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Nigeria’s foreign reserves cross $40bn

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Customers express disappointment over CBN’s directive on transaction charges

…As NUPENG President warns: We’ll react appropriately if FG increases fuel price***

Figures obtained from the Central Bank of Nigeria (CBN) on Monday, indicated that Nigeria’s External Reserves reached the $40.4 Billion mark on Friday, January 5, 2018, indicating an increase of about one billion United States dollars between December 2017 and January 2018.

This is in line with the projection of the Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele at the Annual Bankers’ Dinner of the Chartered Institute of Bankers (CIBN) in Lagos last November, the nation’s External Reserves have hit a new level of $40.4 Billion.

This is even as the Bank injected a total of $210 million into the Interbank Foreign Exchange Market in the first round of trading for the year on Monday, January 8, 2018.

Confirming the figure, the Acting Director in charge of Corporate Communications at the CBN, Isaac Okorafor attributed the accretion to the country’s reserves to the Bank’s strategy to effectively manage forex demand by various sectors of the economy.

Citing the CBN policy restricting access to forex from the Nigerian forex market by importers of some 41 items as the major turning point, Okorafor said the policy had helped to stop the hemorrhaging of the country’s external reserves, which hitherto witnessed heavy depletion due to huge import bills and other debt obligations.

According to him, the CBN policy had ensured a decline in Nigeria’s import bills from over $5 billion monthly in 2015 to about $1.5 billion in 2017.

He expressed optimism that with the determination of the Bank and the cooperation of the fiscal authorities, the external reserves will continue to enjoy more accretion in the course of 2018.

In the meantime, the National Union of Petroleum and Natural Gas (NUPENG), has warned against any increase in fuel pump price, saying that Labour would react appropriately should the Federal Government increase price.

President of NUPENG, Comrade Igwe Achese, said in a chat with our correspondent that the union dud not believe in fuel price increase, hence, it would never support it.

The Minister of State for Petroleum, Ibe Kachukwu has said that the current pump price of N145 per litre is not sustainable, because the landing cost is now N171, due to the dollar exchange rate.

This, according to the minister has led to the current fuel scarcity, because the independent marketers can no longer import; thus leaving the import solely to the Nigeria National Petroleum Corporation (NNPC).

To end the acute fuel scarcity, he gave three options, which include a special arrangement by the Central Bank of Nigeria to provide forex for fuel importers at N131 to a dollar, rather than the general public exchange rate; go back to the era of subsidy or allow the independent marketers to sell at their own price.

This was perceived by Nigerians as a ploy by the government to increase pump price; going by the earlier demands and calls by the marketers for price increase.

However, the NUPENG President said any plan to increase fuel price in any or through any means would not be supported; adding that he would not even want to talk about fuel price increase.

Comrade Achese said: “I don’t believe in any increase and I don’t want to talk about it. Should there be any we will react appropriately.”

Meanwhile, the President of Nigeria Labour Congress (NLC), Comrade Ayiba Wabba, said the pump price of N145 per litre is sacrosanct; adding that in their meeting with the Federal Government and other stakeholders last week Tuesday and subsequent meetings, the issue of price increase was never on the table or in the agenda.

The NLC President said President Muhammadu Buhari, had indicated, as revealed during the meeting held at the Presidential Villa that the issue of price increase should not be contemplated.

Wabba said the issue on the table is how to make product available at the current price, sustained and monitor distribution.

“It (price increase) was not actually on the table. The only thing on the table, which we are presently discussing is how to make product available at the price of N145 per liter. Nobody has the mandate to discuss the issue of price. The price at N145 is sacrosanct, all we discussed at the meeting is how to make product available.

“The President initially, when he said we should have that meeting, said the price must remain N145, and we should look at how to make product available and look at factors responsible for the shortage in the month of December. So, that is the only mandate we are discussing.

“The issue of pump price increase is not on the table now, nobody is contemplating that. The issue is not on the table, it is not contemplated at all. Let us limit ourselves to where we are, because that gives room for speculations and the marketers may begin to do what will not be favourable to consumers and the generality of the citizens.

“What is on the table now is to make products available at the prevailing rate. That is what everybody is aware; anything outside that is not actually on the table and nobody is trying to bring it on the table.”

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Economy

Subsidy Removal: Ibadan Deserts Stations, Lagos Shocked, P-Harcourt Watches, NLC-FG Talk Deadlocked

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…Nigerians Express Concerns Over Immediate Implementation***

The fuel queue which had created motley crowds of rowdy buyers on Tuesday and the early part of Wednesday in the few dispensing petrol stations, suddenly disappeared in Ibadan, as filling stations changed prices and hiked it to N500 per litre.

