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Tag: oil revenue

  • Oil revenue down to $24.7b

    There was steep decline in oil revenue between 2011 and 2015, Nigerian Extractive Transparency Initiative (NEITI) Executive Secretary Waziri Adio said yesterday.

    Nigeria, he said, earned about $68.4billion from oil in 2011, and a paltry $24.7billion in 2015.

    He said the Nigerian National Petroleum Corporation (NNPC) was yet to remit into the Federation Account the $16, 898,725, 000 dividends which accrued to the government from its share in the Nigerian Liquefied Natural Gas (NLNG) between 2000 and 2015.

    The NNPC, he said, claimed that it received instruction from former President Goodluck Jonathan to warehouse the fund and spend as directed.

    NEITI has demanded for a copy of the directive from the ex-President.

    But Adio noted that the level of malfeasance in the oil and gas industry has reduced under President Muhammadu Buhari.

    The nation, he said, was now experiencing more accountability and transparency in the sector than before.

    Adio made these known at a session tagged “Anti-Corruption Situation Room in Abuja” during a training workshop organised by the Human Environmental Agenda (HEDA) Resource Centre in conjunction with MacArthur Foundation.

    His presentation focused on the highlights of the NEITI 2015 Oil and Gas Audit Report which covered 75 entities including 54 oil and gas companies;  three refineries; 10 agencies;  seven

    generating companies (GENCOs),  Nigerian Gas Company and NLNG.

    Nigeria, he said, had been experiencing a “steady decline in oil revenue since 2011 but all the decline had been in single digit between 0 and 9.

    “But it is only in  2015 that we had a major decline that not only went into double digit but more than 50 per cent. And this was as a result of a sharp drop in oil price but also the constraints in our oil production.

    A breakdown of the revenue decline is as follows:

    2011—$68.4b; 2012—$62.9b; 2013—$58.01b; 2014—$54.55b; and 2015—$24.7b.

    Adio said it was time the government, civil society groups and Nigerians asked questions on the whereabouts of the $16.8billion NLNG dividends.

    He said: “NNPC confirmed receipt ($16.8b) but no evidence of remittance to Federation Account. NNPC said it received instruction from President to warehouse the fund and spend as directed.

    “NEITI requested NNPC to provide evidence of the presidential directive and the statement of account on NLNG dividends.

    “We own 49 per cent interest in NLG and the private investors about 51 per cent. Between 2000 and 2016, the total  money paid  by NLNG  as dividends to NNPC which is holding the 49%  interest on account of the the Federation  came to $16.8b in 16 years.

    “There are  some issues around these dividends. The  first is that there is a paper trail, nobody denies that NLNG pays dutifully on time to NNPC and the oil corporation has records it received the money. In fact they dispute many things about what we do but not this one. And

    they will tell you that NLNG Account is one of the best accounts in NNPC.

    “But the money does not go into the Federation Account. They receive it, they hold it. They said there is a confusion about who holds the investment in NLNG whether it is the Federation or the Federal Government.

    “A very good argument but  the counter-argument is that all the interests that NNPC holds in trust are usually held in trust for the Federation.

    We believe that it is  one of the best investments we have had. It is a model.”

    Adio advised Nigerians to show interest in the oil sector’s development, saying:  “No matter how much we work in NEITI, if citizens do not engage robustly, it will come to naught. If the information we generate is not used, it is useless.

    “Let us try and understand what is going on in the oil sector. The resources we have do not belong to the government; they belong to the people of Nigeria. It is a sector that is very technical and the people who are benefiting from the status quo who want to keep it

    secret. There is nothing in the oil and gas sector that cannot be understood. We must ask questions based on evidence.

    “I know that of recent we have had more transparency and accountability in the system. Also, the level of malfeasance has reduced.”

    Findings confirmed that about $7.85billion was withdrawn from the NLNG Dividend Account in March 2011 for the Brass LNG Project for which payment should spread for five years.

    Former Minister of Petroleum Resources Mrs. Diezani Alison-Madueke on March 30, 2011, sent a memo to ex-President Jonathan that about $7.85billion be sourced from NLNG Dividend Account for the Brass LNG Project.

