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Nigeria may lose N985bn oil revenue this year – PwC

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… As Jibrin: says Navy has achieved drastic reduction in crude oil theft

Should oil price average $55 barrels per day this year and recent oil production trends in the country continue, Nigeria could see about $5bn (N985bn) oil revenue shortfall, PricewaterhouseCoopers has said.

PwC’s economists, in a new report published on Wednesday, said this financing hole could widen to about $10bn in the event of a re-emergence of Iran oil production in the second quarter of the year as price is expected to hit a low point of $35 per barrel, slowly recovering to an average of $45 per barrel.

They said significant debt issuance and cuts to recurrent expenditure would be needed, adding that state governments could struggle to borrow from the financial markets to pay their workers.

According to the report, some highly-indebted states may miss planned interest payments on their debts.

If oil production falls by 15 per cent through bunkering and other supply disruptions, gross oil revenues will fall to a third of the 2013 level (about $43bn), it stated.

“Combined with difficulties of administering tax collection from unstable parts of the country, we would expect the Federal Government to fall over three months behind on paying employee wages and government bond yields on US dollar-debt could approach 20 per cent,” the economists noted.

They said that they expected that if the oil price continued to stabilise, the Central Bank of Nigeria’s recent adjustment of the exchange rate regime would be sufficient to ease pressure on the naira this year.

“However, if oil prices deteriorate further, a further 10 per cent devaluation of the naira will be necessary in 2015,” they stated.

They said any deterioration of the political and security landscape could unnerve investors and tip the country into recession.

If a ‘medium’ political shock occurs against the backdrop of a severe oil price scenario, the report predicts that Nigeria’s economy could see zero growth or even contract in 2015 and 2016.

It, however, stated that despite the uncertainties generated by the volatility in oil prices and the significant drop in government revenue, the Nigerian economy would continue to grow, even if oil prices fall to $35 per barrel and average just $45 in 2015, provided there was no deterioration of the political and security landscape.

A Partner and Chief Economist at PwC Nigeria, Dr. Andrew Nevin, said, “Our modelling and forecasts show that while the economy will continue to struggle even under the most benign scenario, it will be able to realise growth averaging four per cent for the period.

“Despite oil’s importance to the Nigerian exchequer, the real economy is largely insulated against falling oil prices. This is driven by the fundamental structure of Nigeria’s economy and how the oil and public sectors interact with the non-oil sector.”

In the mean time, the Chief of Naval Staff (CNS), Vice Adm. Usman Jibrin, has said that the Nigerian Navy in the last one year has achieved a drastic reduction in crude oil theft.

Jibrin who was represented by the Chief of Policy and Plans, Rear Admiral Johnson Olutoyin stated this during the Inter-Denominational Church Service, marking the 59th Anniversary of the Nigerian Navy, at the All Saints Protestant Church,  Mogadishu Cantonment, Abuja.

He said the Nigerian Navy was working assiduously to rid the country’s waters of illegal activities and has done tremendously well over the past years.

According to the Naval Chief, the success of the navy has been attested to by the drastic reduction in crude oil theft and illegal activities in the country’s maritime environment.

He said: “There is no doubt that the navy is working assiduously to continue to fight the pockets illegal activities that still remain in our maritime environment.    And that is why we are grateful to President Goodluck Jonathan for the recent acquisition of needed platforms into our fleet.

“Also, the addition of these platforms will assist the navy in its policing operations and be able deal effectively in the remaining areas  of security challenges in our maritime domain”.

Speaking further, Jibrin urged the officers and ratings and civilian staff of the navy to be prayerful, steadfast and faithful adding that the nation was passing through a critical period.

He told the officers and ratings to be peace loving citizens of the country and abide by all the principles that would foster unity in diversity.

As we celebrate, he urged, let us be of goodwill to one another by improving the lives of our fellow human beings and working together to make the navy and the country greater.

Earlier,  the Director of Naval Chaplaincy, Rev. Godshelp Osaghae, had in his sermon titled: “Jesus is the Answer”, said with men some things are impossible but with God all things are possible.

Osaghae, taking his text from John 1 verse 1 to 4,  said that it was the grace of God that has kept everyone alive.

“As we are celebrating the 59th Anniversary, I commit the navy to the word of God who make all things possible”, he prayed.

Punch With additional reports from Ships and ports

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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