The allocations from the Federation Account to the three tiers of government for the month of April declined by N18.2bn to N281.5bn from N299.74bn in March, according to the Federation Account Allocation Committee.
The FAAC meeting for the month of April, which was held on Wednesday at the headquarters of the Federal Ministry of Finance in Abuja, confirmed a decline of N18.8bn in gross statutory revenue from N232.61bn in March to N213.81bn last month.
Addressing journalists shortly after the meeting, which commenced around 4pm and lasted till about 8:32pm, the Minister of Finance, Mrs. Kemi Adeosun, blamed the drop in allocations to a huge decline in the prices of crude oil.
For instance, the minister said there was a revenue loss of $45.9m as a result of the drop in the average price of crude oil from $39.04 in December 2015 to $29.02 in January this year.
She added that a marginal drop in income was recorded from oil and gas royalty as well as import duty.
While oil production increased slightly between December 2015 and January 2016 despite explosions at the Escravos export terminal, she said the force majeure declared at the Brass terminal, shut-ins and shut down of pipelines at other terminals for repairs and maintenance affected government revenues.
Adeosun said, “The gross statutory revenue of N213.81bn received for the month was lower than the N232.61bn received in the previous month by N18.8bn.
“There was a revenue loss of $45.9m as a result of the drop in the average price of crude oil from $39.04 in December 2015 to $29.02 in January 2016.”
In terms of allocations to the three tiers of government, the minister, who is also the chairman of the committee, said the decline in revenue had a negative impact on the amount shared.
The country on Wednesday took a step into the era of telecommunications, broadcasting and media convergence as MTN Nigeria commenced the pilot of its digital television broadcasting service in Jos, Plateau State.
The TV service, which goes live today (Thursday), is sequel to the issuance of a digital broadcast licence to MTN for N34bn, by the Nigerian Broadcasting Corporation in 2015.
Aside the N34bn, sources said that the telecoms company had spent about N25bn extra to get the TV running.
With the service, MTN Nigeria Executive, Lynda Saint-Nwafor, said Nigerians could now watch TV programmes on their smartphones and other devices via Over-the-Top platforms like WhatsApp, BlackBerry Messenger, Facebook and Twitter, among others.
According to the Chief Executive Officer, MTN Nigeria, Ferdi Moolman, subscribers will have the freedom to watch their favourite programmes when they choose the MTN Video-on-Demand service, “rather than having to watch at a specific broadcast time.”
“This will be the first fully converged broadcast and OTT-VOD service to launch in MTN,” he said.
Moolman added that MTN was committed to providing Nigerians with innovative digital platforms, “which will enhance the way we live, work and play.”
He said, “Once we commence full commercial activities, the TV service will deliver an exciting bouquet of rich local and international content to Nigerians.
“Indeed, the launch of MTN TV is another bold demonstration of MTN’s abiding faith in the future of Nigeria, driving growth and development by enabling Nigerians to keep pace with the latest global trends and converged solutions.”
Saint-Nwafor also stated that MTN’s vision was to lead the delivery of a bold new digital world.
“We are committed to exploring opportunities and avenues to expand our digital footprint and value offering to our customers. We are, therefore, constantly seeking appropriate channels to place the latest technologies and services in the hands of Nigerians, and this is one of such,” she added.
Meanwhile, a report after the Annual General Meeting of the MTN Group on Wednesday stated that MTN Nigeria’s data revenue in the first four months of 2016 declined by 12 per cent mainly due to the withdrawing of regulatory services.
Oil dipped on Tuesday as a stronger United States dollar and progress in controlling wildfires in Canada’s crude-producing Alberta province dampened prices. At around 1100 GMT, US benchmark West Texas Intermediate for July delivery was down 20 cents at $47.88. Brent North Sea oil, the European benchmark, for July delivery slid 29 cents at $48.06.
“Crude prices continue to roll over as supply outages in Canada and Libya begin to ease, leaving little fundamental support for oil, save an ongoing strike by French oil workers,” noted Accendo Markets analysts in a note to clients.
In addition, hawkish remarks by US Federal Reserve officials hinting at a June interest rate hike pushed up the greenback against major currencies, pushing oil lower. “A stronger US dollar continued to extend pressure on commodity prices,” added CMC Markets analyst Margaret Yang. A stronger greenback weighs down oil prices, as it curtails demand by making the dollar-priced commodity more expensive.