    To the anti-graft agencies, the $7.85billion might have been used for either 2011 presidential campaign  or looted.

    A top source said: “Although the $7.85billion was to be sequestered for Brass LNG Project, only $1.15billion can be officially traced to NNPC.

    “We are working on clues that the bulk of the $7.85billion might have been diverted into private hands or used for the 2011 presidential campaign.

    “Diezani and her collaborators in NNPC and Nigerian Petroleum Development Company (NPDC) allegedly violated NNPC Funding Plan, which made the ex-President to give approval, for the Brass LNG project.

    “Our detectives  discovered that the Brass project was to be funded over a period of five years as follows: Year One($1.18b); Year Two($1.57b); Year Three($1.96b); Year Four($1.96b) and Year

    Five($1.18b). Total is $7.85billion.

    “We want to probe the circumstances behind the withdrawal of $7.85billion at once in 2011.  So far, about $1.15billion was said to have been spent by NNPC leaving a balance of $6.7billion to be accounted for.”

    Former Economic and Financial Crimes Commission (EFCC) chairman Mallam Nuhu Ribadu, said it was important to promote transparency in the oil sector.

    The nation must stop “continuous stealing in the oil sector.”

    He said: “When you continue to do things in your own wish corner, you will never get it right. You can imagine how much we are wasting on subsidy. Today, you hear SWAP, Offshore Processing Agreement and others. They are continuously stealing. We need to comply with the law because the law says that others must know what is going on in the oil sector.”

  • Why oil revenue is not sustainable, by Adeosun

    Why oil revenue is not sustainable, by Adeosun

    To Finance Minister Mrs. Kemi Adeosun, it makes no sense to run the economy with its estimated 180 million population solely on oil. She says it is illogical to rank Nigeria among the traditional oil economies when the sector accounts for just 10 per cent of the Gross Domestic Product (GDP). In her article, entitled: “All change!!! Nigeria is not an oil economy”, the minister explains the need to urgently mobilise revenue from other sources, including taxation.

    Descriptions of Nigeria’s economy often include such phrases as ‘Africa’s largest oil producer’ and ‘the oil rich African nation’ but oil economies are typically characterised by low population densities and abundant oil resources.

    Saudi Arabia, with 10 million barrels of oil per day and 30 million people, Kuwait, with 2.7 million barrels of oil per day and four million people and Qatar, with 1.5 million barrels of oil per day and 2.5 million people are typical of such.

    These economies pursued an economic model that was built around a large government dependent almost entirely on oil revenue for funding. Such economies could afford to have low, or in some cases, no domestic revenue mobilisation, in the form of taxes. Tax to Gross Domestic Product (GDP) ratios of less than 10 per cent against the OECD average of 34.6 per cent could be justified especially in the era of high oil prices.

    For over three decades, Nigeria pursued this model. But things are changing, with the election of President Muhammadu Buhari in 2015, who was propelled into office under the mantra of ‘Change’. That clamour for change, in the areas of governance, security and economy, coincided with the collapse of global oil prices and a consequent huge deficit in government revenues.

    These circumstances provided the ingredients for an overhaul of the entire economic model.  The first and rather numbing conclusion of that exercise was that Nigeria is not actually an ‘oil economy’. With just two million barrels of oil per day and over 180 million people, simple mathematics tells us that 90 Nigerians share a barrel of oil compared to three Saudis, 1.44 Kuwaitis and 1.69 Qataris. With oil at just 10 per cent of GDP, Nigeria simply does not fit into the mould of the traditional oil economies.

    Interestingly, even nations who did legitimately fit into this narrow mould of high oil revenues and low populations, are abandoning what is now considered to be a flawed model. Thus, the imperative for Nigeria was even more urgent. Nigeria recalibrated its target peer group from the oil economies to the ‘oil plus’ economies such as Mexico and Egypt. This new peer group has diversified economies and tax to GDP ratios of 20 per cent and 16 per cent respectively, compared to Nigeria’s six per cent.

    Consequently, the change mantra had to be urgently applied to revenue mobilisation. Analysis of the data suggests that revenue mobilisation is potentially the master key to unlocking Nigeria’s huge growth potential by funding its ailing infrastructure including roads, power and rail.

