CAPITALDIGEST DAILY NEWS, 15/5/2023

OIL PRODUCTION NOW ONE MILLION BARRELS LOWER DAILY oil production is currently lower than its technical allowable capacity by about one million barrels per day, the Federal Government announced on Wednesday. It attributed the low oil output to challenges such as lack of investments, insecurity, and reduction in hydrocarbon funding arising from energy Nigeria’s transition, among othersThe government disclosed this through the Nigerian Upstream Petroleum Regulatory Commission at the host communities sensitisation workshop with the theme, “The Implementation of The Host Communities Development Trust,” held in Abuja. “While the commission is prioritising efforts towards increasing oil and gas production and ensuring maximum federation revenue through the optimisation of oil and gas value chain, the efforts have been constrained by a myriad of challenges. “These challenges range from insecurity, low investment, and de-prioritisation of funding of hydrocarbon development arising from the energy transition. Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day. However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day,” the Chief Executive, NUPRC, Gbenga Komolafe, stated.. Komolafe, who was represented by the the Commissioner, Economy, Regulatory and Strategic Planning, NUPRC, Kelechi Ofoegbu, said the workshop would create awareness and provide a platform for knowledge sharing on the implementation of the host community provisions in the Petroleum Industry Act 2021.He said the implementation of the provisions would be in a manner that would impact positively on the people of the Niger Delta and other oil and gas host communities. NAIRA STRENGTHENS AT I&E WINDOW, WEAKENS AT BLACK MARKET Amid supply crunch, the naira weakened at the black market by 0.54 per cent to close at ₦750 against the American dollar on Thursday while at the Investor and Export window, the Naira strengthened by 0.06 per cent to close at ₦462.73/USD. The naira at the official market however closed flat at ₦461.07/USD. According to data from the FMDQ, the naira hit an intra-day trading high of N467 and a low of N460 on Wednesday but closed trading at ₦463.02 per US dollar. On Thursday, traders said that the Nigerian naira hit a record low of 466 per dollar on the official market after the Central Bank of Nigeria weakened the currency on the spot market and at its foreign exchange auction in a bid to address a backlog of demand for foreign currency, reports Reuters. The traders claimed that the CBN adjusted rates on Wednesday to N465 from 460 naira per dollar, while it sold hard currency to businesses for raw materials and other imports at N630 at its last auction on Friday. The forex situation in Nigeria has been a constant source of grief for players in the economy, who have lamented its impact on their operations such as the importation of raw materials and others. Recall that in April, the World Bank in its latest Macro Poverty Outlook for Nigeria advised the Federal Government to unify the nation’s multiple exchange rate windows and carry out some other reforms to strengthen the economy and restore macroeconomic stability. It partly read, “Macroeconomic stability has weakened amidst declining oil production, costly fuel subsidies, exchange rate distortions, and monetization of the fiscal deficit. “The authorities can strengthen the economy by restoring macroeconomic stability through reforms to increase oil and non-oil revenues, tighten monetary policies to reduce inflation and unify the multiple FX windows and adopt a single, market-responsive exchange rate.” DEBT SERVICING HIT $112M IN JANUARY – CBN. The Federal Government spent $112.35m servicing external debt in January 2023, according to findings by The PUNCH. Data from the Central Bank of Nigeria’s Weekly International Payments showed that the amount spent in January was 146.17 per cent higher than the $45.64m spent in December 2022. This occurred as the Federal Government struggled to boost its revenue base despite its revenue generation efforts. The PUNCH earlier reported that the Federation Account Allocation Committee shared N750.17bn among the three tiers of government in January 2023. The figure represents a decrease of N240.02bn compared to the N990.19bn shared in December 2022. In 2022, Nigeria spent $2.4bn to service its external debt, which was a slight increase from the $2.11bn spent in 2021. The PUNCH also reported that the Federal Government deducted over N78bn from allocations made to the states for external debt servicing. This was according to data from the Federation Account Allocation Committee Disbursement reports published by the National Bureau of