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S.Korean refiners aim to benefit from 2020 shipping mandate

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  • As Saudi Arabia orders citizens to leave Lebanon as tensions rise

South Korean refiners are planning to spend over five billion dollars on plant upgrades in response to tighter rules on shipping fuel, boosting production of low- sulphur fuel oil and other high-end products.

The refiners hope the investment, which comes ahead of the 2020 introduction of the new rules, will make them one of the biggest beneficiaries of the new regulations, with many competitors still waiting to commit to new spending.

“Not many refiners are doing so. Korean refiners are investing proactively,” said Hwang Yu-sik, an analyst at NH Investment & Securities.

“Low-sulphur products are more expensive and as a result they could make profits by producing better quality fuel oil.”

In 2016, the International Maritime Organisation (IMO), the United Nations’ shipping agency, capped the sulphur content in shipping fuel from 2020 at 5,000 parts-per-million (ppm) from 35,000 ppm at present.

South Korea has four oil refiners with a combined refining capacity of 2.964 million barrels per day (bpd), and is a mid-size player in the Asian bunker fuel market with average monthly sales of about 500-550 kilotonnes, according to analysts.

Globally, refiners have so far largely held off from making changes due to the high cost of adding desulphuriser units as well as secondary units such as crackers, cokers and visbreakers.

These ones typically convert residual fuel oil to gasoil, which will be increasingly in demand as a marine fuel.

However, SK Innovation, owner of top refiner SK Energy, S-Oil, the third-largest refiner, and Hyundai Oilbank, plan to spend more than five billion dollars over the next one to three years on such units.

S-Oil, which is building a 4.8 trillion won (4.3 billion dollars) residue fuel oil upgrading and olefin production facility due for completion in the first half of 2018, sees margins worsening for high sulphur fuel oil from 2020.

“After the completion of the project, our company will not sell high
sulphur fuel oil (and); we are expected to become one of the biggest beneficiaries of the IMO regulations,” S-Oil treasurer Shin Kwan-bae said on a recent earnings call.

The refiner plans to add a new solvent deasphalting (SDA) unit and expand its existing delayed coking unit (DCU) and hydrocracking unit (HCR) to produce more low sulphur gasoil.. ($1 = 1,113.8400 won)

In the meantime, Saudi Arabia has ordered its citizens to leave Lebanon immediately, escalating a regional standoff with Iran centred on the fragile state, which it claims is being run by Tehran’s proxy, Hezbollah.

The move follows a week of bellicose rhetoric from the Sunni Arab powerhouse about its Shia rival, drawing strong support from Donald Trump and Israel, all three of whom insist Iran is forging strongholds across the region.

The standoff has taken tensions between Riyadh and Tehran to new levels and raised fears that decades of distrust and manoeuvrings between the two may be building towards a military confrontation, underwritten by the Trump administration and joined by Israel.

The Saudi order for its citizens to leave, also made by the kingdom’s allies in Bahrain and Kuwait, came after the country’s foreign minister, Adel al-Jubeir, said his government would treat Lebanon as a hostile state as long as Hezbollah was in the government. He described Hezbollah’s participation in government as an “act of war” against Saudi Arabia.

The Israeli intelligence minister, Yisrael Katz, said on Thursday he believed conditions were ripe for a diplomatic offensive against Iran and Hezbollah at the United Nations, where he said Israel would seek better enforcement of a 2006 ceasefire agreement that called on Hezbollah to disarm and stay away from its border.

Allegations of a pact, at least on a de facto level, between Saudi Arabia and Israel were given impetus after it was revealed that Israeli diplomats were asked to repeat talking points, almost identical to remarks made by Saudi leaders after Saturday’s resignation of the Lebanese prime minister, Saad Hariri, claiming Hezbollah had made his job impossible.

The emergence of the reported memo sent to Israeli missions around the world strongly echoes public statements made by the Israeli prime minister, Benjamin Netanyahu, and his defence minister, Avigdor Lieberman.

Hariri’s departure came at the behest of Saudi leaders, who then launched an unprecedented round of anti-Iran rhetoric, led by Hariri, accusing Hezbollah of dominating life in Lebanon and subverting the political system.

Hariri had led the government in Lebanon for 11 months after five years in exile, mainly in Riyadh. Saudi Arabia was a prominent patron of Hariri, but he had fallen out of favour with his hosts after the collapse of the construction sector, during which a company he chaired, Saudi Oger, incurred large debts.

