting and remediation Office personnel in Ekiti, Niger and Benue states and other risk management instruments to guarantee adequate returns on investment.”

He said the NIRSAL team would be in touch with all key stakeholders to ensure requirements are duly captured and interests fairly represented in the agreements and contracts for implementation.

On the need to have a price hedging structure that would give comfort to all stakeholders, he said NIRSAL was in discussion with relevant institutions such as the Commodity Exchange, National Collateral Registry and insurance companies on how to craft the best option.

Restructuring Taxation Wil Create Better Opportunities for Growth –  Chike-Obi

Nigeria will be better if government can bring more people into the tax net, as this can unlock the hidden economic opportunities therein.
Executive Vice Chairman, Alpha African Advisory, Mustafa Chike-Obi while speaking yesterday at the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly Forum, with theme: Repositioning Nigerian Economy for Sustainable Growth, said Nigeria’s tax rate at 30 per cent is one of the highest in the world, adding that multiple taxation should be discouraged.
Chike-Obi, who was former Managing Director/CEO Asset Management Corporation of Nigeria (AMCON), also  hinted on the need for adequate infrastructure as well as intervention funds to stimulate the economy instead of relying solely on intervention funds.
He charged financial institutions to lend at lower interest rate at ar!ound 12 to 15 per cent per annum as this forms part of! considerations by foreign creditors in lending to emerging markets.
“All these intervention funds, don’t work. And let me tell you why they don’t work. If you  lend to a farmer at five per cent, you think you are helping him but everything around him is at 26 per cent. So, he gets a little bit of relief on his financing, but he doesn’t get reliefs on his supplies, diesel, food, employees, so at the end of the day, those things he gets at 26 per cent invades his five per cent,” he said.
The event was meant to set economic agenda for the newly inaugurate government and address key economic issues. 
Chike-Obi said intervention funds also don’t work because “the default rates are as high as default rates of non-intervention funds. So, they don’t work. They are not very efficient”.
According to him, what the economic managers need to do instead, is to provide capital at a reasonable interest rates that work for everyone.  
He said: “There must be access to capital at a reasonable price. With 26 per cent interest rate, you cannot do a business successfully. So, we must find a way to provide interest rate to everybody at a reasonable rate. We must have an interest rate that will support our economy. And it cannot be much higher to the borrower at 12 to 15 per cent. Every Nigerian should be able to borrow money at between 12 to 15 per cent, so, we must have capital available.
He also spoke on the foreign lenders look out for in lending to developed markets, arguing that borrowing in dollar may not be cheaper in the long-run.
He that even when one borrows borrow dollar at eight per cent for instance, the creditors will be looking at the exchange at at the time of repayment, which is unlikely to remain at N360/$. He said the foreign creditors also consider borrowers that have the capacity to generate needed funds for repayment of loans.
“The reason why they are lending money at eight per cent, instead of 16 per cent, is because they know that by the time that money matures, your Naira will not be exchanging at N360/$. This is because the Naira always depreciated by approximately 50 per cent in every five years,” Chike-Obi said.
Debt servicing gulps over 50% of Nigeria’s revenue — AfDB

Debt servicing gulps more than 50 per cent of Nigeria’s revenue, the African Development Bank has said.

The bank, which said this in its West Africa Economic Outlook 2019, said the servicing of the country’s external debt gulped about 50 per cent of the country’s revenue.

According to AfDB, the average revenue spent by West African countries on external debt servicing is 17 per cent. This is high and even higher in Nigeria which spends about 50 per cent revenue on external debt servicing.

It added that with the increasing domestic debt burden, the percentage of revenues spent on debt servicing in Nigeria was even higher.

The bank said that even though the country’s debt burden had increased by as much as 128 per cent in the last eight years, Nigeria’s debt to Gross Domestic Product remained low.

The low debt-to-GDP ratio notwithstanding, it added, the problem with the nation’s increasing debt burden was the high proportion of revenue spent on debt servicing.

It said, “Cape Verde had the highest external debt-to-GDP ratio in 2018, an estimated 103 per cent, followed by Senegal, Niger, and Sierra Leone. Liberia had the highest rate of debt accumulation between 2010 and 2018, at 329 per cent, followed by Nigeria at 128 per cent.

