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Economy

Buhari Hails NLNG As NNPC Reviews Activities

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GMD NNPC, Mallam Mele Kolo Kyari

The Nigerian National Petroleum Corporation (NNPC) held its head high as it commenced activities for the week following commendation from President Muhammadu Buhari for rallying shareholders to make Nigeria Liquefied Natural Gas Limited (NLNG) a company to reckon with.

Buhari who is also the Minister of Petroleum Resources gave the commendation at the groundbreaking of the NLNG Train 7.

He said that the NLNG had always been associated with success and had become a global company.

“The NLNG Train 7 represents another historic milestone in the history of NLNG. NLNG story has been associated with success,” he said.

The president also said that the NLNG had contributed 114billion dollars in taxes to Nigeria, and tthat with NLNG Train 7, there would be more jobs that would touch the lives of everyone particularly the host community.

He expressed joy how the NLNG had transformed from just a project to a very successful company in about 30 years.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, urged all shareholders to work hard to ensure the successful completion of the project which he said would boost government’s efforts to make Nigeria a fully industrialised nation.

Sylva also said the project would help the nation’s gas development aspiration.

Malam Mele Kyari, Group Managing Director (GMD), NNPC, said at the groundbreaking that there was consensus among shareholders and board members to take the next step towards providing additional capacity which should be greater than what was on ground.

The NNPC GMD thanked President Muhammadu Buhari for his quick intervention which ensured the eradication of all pre-existing stumbling blocks on the path of NLNG Train 7 project.

Also in the week under review, Minister of State for Petroleum, Sylva commended President Buhari at a ceremony to mark the execution of Shareholders Agreement between the NNPC, the Nigerian Content Development & Monitoring Board (NCDMB) and Zed Energy.

The agreement signed was for the establishment of a 50 million litres of Petroleum Products Terminal in Brass, Bayelsa State, for his giant strides in the Niger Delta which were making huge impact on the people of the area.

Sylva said the N10.5 billion Brass Petroleum Products Terminal project was expected to deliver an automated 50-million-litre depot with two-way product jetty and an automated loading bay.

He added that the project would deliver six automated tanks for storage of 30 million litres of Premium Motor Spirit (PMS) and 20 million litres of Automotive Gas Oil (AGO) as well as Dual-Purpose Kerosene (DPK).

Speaking after signing the agreement, Kyari, NNPC GMD, said the Corporation was proud to be part of the project which aside ensuring products availability in all nooks and crannies of Niger Delta would also guarantee the nation’s energy security.

Kyari also said the project would generate employment.

The Executive Secretary of NCDMB, Mr Simbi Wabote said the milestone recorded was as a result of strong interagency collaboration and public-private sector partnership.

“The NCDMB will continue to drive such partnerships across the industry to bring development in Nigeria,” he noted.

Earlier, the Coordinator of the Project and Group General Manager, National Petroleum Investment Management Services (NAPIMS), Mr Bala Wunti stated that the project would enhance the economics of marine petroleum products distribution.

Still in the Week under review, the NNPC GMD, Kyari expressed delight at lawmakers’ readiness to pass the Petroleum Industry Bill (PIB) before the end of June 2021, to bring fiscal stability to the oil and gas industry in Nigeria.

Kyari said the passage of the bill would help to address a litany of challenges facing the nation’s oil and gas industry, noting that it was a piece of legislation that would change the fortunes of Nigeria’s economy.

He added that Nigeria, as a hydrocarbon resource dependent nation required much revenue from today’s oil to develop gas infrastructure for its energy transition.

On revenue generation, the House of Representatives Committee on Upstream expressed its readiness to continue to forge closer ties with the NNPC in order to grow the nation’s revenue for the interest of all Nigerians.

Chairman of the Committee, Rep. Musa Adar, made this known during an oversight visit of the Committee to one of NNPC’s Corporate Services Unit, National Petroleum Investment Management Services (NAPIMS) in Lagos.

He commended NAPIMS for the cordial working relationship and assured that the Committee would sustain the visit to foster development of the country.

Mr Bala Wunti, Group General Manager, NAPIMS, assured that the Corporation would work with the National Assembly and all other relevant stakeholders to ensure that her operations remained visible to all.

