Summary of the top business, economic and political news in Nigeria.
NAIRAMETRICS BUSINESS & ECONOMY
Nigeria’s total debt now N17.5tn –NBS – The National Bureau of Statistics has said that the country’s foreign and domestic debts stood at $11.41bn (N3.49tn) and N14.02tn as of December 2016. Source Punch Read More
FG appoints transaction advisers for national carrier, airports – The Federal Government has approved the appointment of transaction advisers for the proposed national carrier and concession of the nation’s airports. Source Punch Read More
Govt. Approves $250m multilateral loans and will be used as follows – Nairametrics| The Federal Executive Council (FEC) yesterday approved a $150 million soft loan from African Development Bank (AfDB) and $100 million from African Development Finance (ADF) to finance some basic services. According to a memo presented to the Council by the Minister of Finance, Mrs Kemi Adeosun, the funds will be used for the following Source Nairametrics Read More
CBN Reverses Ban On 48 Items – Nairametrics| In yet another step towards a deregulation of the foreign exchange market, the Central Bank of Nigeria (CBN), has removed the 48 items from the banned list. Source Nairametrics Read More
Customs revenue fell by N216.5bn in 2016 – Ali – The revenue target of the Nigeria Customs Service for 2016 fell by N216.5bn, the Comptroller-General of Customs, Col. Hameed Ali (retd), told the House of Representatives on Wednesday in Abuja. Source Punch Read More
[email protected]: Ambode commissions 10 roads, three bridges, other projects – The Lagos @ 50 celebrations took a new dimension this week as the State Governor, Mr. Akinwunmi Ambode embarked on commissioning of several infrastructural projects across the State. Source The Nation Read More
Nigeria lifts FX ban for imports of up to $20,000 per quarter – Central bank – Nigeria’s central bank has lifted a ban on currency allocation for importers bringing in goods worth up to $20,000 per quarter, the bank said in a circular seen by Reuters on Thursday. Source Reuters Read More
CBN Readmits These 3 Previously ‘Banned’ Banks Into The Forex Market – Nairametrics| The Central bank of Nigeria (CBN) has readmitted three of the previously banned banks into the into the spot and wholesale forwards segment of the foreign exchange market after the banks provided ‘proof’ of selling forex to Small and Medium Scale Enterprises (SMEs) since the introduction of the special window for small businesses. Source Nairametrics Read More
$13.5bn Zabazaba project to continue despite Malabu scandal – Kachikwu – The federal government and its joint venture partners will proceed with the $13.5 billion Zabazaba Deepwater project located in Oil Prospecting Lease (OPL) 245 despite the controversies that have rocked the oil block. Source Daily Trust Read More
Nigeria’s Balance of Trade Projected to Hit $3.8bn Next Year – Nigeria’s balance of trade is expected to improve from -$0.5 billion to $3.8 billion before the end of next year, the Chief Executive Officer of the Financial Derivatives Company Limited, Mr. Bismarck Rewane, has said. Source Thisday Read More
FRC set to release template on MDAs operating surplus to curb fraud – To enforce compliance of financial discipline and curb corruption in public life, the Fiscal Responsibility Commission has concluded plans to set template and timelines for all revenue generating agencies on the payment of operating surpluses to the Federation Account of the Nigerian Federation. Source Guardian Read More
Buhari approves $186million to combat criminalities on waterways – President Muhammadu Buhari has approved $186million to combat and stem the cycle of criminalities on the Nigerian waters. Source The Nation Read More
Lagos ranks world’s second cheapest city to live in – Lagos, Nigeria’s largest commercial city is the world’s second cheapest city to live in while Almaty, a city in Kazakhstan is the cheapest to live in, a new survey by the Economist Intelligence Unit (EIU) reveals. Source BUSINESSDAY Read More
Domestic gas supply increases to 40%, says DPR – Domestic Gas Supply Obligation (DSO), an initiative of the Federal Government to meet national demand, is achieving the desired result with the level of compliance by oil producing firms rising to 40 per cent this year. Source The Nation Read More
Port efficiency: NPA inaugurates four tugboats worth over N9.16b – The Nigerian Ports Authority (NPA) has acquired four tugboats at the cost of over N9.16 billion to improve port efficiency. Source The Nation Read More
‘Illegal miners ‘ll not benefit from $150m fund’ – The Federal Government has said illegal mining firms will not benefit from the $150 million grant given by the World Bank to support the Ministry of Mines and Steel Development. Source The Nation Read More
CBN documents expose diversion of $141m for PMS importation – The House of Representatives’ Adhoc Committee investigating the review of price of Premium Motor Spirit (PMS) on Wednesday uncovered the diversion of $141 million special intervention forex allocation and 50,000 Metric Tonnes of premium motor spirit (PMS). Source BUSINESSDAY Read More