Additional report from Guardian UK

Economy

NEPZA Boss Says Nation’s Free Trade Zones Not Really `Free’

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The Nigeria Export Processing Zones Authority (NEPZA) says the country’s Free Trade Zones are business anchorages that have for decades been used to generate revenues for the Federal Government.

Dr Olufemi Ogunyemi, the Managing Director of NEPZA, said this in a statement by the authority’s
Head of Corporate Communications, Martins Odeh, on Monday in Abuja, stressing that the the widely held notion that the scheme is a `free meal ticket’ for investors and not a means for the government to generate revenue is incorrect.

Ogunyemi said this public statement was essential to clarify the misunderstanding by various individuals and entities, in and out of government, on the nature of the scheme.

He reiterated the authority’s commitment to enhancing public knowledge of the principal reason for the country’s adoption of the scheme by the NEPZA Act 63 of 1992.

“The Free Trade Zones are not hot spots for revenue generation. Instead, they exist to support socioeconomic development.

“These include but are not limited to industrialisation, infrastructure development, employment generation, skills acquisition, foreign exchange earnings, and Foreign Direct Investments(FDI) inflows,” Ogunyemi said.

The managing director said the NEPZA Act provided exemption from all federal, state, and local government taxes, rates, levies, and charges for FZE, of which duty and VAT were part.

“However, goods and services exported into Nigeria attract duty, which includes VAT and other charges.

“In addition, NEPZA collects over 20 types of revenues, ranging from 500,000 dollars-Declaration fees, 60,000 dollars for Operation License (OPL) Renewal Fees between three and five years.

“There is also the 100-300 dollar Examination and Documentation fees per transaction, which occurs daily.

“There are other periodic revenues derived from vehicle registration and visas, among others.

“The operations within the free trade zones are not free in the context of the word,” he said.

Ogunyemi said the global business space had contracted significantly, adding that to win a sizable space would require the ingenuity of the government to either expand or maintain the promised incentives.

“These incentives will encourage more multinational corporations and local investors to leverage on the scheme, which has a cumulative investment valued at 30 billion dollars.

“The scheme has caused an influx of FDIs; it has also brought advanced technologies, managerial expertise, and access to global markets.

“For instance, the 52 FTZs with 612 enterprises have and will continue to facilitate the creation of numerous direct and indirect jobs, currently estimated to be within the region of 170,000,” he said.

Ogunyemi said an adjustment in title and introduction of current global business practices would significantly advance the scheme, increasing forward and backward linkages.

“This is with a more significant market offered by the Africa Continental Free Trade Agreement (AfCTA).

“We have commenced negotiations across the board to ensure that the NEPZA Act is amended to give room for adjusting the scheme’s title from `Free Trade Zones to Special Economic Zones respectively.

“This will open up the system for the benefit of all citizens,” he said.

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Economy

2023 CLPA: Policy Cohesion Imperative For Implementation Of AfCFTA Agreements, Others

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Some policy experts and stakeholders have called for policy cohesion across Africa for the successful implementation of multilateral policy decisions.

They spoke on Wednesday during one of the plenaries at the 2023 Conference on Land Policy in Africa (CLPA), held in Addis Ababa.

The CLPA, the fifth in the series, is organised by the tripartite consortium consisting of the African Union Commission (AUC), the African Development Bank (AfDB), and the United Nations Economic Commission for Africa (ECA).

The 2023 edition has the theme, ‘Year of AfCFTA: Acceleration of the African Continental Free Trade Area Implementation’.

Dr Medhat El-Helepi (ECA), chaired the plenary with the sub-theme: ‘Land Governance, Regional Integration, and Intra-Africa Trade: Opportunities and Challenges’.

Panelists at the plenary included Dr Stephen Karingi, Director, Regional Integration and Trade, ECA; Mr Tsotetsi Makong, Head of Capacity Building and Technical Assistance, AfCFTA Secretariat.

Others were Mr Kebur Ghenna, CEO, of the Pan African Chamber of Commerce and Industry (PACCI) and Ms Eileen Wakesho, Director of Community Land Protection at Namati, Kenya.

The event also attracted various stakeholders, including traditional leaders, Civil Society Organisations, and policy decision-makers.

Makong expressed worries over the reluctance of some participants to openly discuss some matters, pleading ‘no go areas of domestic affairs’.

