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Forex crisis: Why CBN should review recapitalization requirement for BDCs – ABCON

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The Association of Bureau De Change Operators has criticized the Central Bank of Nigeria’s new recapitalization requirements for its members amid the ongoing foreign exchange crisis.

ABCON President Aminu Gwadabe expressed this sentiment on Thursday at the 8th edition of the Vanguard Economic Summit.

This follows the CBN’s announcement of a new guideline for BDC operators in Nigeria on Wednesday.

The central bank mandated that all BDC operators reapply for licenses, raising the minimum capital requirement for tier-1 and tier-2 licenses to N2 billion and N500 million, respectively.

However, Gwadabe has urged a review of the CBN’s directive to increase the capital base for BDC operators, arguing that it deviates from global standards.

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“You increased the capital from N10 million to N35 million in 2014, and now you are raising the capital base of BDCs from N35 million to N500 million for Tier 2 operators and N2 billion. It’s highly against the global standard,” Gwadabe said.

These developments occurred as the Naira depreciated on Thursday in both parallel and official forex markets after four days of appreciation.

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Dangote Refinery imbroglio: Experts react as NASS mulls sanctions on economic saboteurs

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The Nigerian government authorities have offered the Chairman of Dangote Group, Aliko Dangote an olive branch amid the feud between Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority over substandard petroleum products.

This comes as Nigerian lawmakers, particularly, the Senate have vowed to come tough on economic saboteurs in the petroleum industry.

DAILY POST reports that on Monday night, the Minister of State Petroleum Resources (Oil), Heineken Lokpobiri, Dangote, NMDPRA CEO, Farouk Ahmed and others met over the quality of the refinery’s petroleum products and domestic crude oil supply challenges.

Others in the meeting were Gbenga Komolafe, Chief Executive Officer, of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and Mele Kyari, Group Chief Executive Officer of Nigerian National Petroleum Corporation Limited (NNPC).

In a statement by the Minister’s media aide, Nneamaka Okafor, he said the meeting “marks a significant step towards resolving the challenges and underscores the Minister’s dedication to fostering a conducive environment for Nigeria’s oil and gas sector.

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“The meeting focused on finding a sustainable and lasting solution to the current impasse affecting the Dangote Refinery, with all parties demonstrating a commitment to collaborative and proactive problem-solving”.

Similarly, in what seems like a feel-good day for the Dangote brand, the Senate and the House of Representatives also waded into resolving the challenges facing the refinery.

On his part, the Senate President, Godswill Akpabio on Monday decried economic sabotage bedeviling the country’s oil and gas sector.

He set up an ad-hoc committee to address the challenges facing Dangote Refinery and the oil and gas sector.

“The shadows of economic sabotage looms large, threatening to destabilize this critical industry by extension our Nation’s financial stability”, he said.

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He charged the committee “to identify the perpetrators, their modus operandi and networks, then report same to the Nigerian senate for further legislative action”.

Earlier, DAILY POST reported that the House Committee chairman of the joint Committee on Midstream and Downstream, Ikenga Imo Ugochinyere also asked Dangote Refinery and NMDPRA to halt allegations and counter allegations over the alleged substandard of products from the refinery.

According to him, the Committee has commenced an investigation into the issue of substandard petroleum products, non-availability of crude oil supply and other challenges Dangote Refinery was grappling with.

Though these moves might not have addressed entirely the petroleum industry crisis, they present a springboard for a more conversation towards ending the imbroglio facing Dangote Refinery and indeed Nigeria’s oil and gas sector.

Dangote Refinery, NMDPRA feud

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The Dangote Refinery and NMDPRA dispute started in June 2024, when Devakumar Edwin, the Vice President of Dangote Industries Limited accused NMDPRA of granting indiscriminate licenses to oil marketers to import dirty fuel.

The feud heightened barely four days ago when the CEO of NMDPRA, Ahmed stated that the quality of the 650,000 barrel per day Lagos-based Dangote refinery’s diesel product is inferior compared to imported ones.