Wunti said this would be achieved in line with the current management Transparency, Accountability and Performance Excellence (TAPE) drive.

In the meantime, Mrs Betty Ugona, Chief Innovation Officer, Research, Technology and Innovation (RTI) a corporate services unit of the NNPC said that energy transition remained key to the Corporation’s sustainable business approach.

Ugona identified energy transition as viable and sustainable business approach for the NNPC in its strategic business plans in order to remain a going concern.

She said the Corporation established the Business Unit of RTI in March 2020 in order to remain relevant and competitive in the global energy mix.

She also explained that RTI was spearheading the drive by the NNPC to reposition itself as an energy company of global excellence through its core aspects of Research, Business efficiency and innovation.

Also in the week under review, the Group General Manager, Crude Oil Marketing Division (COMD), Sir Billy Okoye, and the Managing Director of the Port Harcourt Refining Company (PHRC), Engr. Ahmed Dikko, were honoured by the Democracy Heroes Award Africa.

While Sir Okoye was honoured with the Best Administrator of the Year Award, Engr. Dikko was honoured with the Most Innovative Public Servant of the Year Award.

The honour bestowed on them at the group’s 9th edition of the awards aimed was for the various outstanding roles they played in the growth of the oil and gas sector and the country.

It was also to recognise Nigerians, who have contributed immensely to the sustenance of the nation’s democracy,

Receiving the award Okoye advocated the culture of having firm belief in the Nigerian project, saying, “Nigeria is a great country and as Nigerians, we must make this country greater”.

On his part, the Managing Director of PHRC, Dikko, expressed delight for being the winner of “Most Innovative Public Servant of the Year Award”.

He said that the award would spur his team to put in more effort towards delivering the Port Harcourt Refinery rehabilitation project in good time.

Commenting on criteria of selection, the President and Chief Executive Officer of the Democracy Heroes Award Africa, Mr Olufunso Ajagbonna, pointed out that the honour was based on merit through public votes.

The NNPC Advance Leadership Programme Class 094 lifted School of the Blind in Federal Capital Territory (FCT) with Braille Machine, Typewriters and Food items as part of its Cooperate Social Responsibility.

Mr Akpan Nkereuwem, President of the class, said the class was able to locate the FCT School of the Blind and found it deserving of the token of support because the Class 094 was also known as “The Eagle”.

Some members of the class also gave monetary donations to support one of the students, Lucky Pastor, who authored a book entitled “Braving the Storm: Rebranding the Mind”.

The headmistress of the school, Mrs Rose Uganden, thanked members of the Class for their generous donations to the school and urged them to continue to support the children.

A member of the class, Mr. Ogbonnaya Kalu spoke on their behalf.

The head boy of the school, Joseph David, also expressed gratitude to “The Eagles” for their kind gesture.

What you need to know about NLNGThe Nigeria Liquefied Natural Gas Limited was established in 1989 and did her first shipment abroad in 1999.

It has contributed 114 billion taxes to the Nation’s economy.

The NLNG Train 7 will attract 12 billion dollars Foreign Direct Investment and will create 10,000 jobs.

It will also help the Local content capacity development as 55 per cent of the project needed will be done locally in Nigeria and 49 per cent of installation will also happen in Nigeria.

It is the most successful business model in Africa.

Economy

LCCI Applauds Nigeria’s Economic Growth Performance

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This action also has implications for economic growth, job creation, and revenue generation for the government

…Highlight some threats to future growth that need special attention

Olushola Okunlade Writes

The Nigerian economy has recorded an impressive recovery from the recession induced by the COVID-19 pandemic in 2020.

The economy has consistently recorded growth rates breaking many analysts’ predictions of expected lower growth rates. However, the economy has continued to struggle with many inhibiting burdens like inflation, weak revenue generation, degenerated infrastructure, forex challenges, unsustainable cost profile seen in debt services and subsidy payments, and the daunting threats of worsening insecurity.

LCCI is concerned that if we continue in this trajectory, the economy may bleed away into stagflation which will impact production costs, job losses, worsened forex crisis, and dampened growth in the medium term.

