Connect with us
iubh
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
british airways
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
app

Economy & Politics

Nigeria to negotiate with IOCs over $62 billion demand 

Nigeria’s Justice Minister, Abubakar Malami, disclosed over the weekend that negotiations had begun towards a possible resolution.

Published

on

reserves, Nigeria Crude Oil Prices, Nigeria wants international oil companies to pay up now , Trade conflict between United States, China continues to affect oil prices, Global oil prices rally to $69.16, as Soleimani killed in US air strike, Crude oil prices continue to rise on the backdrop of US-Iran tension, Coronavirus projected to affect crude oil demand negatively , Worry, as Coronavirus threat pushes oil price below budget benchmark, Coronavirus: FG to review budget as oil price plunges, BOOM: Crude oil price crash below $30 in worst trading day since 1930,Bears ravage Global market, Brent Oil surges 10% trading at $27.29 per barrel, Crude Oil up 10% as Brent crude raises to $27 per barrel, Oil market crisis – possible production shutdown looms, The time crude oil became cheaper than water,, Brent crude surges past $40, analyst recommends investment in crude oil derivatives, Nigeria's Bonny light hit four months high, Nigeria's Bonny light hit four months high

Following last week’s reports that Nigeria is asking international oil companies to pay up about $62 billion accrued interests from years of non-compliance to a 1993 contract law, the country’s Justice Minister, Abubakar Malami, disclosed over the weekend that negotiations have begun towards a possible resolution.

Nairametrics reported that the likes of ExxonMobil Corp, Chevron Corp, Total SA, Royal Dutch Shell, and Eni SpA were asked to pay up $62 billion which they had allegedly failed to pay overtime. These companies are responsible for pumping most of the country’s crude oil output.

[READ MORE: How NNPC discovered oil, gas deposits in the North]

In 1993, when Nigeria entered into the contracts with these IOCs to develop the country’s oil fields, the revenue sharing model was set at 20% for the government and 80% for the companies. However, a key clause specified that Nigeria would receive more share from oil revenues generated by them should global oil prices ever exceed $20 per barrel.

Crude Oil prices, oil

Between then and now, oil prices have risen and fallen and currently stands above $20 per barrel. Yet, Nigeria claims the oil companies have persistently refused to adhere to the specifics of the contract law.

Last year, the Supreme Court ruled in favour of Nigeria’s demand for more share from oil proceeds. However, the oil companies kicked against the demand with counter lawsuits, arguing that the government does not have the right to ask them to pay for accrued interests. They also argued that they “weren’t party to the 2018 case, they shouldn’t be subject to the ruling.”

[READ ALSO: Shell wants oil spillage case tried in Nigeria, but victims say no]

Hotflex

It appears IOCs’ protests worked, seeing as Nigeria is now willing to negotiate. However, as the Justice Minister clarified, the outcome of these negotiations is yet to be seen.

“We have opened up a process of engagement between the parties. Whether those discussions will eventually translate to settlement, whether it will translate to opening up of a full-blown negotiation process, is what we wait to see.”

british airways

Nigeria is desperate to raise revenue from anywhere possible in order to facilitate economic activities in the country. One of such attempts is to demand $62 billion from IOCs. Now, while the government obviously has the right to make such demand based on the contract, it is also making sure to do it wisely in order not to scare away foreign investors.

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Economy & Politics

Nigerian states generate N1.31 trillion IGR in 2020 as Lagos dwarfs others

The 36 states and the Federal Capital, generated a sum of N1.31 trillion as Internally generated revenue (IGR) in 2020

Published

on

FAAC, IGR, Fiscal federalism in Nigeria, NEC Inauguration, Bailout Fund: FG begins deduction of N614 billion from states’ allocation in 2 weeks , Ekiti, Enugu, Bayelsa, 12 others attract no investment in 1H , States’ debt stock, Fiscal federalism

The 36 states and the Federal Capital Territory generated a sum of N1.31 trillion as Internally generated revenue (IGR) in 2020. This was contained in the state IGR report, which was recently released by the National Bureau of Statistics (NBS).

According to the report, the states’ IGR declined by 1.93% from N1.33 trillion, recorded in the previous year to N1.31 trillion in 2020. It however increased by 11.7% compared to N1.69 trillion recorded in 2018.

The decline may be due to the effects of the covid-19 pandemic on the various states of the federation, as they were forced to implement lockdown protocols to curb the spread of the disease in the country.

Highlights

  • States generated N1.09 trillion from taxes in the year 2020, accounting for 83.3% of the total IGR received in the year.
  • Tax revenue also declined, when compared to N1.11 trillion collected in the previous year. This represents a 2.25% decline year-on-year.
  • Lagos State recorded the highest Internally Generated Revenue of N418.99 billion, accounting for 32.1% of the total and closely followed by Rivers State with N117.19 billion.
  • Others with the highest IGR in 2020 include Abuja (N92.06 billion), Delta (N59.73 billion), and Kaduna (N50.75 billion).
  • Kebbi State recorded the highest year-on-year growth of 87.02%, closely followed by Ebonyi at 87.3%. Oyo State grew its IGR by 42.23%, Borno (41.63%), while Katsina grew by 34.16%.
  • On the flip side, Benue State recorded the highest year-on-year decline of 41.38%, followed by Sokoto State, which dipped by 37.93%, Kwara (36.03%), Jigawa (32.95%), and Ogun State (N28.44%).

