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News & Happenings / Shell shuts 200,000bpd Trans Niger Pipeline
« on: November 25, 2014, 08:13:47 AM »

Nigeria’s oil exports were disrupted after Shell Petroleum Development Company, SPDC, yesterday, shut the Trans Niger Pipeline, after it discovered a leak on the pipeline.

The pipeline carries one of Nigeria’s main export grades, Bonny Light . About six cargoes of the crude are exported each month, or around 180,000-200,000 barrels per day.

A Shell spokeswoman in London, however, stated that force majeure had not been declared on the grade.

“SPDC is investigating the source of a leak at Okolo Launch in Eastern Niger Delta which occurred near the 24-inch and the 28-inch TNP (Trans-Niger Pipeline),” a spokesman at Shell said in an e-mailed statement.

“The leak occurred near where one of our contractors was preparing to remove crude theft connections on the line. On noticing the leak on November 22, we deployed booms and also shut in the 28-inch TNP.”

The 24-inch pipeline has been shut since Oct. 18 last year for repair and integrity checks, the spokesman added.

Nigeria’s oil industry suffers from rampant oil theft. A report by a national conference convened by President Goodluck Jonathan in March, said the country was losing an estimated $35 million (22 million pounds) a day to oil theft.

In March this year, Shell said it lost nearly $1 billion in 2013 through theft and various disruptions to its Nigerian oil and gas operations.

The oil major has since sold some of its onshore producing fields in part due to these problems.


News & Happenings / Dwindling Oil Price Exerts Toll On the Nigerian Economy
« on: November 24, 2014, 01:21:13 PM »
NIGERIAN economy is struggling to respond to the unexpected drastic fall in crude oil price at the international market even as its managers led by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala hurriedly marshalled a bouquet of stimulus package to check the deceleration of growth in the country. What with declining foreign reserves, the Naira free fall, the bearish trend at the Nigerian Bourse, and the increase in the traffic by young Nigerians seeking to migrate to oversea, in search of greener pastures among others!

On November 12, 2014, the price of the Organisation of Petroleum Exporting Countries' (OPEC's) basket of 12 crudes had fallen to $77.27 below the Nigeria's proposed 2015 budget benchmark of $78 a barrel; by more than two cents, it was also below this year's benchmark price of $77.5 per barrel.

The new OPEC Reference Basket of Crudes (ORB) is made up of the Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

Despite the declining price of crude oil, OPEC's production dropped by 226,400 barrels a day last month to 30.253 million, the largest decrease since March. Saudi Arabia, the world's largest oil exporter, led the decline with a reduction of 69,900 barrels a day, the group said in its monthly report.

Nigeria also contributed to the decline with 56,300 barrels per day to settle at 1.902 million bpd, compared with the 1.958mpd it recorded in the previous month.

According to OPEC's statement yesterday, the price of crude oil stood at $77.27 a barrel, compared with $78.98 the previous day.

Economic experts believe that the continuous decline of the international oil prices will affect the country's fiscal management. And as a direct response to the shock, there have been strings of responses from major stakeholders, including leading firms and major contributors to Nigeria's GDP.

Julius Berger Nigeria Plc, for instance, is one of many multinational companies that have begun a contraction plan so as not to be caught napping if the decelerating trajectory continues. Such contraction plans have already begun to take a toll on the economy with attendant job cuts.

Julius Berger offers integrated construction solutions in the Nigeria's real sector and downsizing operations due to huge debts owed it by the Federal Government. The company has been operating in Nigeria since 1965 and its scope covers all areas of construction.

Already close to 5000 of the Company's 18,000 staff strength are said to have been laid off in an exercise which flagged off shortly after the oil price decline. However, the Public Relations Adviser of the company, Mr. Clement Ilona, denied the development, saying that what happened was an out-sourcing of the security personnel involving 500 men and women.

He said in a statement to The Guardian at the weekend: "Julius Berger Nigeria Plc (Julius Berger) concluded the gradual implementation of Government Policy on security management in corporate organisations. In line with the Federal Government directive stipulating that no organisation is permitted to operate or carryout in-house guarding functions, Julius Berger began, in May 2014, to gradually disengage its own uniformed security staff. The security staff have been duly engaged throughout this process, to inform them on the implication of the directive and how Julius Berger intended to carry out the process in phases.

"The process is now complete and all payments and entitlements due to the security staff have been met by the company," Iloba explained.

But a dependable source within the Julius Berger management team told The Guardian that there was more to it than the official explanation. According the reliable source: " The truth of the matter is that the company is concerned about the economic realities in Nigeria following the dwindling crude oil revenue; more so, the fact that the Federal Government is hugely indebted to Julius Berger and more importantly because of the apprehension over the forthcoming general election.

'The company decided to slow down on activities to watch the situation because it has become even difficult to borrow from the banks because the banks too are maintaining very cautious approach to lending now because of the forth coming elections and the general economic downturn in the country which has equally affected liquidity at their disposal,

Read more here http://allafrica.com/stories/201411241850.html?viewall=1

News & Happenings / Austerity measures: FG, walk the talk
« on: November 24, 2014, 01:02:51 PM »
The reality of the fall in crude oil price in the international market has dawned on Nigeria. The country is a mono product economy dependent on crude oil, which accounts for about 83 per cent of the revenue earnings.

