06 Oct

Daily Watch – CBN adjusts exchange rate, experts see NLNG as model for NNPC

  • The Central Bank has weakened its exchange rate peg slightly to N197 against the dollar from N196.50 it set last week. Traders said the regulator sent a message announcing the adjustment which is the seventh since the bank introduced tight currency controls in February. The CBN assumes an official rate for the Naira but typically devalues or adjust the rate upwards from time to time as it strives to defend the Naira. Many still believe, the Naira is over priced and should be devalued to fall in line with market reality. However, the CBN has remained defiant and insists it will not devalue.
  • President Muhammadu Buhari has said the 2016 National Budget will include fresh policies and measures for the rapid diversification of the economy from its current over-dependence on oil. The President spoke in Abuja when he hosted a delegation of French investors. Buhari said the policies being evolved by his administration to boost domestic manufacturing and attract greater investment to Nigeria’s agricultural and mining sectors would be fully realised in the 2016 budget.
  • Executives of some exploration and production (E&P) companies are advocating for the adoption of the Nigeria Liquefied Natural Gas (NLNG) model for funding joint venture projects with the Nigerian National Petroleum Corporation (NNPC). With the PIB yet to be passed, the adoption of the LNG model could ensure that each joint venture is self-sustaining. According to one executive, the LNG model would free the federal government from any cash-call obligations. “In the absence of the PIB, they should adopt the LNG model and let each venture be self-funding. The two parties will sit together and decide how to raise fund for their operation because there will be no need for government appropriation,” he said. With the adoption of LNG model, the government will derive its revenue from taxes, royalties and NNPC’s share of profit in the form of dividends.
  • NERC is mulling possible sanctions against the TCN, after a 7-day ultimatum given to the transmission company to shut down a supposed illegal account used to trade within the electricity market, elapsed on Wednesday. NERC may consider financial fines against TCN as well as the suspension or outright removal of certain officers found to be culpable in violating the regulations of the electricity market.