He, however, noted that the issues of land were within the limit of domestic regulations, adding that tenure land security was the solution that would allow intra-African investment that is still low in Africa.

Makong pointed out that the success of the investment protocol under the AfCFTA would depend on countries’ domestic laws that should be in line with the AfCFTA.

“There are guidelines on land reforms that need to be turned into regulations within the domestic systems.

“Policy coherence has to be at the heart of what we do. This can be achieved by engaging everyone including women and youth at the grassroots level.

“Also, you cannot be talking of AfCFTA as of it is just about Ministers of Trade, Economy or Investment. The idea is a totality of the entire governance structure. This is very important,” he said.

Speakers also noted that inclusive land governance was one of the key pillars to enhance Africa’s drive to improve intra-African trade, food security, and sustainable food systems.

They said an inclusive governance system would allow stakeholders to create transparency, subsidiarity, inclusiveness, prior informed participation, and social acceptance by affected communities in land-based initiatives beyond their borders.

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Economy

SOLID MINERALS: Alake Revokes 1,633 Mining Titles, Warns Illegal Miners

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The Minister of Solid Minerals Development, Dr Dele Alake, on Tuesday, announced the revocation of 1,633 mining titles for defaulting on payment of annual service fees.

Alake made this known at a news conference in Abuja on Tuesday, saying his decision was in compliance with the law, the Mining Cadastral Office (MCO) on Oct.  4, began the process of revoking 2,213 titles.

“These included 795 exploration titles, 956 small-scale mining licences, 364 quarry licences and 98 mining leases.

“These were published in the Federal Government Gazette Number 178, Volume 110 of Oct. 10 with the notice of revocation for defaulting in the payment of annual service fee.

“The mandatory 30 days expired on Nov. 10. Only 580 title holders responded by settling their indebtedness.

“With this development, the MCO recommended the revocation of 1, 633 mineral titles as follows: Exploration Licence, 536; Quarry Licence, 279; Small Scale Mining Licence, 787 and Mining Lease, 31.

“In line with the powers conferred on me by the NMMA 2007, Section 5 (a), I have approved the revocation of the 1,633 titles,” the minister said.

*Dele Alake, Minister of Solid Minerals

He said that the titles would be reallocated to more serious investors.

He warned the previous holders of the titles to leave the relevant cadaster with immediate effect.

He said that security agencies would work with the mines inspectorate of the ministry to apprehend any defaulter found in any of the areas where titles had been revoked.

“We have no doubt in our mind that the noble goals of President Bola Tinubu to sanitise the solid minerals sector and position the industry for international competitiveness are alive and active.

“We appeal to all stakeholders for their co-operation in achieving these patriotic objectives and encourage those who have done business in this sector the wrong way to turn a new leaf.

“Ultimately, the Nigerian people shall be the winners,” he said.

According to Alake, It is indeed very unconscionable for corporate bodies making huge profits from mining to refuse to give the government its due by failing to pay their annual service fee.

“It is indeed a reasonable conjecture that such a company will even be more unwilling to pay royalties and honour its tax obligations to the government.

“The amount the companies are being asked to pay is peanut compared to their own revenue projections.

” For example, the holder of an exploration title pays only N1,500 per cadastral unit not exceeding 200 units. Those holding titles covering more than 200 units pay N2,000 per unit, In short, the larger the area your title covers, the more you pay.

“This principle was applied to ensure that applicants do not hold more than they require to explore.

“With a cadastral unit captured as a square of 500 metres by 500 metres, any law-abiding title holder should not hesitate to perform its obligations,” he said.

The minister said that every sector required a governance system that regulated the conduct of its participants, the procedures for entry and exit, the obligations of the government to participants and the penalties for non-compliance.

He said that the philosophy of the Nigerian Minerals and Mining Act 2007 was to establish a rational system of administering titles transparently and comprehensively to ensure a seamless transition from reconnaissance to exploration and from exploration to mineral extraction.

“The principal agency for the administration of titles is the MCO, which receives applications, evaluates them, and issues titles with the approval of the office of the minister of solid minerals development.

“Although the MCO has tried to improve its efficiency by adopting new application administration technology, it continues to face challenges in monitoring the compliance of title holders,” he said.“Although the MCO has tried to improve its efficiency by adopting new application administration technology, it continues to face challenges in monitoring the compliance of title holders,” he said.

He warned illegal miners to desist from their illegal activities as their “days were numbered”. 

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