A petrol station on the old Ife Road, near the Loyola College, had dispensed fuel earlier at slightly above N200 per litre to grudging customers, until the Station managers received new directives, mandating them to hike their price.

They complied, and momentarily, the queue disappeared, as buyers fled the petrol station. Even those who had claimed that they came into the station with their vehicles on red light, suddenly had enough to drive home.

A correspondent who drove through the city, from Alakia, through Total Garden to the University of Ibadan, observed that more stations hitherto closed for business opened stations, immediately. Only the Bovas had little patronage because buyers could vouchsafe their integrity.

In the meantime, Nigerians have expressed concern over the sudden implementation of subsidy removal in spite of President Bola Tinubu’s assurance that it would not take effect immediately.

In Lagos, it was a matter of shock for buyers as the new price came up. 

On the Ogudu – Toll Gate- Berger axis, Commuters, particularly those on the Inter-State trips, expressed bewilderment, and started slashing whatever litres they had planned to buy.

Some drivers threatened to go back to their Parks, even as several passengers cough out additional fares.

The story from Port Harcourt, was however that shocked buyers simply watched, helplessly. (See video).

A cross section of residents of Ibadan, Oyo State, however expressed their feelings on Wednesday in separate interviews in Ibadan. 

An Entredepreneur, Mr Tobi Adeyemi, said the development was not a good one.

According to Adeyemi, the new administration should have provided some sort of respite for Nigerians considering the enormous hardship being faced by Nigerians.

“This will definitely affect prices of goods and services; from tomatoes sellers to foodstuffs; transportation, increase in fuel price and so on.

“We will all bear the brunt of it together. I only pity salary earners who are on a fixed income. Besides, I don’t believe this is the right timing,” Adeyemi said.

Also, a sales representative, Dr Adeyinka Adekunle, said the previous administration had budgeted for subsidy till the end of June.

“So, to me it was shocking to learn that the removal had taken effect from May 31 based on what the previous administration had done.

“Everything is sort of confusing now because of the budgetary provision for subsidy till June end,” Adekunle said.

He however, said a nation that was going to be great has to go through some teething periods.

In his remarks, an artisan, Mr Akinola Akinkunmi, said he has yet to comprehend the situation, because things were hard already and buying fuel at N500 per litre now would worsen the situation.

Akinkunmi said: “I cannot yet wrap my mind around how my business will survive; we are already struggling to make ends meet.

“With this development and absence of power supply from the distributing company, we are definitely going further down the poverty line.

“We need support from the government; we need help to survive this time,” Akinkunmi said.

Another entrepreneur, Mr Demola Adedeji, said the timing was not right as the economy had been in bad shape for some time now.

“At least, some things should have been put in place before the total removal of subsidy,” Adedeji said.

In his contributions, Mr Yinka Ajadi, a businessman, said that many people would go into depression as blood pressure of many Nigerians struggling to survive the situation would rise.

Ajadi said, “We can only hope for critical intervention at this time such as solving the problem of power and production inputs.”

Meanwhile, the orchestrated meeting between the Federal Government and the Nigerian Labour Congress (NLC) over subsidy removal has reportedly ended in a stalemate.

The Maritime First learnt that the meeting which was held at the Presidential Villa on Wednesday failed to attract any reasonable conclusion, as parties across the divide stuck to their guns.

It was further gathered that while the Organised Labour was represented by NLC National President, Joe Ajaero, and the President of the Trade Union Congress of Nigeria (TUC), Festus Osifo, and other top labour party notchers.

The Federal Government was however represented by people who included the former labour leader and former Edo State Governor, Adams Oshiomhole, President Bola Tinubu’s spokesman, Dele Alake, the Group Managing Director, Nigerian National Petroleum Company (NNPC) Limited Mele Kyari, and the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele.

Specifically, the National President of the Nigeria Labour Congress, Joe Ajaero reportedly criticised the Federal Government, stressing the need to revert to the status quo ante,  because the government failed to either negotiate or protect the Nigerian workers’ interest, before yanking off the subsidy.

The Federal Government on the other hand had argued that the labour had all the time in the world to negotiate with the Buhari government and therefore lacked the moral rights to talk of negotiations now.

The Organised labour therefore said it was going to throw the inconclusive results of their meeting to the Congress whose decision would be final, a euphemism for a nationwide strike.

Consequently, Government representatives called for a rescheduled meeting in a bid to enable further discussions or negotiations.

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Fuel Subsidy Removal: Don Predicts Reduction In Fuel Price

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Prof. AbdulGafar Ijaiya of the Department of Economics, University of Ilorin, has expressed optimism at President Bola Tinubu’s inaugural remarks on the removal of fuel subsidies, saying this may reduce prices at the long run.