“Despite the increase, Nigeria still has one of the lowest external debt-to-GDP ratios, at 15.2 per cent. Benin, Guinea-Bissau and Togo also have a ratio below 25 per cent.

“The rapid increase in external indebtedness remains a challenge, especially given the shift toward non-concessional external debt. Debt service payments have also increased since 2010 and are projected to remain high in the medium term.”

The bank added, “The increase has heightened the fiscal burden in an already fiscally and growth-constrained environment. This raises important concerns regarding the sustainability of external debt. West African countries spend an average of 17 per cent of revenue on servicing external debt.

“In Nigeria, about half of the revenue is used to service external debt. The increasing domestic debt burden means that the total proportion of the revenue spent on servicing debt is even higher. In a country where only six per cent of GDP is collected in revenue, the high burden of debt service is a major concern.

“Ghana falls into a similar category, with debt service accounting for 40 per cent of revenue. The rising debt burden drove up to the proportion of revenue allocated to servicing external debt to about 500 per cent. This is a country once hailed as an example of a state with a strong commitment to structural and macroeconomic reforms in the post-Heavy Indebted Poor Countries debt relief initiative.”

According to AfDB, the authorities in Ghana and Nigeria recognise the potential risk of rising unproductive debt to growth and to the economy more generally. In both cases, it said, the debt service burden was projected to decline.

Our correspondent reported that the Federal Government spent N2.21tn on domestic debt servicing only in the first nine months of 2018. This is more than N2.01tn budgeted for total public debt servicing in the entire year.

The AfDB said for countries moving from low-income status to middle-income status such as Nigeria, the possibility of accessing concessional debt or increasing the proportion of grants appeared remote.

Their strategy should, therefore, be to contract debt of longer maturities and favourable terms, including longer grace periods that coincided with the gestation of the projects that the debt financed, the AfDB said.

This would ensure that debt was self-financing and allowed countries to avoid a debt overhang, it added.

NGA business forum reinforces gas impact on economy

NGA business forum reinforces  gas impact on economyThe Nigerian Gas Association (NGA) will host industry’s prominent and influential executives involved in the oil, gas, liquefied natural gas (LNG) and power generation value chains, the Association’s President Mrs. Audrey Joe-Ezigbo, has said

According to Publicity Secretary, Violin Antaih, the forum, which will bring together governments officials, gas off takers and developers, gas upstream suppliers, pipelines operators, construction firms, equipment providers, and financiers  to its first Gas Business Forum in 2019.

The theme of the forum is: Evaluating the place of gas as a prioritized enabler of Nigeria’s economic diversification agenda.” The venue of the forum is Civic Centre in Victoria Island.

Speakers include the Chairman, Oil Producers Trade Section (OPTS), Paul McGrath; Group Executive Director, Gas & Power, NNPC, Saidu Mohammed; Group Executive Director, BUA Group, Kabiru Rabiu and Folarin Alayande (SSA to the President on ERGP. Others are Managing Director, Shell Nigeria Gas, Ed Ubong; Maryam Shehu, Deputy General Manager, Commercial, Total E&P Nigeria and Chima Ibeneche, former President, Nigerian Gas Association.Policies play a key role in supporting or constraining the progress of natural gas in any countrys’ energy mix, Ezigbo said , adding that the adoption of measures favourable to natural gas could accelerate the penetration of this source of energy  and achieve many economic, technical, social and environmental advantages.

She noted that the key measures expected to be adopted in this regard are market reforms that aim to improve competition and attract gas investments in the upstream and midstream sectors; the facilitation of permits and administrative processes for gas project developments; and pricing or mandated fuel switching to natural gas.

The association’s 20th annual general meeting will be conveyed immediately after the business forum at same venue, she added.

NIBSS extends POS transaction timeout to 45 seconds

The Nigerian Interbank Settlement System (NIBSS) yesterday extended Point of Sale (POS) transactions timeout from 15 second to 45 seconds.

NIBSS Acting Managing Director, Niyi Ajao, who disclosed this during a press briefing in Lagos, said the agency was aware of the poor transaction network going on in the country, and pains it has caused to e-payment users.

He said the move was to improve on poor network quality for e-payment transactions by extending the time it takes to complete a transaction, especially, POS and restore confidence in the e-payment system.

