The ongoing dispute between the Nigerian Ports Authority (NPA) and BUA Ports and Terminals Limited (a subsidiary of BUA Group) is gradually having a negative impact on the Nigerian economy. The contract disagreement, which has gone through a handful of courts, will affect 1000 jobs as it continues to linger, and BUA Group is losing more than $500,000 monthly revenue.
The conflict resulted from the BUA Group’s Concession in the Port Harcourt Ports area. The port authority had decommissioned the whole concession arrangement which BUA Group got in 2006.
Why NPA decommissioned: NPA had decommissioned the concession, claiming that the unsafe operational environment of the jetty (BUA concession area) needed urgent repairs and reconstruction. But the General Manager, BUA Ports and Terminals Limited, Mohammed Ibrahim, said the withdrawal of license by the Managing Director of NPA, Hadiza Bala-Usman was against the requirement of global judicial/dispute resolution and undermined the NPA concession agreements.
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BUA’s defence against NPA: The concession is expected to last for 20-years before the need for renewal but the company has only been in charge for 13-years, and according to Ibrahim, BUA had on several occasions sought approval from NPA to perform remedial works on the terminal. However, the NPA didn’t grant the approval, yet it shut down the terminal or decommissioned the concession.
Also, in his reaction to the dispute, Ibrahim said NPA’s delay to attend to the request for cost variation arising from the expanded scope of work and this forced Julius Berger to stop work. BUA had contracted Julius Berger for the Engineering, Procurement and Commissioning (EPC) of the area in accordance with the concession agreement. Julius Berger only worked for about 12 months from March 2014 to July 2015.
NPA breaching court order? According to a report, the NPA’s decision is against the ruling of the Federal High Court and will affect the pending case at the Court of Arbitration of the International Chamber of Commerce in Paris.
Ibrahim said a Federal High Court in Lagos had ordered NPA not to terminate or effect the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the lease Agreement, but NPA disregarded the ruling, the report disclosed.
NPA’s decision affecting FG and BUA: It was learnt that the decision to decommission the concession or close the BUA terminal came at a loss to both BUA Group and the Federal Government. If the concession is still operating, NPA is supposed to charge from $85,000 to $105,000 monthly, depending on the volume of cargoes discharged at the terminal on behalf of FG.
Also, the closed terminal, which is supported by a $400 million investment from BUA, will also affect the 1000 direct jobs the concession is expected to provide. It was also revealed that thousands of indirect jobs in haulage, loading, stacking, sales, among others, in the Group’s manufacturing value chain will be affected as well.
Meanwhile, Ibrahim disclosed that BUA also loses between $500,000 and $600,000 monthly revenue, adding that, “This is affecting the economy because when you keep a vessel out for one month without a berth, money is going, somebody is losing. The tank farm that is close to us is losing.
“Crown Flour Mills take their product from BUA Terminal, we have so many customers that bring in fish through our terminal, all of them now are in big problem because the four berths available can only take four ships at a time and when one berthes cargo vessel, the one you saw has been at the port terminal for more than 10 days, which means that that berth cannot take any other ship until this one leaves.”
Shell considers relocating its headquarters to the UK
Royal Dutch Shell has consistently pushed for the Dutch Government to stop taxes on dividends.
Oil and gas giant, the Royal Dutch Shell, is considering moving its corporate headquarters from The Netherlands to Britain. This could be a move against the implementation of dividend tax in The Netherlands.
The move was disclosed by the oil company’s Chief Executive Officer, Ben Van Beurden, during an interview with a Dutch newspaper on Saturday, July 4, 2020. According to him, the oil giant is not ruling out relocating its headquarters from the Netherlands to Britain. He said:
“You always need to keep thinking. Nothing is permanent and of course we will look at the business climate. But moving your headquarters is not a trivial measure. You cannot think too lightly about that.”
Further confirming the Chief Executive Officer’s comment, a Shell spokesman told Reuters that the oil giant is looking at ways to simplify its dual structure, as it had been doing for many years.
Royal Dutch Shell has consistently pushed for the Dutch Government to stop the tax on dividend paid to shareholders, as this makes financing dividend, share buy-backs and acquisition a lot more difficult.
An earlier attempt by the Dutch Government to stop the dividend tax as an incentive to convince Unilever to unify its dual structure in Rotterdam, was met with an outcry by the public, who see that as a gift to rich foreigners.
