Business News
Why Ibe Kachikwu’s re-appointment is highly uncertain at this point
The country’s failure to attain 90% self-sufficiency in oil refining could deny Ibe Kachikwu a second term as the country’s Minister of State for Petroleum Resources.
Nigeria’s three dormant refineries have cost the country about N8 billion after failing to meet operational capacity. The country’s failure to attain 90% self-sufficiency in oil refining could deny Ibe Kachikwu a second term as the country’s Minister of State for Petroleum Resources.
Understanding the Situation: Nigeria’s dormant refineries include the Warri Refining and Petrochemical Company, Kaduna Refining and Petrochemical Company, and Port Harcourt Refining Company.
These refineries to refine crude for eight consecutive months. As such, they failed to generate revenue for the Government.
How the refineries operated: According to the Nigerian National Petroleum Corporation (NNPC), Nigeria began to lose a lot of money starting from May 2018 to January 2019. Since January 2018, only the WRPC was able to make some profits in February (N129.91 million) and April 2018 (N575.16 million).
In its latest monthly financial and operations report, the NNPC disclosed that between January 2018 and January 2019 KRPC and the PHRC were only able to make some profits in April 2018. This is because all the refineries started losing money on a monthly basis beginning from May last year.
The PHRC recorded N2.11 billion loss in January 2019 and the refinery was idle from July 2018 to January this year because it could not refine a drop of crude in the seven months. While the report showed that the KRPC posted the highest loss of N3.74 billion for January 2019, as it stayed dormant and failed to refine any crude oil from February 2018 to January this year.
Meanwhile, the WRPC lost N2.51 billion in January 2019. Out of all the refineries, only the one in Warri was able to process some volumes of crude oil between January 2018 and January this year.
However, the WRPC recorded zero capacity utilisation in January, September, and October, in 2018 in relation to the period under review. In January 2019, the Warri refinery processed 104,459 metric tonnes of crude and posted a capacity utilisation of 19.76 percent.
What this means: The failure to ensure that these refineries continue operation and refine crude oil at expected capacity, means the President Buhari-led administration has failed in its promise to achieve 90 percent operational capacity target for refinery production in Nigeria.
Why this matters: The former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had vowed to resign if Nigeria does not attain self-sufficiency in the refining of petroleum products by 2019. Although his tenure ended with President Buhari’s first term in May 2019, a lot of Nigerians expect him to return for a second term.
While it is uncertain at the moment whether he will be re-appointed when the President’s cabinet list is ready, one thing is sure- Kachikwu will be under the watchful eyes of Nigerians to see if he will willingly accept a reappointment or reject such on the account of his “failure” during his first tenure.
Note: President Buhari has not disclosed when he will be announcing his cabinet. It took him six months before he named Ministers for his first term in 2015. He has, however, hinted that the timeframe for his second term will be different.
Coronavirus
Sanwo-Olu gives incentives to businesses to prevent job loss
Babajide Sanwo-Olu noted that the state is Nigeria’s number one commercial centre and a massive job loss will not bode well for it’s economy
Lagos state governor, Babajide Sanwo-Olu, has promised that any business that employs a large number of people will receive incentives from the state government in order to prevent massive job loss in the state.
He noted that Lagos state is Nigeria’s number one commercial center and heavy job losses will not bode well for the economy of the state, and the country.
As the commercial centre of the country, we are offering incentives to businesses that employ large number of people to avoid job loss.
In our plan to re-open the economy, businesses will follow our Register-to-Open guidelines with protocols that workplaces must put in place. pic.twitter.com/zJgEWLMksK
— Babajide Sanwo-Olu (@jidesanwoolu) May 22, 2020
“We are having conversations with different sectors on the requirements they need to ensure they do not retrench their staff. What many of the companies want will affect the State’s IGR but we are willing to make the sacrifice to prevent the loss of livelihood of our citizens,” the governor stated.
The phased reopening of the economy
The governor explained in his tweet that all businesses were still required to follow the Register-to-open initiative, and put all facilities in place before they would be allowed to reopen.
(READ MORE: COVID-19: Best and worst case scenarios for the Nigerian economy)
According to him, the state will consider companies in the construction and manufacturing sector as top priority in the first stage of the reopening, while businesses in the entertainment and hospitality sector will be considered for reopening in the second phase, as the state tries to balance economic reactivation with COVID-19 management.
The re-opening will not be hastily done. The various sectors will be reset in a gradual manner. The construction and manufacturing sector will be accorded high priority while the entertainment and hospitality sectors will be considered in the second phase.
— Babajide Sanwo-Olu (@jidesanwoolu) May 22, 2020
“We are caught between managing hunger & sustaining an economy that is not only dependent on commercial activities in Lagos alone but also in other states.
“We are at the stage where we have to balance public health safety & the economy that affects the wellbeing of the people” Sanwo-Olu stated.
He urged Lagosians to support the government in breaking the cycle of transmission, by adhering to the guidelines from the authorities.