Power Generation Hits One-month Daily Peak of 4,553.9MW – After several weeks of low power supply in the country, power generation finally hit a daily peak of 4,553.90 megawatts, the highest since March 23 when the daily peak generation was put at 4,452 megawatts, according to yesterday’s operational report by the Nigerian Electricity System Operator, an arm of the Transmission Company of Nigeria (TCN). Source Thisday Read More
CBN directs banks to diversify portfolios, fund MSMEs – The Central Bank of Nigeria has advised commercial banks and other financial institutions to diversify their portfolios and provide more funding for the Micro, Small and Medium Enterprises in order to enhance economic growth. Source Punch Read More
NNPC wants to raise $16.5b for these projects – The Group Managing Director of NNPC, Dr Maikanti Baru has disclosed that it will be shopping for about $16.5 billion to embark on several oil and gas projects lined up for execution. He said the corporation was seeking to raise about $13 billion to $16.5 billion over the next five years for the following projects. Source Nairametrics Read More
$6bn needed to fix refineries, says NNPC – About $6bn worth of investment is needed to adequately rehabilitate and revamp the country’s refineries, the Nigerian National Petroleum Corporation has said. Source Punch Read More
PayPal’s SME lending tops $3bn, launches new tools – Paypal’s small-business financing unit has announced that it has topped $3 billion in financing more than 115,000 businesses worldwide. Source Vanguard Read More
Dangote Group Partners GAC Motor, Buys Company’s Vehicles for Its Operations – With an eye on its expansion drive in the Nigerian economy, GAC Motor, one of the brands under the Choice International Group (CIG) in Nigeria, recently marked a milestone when it signed a new business partnership deal with the largest conglomerate not only in Nigeria but in Africa, the Dangote Group, to supply vehicles to the Nigerian conglomerate. Source Thisday Read More
Govt completes 22MW Ajaokuta power plant – Towards the rehabilitation of the Ajaokuta Steel Complex, the Federal Government has completed the first phase of the ACSL thermal power plant. Source Punch Read More
NNPC shops for $16b to grow upstream, refining sectors – The Nigerian National Petroleum Corporation (NNPC) said it is looking for $16 billion to grow its upstream operations and increase oil refining from 445,000 barrels per day (bpd) to 700,000 bpd within the next few years. Source The Nation Read More
ExxonMobil workers begin warning strike – Workers of Mobil Producing Nigeria Limited, a subsidiary of ExxonMobil Corporation, yesterday commenced a 3-day warning strike over the company’s incessant sack of Nigerians and replacement with foreign expatriates. Source Daily Trust Read More
Shell profit rise by $2.2bn, to invest $25bn in Nigeria, others – The net profit of Royal Dutch Shell more than doubled in the first three months of 2017, surpassing predictions by analyst as rebounding oil prices and refining gains helped to boost the company’s revenue. Source Daily Trust Read More
Ashaka Cement Announces Resignation of Chairman – The Board of Directors hereby announce the resignation of Mallam Suleiman Yahyah, OON as the Chairman of the Board of Directors of the Company with effect from May 2, 2017. Source NSE Read More
Nigerian Breweries Announces Resignation of MD – Nigerian Breweries Plc announces that its Managing Director/CEO, Nicolaas Vervelde will complete his assignment with the Company on June 16, 2017 to take up new role within heineken group outside Nigeria. Source NSE Read More
Alleged false asset declaration: Prosecution closes case in Saraki’s trial – The prosecution on Thursday closed its case in the ongoing trial of the Senate President, Bukola Saraki. Mr. Saraki is facing 18 counts of false asset declaration-related charges. He is being tried at the Code of Conduct Tribunal, Abuja. Source Premium Times Read More
N’Assembly Increases Its Budget to N150bn, Lays 2017 Appropriation Bill Thursday – Owing to rising inflation and the depreciation of the naira, the National Assembly, which for years has faced criticism over the lack of transparency and accountability over its budget, has increased its 2017 budget in this year’s Appropriation Bill to N150 billion from the initial proposal of N120 billion. Source Thisday Read More
Economic restrictions in world’s largest economy lowers crude oil prices
Brent crude lost about or 1.62 to trade at $42.04 per barrel.
Crude oil prices dropped lower on Tuesday amidst worries that new restrictions on businesses in the United States could threaten fuel demand recovery.
Also, expectations that OPEC+ might remove the cap placed on crude oil output from August, in a meeting scheduled for Wednesday, has sent Brent crude south.
Brent crude lost about 1.62% to trade at $42.04 per barrel by 6.25 am local time, after losing about 1% yesterday.
Sell-offs in the energy derivative increased pace in the energy market after news filtered in about California’s Governor commanding a massive retrenchment of the state’s reopening, banning indoor restaurants, shutting bars, gyms, hair salons, and closing churches in hardest-hit regions.
Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oils. The international benchmark is used to set the price of crude oil for about two-thirds of the world’s traded crude oil, including Nigeria’s crude (Bonny Light, Brass River, Qua Iboe, etc.).