The National Bureau of Statistics (NBS) announced that Nigeria’s Gross Domestic Product (GDP) grew in 2022Q2 by 3.54% year-on-year in real terms. This is the seventh quarter of positive growth. This rate is lower than the 2021Q2 rate which was at 5.01% decreasing by 1.47%. Quarter-on-Quarter, it was an increase of 0.44% points relative to 3.11% recorded in 2022Q1.

While we celebrate the latest growth figures, the Chamber wishes to highlight some threats to future growth that need special attention:

The oil sector has consistently recorded negative growth for the ninth consecutive quarter, contracting again by -11.8% y/y in Q2 2022 following a higher contraction of -26% y/y in Q1. The average daily crude oil production in Q2 was 1.43mbpd even lower than the 1.49mbpd produced in Q1. If oil revenue makes up more than 80 percent of government revenue, we expect the Government to tackle the menace of oil theft and pipeline vandalism with a sterner approach. 

The non-oil sector grew by 4.8% y/y in Q2 ’22 against 6.1% y/y in Q1 ‘22. Key drivers within the non-oil economy include transportation and storage (51.7% y/y), finance and insurance (18.5% y/y), telecommunications (7.7% y/y), trade (4.5% y/y), real estate (4.4% y/y), construction (4.0% y/y), manufacturing (3% y/y), and agriculture (1.2% y/y). Combined, these sectors account for 78.3% of the total GDP in Q2. We urge the government to continue with the non-oil campaigns and interventions to sustain the targeted financing towards boosting non-oil export for enhanced foreign exchange earnings.

The growth of 1.2% recorded for agriculture and 3% for manufacturing are comparatively low when compared with other sectors that grew above 5%. This is also indicative of the threats facing these sectors that power Nigeria’s real sector. The woes in these two sectors are responsible for the frightening rise in our inflation rate. And with the excruciating burden of debt service, subsidy payments, and worsening insecurity, many more production activities may be constrained in the coming months. 

The Federal Government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, and export infrastructure, tackling insecurity, and freeing more money from subsidy payments. It is also worrisome that the 2023 budget estimations indicate that there may not be any significant allocation to capital projects in 2023. We urge the government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and take a decisive step toward removing fuel subsidies.

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Economy

Economy: Dangote Petrochemical Plant To Position Nigeria As Polypropylene Hub In Africa

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Economy: Dangote Petrochemical Plant To Position Nigeria As Polypropylene Hub In Africa

…As Godwin Emefiele commends the effort, says timely and appropriate

Olushola Okunlade Writes

The Dangote’s $2 billion Petrochemical Plant located in Lagos when fully operational will position Nigeria as one of Africa’s largest petrochemicals hubs and boost non-oil export earnings for the country, according to the Dangote Group President, Aliko Dangote.

The 900,000 metric tons per annum capacity Plant, which is being built alongside the 650,000 barrels per day Dangote Petroleum Refinery will produce polypropylene strategically positioned to cater to the demands of the growing plastic processing downstream industries not only in Africa but also in other parts of the world.

Dangote who made this disclosure at the 2022 Zenith Bank International Trade Seminar on Non-oil Export recently in Lagos, said the refinery and petrochemical projects will ensure petroleum products’ sufficiency and security for Nigeria.

He emphasized the need for government to unlock the potential of petrochemical export by completing the OB3 pipeline to make gas available to manufacturers. “There is a need to prioritize financing gas infrastructure, gas allocation to the domestic market, and adjustment of fiscal framework to make the supply of gas to domestic market attractive for oil companies,” he added.

Dangote disclosed that the refinery reputed to be the largest single train greenfield petroleum refinery in the world is at an advanced stage of completion and that on completion, it is expected to export much more than 8 million tons of Petroleum products annually after meeting domestic consumption, while about 900,000 tons of polypropylene is also expected from the petrochemical plant.

The business mogul revealed that the recently commissioned 3m mtpa Fertilizer Plant has “commenced export to India, North America, and Latin America. At steady state, will export two million tons per annum after meeting domestic consumption.”

He explained that the Dangote Fertiliser regarded as the second largest urea fertilizer plant in the world is leveraging Nigeria’s abundant gas reserves as raw material for the production of Urea.