Ahmed said Dangote Refinery is “producing between 650 and 1,200 PPM. Therefore, in terms of quality, their products are inferior to imported ones”.

The statement sparked reactions among Nigerians and stakeholders in the country’s oil and gas sector.

Meanwhile, days after, Dangote dismissed Ahmed’s statement.

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According to him, Dangote Refinery’s products are not substandard.

He called for an independent test of its products.

Reiterating Dangote’s stance, Rabiu Umar, the Group Chief Commercial Officer at Dangote Industries Limited in a Channels Television interview on Monday said it was untrue that Dangote Refinery had high sulfur content.

Dangote Refinery and domestic crude supply crisis

The Dangote refinery had continued to lament its inability to get crude oil from Nigeria.

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The refinery had sought crude oil supply from the United States and Brazil.

A recent statement by the firm indicated that it was also approaching Libya and Angola for crude oil import.

This comes amid moves by NUPRC to extract a commitment from stakeholders over meeting the Petroleum Industry Act Domestic Crude Supply Obligation, DCSO.

Consequently, NUPRC ordered refiners to provide monthly price quotes on crude supply.

This comes after Edwin had said that International Oil Companies were frustrating the 100 percent commencement of Dangote Refinery by selling crude oil at higher prices to the refinery.

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Expert reactions

Speaking to DAILY POST on Dangote Refinery and the challenges facing Nigeria’s energy sector, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf said government authorities in the industry should be more interested in scaling up domestic production rather than deepening the corruption-riddled importation of petroleum products.

He said that the government should provide support to all domestic refiners as a way of encouraging its own.

“What the economy needs at this time is production. This is true of all sectors of the Nigerian economy. But it is even more so for our energy sector.

“This is the pathway to energy independence, energy security, conservation of our foreign exchange, building our foreign reserves and deepening backward integration in the Nigerian economy.

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“Domestic refining of petroleum products has incredible multiplier effects on the economy, in addition to promoting macroeconomic stability through reduction in import dependence.

“The government and its agencies therefore need to provide every support possible to support domestic refining of petroleum products.

“Importation of petroleum products currently accounts for about 30% of our import bill. Domestic refining of petroleum products would provide considerable relief to our forex market.

“The narrative about monopoly powers is better addressed by encouraging more domestic producers than perpetuating the culture of Importation.

“The economy had suffered enormous bleeding from the decades of Importation of petroleum products, the subsidy regime and the associated corruption in the entire supply chain. We cannot afford to continue on this path.

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“Government agencies in the oil gas ecosystem should be more interested in scaling up domestic refining of petroleum products rather than deepening the corruption stricken Importation of petroleum products”, he told DAILY POST.

Similarly, an energy expert, Joseph Eleojo said the government should do everything to fight those sabotaging Dangote Refinery.

However, Managing Partner, BBH Consulting and Convener, Public Interest Advocacy Network (PIAN), Barr. Ameh Madaki believes that the government should uphold regulatory sanctions on Dangote Refinery to checkmate anti-competition tendencies in the oil industry.

He noted that if Dangote Refinery must succeed in the oil sector, it must wean itself off the ‘feeding bottle syndrome’.

“I think that the Regulators should clamp down firmly on Dangote’s allegations that the NMDPRA is authorizing the importation of substandard products into Nigeria.

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“That is a direct affront to the regulator, to which Dangote Refinery is subject. Dangote’s utterances are totally anti-competition, and unless he weans himself off the feeding bottle syndrome, he will never be able to play on a level playing field”, he said.

CREDIT: DAILY POST

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Concerns as NNPCL seeks fresh $2bn crude-for-cash loan amid fuel scarcity

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The Nigerian National Petroleum Company Limited, NNPCL, is planning to secure a fresh $2 billion oil-backed prepayment loan amid fuel scarcity in the country.

This is according to a report by Reuters on Tuesday, suggesting that NNPCL plans to achieve the deal in two months.

The Group Chief Executive Officer, Mele Kyari said the new financing would allow investment in its business.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” Kyari told Reuters.