    A cursory look at the effective tax rates paid by the huge multinational and local operators, as well as the data on illicit financial flows, indicates a pattern of systematic tax evasion at all levels.

    Recent statistics released by the Federal Ministry of Finance showed that Nigeria has just 14 million active tax payers from an economically active base of 70 million. Over 95 per cent of these are salary earners in the formal sector, just 241 persons paid personal income taxes of N20m ($65,573.77) in 2016.

    Taxing the high net worth and Nigeria’s huge community of entrepreneurs constitutes a critical but yet attainable target. The statistics for corporate tax payment shows the debilitating effects of base erosion and profit shifting as well as abuse of an overly generous tax incentive and duty waiver system.

    The historical government apathy towards revenue mobilisation is one of the effects of the mistaken identity that saw Nigeria perceive itself as an oil economy.

    This administration is determined to correct this identity crisis and all its concomitant effects.

    In that spirit, we launched an ongoing and well received, tax amnesty, ‘The Voluntary Asset and Income Declaration Scheme’ (VAIDS) is affording a nine-month window for Nigerian tax payers (both corporate and individual), to regularise their tax status in exchange for a guarantee of no interest, penalties, tax investigation or further audit. This amnesty follows successful initiatives in a number of countries, where tax evasion is a problem, such as Indonesia, Argentina, South Africa and India.

    It has been programmed to end just as the Automatic Exchange of Information (AEoI), which will provide Nigerian tax authorities with unprecedented levels of information on offshore assets, becomes effective.

    The initial signs suggest that Nigerians are responding positively to the new revenue narrative. Despite the emergence from a recession, tax revenues are showing early signs of growth. The Value Added Tax (VAT) shows 18.97 per cent year-on-year improvement. Over 800,000 companies, including some government contractors, that have never paid taxes have already been identified and are being audited. This is an unprecedented initiative that entails cooperation between federal and state governments. The Federal Ministry of Finance has also commenced a database project that combines data from the various arms of government, including bank records, property and company ownership, and customs records to create accurate profiles of those liable to pay taxes. The ministry has also placed one of the world’s premier private investigation agencies on retainership to trace overseas assets.

    Changing the Nigerian economic psyche is not an easy task. By its nature, tax mobilisation risks the popularity of any government, but the present administration understands that the short-term lure of political expediency must give way to the long-term best interests of Africa’s largest economy. Her energetic, young and growing population are deserving of the chance to experience a truly transformed, sustainable and growing economy.

  • Nigeria must apply caution on oil revenue spending, says NEITI

    Nigeria must apply caution on oil revenue spending, says NEITI

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has advised Nigeria to apply restraint in spending oil revenues, in view of the experience from economic recession and instability in the oil market.

    The agency said the time had come for the country to embrace a robust saving culture, irrespective of whether oil prices are low or high, noting the importance of healthy savings as one of the tools for tackling resource curse.

    It recommended that the federating units, especially the federal and state governments seek the speedy resolution of pending cases at the Supreme Court on the constitutionality of remittances to the Excess Crude Account, and the Nigeria Sovereign Investment Authority.

    It also said there is urgent need for the government to amend Section 162 of the 1999 Constitution, drawing on the political consensus that led to the creation of the Excess Crude Account (ECA) and the Nigeria Sovereign Investment Authority (NSIA). NEITI noted that oil revenue savings in the ECA and Stabilisation Fund should be consolidated into the Nigeria Sovereign Investment Authority. “We are persuaded by the recent 9 out 10 score ranking of NSIA by the global sovereign wealth institute transparency index, the highest by an African Sovereign Wealth Fund,” it said.

    NEITI Director of Communications Ogbonnaya Orji noted that the NSIA was the only one of the three funds that has recorded profit, adding that NSIA should be strengthened with appropriate guarantees on transparent and accountable governance to reassure stakeholders.

    Orji, who spoke with The Nation on phone, said the time to separate government expenditure from oil revenues and pursue prudent macro-economic policies was now. He said these measures were critical success factors that would rescue the country from resource curse syndrome.

