Business

Economist Group Faults Crude Supply Delay To Dangote … Says Its Risky To Nigeria’s Economy’

Published

3 months ago

August 21, 2024

The Economist Intelligence Unit (EiU), the research and analysis division of the Economist Group, has warned that further delays in crude oil feedstock to the Dangote Petroleum Refinery and Petrochemicals could jeopardise Nigeria’s economic recovery, putting more pressure on the Naira, the local currency.

It noted that the Dangote Refinery, which began production in January, has encountered setbacks in petrol production due to a shortage of crude oil feedstock.

The $20 billion facility, it stated, has successfully exported various products, including fuel oil, naphtha, nitrogen fertilisers, gasoil, jet fuel, and diesel, but has been unable to ramp up petrol production due to challenges in sourcing adequate crude oil.

The delays are expected to have significant economic repercussions for Nigeria, and likely to worsen the already strained relationship between public finances and the management of the Naira.

Acknowledging that the government had previously scrapped the official petrol subsidy in June 2023, the report said the practice of unofficially subsidizing petrol continues, with substantial implications for the national budget.

It further noted that this has led to increased currency losses, contributing to a widening budget deficit that has become increasingly difficult to manage and could force the Central Bank of Nigeria to revert to stronger management of the currency.

“As the Federal Government unofficially subsidises petrol (the official subsidy was scrapped in June 2023), currency losses feed into a widening budget deficit that is becoming more challenging to finance.

“This provides extra incentive for the central bank to revert to stronger management of the currency, as we already expect, but the degree of market intervention could become heavier.

“Meanwhile, ongoing fuel imports would reduce the current-account surplus from the 1.9% of GDP that we currently project for 2025, potentially leading to lower foreign reserves and the return to a more rigid and unstable foreign-exchange system”, it said.

The delay in securing a reliable pipeline of affordable crude oil feedstock was attributed to low crude production due to oil theft and underinvestment, and using crude oil to repay outstanding loans.

“The refinery has encountered a range of problems, both practical and political in nature. The most publicly discussed issue is how the refinery can secure a reliable pipeline of crude oil feedstock at affordable prices.

“NNPC, the state oil firm, has not been able to provide enough volume. The government has promised to deliver 450,000 b/d of oil to the refinery through NNPC in a pilot scheme, sold in Naira, but the state oil company is not in a position to make this a reliable arrangement.

“Crude production in Nigeria is stubbornly low, as a result of oil theft and underinvestment. Output was 1.31m b/d in July, against an OPEC+ target of 1.38m b/d.

“NNPC receives a varying minority share of this and, moreover, a sizable quantity (about 90,000 b/d) is being committed as loan collateral”, it stated further.

Accordingly, it said, the situation has been worsened by International Oil Companies (IOCs) operating in Nigeria, which demand a premium of $3-$4 per barrel over the prices they receive elsewhere.

It noted that regulators are hesitant to enforce the Domestic Crude Supply Obligation (DCSO)—which requires IOCs to sell crude to local refineries—out of concern that such enforcement might lead to divestment.

The report emphasised that producing fuel locally would significantly benefit Nigeria’s fiscal position and currency, given that petroleum products account for 15% to 20% of the country’s goods import bill.

The Dangote refinery, hailed as a transformative development, is expected to resolve the paradox of Nigeria being a major crude oil producer yet still dependent on fuel imports.

With a capacity of 650,000 barrels per day (b/d), the refinery is expected to potentially eliminate the need for fuel imports and shield local fuel prices from exchange-rate fluctuations.

“The Dangote fuel refinery is potentially transformational for Nigeria, which has always been an oil exporter and fuel importer.

“This fact is often regarded as a failure and an embarrassment by politicians, businesses and the media alike, but the new refinery has the ability to change this”, it stated.

Business

CFAO Hits Nigerian Automobile Market With New Land Cruiser Prado

Published

2 days ago

December 2, 2024

The Tide

CFAO has added to its fleet of cars in the motoring industry with the recent launch of the 2024 Toyota Land Cruiser Prado, one of Toyota’s flagship models, alongside a range of others for the Nigeria market.
Unveiling the product in Port Harcourt on Tuesday, the General Manager, CFAO Mobility, Port Harcourt, Julius Fasetire, said the model is exceptional tailored for Nigeria’s market.
According to him, the unveiling was an exclusive opportunity for Nigerians to explore the latest in automotive excellence, discover new vehicle options , and benefit from Toyota by CFAO’s end of year bonus.
He further explained that CFAO is an authorised distributor of Toyota vehicles in Nigeria, committed to providing high quality vehicles and services to meet the needs of customers across the country.
“With an extensive network of service centres, Toyota by CFAO offers top-notch sales, service and support to ensure a seamless ownership experience”, he declared.