Around the World
Air Peace to evacuate stranded Indians from Lagos to Kerala
A list of the passengers to be attended to has already been given and the flight shall depart Lagos on May 30, 2020, to Cochin Airport, Kerala.
The management of Air Peace Nigeria has been contacted by the Indian High Commission in Nigeria to undertake the evacuation of stranded Indian nationals to Kerala, India. This was disclosed by the airline via its Twitter handle.
The airline explained that a list of passengers that would be attended to have been released and it has started reaching out to the Indians on Saturday.
It stated, “A list of the passengers to be attended to has already been given to us and we have commenced reaching out to them. The flight shall depart Lagos on May 30, 2020, to Cochin Airport, Kerala.”
The flight is not free anyway. According to the airline, payments are expected immediately and they are Economy is $1.300 and Business class is tag $1,700. “You are equally allowed to pay in Naira at N460/$,” it added.
PUBLIC NOTICE (23-05-2020) pic.twitter.com/bn0xNxnRmO
— Air Peace (@flyairpeace) May 23, 2020
However, some Indians in Nigeria has reacted with mixed feelings to the development on Twitter. While some were ready to join the flight back home, others called for the refund of ticket fare booked a week ago.
READ ALSO: Hope rises as Emefiele set to meet MTN, 4 banks today.
For instance, Jayant Khamesra requested for the refund ticket fare of N568, 100, which he paid for a flight from Lagos to Delhi.
He said, “Please refund ticket fare P47812 LAGOS to DELHI. No show by Air Peace and it is been 1 week now, there has been no refund or confirmation of the same. Reference ALHN79 amount N568,100. I am sure a good world-class carrier like Air Peace won’t delay refunds purposely. Please act fast.
Pls refund ticket fare P47812 LAGOS to DELHI – NO SHOW by AirPeace and it’s been 1 week now —- there has been no refund or confirmation of the same. Reference ALHN79 Amount 568100 NGN. Am sure a good world class carrier like AIRPEACE won’t delay refunds purposely. Pls act fast
— Jayant Khamesra (@JKhamesra) May 23, 2020
Coronavirus
The World’s Economy may not survive without a vaccine
Industries like tourism and travel with social distancing rules in place will only scramble for the little they can get while sports stadiums, entertainment hot-spots, etc., will remain closed.
As parts of the world restart economic activities, it is becoming clear that the worst plunge in modern history would need a vaccine or cure before things can revert to normal.
In response to the exogenous shock that is the Covid-19 pandemic, leaders, researchers, analysts, and experts have sought methods, options, – anything to reduce the negative impact of what many now regard as the worst slump since the 1930s. So far, different parts of the world have put systems and structures in place to allow a level of economic activity to continue as it became increasingly clear that full social welfare was simply unsustainable. This is, however, not without the existence of relevant restrictions like temperature checks, social distancing rules, and the latest fashion accessories – masks and gloves.
READ ALSO: Nigerian economy going into recession, might contract by -8.9% – Finance Minister
While this is an admittedly better development than the enforced total lockdown – at least for the economy, this too has its limitations. Economic activities have taken on a sluggish growth pace and while production might continue, global demand remains hamstrung. Industries like tourism and travel with social distancing rules in place will only scramble for the little they can get. Sports stadiums, entertainment hot-spots, etc., will remain closed. Even with the increased dependence of delivery services, restaurants will struggle to make what they used to before. Jobs have been cut and even more will. In essence, the partial reopening of the economy isn’t also sustainable. Yet, it is impossible to ignore the virus itself especially given the risks of a resurgence of the virus in already treated patients and the increasing cases in many parts of the world.
Data obtained from Bloomberg revealed that people infected around the world reached 5 million with a death toll of over 330,000. With the pandemic still on our tails, finding a vaccine is our best bet – and nothing else might be able to beat that. Stephen Jen, CEO of Eurizon SLJ Capital – hedge fund and advisory firm in London told Bloomberg News that there’s some sort of bounty on the virus globally.
READ MORE: Osinbajo sets up committee on reopening of Nigerian economy, suspends loan deductions for states
In his words, “I don’t see how it is wiser for investors to bet on the virus than to bet on science, technology, and unlimited political and financial capital in the world to contain and defeat the virus.”
Also, the shares of American drug maker based in Massachusetts, Moderna Inc., hit a record high early in the week, as a result of its early data from a small trial of the company’s Covid-19 vaccine. It, however, gave up some of those gains days after stock traders scrutinized the early nature of the vaccine data.
Bloomberg Economics predicts that the restriction and shutdown of businesses triggered a plunge in economic activities of about 30% and their findings found that the first steps to relax controls will have a good impact on activity than later ones. Yet, our optimism is palpable. Anita Zaidi, Director of Vaccine Development and Surveillance at the Bill & Melinda Gates Foundation have advised that the process of creating an effective immunity could take years, and even then it will have to solve the issue of logistics that is making the vaccine readily available globally.
Today, the world waits in hope that this too passes like many of its predecessors. While it will indeed pass, there still is no saying how long it will take before life reverts to a new but sustainable normal.
