Business News
Nigeria to save $300 million from importation of barite
The mineral made up of barium sulphate, is mainly used in the oil and gas industry.
Nigeria’s Minister of Mines and Steel Development, Mr Olamilekan Adegbite, announced that Nigeria will ban the importation of barite to help the country save foreign exchange for other purposes.
This comes as the Central Bank recently banned the importation of maize for the same reason as Nigeria aims to save foreign exchange in an era of falling oil revenue and OPEC production cuts.
The Minister announced this in a forum with the News Agency of Nigeria (NAN), where he revealed that Nigeria imports $300 million worth of barite annually from Morocco.
The mineral made up of barium sulphate, is mainly used in the oil and gas industry for as a weighting agent for drilling fluids in the upstream sector.
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Barite (or Barytes) is the naturally occurring mineral form of barium sulphate. Its main properties are its high specific gravity (4.5), very low solubility; it is non-toxic, and also chemically and physically unreactive. It is extracted by both surface and underground mining, followed by simple physical processing methods to produce correctly sized product and to remove extraneous materials.
Some 70% worldwide is used as a weighting agent for drilling fluids in oil and gas exploration. Other uses are in added-value applications which include the car, electronics, TV screen, rubber, and glass ceramics and paint industry, radiation shielding and medical applications (barium meals).
Why it matters: The minister said the country could not continue spending millions of dollars every year on barite. He said the country imports 300 million dollars worth of barite from Morocco annually, adding that it was a mineral which was quite available in Nigeria.
“We have barite all over the country (in Nasarawa, Cross River States); so, why can’t we produce our barite. There are standards required by the industry and we have it.
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“The first thing is that it is measured by specific gravity; do we have the specific gravity that is required? We do, but the processing is what is missing,” he said.
He added that when he resumed office as Minister, he worked with consultants on the sourcing of barite locally to oil drilling sites. Adding that when mined, its discovered as big stones that need crushing to fine particles, therefore standards are needed in the milling of the mineral before it is bagged to sites.
He also added that the bagging procedure has to be done right, and if Nigeria achieves that, we will end the foreign importation, and if Nigeria gets the value chain right, it will enable Nigeria save on foreign exchange and also create local employment.
He added that Nigeria has begun plans to locally refine minerals found here and diversify the country’s economy, citing the gold bars launched by President Buhari during the Presidential Artisanal Gold Mining Development Initiative (PAGMI) on July 16. Adding that the government is working with a Canadian company to begin the export of Gold in Nigeria’s proven one million ounces of gold by next year.
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He said data would have to be collected on the minerals Nigeria has in large quantities through an Aero Magnetic Survey, which is done through a plane flying low to observe mineral data. And that proven surveys have discovered large quantities of gold in Zamfara, Kebbi, Niger, Kaduna, Osun, Kwara, and the FCT.
The minister says Nigeria’s proven gold reserves could rise to over 200 million ounces. He said the plans are to begin processing of local minerals next year.
Economy & Politics
FAAC disburses N682.06 billion to 3 tiers of govt in September [Full-List]
FAAC disbursed the sum of N682.06bn to the three tiers of government in September 2020.
The Federation Account Allocation Committee (FAAC) disbursed the sum of N682.06bn to the three tiers of government in September 2020. This is contained in the latest monthly FAAC report released by the National Bureau of Statistics.
According to the report, the federal allocation of N682.06bn disbursed to the three tiers (FG, States and LGAs) indicates a 1% marginal increase when compared to N676.4 billion disbursed in August 2020.
READ: FAAC disburses N647.35 billion in February as allocation drops further
Explore the Advanced Financial Calculators on Nairametrics
The Breakdown
A cursory look at the report showed that in September, the Federal Government received a total of N272.90bn (40%), States received a total of N197.65bn (21.6%) and Local Governments received N147.42bn (21.6%). The sum of N30.88bn (4.5%) was shared among the oil producing states as 13% derivation fund.
In addition, revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N6.66bn (1%), N13.48bn (2%) and N5.70bn (0.8%) respectively as cost of revenue collections.
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Further breakdown of revenue allocation distribution to the Federal Government of Nigeria (FGN) revealed that the sum of N196.56bn was disbursed to the FGN consolidated revenue account; N4.78bn was disbursed as share of derivation and ecology; N2.39bn as stabilization fund; N8.03bn was for the development of natural resources; and N6.12bn to the Federal Capital Territory (FCT) Abuja.
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States federal allocation rose marginally
In September 2020, allocation to states rose by 3.4% to N197.65 billion compared to N198.8 billion recorded in the previous month.
The top five states with the largest share of monthly allocation in September are Delta (N13.8 Billion), Lagos (N11.44 billion), Rivers (N11.04 billion), Akwa Ibom (10.33 billion) and Bayelsa (N8.33billion). On the other hand, the top five states at the bottom of the ranking are Ekiti (N3.8 billion), Ogun (N3.7 billion), Plateau (N3.6 billion), Osun (N3.24 billion), and Cross River (N3.23 billion).
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Key Takeaway
The federal allocation disbursed to the three tiers in September showed consistent improvement, when compared the previous months. However, this is still a short fall when compared to N740.87bn disbursed to the three tiers in the corresponding period of 2019.