Prices have rebounded since plunging to near 13-year lows below $30 in February but are still well short of peaks of more than $100 a barrel reached in June 2014. There are market concerns that a supply glut may return following news of Canada lifting evacuation orders for several oil production sites in fire-ravaged Alberta province amid cooler weather and light rain.
Prices were also weakened this week by comments from Iranian officials who vowed to keep up oil production after the lifting of Western sanctions in January. “$50 appears to be the resistance level because there seems to be not enough of a will to boost it any higher,” IG market strategist Bernard Aw told AFP.
All eyes are now on the OPEC meeting in Vienna on June 2 where it is hoped an agreement to cut production can be reached, Aw said. The market is also keeping an eye out for inventory data from the American Petroleum Institute, which is due later yesterday, followed by US Energy Information Administration figures today.
The House of Representatives said on Tuesday that the country was losing an estimated $2.9bn (N571.3bn) yearly to tax waivers granted to multinational corporations and indigenous companies operating in Nigeria.
The House noted that this was a huge revenue loss to the country and ordered an investigation into such waivers with a view to either reducing or abolishing them completely.
It also said many local companies benefited from the tax incentives, which were granted by successive governments over the years.
According to the House, the tax incentives in most cases failed to meet the aims they were intended to achieve.
For instance, Mr. Kehinde Odeneye, who moved a motion on the need to investigate the waivers, stated that foreign investors were granted incentives with the belief that they would bring in capital to support the nation’s economic development and create employment.
But he argued that the turn of events indicated that “there is little evidence that tax incentives have increased investments.”
As many members spoke in support of the motion, the consensus of views was that the Federal Government should pursue economic policies that could genuinely attract investors as against granting tax waivers.
Members suggested that such policies should include the provision of quality infrastructure, reducing the administrative cost of opening and running business in Nigeria, and promoting predictable micro-economic policies.
The session was presided over by the Deputy Speaker, Mr. Yussuff Lasun.
The original motion sought to probe the incentives granted to multinationals.
However, on the advice of the Leader of the House, Mr. Femi Gbajabiamila, the motion was amended to include indigenous companies that also enjoyed tax incentives.
Gbajabiamila urged the House to expand the scope of the investigation to cover many local companies that made huge profits from their operations but paid nothing to the government as tax.
He, however, did not mention the names of such companies.
In passing a resolution on the matter, the House asked its joint committees on Finance and Public Accounts to investigate the incentives with a “view to reducing them, abolishing unproductive incentives and ensuring that those remaining are targeted at achieving specific social and/or economic objectives.”
The committees will be jointly chaired by Mr. Babangida Ibrahim and Mr. Kingsley Chinda.
In a separate resolution, the lawmakers directed the Federal Ministry of Power, Works and Housing to urgently reconstruct the bad sections of the Sango-Abeokuta Expressway.
The poor state of the road was brought to the attention of the House by a member from Ogun State, Mr. Jimoh Ojugbele.
He informed his colleagues that the road was economically important as a link between Lagos and Ogun states for people engaged in business activities on both sides.
The resolution stated, “The House is concerned that some sections of the expressway have failed considerably, which affect the smooth flow of traffic on the road, thereby causing severe loss of man-hours.
“The most worrisome is the incessant carnage due to fallen tankers and other articulated vehicles that litter the expressway.”
Amidst widespread speculation that there might be a forex policy reversal in this week meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) in favour of flexible exchange rate, bull investors, who want to quickly capture the attractive stocks, have swooped on the equities market ahead of the outcome of the MPC’s meeting.
Beginning from last week, the market suddenly became bullish amidst lingering bear-market environment, which has been on since last year. Initially, the acute bull market was attributed to swing trading ignited by the recent deregulation of petrol price from N86.50 to N145 by the Federal Government, but investigation by The Guardian, this week, revealed that the cause of the prevailing bull rally is rooted more on expectation of flexible forex policy from the MPC’s meeting.
Current trend in the market revealed that though the Market recorded a dip in Capitalisation on Tuesday May 17, after posting appreciations for three consecutive days from Thursday, May 12, where capitalization was N8.900 trillion, this later rose to N9.223 trillion on Monday, May, 16.
But on Tuesday May 17, the bull run caused by the petrol price increase was terminated by the resurgence of the bears, which pulled down market capitalization from Monday’s position of N9.223 trillion to N9.173 trillion on Tuesday May 17, translating to a loss of N0.05 trillion on that day.
But beginning from Wednesday, May, May 18, bull investors, spurred by the speculation of coming flexible forex rate, stormed the market to capture the larger cap stocks that are among the most actively traded.