    There are predictions the Nigerian oil reserves would likely dry up in the next 38 years, development economic analysts have said. If the proceeds from oil are not diversified into the non-oil sector, the country may be in for more problems

    NEITI noted that resource-rich countries, including Nigeria, that depend on revenues from natural resources to finance annual budgets, plan early to insulate themselves from  price volatility in the international market and eventual depletion of the resources.

    He said many countries set up stabilisation funds for the rainy day and for the future of the next generation.  This, he said, requires a deliberate policy by the government to set aside money earned from natural resources, especially during periods of high prices to help sustain expenditure when prices fall.

    The stabilisation funds, he added, protect countries against total dependence on natural resources’ revenue and create incentives to look in wards, he restated.

    Furthermore, Orji recalled that saving a portion of oil and gas revenues began in Nigeria in 1989, when the Stabilisation Fund was set up.  The objective was to set aside 0.5 per cent of the Federation Account to support any state that suffers absolute decline in its revenues as a result of circumstances beyond its control.

  • Saving oil revenue for the rainy day

    All over the world, resource-rich countries like Nigeria that depend on revenues from natural resources to finance annual budgets plan early to insulate themselves from  price volatility in the international market and depletion of the resources. Many of these countries do so by setting up stabilization funds to save for the rainy day and for the future.  This essentially requires a deliberate policy to set aside money earned from natural resources especially during periods of high prices to smoothen expenditure when prices fall.

    The stabilization funds also protect these countries against total dependence on natural resources revenue. The essence of saving for the rainy day is that it also helps resource-rich nations to effectively address the resource curse syndrome and the moral burden of generational equity.

    In Nigeria, the idea of saving a portion of oil and gas revenues for the rainy day and for the future generation began in 1989 when the Stabilisation Fund was set up.  The objective was to set aside 0.5% of revenues going into the Federation Account to support “any state of the Federation that suffers absolute decline in its revenues as a result of circumstances beyond its control.”

    However, investigations reveal that management of the Stabilization Fund over the years was anything but prudent. For instance, the Fiscal Allocation and Statutory Disbursement Audit Report by Nigeria Extractive Industries Transparency Initiative (NEITI), released in 2013 showed that while N109.7 billion was transferred into the account for the period between 2007 and 2011, N152.4 billion was withdrawn from the Fund for purposes other than its original intent.

    The result was that the opening balance which stood at N41 billion in January 2007 was further depleted to N36.1 billion by December 2011. A recent Occasional Paper released by NEITI disclosed that as at May 31, 2017, only N29.02 billion was left in this Fund.

    In 2004, the government again set up another fund known as the Excess Crude Account (ECA), most probably to address the failure noticed in the management of the Stabilisation Fund. This time the government adopted what it called an “Oil Price-based Fiscal Rule policy” in the management of the account. Under the arrangement, revenues in excess of a pre-determined commodity price were saved in a Consolidated Revenue Fund under the custody and management of the Central Bank of Nigeria. The law that set up the Excess Crude Account also provided clear stringent conditions under which spending from the account could be permitted.

    However, findings in a recent publication by NEITI revealed that the conditions for withdrawal from the account were seriously abused and violated..

    The Occasional Paper which focused on “the case for a robust oil savings fund for Nigeria” revealed that the total credit balance in the Excess Crude Account as at May, 2017 was a meagre $2.3 billion for a country with a huge population like Nigeria.

    Again, and  perhaps in efforts to address the challenges being experienced in the management of the Excess Crude Account and the Stabilization Fund, the National Economic Council in 2010,approved the creation of a Sovereign Wealth Fund (SWF) with a seed capital of $1 billion. The Fund was placed under the management of the Nigeria Sovereign Investment Authority, specially set up for this purpose.  Since coming to power in May 2015, the Buhari Administration has boosted the fund by injecting additional $500 million bringing its total capital base to $1.5b.

    The SWF is quite unique in several ways. This probably explains why three distinct (ring-fenced) components   were created within the fund structure namely; the Future Generations’ Fund, Nigeria Infrastructure Fund and Stabilization Fund.

