CAPITALDIGEST DAILY NEWS, 2/5/2023

NIGERIA LOST N2.3TN REVENUE TO OIL THEFT IN 12 MONTHS Nigeria has lost an opportunity to produce and sell about 65,700,000 barrels of oil in the last one year due to issues bothering on pipeline vandalism and the resultant oil theft. This translates to about N2.3tn loss in oil revenue if the prevailing exchange rate and average oil price are used. The Chairman of Shell Companies in Nigeria, Dr Osagie Okubor, said at the just concluded Nigerian International Energy Summit held in Abuja, said the 180, 000 barrels per day Trans Niger Pipeline had remained shut for more than one year- March 2022 to March 2023. The loss from March last year to March this year brings total shut in/loss to about 65, 700, 000 barrels. Brent crude price averaged about $83 per barrel from March 2022 to March 2023, meaning the country could have lost as much as N2.3tr to the menace. The TNP, a Joint Venture operated by SPDC is a major pipeline capable of transporting about 180,000 barrels of crude per day to the Bonny export terminal. Speaking at the NIES, Okunbor said the TNP remained shut for one year due to the massive crude oil theft on the pipeline. The pipeline, according to Shell, is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation and liquefied gas exports. He said, “What keeps me awake today as regards my onshore business in Shell is the fact that we cannot operate a pipeline, and that’s what is responsible for the 60 percent capacity. FOREIGN TRANSACTIONS ON NGX FALL BY 53% The transactions done by foreign investors on the Nigerian Exchange Limited decreased by 53.16 per cent from N19.62bn (about $42.51m) to N9.19bn (about $19.94m) between February and March 2023. This was disclosed in the March edition of the Domestic & Foreign Portfolio Investment Report of NGX, which was released this month. The report said, “Total transactions executed between the current and prior month (February 2023) revealed that total domestic transactions decreased by 19.06 per cent from N169.29bn in February to N137.03bn in March 2023. Similarly, total foreign transactions decreased more significantly by 53.16 per cent from N19.62bn (about $42.51m) to N9.19bn (about $19.94) between February 2023 and March 2023.” Also, as of March 31, 2023, total transactions at the local bourse decreased by 22.60per cent from N188.91bn (about $409.72m) in February 2023 to N146.22bn (about $317.09m) in March 2023. The performance of the current month when compared to the same period in 2022 (N185.26bn) revealed that total transactions decreased by 21.07per cent. In March 2023, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 88 per cent; the figure for local investors stood at 96 per cent to the six per cent of foreign investors. A comparison of domestic transactions in the current and prior month (February 2023) revealed that retail transactions increased by 51.85 per cent from N34.79bn in February to N52.83bn in March 2023. NIGERIA LOSES GAS EXPORT CONTRACTS OVER LOW INVESTMENT Low investment in the energy sector has caused Nigeria to lose gas export contracts running into billions of dollars, according to findings by The PUNCH. It was learnt that numerous contracts, which ought to have been signed with foreign companies and countries in the last two years, were lost due to low investment in the sector especially new exploration, insecurity in the Niger Delta, and lack of good fiscal policies to drive investments. The lost gas export contracts were expected to run for several years, according to industry officials close to the development. While gas countries such as Qatar, the United States, Algeria, Egypt, and Iran are signing huge gas contracts, officials lamented that Nigeria has not been able to meet gas obligations to its international customers, thereby losing out on juicy contracts worth billions of dollars. Part of the natural gas deals lost, The PUNCH gathered were mostly from Western European countries as the continent seeks to ramp up imports from Africa and cut off imports from Russia due to the country’s ongoing war with Ukraine. Experts presently put Europe’s natural gas needs at about 40 per cent of total global consumption. In an effort to achieve that, The PUNCH learnt that Europe had sent several delegations to Nigeria to discuss ways of increasing importation. However, the country’s inability to meet expectations due to low exploration and part-implementation of the Petroleum Industry Act has dashed the hope of increasing earnings from its huge reserves which sit at 209 trillion cubic feet. According to BP’s Statistical Review of World Energy, 2021, Russia has the world’s largest reserves of natural gas, followed by Iran and Qatar, accounting for half of the world’s natural gas reserves in 2020. The International Energy Agency in 2021 stated that European imports of gas from Russia were more than 380 million cubic metres per day via pipelines and totalled about 140 bcm yearly while an additional 15 bcm was delivered in liquefied natural gas form. CASH SCARCITY CRIPPLED NIGERIA’S ECONOMY, SAYS UN The shortage of the naira in recent times crippled the Nigerian economy, the United Nations has disclosed. It stated that the informal sector felt the brunt of the scarcity the most. It noted that the continuing decline of oil production is set to impact the country’s finances in 2023. The UN disclosed this in its ‘Trade and Development Report Update; Global Trends and Prospects (April 2023),’ report produced by the United Nations Conference on Trade and Development. UNCTAD said, “In Nigeria, a shortage of cash, triggered by the replacement of the highest denominations of the country’s currency, hobbled the economy, especially the informal sector. “Meanwhile, the continuing decline of oil production, accompanied by large-scale oil theft, poses a main threat to strained finances in Africa’s most populous nation.” According to the organisation, the general African economy is projected to expand 2.5 per cent, which is a drop from last year, and insufficient to curtail poverty levels on the continent. It explained that this is in no thanks to weaker external demand and tighter financial conditions. It noted that many African economies are at risk of stagflation in 2023, with half of African countries recording double digit inflation in early 2023. UNCTAD highlighted, “In many instances, these recent inflation spikes relate to the continuing depreciation of several African currencies in early 2023 – often following a loss in 2022 of 10–30 per cent of their value vis-à-vis the dollar. “Public debt, in many cases standing at levels not seen since the early 2000s, is another worry across the continent. BANKS’ CREDIT TO PRIVATE SECTOR RISES BY N1.6 TRN Banks’ credit to the private sector rose month-on-month (MoM) by N1.6 trillion or four percent to N43.06 trillion in March 2023 from N41.5 trillion in February. However, credit to the government fell MoM by three percent to N27.5 trillion in March 2023 from N28.4 trillion in February Data from the Central Bank of Nigeria , CBN, Money and Credit statistics, released today showed that the credit to the private sector and the government resulted in a net domestic credit of N70.6 trillion during the period. This represents a 0.56 percent MoM rise when compared to N70.2 trillion in February 2023. Recently, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, said Nigeria secured a World Bank facility worth $800 million as the first tranche of palliatives to be disbursed through cash transfers to about 50 million Nigerians, who belong to the most vulnerable category in the society, to cushion effects of a planned removal of petrol subsidy by June. However, the International Monetary Fund, IMF, at the IMF/World Bank Spring meetings in Washington DC advised the Federal Government to widen tax net to cut borrowing and thereby reduce its debt burden. According to the Debt Management Office, DMO, Nigeria’s public debt rose year-on-year by 17 percent to N46.25 trillion in December 2022 from N39.56 trillion in December 2021.