This second round of positive rally, which began on Wednesday last week, has raised market capitalisation from Tuesday, May 17’s position of N9.173 trillion to N9.279 trillion on Monday, May 23, translating to an appreciation of N106 billion as at Monday.Commenting on the development, Tunde Oyekunle, CEO, Finawell Capital Limited said:
“A major factor that is responsible for the bull market is investors’ anticipation of a deregulation favoured shift in the country exchange rate policy at the MPC meeting following the deregulation of the fuel imports. The deregulation of the Naira is expected to bring back most foreign fund managers and increase their participation, which has dropped from 70 per cent to 35 per cent.”
David Adonri, CEO, Highcap Securities Limited, in his reaction, noted that the Bull Run has been a reaction to the increase in fuel price deregulation. It is a major market friendly policy that will end fuel scarcity and empower the oil companies to reduce their non-performing loans.
“It is the hope of economic operators that if government, which has deregulated the petrol price makes foreign exchange flexible, more positive reactions will occur in the market,” he said.
In his contribution, Sola Oni, who is a Lagos-based stockbroker and the CEO, Sofunix Investment and Communications Ltd, pointed out that: “The protracted delay in passing the 2016 fiscal budget and the controversial management of the Naira Exchange rate to Dollar has caused more harm than good. At present, the economy is like a banana peel as all economic sectors are battling for survival. Manufacturers are crying of high production costs and low consumer demand. There is massive unemployment.”
According to him, the shocks from the international oil market and failure of the previous administration to save from the excess gain on crude oil in the past has put us in a quandary.
“The emergency deregulation of the downstream sector as typified by the current increase in pump price of petrol, though welcomed by a section of the society, is still a subject of controversy.
“However, we have recorded negative growth in the Gross Domestic Product in the first quarter and inflation rate is on the upswing. These and other parameters have forced analysts to caution the federal government through the Central Bank of Nigeria on the need to embrace flexible exchange rate regime as a quick means of revamping the economy. We are awaiting the outcome of the Monetary Policy Committee ‘s meeting on this very important matter. We just hope and pray that the yearnings of the private sector operators are met by the government,” Oni concluded.
The Monetary Policy Committee of the Central Bank of Nigeria has directed the management of the apex bank to adopt a flexible exchange rate policy in the inter-bank forex management structure.
The CBN Governor, Mr. Godwin Emefiele, disclosed this on Tuesday while addressing journalists shortly after the two-day MPC meeting held at the apex bank’s headquarters in Abuja.
He said with the directive, the bank would soon release a new guideline on the management of foreign exchange in the country, adding that it would retain a small window for critical transactions.
The governor gave some of such transactions as importation of vital machineries for production as well as essential basic raw materials critical for manufacturing, which, by their nature, could not be sourced locally.
A flexible exchange rate system is a monetary system that allows the exchange rate to be determined by supply and demand.
The implication of this is that with a high demand for the dollar in Nigeria, there is every likelihood that the naira will experience a further decline in the coming months.
The CBN had been under pressure over the last few months to either devalue the naira or adopt a flexible exchange rate policy.
Emefiele said following the recent decrease of the country’s foreign exchange reserves, the time had come for the bank to introduce greater flexibility in the management of forex.
He said all the members of the committee voted unanimously to introduce greater flexibility in the inter-bank forex market structure and to retain a small window for critical transactions.
According to him, while the country awaits the new policy to be unveiled soon, the CBN will only fund critical transactions as the apex bank does not have enough foreign exchange to meet all the demand by users.
He added that those who desired foreign exchange should seek for it from autonomous sources.
The governor also ruled out the possibility of the CBN providing foreign exchange to fund the operations of Bureau De Change operators under the new policy.
He recalled that the committee had in its last two consecutive meetings signalled the imperative of the reforms that needed to be carried out in the foreign exchange market.
Emefiele said, “The committee observed that while the bank had been working on a menu of options to ensure increased supply of foreign exchange, there was no easy and quick fix to the foreign exchange scarcity problem as supply remained essentially a function of exports and the investment climate.
“The committee is aware that a dynamic foreign exchange management framework that guarantees flexibility could not replace the imperative for the economy to increase its stock of foreign exchange through enhanced export earnings.
“Consequently, such a structure must evolve to provide a basis for radically improved investment climate to attract new investments. The committee recognises the exchange rate as a very important macroeconomic variable, which must be earned by increased productive activity and exports.
“Accordingly, the MPC decided that the bank should embrace some level of flexibility in the foreign exchange market.”