It can be recalled that Shell had announced a few days ago that it might likely write down between $15 billion-$22 billion in post impairment charges for the second quarter of 2020. The impairment, which is its largest since the merger with Shell Transport and Trading Company Ltd in 2005, shows the huge adverse impact that the coronavirus pandemic has had on the oil giant’s businesses.
Also, in a move that shocked investors, Shell for the first time since the Second World War, cut down the dividend that it paid to its shareholders by two-thirds due to the negative impact of the pandemic. The decision came as a surprise to many including shareholders of the oil company which is by far the biggest payer of dividend in the FTSE 100.
Governor David Umahi of Ebonyi tests positive for COVID-19
Umahi has directed those who worked in the budget review for 2020 to immediately test for COVID-19.
The Governor of Ebonyi State, David Umahi has tested positive for COVID-19, reported on Saturday afternoon.
Umahi’s Special Assistant on Media, Mr. Francis Nwaze, confirmed the news and also revealed that some associates of the governor also tested positive.
He also said that the Governor is not showing any symptoms of the disease, though he has isolated himself in line with the NCDC protocols.
“The governor has directed his Deputy, Dr Kelechi, to coordinate the state’s fight against the disease and appealed to the citizens to take the NCDC protocols seriously.
“He will currently be working from ‘home’ and will be conducting all meetings virtually,” Nwaze added.
David Umahi becomes the sixth Nigerian governor to test positive for the disease, Governors of Kaduna, El- Rufai, Bauchi, Bala Mohammed and Oyo, Seyi Makinde have fully recovered while the recent cases have been the Governors of Ondo, Rotimi Akeredolu and Delta, Ifeanyi Okowa.
On Thursday, Governor Umahi announced that the state’s Executive Council was finalizing the budget review required by World Bank and said “most us broke down and are being treated of malaria.”
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He also directed those who worked in the budget review for 2020 to immediately test for COVID-19 and admitted he is expecting a second test result after he initially tested negative in March.
Nigeria’s debt rises to $79.5 billion, as debt to revenue ratio worsens
According to data obtained from DMO, $27.66 billion (N9.9 trillion) is the total external debt.
Nigeria, Africa’s largest economy’s total public debt rose to $79.5 billion (N28.63 trillion) as of the first quarter of 2020, which is March 31, 2020. This represents a 15% increase from the figure that was recorded for the corresponding period in 2019, which was about $69.09 billion (N24.94 trillion).
This was disclosed in a latest publication by the Debt Management Office (DMO) on Friday June 3, 2020.
Nigeria has seen its debt stock rise sharply in recent years as the country tries to fund infrastructural and developmental projects and boost its fragile economy, which has been in and out of recession. The country’s economy has been projected to fall into recession again, due to the adverse impact of COVID-19 that has seen oil prices crash globally.
According to data obtained from DMO, $27.66 billion (N9.9 trillion) is the total external debt. This represents 34.89% of the total public debt stock. Whereas, $51.64 billion (N18.64 trillion) is the total domestic debt, which represents 65.11% of the total public debt.
The Federal Government accounts for 50.77% of the total domestic debt, which is $40.26 billion (N14.53 trillion), whereas the State Governments and Federal Capital Territory account for 14.34% of the total domestic borrowing which is $11.37 billion (N4.11 trillion).
Nigeria has been under a lot of fiscal crisis following the crash of oil prices triggered by the coronavirus pandemic. The oil sector accounts for about 90% of the country’s foreign exchange earnings and about 60% of its total revenue.
The country, which had lined up a series of debt issue this year, had to halt the external commercial borrowing due to oil price collapse. The Minister for Finance, Zainab Ahmed, had last week disclosed that the country would no longer go ahead with its Eurobond debt issue.
The Nigerian government, for now, is focusing on the domestic markets and concessionary loans to help fund the 2020 budget deficit which is made worse by drop in revenue. In the recently approved 2020 revised budget, the federal government is expected to borrow N850 billion from the domestic market.
This rising debt has put a lot of pressure on the government’s resources as it spent $1.69 billion (N609,13 billion) to service its domestic debt in the first quarter of 2020 alone.
Nairametrics had reported that Nigeria’s global rating is at risk due to the sharp rise in the country’s sovereign debt and a growing finance gap. According to a report from the global rating agency, Fitch Ratings, this could trigger a rating downgrade as policymakers struggle to stimulate growth and deal with the impact of low oil prices and sharp drop in revenue.
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According to Fitch, the country’s debt to revenue ration is set to deteriorate further to 538% by the end of 2020, from the 348% that it was a year earlier.