18 May

Daily Watch – Kachikwu wants to keep petrol at ₦145/l, Lake Chad still disappearing

  • The FG recorded an $11 billion deficit (₦3.3 trillion using the official exchange rate of $305 per dollar) revenue from crude oil exports in 2016. Specifically, the revenue fact sheet released on Monday by the U.S. Energy Information Administration, revealed that Nigeria’s crude oil revenue fell from $37 billion in 2015 to $26 billion in 2016. This comes as Nigeria had already earned $10 billion or N3.05 trillion from oil export between January and April this year, according to the oil and gas revenue fact sheet of OPEC. OPEC members earned about $433 billion in net oil export revenues in 2016, a 15 percent decline from the $509 billion earned in 2015, mainly as a result of the fall in average oil prices during the year, and to a lesser extent to decreases in OPEC net oil exports. According to the EIA, this was the lowest earnings for OPEC since 2004. The net oil export revenues reflect OPEC members as of May 2017. Nonetheless, the EIA said Nigeria became the sixth highest revenue earner among the 13 OPEC member countries in the 2016 period. Saudi Arabia occupied the number one position with revenue of $133 billion; Iraq, $54 billion; the United Arab Emirates, $47 billion; Kuwait, $37 billion; Iran, $36 billion; and Nigeria, $26 billion.
  • Nigeria plans to raise $3.5 billion in foreign loans including from the World Bank and from international debt markets to help fund its 2017 budget deficit. Budget Office Director General Ben Akabueze said $2 billion of the foreign borrowings would come from concessionary loans with the balance of $1.5 billion from commercial markets including the Eurobond market. He said Nigeria has a shortfall of $7.5 billion for its 2017 budget expenditure. “We would look at which options gives us the best value including Eurobonds,” he told Reuters in an interview. The government will raise $4 billion from the local debt market, Akabueze said. The Debt Management Office sold fewer bonds than expected at its last auction in May as the yields on offer failed to attract foreign investors worried about currency risk. The National Assembly signed off on a ₦7.44 trillion ($24 billion) budget for 2017 last week, aiming to drag the country out of its first downturn for a quarter of a century.
  • Nigeria’s refineries processed 10 million barrels of crude oil in the first quarter, more than they did for the whole of 2015 after talks with militants reduced attacks on facilities. “Refining activities peaked at 10 million barrels of crude oil in the first quarter,” said NNPC Group Managing Director Maikanti Baru. That compared with just 8 million barrels for all of 2015 and 24 million for the whole of last year. Last year’s militancy in the Niger Delta region cut crude output by as much as a third, but there has been a lull in attacks this year. The 10 million barrels processed in the first quarter equates to around 111,000 bpd, or around 25 percent of capacity. 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 minister of state for petroleum said last week.
  • Oil minister, Ibe Kachikwu, has said a number of steps have been taken to maintain the pump price of petrol at ₦145 per litre despite significant challenges in the downstream sector. Kachikwu said the issue of freighting and docking was addressed last month. He said the ministry would continue to work with the CBN to make foreign exchange available to marketers for the importation of petroleum products. Kachikwu stated, “We are also working very hard with the NNPC to reduce some of the charges on products such as the usual five percent provision on proforma invoices as allowed for ship-to-ship operations. We are doing all these to help manage and maintain the current price ceiling of ₦145 per litre in the face of very significant challenges.”
  • Lake Chad in Nigeria’s northeast region is now less than a tenth of its size and is gradually drying up as a result of climate change effects in the area, the West African Science Service Centre on Climate Change and Adapted Land Use has said. According to WASCAL, the severity of climate change in Nigeria has deprived millions of citizens their sources of livelihood, adding that the federal government must come up with ingenious ways of managing the situation. The WASCAL’s Executive Director, Jimmy Adegoke, who disclosed this at the headquarters of the Federal Ministry of Environment in Abuja on Wednesday, said Nigeria was ranked among the world’s most vulnerable countries to climate change. According to Adegoke, “If you look at the index of vulnerability, West African countries are the most vulnerable in terms of the impact of climate change. Now, these same most vulnerable countries are the least capable with respect to addressing the problem.”