Stressing the need for Nigeria to encourage non-oil export, Dangote said that Nigeria’s non-oil export is quite low compared to other African top oil producers. “This exposes the economy to oil price and production risks. Export opportunities abound in Nigeria but there are two main routes import substitution and export-oriented industries. Import substitution is ideal for economies like Nigeria which has a large domestic market and a huge import bill”, he added.

Dangote said that investors can build industries, which initially target the domestic market, then subsequently target export markets as they build scale and competitiveness.

He then urged the Federal Government to build on the country’s competitive advantage to develop industries that are primarily geared toward export. “Nigeria LNG Limited (NLNG) in Bonny is a good example of an export-oriented investment (though would be good to get a model where such revenues are sold in the I&E window”, adding that some countries have gone a step further to create special economic zones to achieve this objective.

In his goodwill message, the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele described the theme of the seminar “Unlocking Opportunities in Nigeria’s Non-Oil Export Business” as timely and appropriate.

The CBN Chief reasoned that the theme was apt because “the global economy and structure are changing rapidly before our eyes. The previous world economic order underpinned by globalization and seamless trade possibilities seems to be suffering major disruptions lately. We believe Nigeria has a lot of potential, and we can harness this for the good of our people and country.”

He pointed out that the CBN had undertaken several initiatives to promote the non-oil export sector because of its firm belief that the non-oil export sector holds enormous potential to contribute to employment generation, wealth creation, and economic growth of the country.

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Business

CBN Interest Rates Mean Less Credit To Private Sector, Reduced Investment, And Constrained Production In Economy – LCCI

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This action also has implications for economic growth, job creation, and revenue generation for the government

…CBN action has implications for economic growth, job creation, and revenue generation for the government – LCCI

Olushola Okunlade Writes

LCCI Statement on Monetary Policy Rate Hike by the Central Bank of Nigeria (CBN)

The Lagos Chamber of Commerce and Industry (LCCI) has stated that the recent hike in Monetary Policy Rate (MPR) by the Monetary Policy Committee of the Central Bank of Nigeria (CBN) from 11.5% to 13% was well expected by the Lagos Chamber following the recent fundamentals in the economy.

LCCI has also noted the trend around the rising inflation rates across many economies globally. It is well understood that the hike was meant to control the rising inflation rate feared to assume a galloping trend soon.

“The CBN has always maintained that Nigeria’s high inflation rate was due to non-monetary factors outside its purview. We have consistently pointed at factors responsible for the rising inflation including an epileptic supply of Premium Motor Spirit (PMS), high cost of Automotive Gas Oil (AGO/Diesel), electricity tariff hikes, insecurity, and the illiquidity crisis in the foreign exchange market. These factors have continued to put pressure on the cost of production translating to higher prices or cost-push inflation. These headwinds must be tackled head-on for the inflationary pressure to be tamed sustainably.”

LCCI stated that the hike in the interest rates will normally mean less credit to the private sector and that can translate to reduced investment and constrained production in the economy, at least in the short term. This action also has implications for economic growth, job creation, and revenue generation for the government. When the MPR was 11.5% some credit lenders charged as high as 25%  maximum rate to small companies. With the benchmark interest rate at 13%, we may likely have rates climb beyond 30% for SMEs.

While we agree with the proposition that a lower interest rate in Nigeria compared with higher rates in developed economies would lead to capital flight, we must restate our recommendation that interest rate hikes will not on their curb inflationary pressures.  The supply-side challenges like insecurity, forex scarcity, and uncertainties from the inconsistent policy environment must be tackled to curb the rising inflation. This is the more sustainable solution to the rising inflation in Nigeria.

In the coming months and into the third quarter, the CBN should expand its targeted intervention schemes to support the productive sectors of the economy to reduce the cost of production. Beyond the role of price stability, the CBN must pay attention to sustaining economic growth that can create jobs and boost government revenues. Again, we reiterate that hikes in rates alone will not tackle the near-galloping inflation trend in Nigeria. We need interventions to boost the supply of goods and services, build critical supportive infrastructure, and resolve the illiquidity crisis in the forex market.

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