     Under the arrangement, 60% of the Sovereign Wealth Fund was allocated equally to the three components while 40% was allocated at the discretion of the Board of the Nigeria Sovereign Investment Authority. Investigations by NEITI revealed that the Board allocated 40% each to the Future Generations and the Infrastructure Funds, while Stabilization Fund has 20%. The threshold is to be reviewed every two years by the NSIA, giving consideration to our country’s population and growth projections.

    The Stabilization Fund component of the Sovereign Wealth Fund was invested in short-term assets that are easily monetized for possible budget augmentation. Up to 10% of the Infrastructure Fund was invested in identified key “development projects” such as agriculture, healthcare, motorways, power and real estate. The projects include the presidential initiative to deliver locally produced fertilizer at an affordable price. The immediate aim is to deliver 100 million metric tons of fertilizer in 2017 for direct delivery to rural farmers, resulting in potential budgetary savings from fertilizer subsidies, foreign exchange savings and job creation. Other projects include the $200 million Agriculture Fund Investment, the Family Homes Fund, and the Second Niger Bridge while up to 60% of profits from the SWF are available every year for distribution to the three tiers of government.

      Findings by the Nigeria Extractive Industries Transparency Initiative (NEITI), shows that investments into the SWF seed capital of $1.5 billion has  generated net income profit  of N505 million in its first 15 months, N15.8 billion in 2014, N26.3 billion in 2015 and N149.83 billion as at last year ending. This is a feat never achieved by savings in the Excess Crude Account or the 0.5% Stabilization Fund.

    Further disclosures by NEITI report shows that all Nigeria’s efforts at saving some portion of oil revenues for the rainy day  put together have only yielded a total of $3.9 billion. The break down consists of $95 million in the Stabilization Fund, $2.3 billion in the Excess Crude Account and $1.5 billion in the SWF.

    A quick comparison with other resource rich countries that have imbibed the robust culture of saving for the rainy day and for the future of the next generation shows that Nigeria is amongst the lowest in the world. For instance, Norway with a population of 5.2 million has so far saved over $922 billion since 1990 when that country embraced the savings culture. In this direction, Russia has saved $89.9 billion since 2008 Kuwait with a population of about 4.1 million has so far saved $592 billion and Chile $24.1 billion. Even neighbouring African countries have done better. For instance, Angola has saved $4.6 billion while Botswana with a population of 2.3 million people and  endowed with solid minerals resources only has so far saved $5.7 billion since that country embraced compulsory savings culture in 1994.

    It is against this background, that NEITI has strongly recommended that the time has come  for Nigeria to embrace a robust saving culture irrespective of whether oil prices is low or high. Our country’s experience over the current   economic recession and volatility in the oil market has made this decision quite imperative.

    Under the circumstance, and given the importance of healthy savings as one of the tools for tackling resource curse, NEITI strongly recommends that the federating units especially the federal and the states governments should seek speedy resolution of all pending cases in this regard at the Supreme Court on the constitutionality of remittances to the Excess Crude Account and the Nigeria Sovereign Investment Authority.

     Besides, NEITI is of the view that all the oil revenue savings in the ECA and Stabilization Fund should be moved to and consolidated into the Nigeria Sovereign Wealth Fund. In making this recommendation, NEITI is persuaded by the recent ranking of NSIA by the global Sovereign Wealth Institute Transparency Index, the highest by an African Sovereign Wealth Fund.

    • Dr. Orji is NEITI’s Director, Communications.
  • ‘Decline in oil revenue a blessing in disguise’

    ‘Decline in oil revenue a blessing in disguise’