Thus, crude oil is not just the principal export commodity of Nigeria; every aspect of the country’s life revolves around the commodity. The stark reality today is that the revenue earnings of the country have dwindled.

Consequently, in a bid to insulate the economy from falling crude oil prices, the federal government has announced far-reaching policy measures to deal with the crashing crude oil prices. It has cut the 2015 oil benchmark from $78 to $73 per barrel, introduced tax on luxury goods, private jet, yacht, Champaign; it also put a stop to overseas trips among others.

The government has also agreed to implement the recommendations of the Steve Oronsaye-led Presidential Committee on the Restructuring and Rationalisation of Federal Government Parastatals, Commissions and Agencies to merge or scrap some Agencies and Parastatals of the Federal Government. The committee headed by the former Head of Civil Service of the Federation had proffered far-reaching recommendations on how to eliminate duplication among the functions of government ministries, department and agencies (MDAs) and save cost in governance. 

While the Federal Government deserves commendation for adopting measures to cushion the economy without resorting to external borrowing, the action seems more or less a reaction to suit the circumstances of the times, rather than something that ought to be done. 

The government did not have to wait until the country was boxed into the corner of falling crude oil prices before it begins to think of reducing profligacy and waste in governance.

Moreover, Nigeria found itself in this situation because it is a mono product economy. Indeed, successive governments over the years have neglected other sectors of the economy since crude oil was discovered in 1958.  The plunge in crude oil prices should therefore be a wakeup call on the present government to begin to think seriously of shifting emphasis from crude oil as the economy base.

Crude oil can no longer be a dependable revenue source because the glut of the oil market following the discovery of crude in many parts of the world, the new wave of alternative source and shale oil discovery have contributed in making crude oil less lucrative.

The time has come to diversify the revenue source in terms of exploring other viable frontiers of international revenue earnings. The government must revive agriculture and solid minerals, which were sustainable sources of revenue for the country long before the discovery of crude oil.

The government also needs to make the private sector the engine of growth in order to generate, export goods and services as well as create the enabling environment for direct foreign investment.     

Gladly, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala has said part of government’s “strategy is to continue to strengthen the sectors that drive growth such as infrastructure, agriculture and housing while reducing waste with a renewed focus on prudence.”

However, there is need for the government to put words into action and not just go on and on about what it wants to do.

In this regard, when the government talks of cutting cost of governance, it will have to first shed itself of the excess baggage of the chains of Personal Assistants, Special Assistants and their assistants with their own litany of aides who do nothing but are paid huge salaries and allowances for being idle.

Again, the government needs to put measures in place to ensure that already downtrodden Nigerian masses are not further impoverished by the austerity measures. Experience in Nigeria has shown that whenever such belt-tightening measures are put in place, it is the masses that bear the brunt. 

More importantly, government should demonstrate the political will to fight corruption and mismanagement, which are part of a lachrymal waste pipe of public resources.


News & Happenings / NLNG to end shortage of cooking gas soon
« on: November 22, 2014, 01:58:25 PM »
The Nigeria Liquefied Natural Gas (NLNG) Limited said on Friday that shortage of cooking gas would soon be a thing of the past following the increased production capacity of Bonny facility.

This is contained in a statement by Kudo Eresia-Eke, General Manager, NLNG’s External Relations Manager, made available to newsmen in Lagos.

The statement quoted the company’s Chief Executive Officer, Mr Babs Omotowa as saying that the company’s six-train facility at Bonny, Rivers, was operating at installed capacity.

Omotowa reiterated that the absence of a functional cylinder, poor transportation network and infrastructure, limited jetty availability and low-priority berthing given to LPG vessels, were responsible for poor marketing of cooking gas.

He urged the government to intervene in terminal operation and development, distribution and retail, promotion and awareness and incentives for full maturity of the domestic LPG market.

NAN reports that NLNG is owned by the Federal Government, represented by the Nigerian National Petroleum Corporation (NNPC) (49%),  Shell Gas BV, SGBV (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%). (NAN)

- See more at: http://www.vanguardngr.com/2014/11/nlng-end-shortage-cooking-gas-soon/?#sthash.G4ZjWrEO.dpuf

Russia's second-largest oil company, privately controlled Lukoil, said on Friday it planned to invest in Nigeria with U.S. oil major Chevron Corp , part of its push to seek opportunities away from Russia's state-dominated oil sector.

"We have decided to enter a joint block with Chevron in a project in Nigeria, which we consider to be promising," Chief Executive Vagit Alekperov told reporters in Moscow.

He declined to name the project and provided no detail.

According to Chevron's website, the Aparo field and the third-party-owned Bonga SW Field in Nigeria share a common geologic structure. It plans joint development for both.

Lukoil, controlled by Alekperov and his deputy, Leonid Fedun, has been expanding its operations overseas.

