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Nigeria’s external reserves fall by $753m



  •  Don says 30-day fuel imports can build 15 modular refineries 

Nigeria’s external reserves diminished by a total of $753 million to close at $27.123 billion as at April 28th, compared with the $27.859 billion it was as at April 1.

The current position of the reserves, which are derived mainly from the proceeds of crude oil earnings represented a decline by $1.855 billion or 6.4 per cent, as against the $28.978 billion it stood at the beginning of this year, according figures gathered from the Central Bank of Nigeria (CBN).

Crude oil prices recorded nearly 20 per cent climb in April to about $46 per barrel. OPEC crude-oil production surged by 484,000 barrels to 33.217 million a day in April, according to a Bloomberg survey.

THISDAY had reported that the external reserves were expected to decline further due to the settlement of large swap positions between the banks and the CBN. According to estimates, the overall swap books of some Nigerian banks were about $5 billion, with most of it to be paid back this year. However, findings showed that there were some 400-day swap deals that were done in the fourth quarter of 2015. A swap is a derivative in which two counter parties exchange cash flows of one party’s financial instrument for those of the other party’s financial instrument.

Analysts at FBN Quest noted the peak in crude oil price from its recent floor in January, saying the budget assumption of $38 per barrel has started to look conservative. They predicted an end-2016 spot price for Bonny Light of $55 per barrel.
“They said, the global supply/demand balance for crude is set to remain out of kilter until late 2017. Inventory accumulation, data-driven China worries and an uncompromising Saudi stance militate against an earlier recovery.

“The success of the President Muhammadu Buhari agenda rests upon whether its expansionary fiscal stance will deliver the capital spending and the jobs to make its contribution to a revival in the economy. This, in turn, requires that it comes close to hitting its ambitious targets for non-oil revenue generation.

“These are heady projections and the impact of the 2016 budget will not be felt much before the end of the year. Beyond the fiscal, the FGN would do well to clarify its policies and trumpet its successes, given the limits on the patience of voters and markets.
They also predicted that there would be unexciting growth this year and next. Growth of 2.1 per cent year-on-year was recorded in fourth quarter Q4 2015, which was the lowest in the revised series of national accounts.

Analysts also projected that a combination of government spending, sector-specific reforms and a modest rise in oil revenues should deliver unexciting growth of 3.5 per cent in 2017.
FBN Quest predicted that devaluation would be the last resort by the central bank.

“The CBN has stiffened its defence of its exchange-rate policy. We see devaluation under duress and a year-end interbank rate of N230. We see further monetary tightening ahead as the Monetary Policy Committee responds in textbook manner to rising inflation. We also see FGN bond yields in the middle of the curve backing up towards the 14 per cent level in the weeks ahead. The budget deficit target requires consistently large sales of bonds at auction,” the firm added.

Renaissance Capital Limited (RenCap) recently stated that it foresees Nigeria’s forex policy becoming more flexible by mid-2016. The firm, in a recent report said it expects the country’s policy-based budget support to spur a change in the CBN’s forex policy.

According to RenCap, this was the case the last time Nigeria sought financing from development finance institutions in 2009.
Buhari’s government has described its first budget, which is yet to be signed into law, as reflationary.

It plans to accelerate economic growth by spending N6trillion, up from N4.49 trillion that was planned for 2015. Of this, 30 per cent will go towards capital expenditure, up from 20 per cent in recent years.

In the meantime, a university don has argued that the cost of importing petroleum products for 30 days is capable of building up to 15 modular refineries in the country, even as he urged the federal government to tap from the technology of illegal refineries instead of destroying them.

A Director, Centre of Gas, Refining and Petrochemicals, Institute of Petroleum Resources, University of Port Harcourt, Prof. Godwin Igwe, who said this at the African Modular Refinery Seminar in Lagos, also said modular refineries will diversify the Nigerian economy, with its security implications for the country. According to him, “Modular refineries are required right now.

Cost of importing fuel in 30 days is enough to build 10-15 modular crude refineries. The Government should therefore set up a guiding policy document (law) to enable entrepreneurs to develop the country.” As regards illegal refineries, Igwe said: “We can train and turn the ‘illegal refineries’ to ‘legal refineries. The ‘illegals’ already have the necessary raw production skills.  We just need to provide guidance and training.

The knowledge gap in distillation processes will be provided on appropriate standards, specifications, and catalysis.” The university don listed the benefits of establishing 15 modular refineries to include: Production of a combined volume of over 1,000,000 liters per day of petrol, diesel, aviation kero, kerosine, naphtha, and other petrochemical products Creation of over one million jobs for Nigerian youths Creation of over 1000 spin off medium and small businesses, such as shipping, engineering, construction, logistics, fabrication, and many more Training of over 120,000 Nigerians and community indigenes Provision of food and shelter for over 5 million Nigerians Rejuvenation of our national economy with another “oil boom era” and chance to export excess fuel produced by the refineries and earn forex from fuel export Regeneration of various key socio-economic sectors that can sustainably raise the Nigerian GDP Oil communities can be transformed into an oil capital of Nigeria and Africa by forming oil community cooperatives and making them key stakeholders as joint venture partners in the ownership and operation of these modular refineries.

Igwe further said that the idea of modular refineries at strategic locations of the country will increase internally generated revenue and reduce fuel scarcity. “The role of Federal and State Governments is to create enabling environment for all, including foreign, local investors, and the oil rich community cooperatives. “Government should provide oil communities, indigenes an alternative sustainable source of income to foster a fresh sense of ownership and deep sense of commitment and responsibility for protecting all the Nigerian oil assets in their environment.“

ThisDay with additional report from Vanguard


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



…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



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

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Wind Farm Vessel Collision Leaves 15 Injured



…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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