On the negative Gross Domestic Product growth rate recorded in the first quarter of this year, Emefiele said the delay in the passage of the 2016 budget was a major factor that contributed to this.
While acknowledging the severely weakened macroeconomic environment, as reflected particularly in increased inflationary pressure, contraction in real output and rising unemployment, the CBN governor recalled that in July 2015, the committee had hinted on the possibility of the economy falling into a recession.
This, according him, would have been averted if appropriate complementary measures were taken by the monetary and fiscal authorities to stimulate the economy.
He added, “A lot of activities are predicated on the budget, because with the budget, construction workers will return to sites; people will buy gravel and sand as well as other building materials. People will earn income from these activities.
“Unfortunately, the delayed passage of the 2016 budget constrained the much desired fiscal stimulus, thus edging the economy towards a contractionary output.
“As a stop-gap measure, the central bank continued to deploy all the instruments within its control in the hope of keeping the economy afloat. The actions, however, proved insufficient to fully avert the impending economic contraction.
“With some of the conditions that led to the contraction in the first quarter of 2016 still largely unresolved, the recession, which was signalled in July 2015, now appears imminent.”
Also at the meeting, the MPC decided to retain the Monetary Policy Rate at 12 per cent, the Cash Reserve Requirement at 22.5 per and the liquidity ratio at the current rate of 30 per cent.
While reacting to the decisions of the MPC, the President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said the group was in support of the flexible exchange rate policy, adding, “It is what we have been advocating for all this while: that the government should allow market forces to determine the exchange rate instead of fixing it. At the end of the day, the law of demand and supply will usher in an effective and even exchange rate.
“It will help us to plan and know where we are going instead of depending on speculation all the time. Initially, the rate may be volatile; but as time goes on, it is going to stabilise.”
Similarly, the Lagos Chamber of Commerce and Industry commended the decision to adopt a flexible exchange rate regime.
According to the chamber, the new regime will lead to improvement in the efficiency of foreign exchange allocation; reduction in the distortions that currently characterise the forex market and bring the economy closer to equilibrium; improvement of liquidity in the foreign exchange market; and reduction in the current trade arrears.
The Director-General, LCCI, Mr. Muda Yusuf, said it would also lead to reduction in the arrears of remittances, which had accumulated for the past 18 months; reduce uncertainty that investors had been grappling with over the last one year; and boost investor confidence as well as attract greater forex inflows to the economy.
Economic experts also hailed the decision of the MPC, saying it was long overdue.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who lauded the new exchange rate policy, said the development would eliminate the fears that foreign investors had been nursing about the Nigerian forex policy.
According to him, the decision may make the naira to depreciate initially, but it will find its equilibrium price against the dollar and other major currencies over time.
The FDC boss, however, warned the CBN against further creating a separate forex market where the central bank could sell dollars at cheaper rates for some critical goods and services.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said the flexible market-determined exchange rate regime was long overdue, describing it as “a much-awaited decision.”
“We have been canvassing this for a very long time; we are happy that the CBN has finally adopted it,” he said.
A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sherriffdeen Tella, also hailed the adoption.
He said the exchange rate policy the CBN was using would have worked for the country but unpatriotic elements, especially in the banking sector, frustrated it.
The Head, Investment and Research, Afrinvest West Africa Limited, Mr. Ayodeji Ebo, said the MPC’s decision would enhance liquidity in the market and help to stabilise the naira.
Ebo foresees the naira-dollar exchange rate at something close to 300.
An economic analyst and Head, Investment Advisory, Sterling Capital, Mr. Sewa Wusu, also hailed the MPC’s decision.
“The muted economic growth was traceable to structural issues such as scarcity of forex and scarcity of fuel. The MPC’s latest decision on the exchange rate will help to stimulate growth. It is a right move,” he added.
The National President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, also hailed the decision of the MPC, saying it would help to enhance liquidity in the forex market.
He said the decision to rule out the sale of forex to the BDCs was right, adding that it had been overtaken by events in the forex market.
Meanwhile, the naira weakened slightly in the parallel market on Tuesday following the MPC decision.
The currency closed at 346 to the dollar on the parallel market, weaker from 345 at Monday’s close.
At the official interbank window, commercial lenders were quoting 199 naira to the dollar, close to its peg of 197.
Also, the external reserves fell by 2.7 per cent to $26.56bn as of Monday from a month earlier, according to the CBN data.
The external reserves have lost over $2bn this year and were down by 10.7 per cent a year ago when they stood at $29.77bn.
