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External reserves drop by $3.2 billion in Q3’19 

Nigeria’s external reserve has reduced by $3.22 billion from $45.07 billion as at end of June 2019 to $41.85 billion by the end of September 2019. 

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CBN, Key lending rate, CBN to boost creative industry with N22 billion , CBN increases LDR to 65%, sets December deadline, External reserves drop by $3.2 billion in Q3’19 , Banks' loans to Oil and Gas, Power, other sectors drop by N411.8 billion 

Nigeria’s external reserve has reduced by $3.22 billion from $45.07 billion as at end of June 2019 to $41.85 billion by the end of September 2019.

The development is attributed to the impact of volatility in the price of crude oil, a slowdown in dollar inflows from Foreign Portfolio Investors (FPIs), and increased dollar sales by the Central Bank of Nigeria.

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Analysts projected that the downward trend, which started from $45.149 billion on July 5th, would likely persist this month, with the possibility of touching the $40 billion mark.

[READ MORE: Nigeria’s foreign reserves shed $1 billion, biggest fall in 17 months]

On factors that will impact the reserve this month in his monthly economic review in Lagos recently, Chief Executive Officer, Financial Derivative Company Limited, Mr. Bismack Rewane said, “Demand for dollars will increase in the coming month due to inventory build-up ahead of Christmas and this will mount pressure on external reserve, hence gross external reserve level may decline to $40 billion. I am cautiously optimistic that the reserve will stay above $41 billion this month because when it falls below $41 billion everybody begins to panic.”

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Executive member, Corporate Banking, FSDH Merchant Bank, Ayo Akinwunmi, said, “The direction of the reserve in October is unpredictable. However, if it continues to decline the way it did between August and September when it fell by about $3 billion, it may go below $40 billion by the end of this month.

“And as the reserves drop, foreign portfolio investors will be hesitant to bring in their money and this will further reduce accretion to the reserve.”

[READ ALSO: Nigeria’s External Reserves drop by $2.9 billion, hit 10-month low]

Akinwunmi explained that while FPIs still find the Nigerian market attractive due to the huge difference between yields on the one year Treasury Bill (TB) in the United States and Nigeria which, for now, overcompensate for the risk of devaluation, further fall in the reserves below $40 billion may, however, trigger serious concerns among the FPIs.

 

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Patricia

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - abiola.odutola@nairametrics.com.

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Business News

Ecobank Transnational to hold AGM by proxies on June 30th

Due to the ravaging Coronavirus pandemic, ETI said the AGM will be held by proxies.

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Ecobank Transnational Incorporated (ETI) has announced the date and venue of its 32nd Annual General Meeting (AGM). According to a disclosure that was sent to the Nigerian Stock Exchange, the company’s AGM and an Extraordinary Meeting are scheduled to hold on June 30th, 2020, at Eko Hotels and Suites in Victoria Island, Lagos.

Due to the ravaging Coronavirus pandemic, ETI said the AGM will be held by proxies. The proxy AGM is expected to enable the Pan-African financial institution to abide by the directives issued by governments and agencies regarding COVID-19 and how to contain its spread.

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“As a responsible corporate citizen, ETI intends to strictly comply with this restriction in addition to other applicable health and safety measures. Accordingly, attendance at this year’s General Meetings shall be mainly by proxies in accordance with the Articles of Association of the Company and applicable law,” a statement by the company said.

To this end, shareholders have been advised to select any of the company’s top executives (including the Chairman, Emmanuel Ikazoboh, and the MD of Ecobank Nigeria, Patrick Akinwuntan) to represent and vote on their behalf during the AGM. Proxy forms may be downloaded from the company’s website, filled, and submitted in advance.

READ ALSO: NSE commemorates FBNQuest Merchant Bank’s N5 billion Bond Listing with Digital Closing Gong Ceremony

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Meanwhile, the issues that are up for discussion during the AGM and the Extra Ordinary meeting are enumerated below.

Annual General Meeting

1. Approval of the accounts
2. Appropriation of the Profits
3. Election of Directors
4. Ratification of the co-option of directors
5. Renewal of the appointment of the joint auditors
6. Approval of the Final Board Fees for Retiring Directors

Extraordinary General Meeting

1. Withdrawal of resolution on consolidation of shares
2. Amendment of the Articles

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Note that in Q1 2020, ETI reported profited after-tax from continuing operation of N66.4 billion, marking a 19% decline when compared to N81.9 billion during the comparable period in 2019.

ETI’s share price on the Nigerian Stock Exchange closed Friday’s trading session at N5.55. The company has a market capitalisation of about N137.3 billion according to information obtained from Bloomberg.