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The marginal growth recorded in the disbursed federal allocation may be due to the rise in revenue generation, on the back of earlier improvement in both domestic and cross border economic activities.
For states in Nigeria that largely depend on federal allocation to meet recurrent obligations, this may represent some sort of boost. However, the outbreak of the Covid-19 pandemic (second wave) currently emerging in some developed economies may threaten oil price (the country’s main revenue source), as industrial activities may collapse globally for the second time in the year.
Energy
Abuja, Ikeja Discos top list in collection efficiency in Q1 2020- NERC
Abuja and Ikeja had highest in collection efficiency, out of the 11 electricity distribution companies in Nigeria.
A report released by the Nigerian Electricity Regulatory Commission (NERC) revealed that Abuja and Ikeja DisCos scored the highest in collection efficiency, out of the 11 electricity distribution companies in Nigeria, for the first quarter of 2020.
In appraising the individual performances of the DisCos, Abuja DisCo had the highest collection efficiency of 80.89%, followed by Ikeja DisCo with 72.39%. Port Harcourt DisCo has the lowest collection efficiency of 43.36%.
However, on a quarter-on-quarter basis, only Abuja and Kaduna DisCos recorded improvements in collection efficiency. In particular, Kaduna DisCo recorded the highest increase of 3.65 percentage points, moving from 40.44% in 2019/Q4 to 44.09% in the first quarter of 2020.
The total revenue collected by eleven electricity distribution companies (DisCos) from customers in the first quarter of 2020, Q1 2020, stood at ₦114.29 billion out of a total bill of ₦186.82 billion.
The DisCos’ collection efficiency, which is arrived at through total revenue collected as a ratio of the total billing by DisCos, declined in 2020/Q1.
The overall collection efficiency for all DisCos decreased to 61.18% in the first quarter of 2020, representing 8.26 percentage points decrease from the 69.44% collection efficiency recorded in 2019/Q4.
The collection efficiency implies that for every ₦10.00 worth of energy billed to customers by DisCos in the first quarter of 2020, approximately ₦3.88 remained unrecovered from customers as at when due.
Low collection efficiency combined with billing inefficiencies have had adverse impact on the financial liquidity of the industry, which in turn, has led to low investment in the Nigerian Electricity Supply Industry (NESI).
What you should know
- Low collection efficiency has been largely attributed to the customers’ displeasure with estimated billings which have often resulted in an unwillingness to pay the bills.
- The Commission, during the quarter, issued an order on capping of monthly estimated bill, limiting the total volume of energy an unmetered customer can be billed to the average monthly energy use of a typical pre-paid meter customer in the same business unit.
- Abuja Electricity Distribution Company (AEDC) is one of the 11 power distribution companies that was privatized and handed over to new investors on 1 November 2013. KANN Utility Limited (KANN) is the 60% equity holder in AEDC. The Federal Government of Nigeria holds 40% equity in AEDC. It has franchise for the distribution and sale of electricity in the Federal Capital Territory, Niger State, Kogi State and Nassarawa State.
- Ikeja Electric Plc is based in Ikeja, the capital city of Lagos. The company emerged on November 1, 2013 following the handover of the defunct Power Holding Company of Nigeria (PHCN) to NEDC/KEPCO Consortium under the privatization scheme of the Federal Government of Nigeria.
Economy & Politics
WTO: Nigeria to persuade the US to join the consensus on Okonjo-Iweala – Trade Ministry
Nigeria is making moves to reach out to the US to agreed to appoint Okonjo-Iweala as Director-General of the WTO.
The Federal Ministry of Industry, Trade & Investment has said that Nigeria is currently reaching out to the United States and South Korea to back the WTO preferred candidate, Dr. Ngozi Okonjo-Iweala, for the role of DG of WTO.
This was disclosed in a statement by the Ministry and reported by Reuters on Saturday morning.
READ: Why Okonjo-Iweala should win the WTO DG role – Prof. Moghalu
Recall that Nairametrics reported this week that the Ministry of Foreign Affairs announced in a statement that Nigeria’s candidate for Director-General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, had secured the support of the majority of the member-nations – but was yet to be declared and returned as the winner, as the United States opposed the consensus.
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Nairametrics also reported this week that Dr. Ngozi Okonjo-Iweala was close to being appointed as the new Director-General of the World Trade Organisation (WTO). A group of ambassadors also known as “troika” had proposed Okonjo-Iweala to lead the WTO, giving her a clear path to becoming the first woman to head the WTO since it started 25 years ago.
The U.S President, Donald Trump, blocked the appointment of Ngozi Okonjo-Iweala as the WTO’s next DG on Wednesday, declaring support for South Korea’s Yoo Myung-hee instead.
READ: Nigeria’s Vehicle, Aircraft & Vessel import jump 891% in Q3 2018
The Ministry said that the FG would try to persuade the United States to join the consensus, as most of the WTO’s members had agreed to appoint Okonjo-Iweala as DG.
“Nigeria is currently reaching out to all members of the WTO including the United States and South Korea to overcome the impasse as well as persuade the United States to join the consensus,” the trade ministry said.
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