10 May

Daily Watch – Forcados closer to reopening, Etisalat misses another payment

  • Senate President, Bukola Saraki, says the Senate will ensure the passage of the 2017 budget on Thursday. Saraki said this after the report of the budget was laid at plenary by Danjuma Goje, chairman of the joint committee on appropriation. Commending the committee for a “job well done”, Saraki said in the history of the country, this would be the first time that budget report would be laid with details. “On behalf of our colleagues let me congratulate the committee,” he said. “This is history being made because this is the first time report of the appropriation bill will be laid with details. Because of that, by tomorrow (Wednesday) you will get hard copies of the report, but the soft copy will be ready today. We will distribute them and ensure we pass the bill on Thursday.” The 2017 budget proposal report was laid four days after the expiration of the 2016 fiscal year. President Muhammadu Buhari had presented a budget proposal of ₦7.30 trillion for the 2017 fiscal year before a joint session of the National Assembly on December 14, 2016.
  • Shell is testing Nigeria’s Trans Forcados crude export pipeline for a potential restart with the Astro Perseus tanker expected to load the first cargo by the weekend, Reuters reports quoting sources. The pipeline has been mostly shut since it was bombed by militants in February 2016. After repairs, exports briefly resumed in October until a new attack forced another shutdown in early November. A spokeswoman for Shell declined to comment. Before the attacks, the Forcados stream accounted for 200,000-240,000 barrels per day (bpd). No loading programme is expected to be issued until the pipeline is fully tested. Companies producing oil that feeds into the Forcados stream have already been working around the long-term pipeline outage, exporting oil via barges at the Warri refinery, but this has been limited to roughly 20,000 bpd. Seplat said it was aiming to bypass the often-attacked Trans Forcados pipeline with the Amukpe to Escravos pipeline, which is expected to be completed this year. Oil minister, Ibe Kachikwu, said Nigeria would voluntarily join OPEC cuts, which the group will meet later this month to discuss if its production reached 1.8 million bpd and it decides to extend and/or deepen them. Forcados is the last major oil stream yet to resume exporting.
  • Economic growth in sub-Saharan Africa should recover slightly to 2.6 percent this year after a more than two-decade low in 2016 as commodity exporters faced lower prices, the IMF said on Tuesday. The slight rebound will be driven by a recovery in oil production in Nigeria, higher public spending ahead of elections in Angola, and the fading of drought effects in South Africa, the IMF said in its regional economic outlook. However, Nigeria, Angola and Central Africa’s six-nation CEMAC bloc are still struggling to deal with the losses caused by low oil prices, the IMF said. “The overall weak outlook partly reflects insufficient policy adjustment,” said Abebe Aemro Selassie, Director of the IMF’s African Department, adding that this was holding back investment. For a decade, sub-Saharan African economic growth of around 5 percent drew in foreign investment but that is drying up with economic growth now barely keeping up with population growth. The World Bank also expects growth of 2.6 percent this year, expanding to 3.2 percent in 2018 and 3.5 percent a year later.
  • Talks between the Nigerian arm of Abu Dhabi’s Etisalat and its lenders to renegotiate the terms of a $1.2 billion loan have reached a deadlock after the telecoms firm missed a payment, Reuters quotes two sources with knowledge of the matter. Lenders, under pressure to avoid loan-loss provisions, are pushing to finalise the debt restructuring before next month’s half-yearly audit, a banking source said. Etisalat met with the lenders in London on April 28 led by GTB but they could not agree on a way forward, the sources said. The telecom firm signed the medium-term seven-year facility with 13 local banks in 2013 to refinance a $650 million loan and fund expansion of its network but is now struggling to repay. Etisalat is the biggest foreign-owned victim of the dollar shortages plaguing Nigeria’s financial system. Etisalat has 20 million subscribers, making it Nigeria’s number four mobile operator with 14 percent market share. South Africa’s MTN has 47 percent, Globacom 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 percent.
  • Italian oil company Eni plans to build a crude refinery in Nigeria with a capacity of 150,000 barrels a day through its Agip subsidiary, the country’s oil minister said on Tuesday. Nigeria has been seeking investment in the sector to reduce reliance on imported oil products that consume a large portion of the nation’s scarce foreign currency reserves. After years of neglect its existing, ageing refineries produce hardly any fuel. “We reached an agreement that Agip will build a brand new refinery of 150,000 barrel capacity, Ibe Kachikwu told reporters after meeting Eni executives in Abuja. A memorandum of understanding is being prepared, he added. Eni executives declined to talk to reporters at the event, but in January the company said that it would “intensify” oil and gas exploration in Nigeria and help to revamp the Port Harcourt oil refinery.