Meanwhile, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the OPEC scheduled meeting that oil traders are focused on. He said:
“Still, speculation on OPEC+ strategy ahead of OPEC’s Joint Ministerial Monitoring Committee meeting tomorrow could make for an exciting 24 hours.
“Existing plans call for OPEC+ cuts to taper in August after a one-month extension.
“While Russia has already indicated it expects to increase production in line with the agreement, there is the possibility that uncertainty around demand as a result of rising coronavirus infections will lead to another extension of the deepest initial phase of cuts.
“Traders do not expect the outcome to be hugely significant for oil either way. The most critical deliverable for OPEC+ is the continued demonstration of unity within the group.”
Facebook, Microsoft, Amazon shares drop, top U.S official orders lockdown
Tech stocks in the S&P 500 have rallied nearly 16% this year.
Most U.S tech stocks on the Nasdaq composite slumped yesterday, as tech juggernauts, Facebook Microsoft, NVidia, Amazon, shed more than 2% after gaining earlier on Monday.
The selloff could be attributed to the California Governor’s order on closure of indoor restaurants, shut bars, gyms, hair salons, and closing churches in hardest-hit regions.
Tech stocks in the S&P 500 have rallied nearly 16% this year, even after Monday’s 2.1% slump, fueling a logic-defying market rebound that has largely pulled the major U.S. stock indexes out of their pandemic-induced slump.
Unofficially, the Dow Jones Industrial Average rose 11.04 points, or 0.04%, to 26,086.34, the S&P 500 lost 29.69 points, or 0.93%, to 3,155.35 and the Nasdaq Composite dropped 226.60 points, or 2.13%, to 10,390.84.
Quick fact; The Nasdaq Composite is made up of companies that trade on the Nasdaq. These companies include major software and internet-based juggernauts (Apple, Facebook Microsoft, NVidia, and Amazon) but also include biotech, financial and industrial companies’. The Nasdaq Composite tracks over 3000 stocks.
“The rally’s been driven by a handful of names. You’ve had headlines about COVID and layoffs and the economy. It’s finally caught up with these names everybody’s been hiding in,” said Michael O’Rourke, chief market strategist at Jones Trading in Stamford, Connecticut.
What is holding oil price?
Traders believe if supply comes back from these areas, prices cannot reach the $50 mark.
How is oil doing?
Crude oil hit a 4-month high last week aided by more demand in gasoline, production cuts, and a higher-than-predicted U.S. jobs record. The caveat is that the jobs data has been a major market boost in the last few weeks as it shows signs of a recovering economy. However, analysts nevertheless anticipate oil to face resistance to any further profits. “Oil has carried the burden on recovery and demand, and it’s no longer clear whether or not that would hold into August and September,” Andrew Lebow, senior associate at Commodity studies organization, gave his views on Bloomberg.
OPEC+ scheduled to ease production cuts starting in August, and sources informed Reuters that the organization will likely refrain from an extension. Saudi Arabia also reportedly placed a strain on Nigeria to improve its compliance. Last week, Russian Energy Minister Alexander Novak reiterated that role “We will have a partial resumption of the unprecedented cuts starting from Aug. 1.”
Russia’s oil exports to Europe came to a two-decade low. Russia is about to reduce oil exports to Europe to just 900,000 BPD in July, the lowest stage to Europe since 1999, as supplies from somewhere else continue to benefit from its shortage. U.S. oil has gained a foothold. U.S Shale oil producers have been faced with tightened credit by banks which could hurt the oil production capacity of the United States.
There is also talk of Libya, Saudi Arabia, and Kuwait restarting production. Traders believe if supply comes back from these areas, prices cannot reach the $50 mark. Venezuela’s oil production declined by 32%. Petróleos de Venezuela, S.A’s oil production fell through 32 percent to 422,000 BPD in June, the sixth consecutive month of declines. Political tensions are responsible for these losses in the Latin American country.
With lockdowns easing, it was also noted that the second-most populous country in the world has picked up demand in fuel. India’s fuel demand has begun to pick up the pace. Coronavirus continues to spread in India; however, gasoline demand rises as people begin economic activities.
A couple of weeks ago, I wrote on renewable energy replacing oil. According to Moody, the pandemic might have hastened the power transition. “COVID-19 lockdown experience of reduced commuting and business travel, alongside better air quality and family time, may deliver lasting changes in energy consumption”, as written in a report by Moody.
Considering the long-term economic harm, those adjustments may want to accelerate the shift far from fossil fuels. The EIA corroborates this shift by stating to achieve the goal of net-zero emissions by 2050, the world will require a substantial acceleration in clean energy innovation. In the short term, The Energy Information Administration also increased its price outlook for Brent crude to $41 per barrel for H2 of 2020—this is four dollars higher than their forecast last month.
The rationale behind this upward trajectory is the “EIA expects high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months, but as inventories decline into 2021, those upward price pressures will increase,” as summarized in the EIA’s monthly report.