    The decline in oil revenue could be a blessing in disguise, Nigerian Society of Chemical Engineers (NSChE) national president, Prof Emenike Wami, has said.
    The expert said Nigeria would benefit, in the long run, when the non-oil sectors and other sources of revenue were better harnessed.
    Wami spoke at the society’s 24th Fellows’ Conference, with the theme: The Benefits Derivable From the Impact of Dwindling Oil Revenue on Contemporary Nigerian Economy.
    The scientist noted that if Nigeria seized the opportunity and took corrective actions towards exiting recession, it would be better from the experience.
    He said: “That our country is in recession as a result of sharp decline in oil revenue, which is our major source of income, is no longer news. However, for every problem, there is a solution. For every disappointment, there is a blessing.
    “It is said that great opportunities for success are always disguised as insurmountable problems. However, given a positive mind and the right attitude, it is possible to surmount our present problems and achieve great success.
    “What is happening to our oil revenue now has benefits, if we are willing to seize the opportunity and take corrections required.”
    Chairman of Interswitch Limited, Mr Adedotun Sulaiman, chaired the event.
    Guest speakers were Chief Executive of RTC Advisory Services Limite,d Mr Opeyemi Agbaje and Managing Director of Aiteco Refinery and Petrochemical Limited, Mr Babatunde Akinpelu.

  • ‘Nigeria technically in recession’ as oil revenue dips

    ‘Nigeria technically in recession’ as oil revenue dips

    Nigeria’S economy is inching towards recession after monthly oil revenues dipped from $1.2 billion earlier in the year to $500 million. The development could trigger an external and balance of payment crisis, the Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.

    The market cannot afford any further delays and procrastination on the exchange rate, as this could make a bad situation worse, he stated in the FDC Economic Report for June. He said the risk of a policy reversal and ideological backsliding, is now looming with possible devastating consequences.

    Rewane pointed out that a recession occurs after two consecutive quarters of negative growth. Nigeria’s real Gross Domestic Product (GDP) growth rate in the first quarter was (-0.36 per cent) while second quarter estimate is (-1.5 per cent), a result that would put the economy in recession.

    He said the last time Nigeria was in recession was in 2004, adding that oil price decline of 56.39 per cent from 2014’s peak; sharp oil production drop by 26.3 per cent; under investment over foreign exchange policies and repercussions from Niger Delta Avengers’ agitation, are largely responsible for the ongoing economic woes of the country.

    The FDC boss also  listed budget delays and squabbles; impact of spending now almost late; drying up of new investments; wiping out of trade credit flows, approximately $10 billion and Net Foreign Direct Investment which is down to $1.5 billion (6.25 per cent), as other factors hurting the economy.

    He said poor power supply from the grid, down to 2,023.3 mega watts from 3593 mega watts, oil production at a low of 1.4mbpd: pipeline vandalism, lingering fuel scarcity that lasted for 12 months, misaligned currency and forex shortages, high interest rate environment and trade and import restrictions, were equally responsible for the economic malaise.

    According to him, Nigeria recorded a negative trade balance of N184 billion ($925 million) in the first quarter, from a trade surplus of N364.6 billion ($1.83 billion) in same period of last year; there was sharp decline in exports of 34.6 per cent compared to 7.8 per cent decline in imports, which was the first quarterly trade deficit in at least seven years.

    He said the implications remained that average oil price between January to May is now $39.20 per barrel even as oil prices are currently 24 per cent above the budget benchmark of $38 per barrel.

    Another analyst, Ike Chioke of Afrinvest West Africa Plc, said the weaker external sector performance, as indicated in the trade numbers above, reflects the sustained pressure on the economy worsened by sub-optimal monetary policy responses.

    “We maintain that the continued delay by the CBN in fixing the currency market crisis will continue to worsen key macroeconomic indicators notwithstanding the anticipated fiscal impulse. Recent attacks on oil production assets by Niger Delta Avengers suggest a weaker outlook for trade balance so long as export base remained dominated by crude oil. Also, implementation of the 2016 budget which is based on a daily crude production of 2.2mbpd may be threatened even though recent efforts to strengthen independent revenue is commendable,” he said.

    Chioke said on the whole, since the metrics for the performance of the 2016 budget on the basis of 80 per cent non-oil revenue appears as a fluke, weaker outlook for domestic oil revenue raises credit risk premium on government’s massive borrowing plan for the fiscal year.

  • Seplat targets gas to cushion flagging oil revenue

    Seplat Petroleum Development Company Plc is focusing on growing its gas business to boost performance and moderate the impact of flagging crude oil production and falling revenue.