Finance Minister, Kemi Adeosun, yesterday, described as gladdening Nigeria’s 64th ranking among 140 countries on the protection of minority shareholders interest, comparing favourably with China, 71st; Brazil, 78th; and Russia 116th respectively in the latest World Economic Forum ranking index of 2013/2016.
The World Economic Forum index ranks countries yearly based on the strength of investor protection as well as on the protection of minority shareholders interest.
Adeosun said: ‘’Although we lag far behind South Africa which ranked 3rd globally, I therefore hope that this Study Team will look closely at best practice in other jurisdictions and how it could be applied to ensure stronger protection of minority shareholders in Nigeria.”
The minister stated this in a keynote address to the inauguration of the Study Team on ‘’Voice and Voting Power, – What Role for the Retail Shareholders in the Nigerian Capital Market’’ held in Abuja.
Represented by the Permanent Secretary in the Ministry, Mahmoud Isa Dutse, the minister said that despite the achievements recorded in the sector by the Securities and Exchange Commission in different areas in the market, efforts must be expedited to bring back minority shareholders and retail investors who fled the market following the painful market decline in 2008.
She said, ‘’In this regard the National investor protection Fund (NIPF) set up by SEC should assist towards boosting the confidence of such investors to not only return to the market but also become more active in the affairs of their companies’’.
She challenged the Study group to address the challenges of effectiveness of enforcement of rules and regulations, that the shareholders should not be made so powerful that they can constitute themselves into a ‘’Checkpoint’’ for the extraction of rent from company management stressing, ‘’We should look for the right balance in the power equation between the majority and the minority in the interest of the company and the economy at large’’.
She insisted that Nigeria needs retail shareholders with sufficient voice and voting power to ensure that corporate governance codes are effectively implemented to enable quoted companies access larger funding and achieve higher valuation of corporate assets.
Assuring active shareholders’ associations would also bring about greater hoper for effective implementation of the corporate governance framework, guaranteeing and encouraging many more investments on the stock exchange’’, she noted.
In his Welcome address, the Chairman /CEO, Susman & Associates Ltd and leader of the seven man committee of the Study Team, Dr. Shamsudden Usman said: ‘’We believe that this study will lay the foundation for the necessary changes that will bring back the people through the capital market, I am an investor myself, we suffered losses over the last three years, but there are issues that needed to be addressed and we hope that this study will come out with many of those issues and have the relevant bodies, regulatory and those who make the laws take actions on some of the raised issues.” Usman said that the team is expected to complete its assignment in six months.
For increasing investment value through consistent dividend payout and adherence to corporate governance principles, shareholders of NASCON Allied Industries Plc at the weekend, commended the company’s board on the 2015 performance, even as they approved a dividend of 55 kobo per share.
The shareholders who spoke at the company’s yearly general meeting in Lagos yesterday, applauded the appointment of the new Chairman of the board, noting that the company has continued to stick to its ‘old tradition’ in terms of appointing its board members over the years.
They commended the management for the impressive performance and efficient running of the company, amid harsh economic environment
Specifically, the President, Progressive Shareholders of Nigeria (PSAN), Boniface Okezie, commended the company for the dividend declared in spite of challenging environment.
Okezie lauded the management for the improved performance achieved in 2015 financial year, urging fellow shareholders to support the new chairman.
Reviewing its performance, the company’s new Chairperson, Mrs Yemisi Ayeni assured shareholders that the company would continue to invest in existing and new products lines to achieve its strategy of growing revenues within the context of improved profit margins and increase shareholder value.
She added that the company would focus on evolving strategies that would allow it to put the vegetable-oil and tomato paste plants back in operation to enhance profitability.
“We will ensure we conclude ongoing plant upgrades that will enhance the efficiency of the production lines and guarantee consistently high product standards,” Ayeni said.
She added that the company would further strengthen its existing corporate governance framework to create long-term shareholder.
The Managing Director, Paul Farrer said that the tomato paste business line which was affected by the foreign exchange policy restrictions and operations were suspended in October 2015 to arrest additional impact on account of overhead.
“Tomatoes in not available in Nigeria and we do not want to buy outside because of the forex. We won’t continue operation until we can source tomatoes locally. We intend to produce tomato concentrate from locally grown tomatoes and maybe able to provide us with raw material requirements,” he stated.
Farrer stated that revenue from the sale of tomato paste was N0.54 billion in 2015, adding that the company was in discussions with Dansa Foods, one of its sister companies that had established a state-of-the-art tomato concentrate plant in Kano.