Statistics. The deductions were made in 2022 from the allocations given to state governments from the Federation Account. The federation account is currently being managed under a legal framework that allows funds to be shared under three major components: statutory allocation, Value Added Tax distribution and derivation principle. The PUNCH observed that the most hit state by the deductions was Lagos, with about N23.61bn deducted in 2022 for external debt servicing. It was followed by Kaduna, with N10.25bn deducted, and Cross River with N7.56bn deducted. The International Monetary Fund recently said the Federal Government projected to spend 82 per cent of its revenue on interest payments in 2023. CBN EXPRESSES COMMITMENT TO FOREX EXPANSION The Governor of the Central Bank of Nigeria, Godwin Emefiele, has said the banking sector was committed to expanding foreign exchange supply in the country. He noted that the RT200 programme had made good progress in export proceed repatriation since its establishment in February 2022. Emefiele said, “I want to assure you that the bank is committed to strengthening and expanding foreign exchange supply into the market. “Naturally, you all are important in this clarion call of expanding the supply of foreign exchange inflow into the economy. “For exporters, flying the flag of Nigeria in the international market, the Bankers’ Committee and the CBN stand ready to partner with you to achieve your goals.” While speaking at the third edition of the biannual RTt200 non-oil export summit with the theme, ’RT200: Challenges and prospects to success’, in Lagos, he said the CBN decided to review the progress made so far, from inception of the programme in the first half of 2022 to date. The programme, he added, aimed to x-ray the challenges and opportunities associated with the programme and proffer workable solutions for successful implementation of the programme for greater results going forward. Emefiele said, “Available data shows that repatriation due to the programme increased by 40 per cent from $3.0bn in 2021 to $5.6bn at the end of 2022. “The momentum for 2023 is equally showing strong numbers and impressive prospects. In the first quarter of 2023, a total of $1.7bn was repatriated to the economy while about $790m was sold at the I&E window year-to-date.” He said everyone was important in the call of expanding the supply of foreign exchange inflow into the economy. “For exporters, flying the flag of Nigeria in the international market, the Bankers’ Committee and the CBN stand ready to partner with you to achieve your goals,” the governor said. STOCKS INVESTORS RECORD N136BN LOSS IN ONE WEEK Stocks investors lost N136bn at the end of trading last week on the Nigerian Exchange Limited. Suffering a dip which saw mixed sentiments was the All-Share Index, which depreciated by 0.48 per cent or 250.69 base points to close at 52,214.62 on Friday. All other indices finished higher except for NGX Main Board, NGX 30, NGX Banking, NGX AFR Bank Value, NGX MERI Value, NGX Industrial Goods, and NGX Sovereign Bond which depreciated by 0.85 per cent, 0.12 per cent, 0.99 per cent, 1.45 per cent, 1.11 per cent, 3.36 per cent and 4.83 per cent respectively while the NGX ASeM index closed flat. At the end of last week, the Year-To-Date returns rose to 1.88 per cent from 1.78 per cent recorded on Thursday. In the last trading week, a total turnover of 3.602bn shares worth N36.451bn in 27,801 deals was traded by investors on the floor of the NGX against a total of 2.973bn shares valued at N22.828bn that exchanged hands the previous week in 23,765 deals. The Financial Services Industry (measured by volume) led the activity chart with 3.150bn shares valued at N27.484 bn traded in 14,987 deals; contributing 87.47 per cent and 75.40 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 99.394m shares worth N219.455m in 901 deals. The third place was the Consumer Goods Industry, with a turnover of 87.434m shares worth N1.628bn in 3,768 deals. Trading in the top three equities namely Fidelity Bank Plc, Access Holdings Plc, and FBN Holdings Plc, (measured by volume) accounted for 2.167 bn shares worth N18.650 bn in 5,083 deals, contributing 60.17 per cent and 51.16 per cent to the total equity turnover volume and value respectively. Forty eight equities appreciated lower than 51 equities in the previous week. 30 equities depreciated in price, higher than 26 in the previous week, while 78 equities remained unchanged, lower than 79 recorded in the previous week. Leading the gainers’ table was the Computer Warehouse Group whose shares appreciated by 56.82 per cent to close at N2.07, and Ardova Plc gained 37.50 per cent to close at N26.40.