    At a media interactive session after the annual general meeting yesterday in Lagos, chairman, Seplat Petroleum Development Company Plc, Dr. Ambrosie Orjiako, told shareholders that the company has stepped up investments in its gas production business to mitigate the adverse effect of the decline in the price of the crude oil in the international market.

    According to him, the company had in mid-year 2015 successfully completed and commissioned its Oben gas plant phase I expansion, which saw the company’s overall gross processing capacity double to 300 MMscfd.

    He said the Oben gas plant phase II expansion is underway with additional processing modules ordered noting that once installed, the additional processing modules will take gross processing capacity to an expected minimum level of 525 MMscfd.

    “Alongside the significant increase in gas production, the positive financial impact of Seplat’s gas business was evident as revenues from gas sales increased 185 per cent year-on-year to $77 million,” Orjiako said.

    In his remarks, chief executive officer, Seplat Petroleum Development Company, Mr. Austin Avuru, added that the company has taken its gas business across a transformation threshold with further expansion still to come.

    He explained that the company had acted quickly and decisively in response to weak oil price environment by adjusting its work programme and cost structures.

    While acknowledging that the company’s 2016 full year production expectation has been impacted by the current shut-in of the Forcados terminal, Avuru said the company is in a much better position to withstand such interruption than in previous years.

    “Our gas business takes on additional importance by providing a continuing revenue stream that is de-linked from the oil price and our enlarged portfolio offers us the scope for greater diversification. Our strong focus remains on protecting the business and managing value through effective cost reduction, optimising operations, deleveraging and strengthening the balance sheet as this will position the company to take advantage of opportunities following the current downturn,” Avuru said.

  • NEPC eyes N691b non-oil revenue

    NEPC eyes N691b non-oil revenue

    •1.5m jobs through SMEs

    The Executive Director, Nigeria Export Promotion Council (NEPC), Mr Segun Awolowo has said the agency is planning to grow the nation’s non-oil revenue by 30 per cent over the next four years.

    Awolowo, who spoke in a telephone interview, said the income generated from non-oil exports stood at $2.7billion (N531billion) as at December last year and a 30 per cent increase will see the figure rise to $3.51billion (N691billion) in the next four years.

    He said the council is also planning to generate 1.5 million jobs in the Small and Medium Enterprises (SMEs) sector of the economy in the next five years.

    He said the country has not fully benefited from Africa Growth and Opportunity Act (AGOA) because Nigeria went into the scheme without a strategy.

    Awolowo said now that President Obama has renewed AGOA for another 10 years, the agency will do everything possible to ensure that Nigeria fully benefits from it, adding that NEPC will continue to support capacity development for exporters and working on new exporter development programme.

    He said: “I always use the Australian example, they moved from 4,000 to 74, 000 exporters. With that, they increased the value of their non-oil export by over 4,000 fold. The more exporters you have, obviously the more things are going out. We are now more interested in intelligent trade information, and in what our neighbouring countries are importing from the West and, we are saying: why can’t we do it from here and just drive it across the border?

    “When Nigeria approached AGOA when it was enacted, they went without a strategy. So, one of the things we have done is to work in close collaboration with the Ministry of Industry, Trade and Investment to develop a strategy for AGOA. This time, we are going (to AGOA) prepared.

    “As you know, AGOA is a non-reciprocal trade preference programme that provides duty-free treatment to U.S. imports of certain products from eligible sub-Saharan African countries. AGOA preferences apply to approximately 7,000 tariff lines. We are planning workshops for small exporters on specified training for standards and non-technical barriers to trade.”

    He said the agency is collaborating with the United States Agency for International Development (USAID) and the World Trade Organisation (WTO) to improve on the standard of products.

    “There is going to be a lot of inter-agency collaboration as well as capacity building and we are setting up committees for standardisation to work on that. This will be launched very soon. We are emphasising on capacity building because when we visited the U.K. on an inspection of some of their ports to understand why we get so much rejects, we found out that some of the reasons are simply administrative, the wrong documentation.

    “Everything is computerised in Europe; so when the wrong thing is ticked, it stops the process. We are also talking with the Nigeria Customs on building an export hub. The Nigerian Customs Service (NCS) has a trade hub, the import section of that hub is totally loaded but not the export section, so we are trying to get that off the ground,” he said.