“After sales of 6,537 metric tonnes in bulk tankers, we had to mothball the plant in October due to lack of sufficient amounts of crude palm oil. The local producers of palm kernel have not been able to provide enough raw materials for us to produce efficiently. We are confident that we will get this segment back in operation soon,” he said.
Trading at the Nigerian stock market began the week on negative note as some investors locked in profit while others await the outcome of the Central Bank of Nigeria(CBN)’s Monetary Policy Committee (MPC).
The market has recorded significant gains in the past weeks. However, profit taking by some investors led to a decline of 0.4 per cent in the Nigerian Stock Exchange (NSE) All-Share Index to close at 27,015.97. Similarly, market capitalisation shed N34.7 billion to close at N9.3 trillion.
The volume and value of trading was also lower. Investors traded 316.5 million shares worth N1.9 billion, showing a decline of 43.4 per cent and 46.8 per cent in volume and value respectively company Friday’s performance. Market analysts linked the low volume of trade to decision of some investors to wait for the outcome of the MPC meeting, which began yesterday and will end today.
Analysts at FBN Capital said the monetary policy decisions to be taken by the MPC had been made more complicated by the public release of the national accounts for first quarter (Q1) 2016 on Friday. According to the analysts, they had penciled in a 150bps increase in the policy rate to 14.50 per cent by the committee to combat rising inflation and the related expectations.
“Then we learnt that Gross Domestic Product (GDP) had contracted by -0.4 per cent in the first quarter (Q1) and, more importantly in this context, the non-oil economy by -0.2 per cent. The committee therefore, has to contend with a shrinking economy that is likely to contract further in the current quarter and rapidly rising inflation, as well as exchange-rate policy,” they said.
Twenty-eight stocks depreciated, compared with 14 stocks that appreciated. The major losers that dragged the market included Zenith Bank Plc, Access Bank Plc and Nigerian Breweries Plc, which fell by 4.9 per cent, 4.7 per cent and 0.6 per cent in that order. But the loser’s table was led by PZ Cussons Plc and Union Dicon Salt Plc with 4.9 per cent apiece.
On the other hand, Stanbic IBTC Bank Plc led the price gainers with 10.2 per cent, followed by DN Meyer Plc with 8.2 per cent, just as Fidson Healthcare Plc appreciated by 5.0 per cent.
Unless the Federal Government and investors in the nation’s oil and gas sector invest about $29 billion (about N5.7 trillion) between now and 2019, the country’s crude oil production may decline from its present state of two million to 300,000 barrels per day.
A new report on the country’s petroleum sector, showing the challenges and opportunities, which The Guardian obtained from one of the International Oil Companies (IOCs) in Nigeria, revealed that the government has not been able to maintain its cash calls obligations, which has hit $6.6 billion as at January, this year.
It noted that the Federal Government has not also been able to meet the $1.1 billion to the indigenous oil and gas operators in the country.
The report stated that the sector is still being bedevilled by declining crude oil production and revenue; decreasing investment and financial exposure; and increased risk and social disorder.
It raised alarm over the declining joint venture production, which it said has dropped from two million barrels per day since 2014 to one million barrels per day in 2016.
The report also lamented the delay in the release of the yearly budget, which it said, has contributed to the shortfall in JV production output.
The report also regretted that the JVs have continued to get less than expected from the Federal Government yearly.
Stressing the need for the Federal Government to take the funding of JVs seriously despite the low oil prices, the report explained: “There is no business in Nigeria right now that is better that the crude oil business. The cost of producing a barrel of crude oil remained $18 a barrel during the high and low crude oil prices. Between 2005 and 2014, the government received $7 for every $1 investment. The government has made $147 billion from the investment of $19 billion while the IOCs invested $22 billion and made $25 billion”.
The report noted that the fiscal policies in the Petroleum Industry Bill (PIB) would reduce the profits that go to the IOCs to nothing if it eventually passed into law in its current state.
Dwelling on the way out, it called for the need for the Federal Government to address the issue of pipeline vandalism.
It also urged the government to divest stake-holding to Nigerian investors; make fiscal risk reflective and globally competitive; focus on regulation, revenue optimisation and economic multiplier effects.
The report also wants the government to exert efficiencies, strengthen competitive advantage and maintain relationship.
Managing Director of Seplat Petroleum Development Company Plc, Austin Avuru, explained that if challenges, which include long contracting cycle, cash call arrears and Joint Venture (JV) funding are not urgently addressed, the country’s oil and gas production would nosedive further.