Ajao said that NIBSS facilitated 285 e-payment transactions in 2018, and that the transaction volume will hit 600 million by this year end.

He explained that transaction timeout is the total turn-around-time (TAT) for a POS transaction cycle from the time it is received from a POS to the time a response is sent back to the terminal. “This TAT had been configured at 15 seconds in agreement with banks and processors. However, delayed responses from Issuers after this timeout in recent times could cause authorised debits not to return to the terminal before the set TAT, hence the adjustment to 45 seconds,” he said.

He said there has been several meetings between the Central Bank of Nigeria (CBN), banks and Payment Service Providers on the need to improve transaction quality and provide seamless e-payment services to customers.

According to the NIBSS boss, the adjustment to the timeout will be done on March 22, and is meant to reduce the number of failed transactions in the country.

He said the reversal for failed transactions is one area that NIBSS will henceforth, pay more attention to, so as to strengthen e-payment users confidence in the system.

“Whenever there is a transaction decline the system is supposed to reverse the transaction such that a debited cardholder would receive a reversal credit. Delays on reversal could be caused by platform downtime, network issues at processor level or delayed responses and Issuer/Switch Inoperative – Processor or bank is not available to receive the reversal even when it’s transmitted by NIBSS,” he said.

He said that NIBSS has taken remedial actions in fixing the rising e-payment challenges in the country, by fixing all platform application issues by  February 21; network remediation carried out with concerned Processor and implementation of a secondary process whereby all reversals for any business day are re-transmitted between 10pm and 12 mid-night to return credit back to cardholders through their banks/Processors by March 22.

Decline in Treasury bill rates to persist

THE steady decline in interest rates on treasury bills, TBs, offer in the primary market since last month is expected to continue this week when the Central Bank of Nigeria, CBN, roll over N48.6 billion worth of maturing bills.

Last week the apex bank sold N89 billion worth of TBs in the primary market at lower stop rates. Stop rate for the 91-Days bills dropped by 15 basis points (bpts) to 10.75 percent from 10.9 percent in the previous auction held on February 27.

The stop rate on the 182-Days bills also dropped by five bpts to 12.5 percent from 13 percent in the previous auction, while stop rate for the 364-Days bills dropped by 152 bpts to 12.85 percent, the lowest since August last year, from 14.37 percent in the previous auction in February.

The Central Bank of Nigeria head office in Abuja, Financial Vanguard analysis of primary market TB auction since January revealed a two month downward trend in rates.

Between the first auction on January 16 and the auction held last week Wednesday (March 13), stop rate on 91-Days bills dropped by 25 bpts to 10.75 percent last week from 11 percent on January 16. Stop rate on 182-Days bills fell marginally by six bpts to 12.5 percent last week from 13.1 percent on January 16.

The biggest decline was recorded by the stop rate for 364-Days bills which fell by 215 bpts to 12.85 percent last week from 15 percent on January 16.

The above trend is driven by massive over-subscription (excess demand) for TBs fuelled by foreign portfolio investors seeking to take advantage of the high interest rate regime in the nation’s fixed income market.

This is reflected by the 88 percent increase in dollar injection by foreign portfolio investors through the Investors and Exporters (I&E) foreign exchange window, which rose to $3.07 billion in the first two months of the year (January and February) from $1.63 billion in Q4’18.

This massive inflow triggered 532 percent over-subscription in the primary market TBs auction held by the CBN on February 27.

The CBN offered and sold N115 billion worth of TBs while total subscription stood at N727.35 billion. This trend was repeated last week, with the primary market auction recording 575 percent over-subscription.

While the CBN offered and sold N89 billion worth of bills, total subscription (investors demand) stood at N600.52 billion.

Confirming this development, analysts at Lagos based Cowry Asset Management Limited said: “Amid demand pressure from the foreign portfolio investors, we saw stop rates fall across tenor days: 91-day, 182-day and 364-day maturities.”

They projected that the huge demand for TBs will persist this week when the CBN offers maturing TBs worth 48.6 billion, as well as further moderation in stop rates.

“In the new week, CBN will rollover T-bills worth N48.57 billion, viz: 91-day bills worth N3 billion, 182-day bills worth N8.39 billion and 364-day bills worth N37.18 billion.