By: Nkpemenyie Mcdominic, Lagos

Business

Marketers Threaten Boycott Of PH Refinery

Published

2 days ago

December 2, 2024

The Tide

There are indications that oil marketers may boycot patronising the newly opened Port Harcourt Refinery Company (PHRC), which commmenced crude oil production last Tuesday.
This follows their request that PHRC, under the management of the Nigerian National Petroleum Company Limited (NNPCL), must dispense its refined petroleum products below the prices of the Dangote Petroleum Refinery.
Meanwhile, contrary to NNPCL’s claims, while reactiing to claims that its petrol price was about N1,045/litre, said the refinery had not released its prices, as products from the plant were currently dispensed to only NNPCL stations.
NNPCL’s spokesperson, Olufemi Soneye, revealed that the company was still reviewing its prices and had yet to commence bulk sales, saying that its purchasing portal is still closed.
In the midst of this, The Tide’s source also gathered that oil marketers imported 105.67 million litres of petrol into the country five days ago.
The marketers confirmed that NNPC was selling petrol at N1,045/litre, saying that they may be compelled to opt for petrol importation as a means of meeting local demands.
The source exclusively gathered that a total sum of 78,800 metric tonnes representing 105.67 million litres of petrol was imported into the country in the last five days, specifically identified November 23 and November 28.
The NNPC said the 60,000-capacity newly rehabilitated complex of the old Port Harcourt Refinery, which had been revamped and upgraded with modern equipment, is operating at a refining capacity of 70 per cent of its installed capacity.
The company added that NNPC added that diesel and Pour Fuel Oil would be the highest output from the refinery, with a daily capacity of 1.5 million litres and 2.1 million litres, respectively.
There’s also a daily output of Straight-Run Gasoline (Naphtha) blended into 1.4 million litres of Premium Motor Spirit (petrol), 900,000 litres of kerosene, and low-pour fuel oil of 2.1 million litres.
It was stated that about 200 trucks of petrol would be released into the Nigerian market daily.
However, claims that the national oil firm’s PMS price was higher than that of Dangote triggered diverse reactions from marketers.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, stated that though NNPC had yet to release any price for the products from the refurbished Port Harcourt refinery, a high price would discourage marketers, because Dangote currently sells his petrol at N970/litre, while imported petrol is around that price.
He, however, noted that there was the possibility that the NNPC would review its prices downward when the Port Harcourt refinery comes fully on stream.

Business

NCDMB, ICPC Set To Mark Anti-Corruption Day

Published

2 days ago

December 2, 2024

The Tide

Following its unequivocal and successive ranking as Nigeria’s top performing organisation in efficiency and transparency from 2022-date, the Nigerian Content Development and Monitoring Board (NCDMB) has unveiled plans to mark the 2024 World Anti-corruption Day on Thursday, 5th December at its headquarters, the Nigerian Content Tower, Yenagoa, Bayelsa State.
The theme of this year’s celebration, according to a statement from the Board’s Department of Corporate Communications is “Effective Whistleblowers Protection Mechanism: A Critical Tool in the Fight against Corruption”.
The statement added that the celebration at the NCDMB is organised by the agency’s Anti-Corruption Unit (ACTU) led by the Director of Monitoring and Evaluation, Mr. Abdulmalik Halilu.
The event, according to the Board, will be marked with a workshop that will feature paper presentations by representatives of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and key officials of the Board.
Another highlight of the day will include the grand finale of the debate competition among six federal government colleges from the six zones of the country, plus a representative from Bayelsa State, which is selected automatically as the host state of NCDMB.
The selected schools are Federal Government College, Odi, Bayelsa State; Federal Government College, Okigwe, Imo State; Federal Government College, Warri, Delta State; and Federal Government Girls College, Kazaure, Jigawa State.
Others are, Federal Government College, Ijanikin, Lagos State; Federal Government College, Maiduguri, Borno State; and Federal Government College, Rubochi, Abuja.
Two students, accompanied by an adult from each of the schools will be camped in Yenagoa, the Bayelsa State capital, by the NCDMB for four days during which preliminary debates will be held to determine the best two teams.
The debate, whose grand finale is to be held at the magnificent 17-storey Nigerian Content Tower (NCT), Yenagoa, is being organised to instill the ethics of transparency and public interest in Nigerian students to promote critical thinking, research, and public speaking skills among that segment of the population.
This segment, according to the Board, are generally viewed as potential future leaders of thought and industry in the country, and encourage students to engage with complex issues that underline good governance and democracy in Nigeria, just as prizes will also be awarded to winners.

By: Ariwera Ibibo-Howells, Yenagoa