A cursory look at the data shows that the States recorded the highest quarterly IGR in the first quarter of the year, before the covid-induced lockdown in March 2020. It however dipped significantly by 25.53% to stand at N269.88 billion in Q2 2020.

States generated a sum of N338.57 billion in Q3 2020 and then recorded a marginal decline in Q4 2020 to stand at N335.25 billion.

Lagos dwarfed others

Lagos State recorded the highest internally generated revenue in 2020, having made N418.99 billion, accounting for 32.08% of the total states’ IGR recorded in the period under review.

  • It is no surprise that Lagos State makes this much revenue as it is regarded as the commercial hub of Nigeria.
  • According to the data from NBS, Rivers State is a distant second on the list with N117.19 billion as IGR, representing 8.97% of the total, while the Federal Capital Territory, Abuja followed closely with N92.06 billion, representing 7.05% of the total recorded in the year.
  • Others on the list include Delta State (N59.73 billion), Kaduna State (N50.77 billion), Ogun (N50.75 billion), and Oyo State with N38.04 billion.

Kebbi, Ebonyi boosted revenue by over 80%

Kebbi State and Ebonyi State grew their internally generated revenue by over 80%, with Kebbi recording 87.02% growth in IGR to stand top on the list of states with the highest growth rate; followed closely by Ebonyi State with 82.3% growth in IGR to stand at N13.59 billion.

  • Oyo State grew its IGR by 42.23%, Borno (41.63%), Katsina (34.16%), and Gombe (25.5%).
  • Meanwhile, 18 out of the 37 states of the federation recorded a decline in IGR in 2020, a list led by Benue State, having dipped its annual IGR by 41.38%, followed by Sokoto with 37.93%, Kwara (36.03%), Jigawa (32.95%), and Ogun State with a decline of 25.44%.

What this means

  • The decline in states’ internal revenue was caused by the pandemic which struck earlier in 2020, disrupting economic activities in the country.
  • Nigeria recorded a recession in the third quarter of 2020, after a consecutive economic contraction, recorded in Q2 and Q3 2020.
  • It, however, recovered from the recession in the fourth quarter. It is therefore hoped that as economic activities resume fully in the country, the states will be able to boost their revenue in the short-to-medium term.

Hotflex
Continue Reading

Coronavirus

Lack of vaccine access will reduce Africa’s economic growth compared to rest of world – IMF

IMF forecasts that Nigeria is expected to grow by 2.5% in 2021 and 2.3% in 2022.

Published

on

IMF discloses immediate priority , Reduce funding oil subsidy - IMF to Nigeria , IMF: 40% of African countries can't pay back their debts , Nigeria among countries that pushed Global debt to $188 trillion - IMF , Coronavirus: World Bank, IMF to support Nigeria and other member countries affected, IMF, World Bank to hold meetings via conference call over Coronavirus epidemic, IMF advises banks to suspend dividend payment

The International Monetary Fund (IMF) has stated that a continued lack of access to vaccines will see Africa’s projected growth at 3.4% compared to the rest of the world at 6%.

The IMF disclosed this in its Regional Economic Outlook for Sub-Saharan Africa, April 2021, which was published on Thursday.

What the IMF said

  • Despite turning out better than expected, growth in 2020 is estimated to have been the worst on record at –1.9 %, leading to a sharp spike in poverty.
  • In 2021, the region’s economy is expected to resume expansion at 3.4%, weaker than the 6% for the rest of the world, amid a continued lack of access to vaccines and limited policy space to support the crisis response and recovery.
  • Macroeconomic policies will in many countries entail some difficult choices. Saving lives remains the first priority, which will require access to affordable vaccines, ensuring that the logistical and administrative prerequisites of vaccination rollouts are in place, targeted containment efforts, and added spending to strengthen local health systems.

The IMF urged that African leaders needed to create more fiscal space and implement transformative reforms to unlock economic growth. These include mobilizing domestic revenue, strengthening social protection, promoting digitalization, and improving transparency and governance.

The body added that the need for reforms is to reduce debt and find a sustainable footing which would be a catalyst for longer-term growth and provide opportunities for the region’s new job seekers.

On growth projections

  • IMF forecasts that Nigeria is expected to grow by 2.5% in 2021 and 2.3% in 2022.
  • South Africa is expected to grow by 3.1% in 2021 and 2.0% in 2022.
  • Kenya is expected to have higher growth at 7.6% in 2021 and 5.7% in 2022.
  • Meanwhile, Ghana is forecasted to grow by 4.6% in 2021 and 6.1% in 2022.

In case you missed it

Nairametrics reported earlier this month that the International Monetary Fund had lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020, due to the effects of the COVID-19 pandemic.

Continue Reading

  





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.