  • ‘Falling oil revenue, opportunity to diversify economy’

    The falling revenue in the oil sector is an opportunity for Nigeria to develop other sectors of the economy, President/Chief Executive Officer, Pearl Awards, Mr Tayo Orekoya has said.

    Mr Orekoya who spoke with our reporter in Lagos also urged Nigerians to embrace the opportunities in capital market saying it is a market open to all and not one that requires so heavy funds.

    He said there is need to strengthen infrastructure, diversify productive base, encourage other revenue generation initiative, boost exports and generate non oil revenue for the economy to be more stabilised, adding that this will provide more jobs and help the economy to have its boom again.

    Orekoya said for us to have more investors in Nigeria there must be consistency in principles, policies and we should encourage new companies by giving incentives that would make the capital market more attractive.

    He called for compulsion of some companies in some sectors to be listed on the stock exchange, including the telecoms sector and the oil and gas sector.

    “These are sectors where you have companies that can deepen the market to a large extent; the incentives should be there and for companies that are making so much from the economy, they need to give something back and Nigerians should be part owners of these business by listing them on the stock market.

    “Government and the regulatory authorities should provide more incentives for them, there should be investor education so that confidence can be restored in capital market investors,” he said.

    Orekoya who spoke ahead of this year’s 20th anniversary of Pearl Awards billed to hold on the 29th of this month at Eko Hotel and Suites on Victoria Island, Lagos, noted that Pearl awards Nigeria will continue to develop and support the growth of capital market through its awarding of quoted companies to engender healthy competitiveness and outstanding performances to enhance the capital market.

    He said quite a number of foreign investors in the capital market have been withdrawing their investment, saying this is a call to Nigerians to embrace the capital market so that the market would not be totally in the wings of foreign investors.

     

     

     

     

     

  • Oil revenue and Nigeria’s economy

    IR: The current fall in global prices of crude oil, a major source of revenue for the country, has serious implications for the country’s economy. Presently, the economic situation is biting so hard in some states in the federation as monthly receipt from the federal purse has sharply declined. Consequently, some of the states could no longer meet up with their financial obligations. Thus, only few states’ governments are able to pay their workers as and when due, while many others are unable to meet their obligations to their workers. Some federal government agencies are equally not faring better in this respect. The private sector is also not totally immune from the gloomy economic reality in the country as it has impacted negatively on the value of naira. With the diminishing fortune of the naira, local industries are facing serious challenges that could actually lead to downsizing of workers if the situation is not quickly redressed. These are, indeed, trying times for the country.

    One way of addressing the situation is to revamp the country’s ailing agriculture sector. Over the years, as a result of the neglect suffered by the sector, the export potential of cash crops such as cocoa, groundnuts, cashew among others, has seriously diminished. It is sad today that Nigeria is no longer a major exporter of cocoa, groundnuts, rubber, and palm oil.

    Government needs to really appreciate the potentials of the sector as a catalyst for economic and industrial transformation.  To encourage the teeming army of un-employed youths in the country to take to agriculture, government should make access to loans meant for agriculture much easier while large scale farming powered by mechanized infrastructures should be the central goal.

    Aside revamping agriculture, the tourism sector could also be a boost to the country’s economy. Tourism is a veritable instrument for socio-economic development. It impacts directly on the economy through the provision of resources and income that could be deployed to enhance economic growth, accelerate development and reduce poverty. With its numerous attractive and historical tourist centers, the Nigerian economy certainly stands to gain a lot if efforts are renewed to explore the tourism potentials of the country.

    However, it needs to be emphasised that the power situation in the country has to improve considerably before significant improvement can be experienced in the economy. For instance, regular and stable power supply will enable small scale businesses to thrive better if more creative schemes are put in place to guarantee unhindered power supply. Equally, multi-national firms that have closed shop in the country because of the epileptic nature of power could be lured back if the power situation improves. This would not only bring back lost jobs, but will certainly restore lost ones.

    • Tayo Ogunbiyi,

    Ministry of Information and Strategy, Alausa Ikeja.