We expect their stop rates to fall amid buy pressure. Amid the N169.44 billion bills maturing, we expect yields to further moderate given the declining stop rates.”

In a bid to mop up the excess liquidity from the unmet demand for TBs in the primary market auction, the CBN on Thursday held secondary market (Open Market Operations, OMO) TB auction, which recorded 23 percent oversubscription.

Total public subscription to the N350 billion worth of bills offered by the apex bank stood at N429.5 billion while the apex bank sold N400.48 billion.

In response, cost of funds rose marginally at the end of the week with average short term rates rising by 1.8 basis points (bpts). Data from FMDQ showed that interest rate on Collateralised (Open Buy Back, OBB) lending rose by 2.0 bpts to 11.17 percent last week from 9.17 percent the previous week. Similarly, interest rate on Overnight lending rose by 1.6 bpts to 11.67 percent last week from 10.08 percent the previous week.

This trend may persist this week in the face of further liquidity mop by the CBN  in response to maturing OMO bills worth N169 billion during the week.

External reserves hit 5weeks high at $43bn The naira appreciated further last week in the I&E window as the nation’s external reserves rose to five weeks high of $43 billion on Thursday.

According to the CBN the external reserves recorded a weekly increase of $381 million last week to $42.987 billion from $42.606 billion on Thursday March 7.

The $42.987 billion recorded last week, March 14 represents the highest level since February 6 when the reserves peaked at $42.991 billion.

 

The rise in reserves may be unconnected to the huge dollar inflow from foreign investors through the I&E window since the beginning of the year. Last week, the volume of dollars traded in the I&E window dropped by 58 percent to $1.7 billion from $4.1 billion the previous week.

However, the naira sustained its upward trend in the market since last month. According to FMDQ, the indicative exchange rate dropped further to N360.18 per dollar last week from N360.42 per dollar the previous week, translating to 24 kobo appreciation for the naira.

OPEC to scrap April meeting, keeps oil cut in place

OPEC is set to scrap its planned meeting in April and decide instead whether to extend oil output cuts in June, when the market will be able to assess the full impact of U.S. sanctions on Iran and the crisis in Venezuela.

A ministerial panel of OPEC and its allies recommended on Monday that they cancel the extraordinary meeting scheduled for April 17-18, which means the next regular talks would be held from June 25 to June 26.

The energy minister of OPEC’s de facto leader, Saudi Arabia, said over the weekend that the market was looking oversupplied until the end of the year but that April would be too early for any decision on output policy.

“The consensus we heard is that April will be premature to make any production decision for the second half,” the Saudi minister, Khalid al-Falih, said on Monday.

“As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market toward balance,” he added.

The United States has been increasing its own oil exports in recent months while imposing sanctions on OPEC members Venezuela and Iran in an effort to reduce those two countries’ shipments to global markets.

Washington’s policies have introduced a new level of complication for the Organization of the Petroleum Exporting Countries as it struggles to predict global supply and demand.

“We are not under pressure except by the market,” Falih told reporters before the Joint Ministerial Monitoring Committee meeting in the Azeri capital, Baku, when asked whether he was under U.S. pressure to raise output.

U.S. President Donald Trump has been a vocal critic of OPEC, blaming it for high oil prices. Many OPEC members have said Trump’s sanctions policies have elevated the market.

OPEC and its allies agreed in December to cut output by 1.2 million barrels per day – 1.2 per cent of global demand – during the first half of this year in an effort to boost prices.

The JMMC, which also includes non-OPEC Russia, monitors the oil market and conformity with supply cuts.

Asked if he had been updated on whether Washington would extend its waivers for buyers of Iranian crude, which are due to end in May, Falih said: “Until we see it hurting consumers, until we see the impact on inventory, we are not going to change course.”

Inventory levels and oil investments are the two main factors guiding OPEC’s action, Falih said, adding that oil industry estimates show that 11 trillion dollars of investments will be needed over the coming two decades to meet demand growth.

Oil inventories in developed countries continue to fluctuate, he said.

“Our goal is to bring global inventory levels down to more normal levels – and even more importantly, to proactively protect against a glut,” he said.

“Another important metric is the state of oil investments … we are not seeing an investment trend that will get us even closer to the required figures.”