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NNPC explains measures to cut cost of crude oil production

Ewubare stated that NNPC was looking very closely at such variables as logistics, security, and transportation with a view to reducing the cost of production to $10 per barrel or below. 

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The Nigerian National Petroleum Corporation (NNPC) has said that it is taking some measures to bring down the cost of crude oil production to $10 per barrel or below. 

According to a press statement that was signed by NNPC’s Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, this was disclosed by the Corporation’s Chief Operating Officer (COO), Ventures and Business Development, Mr. Roland Ewubare, on a Channels TV breakfast programme on Friday, June 5, 2020. 

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Ewubare pointed out that the peculiarity of the terrain was an important factor in determining cost, with such issues as pipeline vandalism, crude oil theft, and some others being critical factors that are peculiar to the Nigerian terrain and would definitely drive up crude oil production cost in the country. 

READ ALSO: NNPC unveils COVID-19 contacts tracing app, marketers to buy petroleum products online

He, however, stated that NNPC was looking very closely at such variables as logistics, security, and transportation with a view to reducing cost of production to $10 per barrel or below. 

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He disclosed that much had been done over the years in the area of reducing contracting cycle which used to be a major factor responsible for high cost of production, stressing that the National Petroleum Investment Management Services (NAPIMS) achieved a six-month contracting cycle under him as Group General Manager. 

Mr. Ewubare denied reports that Nigeria is part of OPEC+ member countries that did not comply with the output cut that was agreed by the alliance 

Mr. Ewubare explained that though Nigeria’s total production capacity was 2.3million barrels per day, it was currently producing only about 1.4million barrels per day in compliance with the OPEC+ production quota, stressing that what makes up the little extra over the 1.4mbpd figure being bandied around for Nigeria was condensate which is usually not computed as part of production in OPEC quota.  

READ MORE: NNPC seeks Russian firms’ partnership to revamp oil refineries  

While making some clarification, Ewubare said, There’s some confusion in the market around the parameters for the production cuts. Nigeria has a full production capacity of about 2.3mbpd. We are currently producing between 1.6 and 1.7mbpd. Our OPEC quota as a result of the cuts is about 1.4mbpd. You and I know that condensate is not included in the computation of the cut numbers. So what we have is 1.4mbpd of crude oil. The little you see above 1.4mbpd is made up of condensate which does not count as part of the basis for assessing our OPEC quota”. 

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NNPC Group Managing Director, Mallam Mele Kyari, in a recent interview, advanced a similar position where he stressed that NNPC was working assiduously to bring down the cost of crude oil production to not more than $10 per barrel by 2021.  

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NNPC raises alarm over low grade, contaminated diesel in the market

This warning was contained in a report by the Managing Director, NNPC Retail Limited Managing Director, Dr. Billy Okoye, who also admonished motorists to be careful of the off-spec products. 

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The Nigerian National Petroleum Corporation (NNPC) has raised alarm over the circulation of low grade and contaminated AGO, popularly known as diesel, which is offered at discounted prices in some parts of the country. 

This was disclosed in a press release by the Group General Manager, Group Public Affairs Division, Dr Kennie Obateru, on Friday June 5, 2020. 

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This warning was contained in a report by the Managing Director, NNPC Retail Limited Managing Director, Dr. Billy Okoye, who also admonished motorists to be careful of the off-spec products. 

READ MORE: FG projects $2 billion annual revenue from Escravos Gas project

The state oil giant, in the press statement, said, “The Nigerian National Petroleum Corporation (NNPC) has raised an alarm over prevalent low grade and contaminated AGO, otherwise called diesel, offered at discounted prices in parts of the country.” 

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Dr. Okoye, stated that the warning became necessary because the low grade contaminated diesel is harmful to machines and the environment. He explained that NNPC Retail Ltd is a market leader and therefore considered it incumbent upon it to alert the general public on the circulation of these low grade products. 

While urging consumers of the product to patronize the oil firm’s service stations where the quality of their products was assured, Dr. Okoye gave assurances that NNPC Retail Limited dealt only in premium high-quality products in the interest of Nigerian motorists and users. 

READ MORE: Fitch revises national ratings of GTBank, Zenith bank

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Unlike the premium motor spirit otherwise known as petrol, which was operating a fixed price regime and had NNPC as the sole importer, the diesel products were deregulated and had other independent marketers apart from NNPC importing the products as well. 

The intense competition and unhealthy drive for profit, in addition to poor regulation, could have given rise to this.  

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