08 Nov

Daily Watch – PMB tables ₦8.6t #Budget2018, Nigeria O&G costs 100% above global

  • President Muhammadu Buhari presented on Tuesday a 2018 budget of ₦8.612 trillion, the country’s biggest ever, to lawmakers. He said the budget was based on an exchange rate of ₦305 to the dollar and a projected oil output of 2.3 million barrels per day at an assumed price of $45 per barrel. The president said he was targeting 1 January 2018 for the passage of next year’s budget, adding that the deficit is expected to be ₦2.005 trillion and real economic growth is estimated to be 3.5 percent for 2018. The budget will comprise of recurrent costs of ₦3.494 trillion, debt service of ₦2.014 trillion, statutory transfers of about ₦456 billion, a sinking fund of ₦220 billion to retire maturing bonds to local contractors and capital expenditure of ₦2.428 trillion.
  • Nigerian lawmakers on Tuesday called on the government to scrap a sovereign wealth fund that the Natural Resource Governance Institute, an international watchdog, has called one of the world’s most opaque and poorly governed. The Excess Crude Account, which as of September held $2.31 billion, is a rainy day fund that in theory takes money from oil sold over and above the finance ministry’s benchmark price, and can be used to plug emergency gaps in spending. The upper chamber of parliament passed a motion calling for the operation of the ECA to be suspended, saying it was in violation of the constitution. A committee will be set up to investigate the movement of money in and out of the account and identify any infractions, the Senate motion said.
  • The CBN said on Tuesday it had injected $195 million into the interbank foreign exchange market, extending efforts to boost liquidity and alleviate dollar shortages. The bank said it had released $100 million earmarked for the wholesale market, $50 million for small businesses and individuals, and $45 million for certain dollar expenses such as school fees and medical bills. The bank will continue to intervene in the foreign exchange market to sustain liquidity, the statement said.
  • President Muhammadu Buhari said the country “cannot afford to go back to dark days of insecurity” in the oil-producing Niger Delta region. In a speech to present the 2018 budget, Buhari called on all sides to maintain dialogue. Last week, the militant group Niger Delta Avengers threatened a “brutal and bloody” return to the violence that last year slashed oil output. Oil minister Emmanuel Ibe Kachikwu will visit the region this week in an attempt to maintain the ceasefire. Buhari also said the country’s exemption from production cuts organized by the Organization of the Petroleum Exporting Countries was a significant help to the country during its “most challenging time.”
  • A new report released by oil and gas companies operating in Nigeria has shown the existence of a Nigeria-specific cost premium for the petroleum sector, with operating costs and projects costs significantly higher than in other countries by as much as 100 percent. The oil and gas producers stated that they spend five times more on security than their global peers, with over $500 million spent in 2016 on security services such as escort vessels, convoys and guards. The report prepared by the Oil Producers Trade Section of Lagos Chamber of Commerce and Industry identified a cost premium of between 15 percent and 65 percent for operating costs, and 35 percent and 100 percent for the costs of projects. The OPTS identified insecurity, overregulation and bureaucracy, as well as inadequate infrastructure as the major divers of costs in Nigeria.
  • A Wuse Zone 6 Chief Magistrate’s Court has adjourned a case of alleged fraud against the BGL Group and its officials to January 25, 2018, for further hearing. The accused, M/S BGL, its Asset Management and Securities Limited subsidiaries, and officials were on September 28 arraigned by the SEC for conspiring to defraud the investing public. The accused company, including Chibundu Edozie, BGL Deputy Managing Director were docked on charges of criminal conspiracy, breach of trust and cheating. Chief Magistrate Chinyere Nwecheonwu adjourned the matter following a plea by K. B. Asunogie, counsel to the accused, that the matter was pending in another court concerning one of the accused persons.