Kyari said the company wanted the new loan against 30,000-35,000 barrels per day of crude production, though he declined to say how much money it sought.

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“It will be a syndication with critical but regular partners who have been in business with our company to forward the cash,” Kyari said on Tuesday, adding that he expected to conclude the deal in the next two months.

This comes as a report emerged that NNPCL’s debts to petrol suppliers had doubled in the last four months to hit $6 billion.

However, the spokesperson of NNPC, Olufemi Soneye dismissed the claim.

Recall that on August 16, 2023, NNPCL secured a $3.3 billion emergency crude repayment loan — a transaction aimed at supporting the naira and stabilizing the foreign exchange (FX) market.

Arranged by the African Export-Import Bank (Afreximbank), the $3.3 billion crude-for-cash loan was also targeted at supporting the federal government’s monetary and fiscal reforms.

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Further analysis showed that the existing $3.3 billion and the new $2 billion would amount to a $5.3 crude-for-cash loan.

The development comes amid concerns by Dangote Refinery over its inability to get Nigerian crude from International Oil Companies.

This is also as Nigerians have continued to groan as fuel scarcity which started last week in Abuja, Nasarawa, Lagos has spread across Kano, Kaduna, Katsina and other states.

CREDIT: DAILY POST

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FG allocated N732bn on vague empowerment projects in 2024 budget – Tracka

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Tracka, a subsidiary of BudgIT, has said that Nigeria allocated N732 billion on vague empowerment projects higher than the N646.5 billion allocated to health projects in the 2024 national budget.

Ayomide Ladipo, the Head of Tracka disclosed this in a statement on Sunday.

Tracka maintained that Nigeria’s empowerment projects were vague and challenging to track due to their nature.

According to Tracka, the huge allocation for empowerment projects would have been channeled to curb the gap in Nigeria’s health sector having the second-highest child mortality rate in the World.

Tracka alleged that empowerment projects were used as a funnel to siphon public resources.

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It noted that the National Assembly has 7,447 projects valued at N2.24 trillion in the 2024 budget.

Further analysis of Tracka’s report also showed that over 2,558 projects worth N624 billion were allocated to agencies outside their mandate.

Accordingly, Tracka asked anti-graft agencies in Nigeria to probe these anomalies in the 2024 budget to forestall diversion, misappropriation, and embezzlement.

“Tracka maintains that empowerment projects are vague and challenging to track due to their nature. They are also used as a funnel to transfer public resources to party loyalists, resulting in the misuse of public funds.

“In the 2024 Federal Government budget, there are 4,440 empowerment projects. Previously, empowerment projects were limited to constituency projects, but over the years, they have gradually seeped into capital projects through insertions by the National Assembly. For instance, the National Assembly inserted 7,447 projects valued at N2.24 trillion in the 2024 budget.

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“Tracka identifies this as a problematic trend, considering the huge infrastructure gap and budget deficits the nation is grappling with.

“Further analysis also showed that over 2,558 projects worth N624 billion were allocated to agencies outside their mandate. An example is the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) – ERGP20241489 – allocated N5 billion for the Procurement and Distribution of Official Vehicles to Selected Traditional Rulers in the Six Geo-Political Zones in Nigeria (Multiple Lots). Another is the Nigeria Institute of Oceanography and Marine Research (NiOMR) – ERGP20245718 – allocated N2.32 billion to construct a 3.5km Road from Methodist Church Ibu to the Eri River,” the organisation said.

BudgIT’s Country Director, Gabriel Okeowo commenting on Tracka’s discovery said, “The implications of assigning projects to agencies outside of their mandate are that it undermines monitoring, evaluation, and the sustainability of these projects.

“These agencies lack the expertise and personnel to ensure quality service delivery for these projects, leading to under-delivery and a colossal waste of taxpayers’ money and scarce resources.”

Recall that President Bola Ahmed Tinubu signed the N28.7 trillion 2024 budget into law in January this year.

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CREDIT: DAILY POST

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