- CBN Governor, Godwin Emefiele has insisted on regulated foreign exchange regime to ensure that the naira does not go beyond a certain band in the exchange market. Also, the regulator said it has no intention of becoming reckless with the country’s foreign reserves, which have increased from $24 billion to $29.8 billion in three months. The CBN boss who spoke last week at the Monetary Policy Committee meeting, said the bank would tighten the forex management knob or strategy by introducing more items to the list of banned goods, to deter their importation to the country, as a way of boosting local production, creating employment and growth, as well as, diversifying Nigeria’s sources of income. According to the bank’s spokesman, Isaac Okorafor, “The present economic challenges that we face have been worsened by our past practice of frittering away huge earnings made from oil sales, over the years. As we have explained severally, our decisions on forex management are prompted by the challenge posed by the level of depletion of the country’s reserves, arising from issues such as a drastic reduction in oil earnings, speculative attacks and round tripping.”
- The three tiers of government received a total of ₦4.95 trillion instead of the ₦6.1 trillion projected to be distributed to them in the 2016 fiscal year from the Federation Account Allocation Committee, new data shows. This created a ₦1.1 trillion shortfall within the 12-month period. The federation account is currently being managed by a legal framework that allows funds to be shared based on three major components – statutory allocations, Value Added Tax distribution; and allocation made under the derivation principle. The inability of the revenue generating agencies to meet their targets owing to the challenges facing the economy was largely responsible for the revenue dip, which impacted negatively on the allocations to the three tiers of government. Figures of statutory allocations obtained from FAAC revealed that while the government had projected to distribute ₦509.1 billion monthly among the three tiers of government, the shutdown of oil installation facilities, which led to a drop in crude oil production, made it difficult to generate enough revenue to achieve that target. For instance, within the 12-month period of last year, the government could only surpass the monthly budgeted allocation to the three tiers of government thrice. The Chairman of the FAAC Forum of Finance Commissioners and Adamawa finance commissioner, Mahmoud Yunusa, told reporters on the sidelines of January’s FAAC meeting that the scarcity of resources to implement the programmes of government owing to the economic recession had made it imperative for states to be prudent and transparent in financial management. He said, “The resources are no longer there and so whatever resources that we have must be effective, transparently and judiciously used for the benefit of the people.”
- The seventh naira-settled OTC FX Futures contract, NGUS JAN 25 2017, with a notional amount of $274.39 million matured and settled Wednesday, January 25, 2017, on FMDQ OTC Securities Exchange. This brings the total value of contracts so far matured on the OTC Exchange to circa $1.80 billion, and about $5.46 billion worth of OTC FX Futures contracts traded so far. The contract, which stopped trading on Tuesday, January 17, 2017, was valued against the Nigerian Inter-Bank Foreign Exchange Fixing (NIFEX) Spot rate as published by FMDQ on January 25, 2017, with the associated clearing/settlement effected by the FMDQ-designated clearing agent, the Nigeria Inter-Bank Settlement System plc (NIBSS), in line with the FMDQ OTC FX Futures Market Operational Standards. The CBN introduced a new contract, NGUS JAN 31 2018, for $1 billion at $/₦281.50 to replace the matured contract and also re-priced its quotes on the existing 1 to 11-month contracts.
- American energy giant Chevron has reported a full-year 2016 loss of $497 million, contrasting with 2015 earnings of $4.6 billion. The company reported a second quarter 2016 loss of $1.47 billion in July and reported earnings for four months ending December of $415 million, that way reversing a loss of $588 million in missed forecasted earnings from a year ago. Production in Nigeria shrank by one-sixth because of the impact of militant attacks on pipelines and infrastructure. “Our 2016 earnings reflect the low oil and gas prices we saw during the year,” said John Watson, CEO on January 27 when the results were released. He further said, “We responded aggressively to those conditions, cutting capital and operating expenses by $14 billion. “We are well positioned to improve earnings and be cash flow balanced in 2017 through continued tight spending and cost control and additional revenue from expected production growth.” The company said in a release that production increases from major capital projects and base business were offset by normal field declines, the impact of asset sales, production entitlement effects in several locations and the effects of civil unrest in Nigeria. The energy giant’s average sales price per barrel of crude oil and natural gas liquids was $40 in the quarter, up from $35 a year ago. The average sales price of natural gas was $1.98 per thousand cubic feet, compared with $1.54 in last year’s quarter. However, the company’s downstream earnings plunged 65 percent from the year-ago period to $357 million, reflecting lower margins on refined product sales and higher tax items. Attacks on Chevron’s facilities in the Niger Delta were frequent last year and one of the most devastating was an attack on the company’s Okan facility in May 2016, which shut-in about 35,000 barrels per day of Chevron’s net crude oil production in Nigeria.