Ijaiya, who spoke on Monday in Ilorin, observed that with commitment from the Federal Government in revamping existing refineries alongside Dangote refineries, will increase the availability of petroleum products.

The expert who however explained that though such effect may not be felt immediately, noted that the present pump price is about N200, depending on filling stations across the country.

He questioned if the present fuel price at about N200 was as a result of the subsidy removal, adding that if it is not, then fuel may likely increase with about 50 per cent rate after the removal.

“But the thing is that very soon, what has gone wrong with the refineries will be corrected and Dangote refineries will commence by July/August,” he said.

Ijaiya, who teaches in the Faculty of Social Sciences of the university, pointed out that in the beginning there might be an increase in the prices of foods and services.

He however asserted that in a society like Nigeria where people are used to hike in prices, it would not mean much to the citizens.

“By Economics principle, we have adjusted our expenditure profile consumption to particular items. We have moved from consuming luxury and unnecessary items to necessary items.

“This means people go for what is necessary and do away with those that are not,” he said.

Ijaiya affirmed that in the long run, the fuel pump price will adjust downward and there would be more supply of the products.

He further added that when there are more supply of a particular product in the market, it will automatically reduce the price.

“If we have enough supply, with time and there are no other man-made distortion that has to do with our behaviour, I see us buying it between N80 and N100 per litre,” he predicted.

The economist also foresee filling station advertising and competing for sales, saying it will be good for the nation.

He, however, cautioned that “we are in an uncertain world”, but maintained that fuel subsidy removal would be good for the country eventually as only a minority are benefiting from it.

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NNPC Ltd, OML 130 Partners Conclude Lease Renewal Process  

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The Nigerian National Petroleum Company Limited (NNPC Ltd) and the Oil Mining Lease (OML) 130 Partners have closed out the lease renewal process for OML 130 to unlock additional value from the Asset for stakeholders.

The NNPC Limited announced the renewal of the OML 130 Production Sharing Contract (PSC) and conversion of the acreage to a Petroleum Mining Lease (PML), in accordance with the Petroleum Industry Act (PIA) 2021 provisions on Thursday.

During the ceremony which was presided over by the Permanent Secretary, Ministry of Petroleum Resources, Amb. Gabriel Aduda, five agreements were executed.

The NNPC Ltd management, in a statement, listed the agreements to include the PSC between NNPC Ltd and its Contractors, China National Offshore Oil Corporation (CNOOC) and South Atlantic Petroleum (SAPETRO) with Total Upstream Nigeria (TUPNI) as the operator.

The agreements include a Heads of Agreement (HoA) Amendment involving NNPC Ltd, TUPNI, SAPETRO, PRIME 130, and CNOOC and a Settlement Repayment Agreement (SRA) Addendum between NNPC and its Contractors (CNOOC and SAPETRO).

Others are Concession Contracts for one Petroleum Prospecting Licence (PPL) and three PMLs and Lease and License Instruments between NNPC, TUPNI, SAPETRO, PRIME 130, and Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The NNPC Ltd said the milestone would pave the way to firm up Final Investment Decision (FID) on the Preowei, amounting to US$2.1 billion.

This will subsequently be followed by Egina South projects lined up by TUPNI and the OML 130 partners to introduce additional volumes to the best-in-class Egina Floating, Production, Storage and Offloading (FPSO) Vessel,’’ the company said.

Stakeholders in attendance at the signing ceremony were the NNPC Ltd Group Chief Executive Officer (GCEO), Malam Mele Kyari, the Chief Upstream Investment Officer (CUIO), and Mr Bala Wunti, Chief Strategy and Sustainability Officer, Oritsemeyiwa Eyesan.

The event also had in attendance the NUPRC Chief Executive, Mr Gbenga Komolafe, Managing Directors of TotalEnergies in Nigeria and CNOOC, Mr. Mike Sangstar, and Mr. Li Chunsheng, among others.

OML 130 is in the deep water Niger Delta, 130 kilometres offshore. The block contains the producing Akpo and Egina fields and the Preowei discovery.

To date, the Akpo field, via the Akpo FPSO, has produced over 646 million barrels of Condensate, while the Egina field, via the Egina FPSO, has produced over 233 million barrels of Crude Oil.

So far, about 1.6 Trillion cubic feet (TcF) of gas has been commercialised from both fields with an outstanding record of non-zero gas flare.

OML 130, currently producing 170,000 barrels per day, is the largest producer in TotalEnergies’ Nigeria portfolio and amongst the most prolific assets in Nigeria.

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