Making that harder, however, the United States put Lukoil and some other Russian oil firms on a sanctions list in September, over Russia's role in the Ukraine crisis. That effectively froze access to foreign technology and banned Western firms from cooperating in the Arctic, shale or deep-water drilling.

 Lukoil hopes to double its oil output outside of Russia thanks to its most ambitious project, West Qurna-2, in Iraq. It also works in Western Africa.

Alekperov also said Lukoil expects dividend payments next year to be at the same level as in 2014, while its investment programme will be cut by $2 billion to $14 billion. Major oil companies have trimmed spending as oil prices drop. (Reporting by Olesya Astakhova; Writing by Polina Devitt and Vladimir Soldatkin; Editing by Alexander Winning and Clara Ferreira Marques)


News & Happenings / Seplat, CBN, others sign new gas to power deal
« on: November 21, 2014, 08:25:44 AM »
Seplat Petroleum Development Company Plc operator of the NNPC/SEPLAT JV, has signed a Memorandum of Understanding, MOU, to boost gas supply to the Nigerian Electricity Supply Industry, NESI.

Parties to the MOU include the ministries of Petroleum Resources and Power, in conjunction with the Central Bank of Nigeria, CBN, and the National Electricity Regulatory commission, NERC, as well as NNPC, SEPLAT and Gas Aggregation Company Nigeria Limited.

Under the terms of the MOU which will subsist until December 31st, 2017, the CBN will set up a special purpose vehicle which will provide a facility under the CBN-Nigerian Electricity Market Stabilization Facility (CBN-NEMSF) to offset IRP and Legacy Gas Debts owed by NESI to the gas sector.

Dignitaries present at the signing ceremony included Diezani Alison-Madueke, Minister of Petroleum resources, Godwin Emefiele, CBN Governor, Professor Chinedu Nebo, Minister of Power, Dr. Eyo Ekpo from NERC, Chairman/CEO NERC, Kunle Allen, MD GASM, Austin Avuru, CEO Seplat and many others.

Speaking at the ceremony, the Minister of Petroleum Resources noted that the CBN-NEMF intervention will help “settle legacy debts amounting to over N36.9bn thus bringing closure to the problems of the power sector.”

Following the signing of the MOU, SEPLAT will be paid an outstanding N7billion owed by defunct Power Holding Company of Nigeria, PHCN, and PHCN successor companies.

Seplat will, thereafter, under the terms of the MOU boost its gas supply to the domestic market to 430MM scfd by 2017 in line with the existing Gas Sale and Aggregation Agreements.

The MOU supports the FG and Petroleum ministry’s agenda.

Commenting on the new deal, Austin Avuru, CEO of SEPLAT said “the new MOU is in alignment with our domestic gas commercialization strategy. The offsetting of outstanding debts will provide us with much needed funds to ramp up facility expansion and upgrades leaving us on course to achieve our short to medium term gas objectives while supporting the federal government’s gas to power policy and initiatives.”

- See more at: http://www.vanguardngr.com/2014/11/seplat-cbn-others-sign-new-gas-power-deal/?#sthash.q9U0Vs60.dpuf


In order to safeguard and to benefit maximally from oil and gas exports from Nigeria, as well as monitor crude oil produced at any point in time, starting from the next quarter in 2015, no shipment of oil and gas will be allowed to leave the shores of this country until it fulfills all legal weights and measures requirements.

The Chairman, Chief Executive, Nigerco Nigeria Limited, and consultant to Weights and Measures arm of the Ministry of Industry, Trade and Investment, Yussuf Sani, said while addressing a cross section of the media on the need to get the crude oil measured right from the point of the wellhead that this measure would bring more income and boost the nation’s economy.

Sani said it would also assist the government to know the exact quantity of crude oil produced, sold, used, and imported.

He said: “With the dwindling oil production, coupled with the losses of over $1 billion oil revenue every month to oil theft according to the Minister of Finance, Dr. Ngozi Okonjo-Iweala, it has become necessary that starting from the 1st quarter of next year, no crude oil shipment would be allowed to leave the shores of the country until they have paid up all the requirements of Weights and Measures.”

Sani decried that between 2012 and now, all oil producers and traders, a section of Lagos Chamber of Commerce and Industry (LCCI), except only one, are owing Weight and Measure to the tune of $300 million.

“As at date, the total statutory fees owed by the oil and gas producers and exporters is USD279,335,371.20. The reluctances of the oil companies to settle their respective bills is an attempt to slow down government legal metrology implementation services in order for the operation of the industry to remain opaque.

“To institutionalise a culture of transparency, accountability and prudence in the conduct of government business, the processes of verification of equipment used for trade at export terminals and issuance of the export permit to discerning crude oil and gas exporters in the country have been streamlined and anchored on the Weight and Measures department web portal.

“Furthermore, the Federal Ministry of Industry, Trade and Investment has identified some infractions in the course of its inspection, being perpetuated by the operators of the oil and gas sector taking advantage of the inability of the federal government to address some weaknesses in the policy framework for the enforcement of the Weights and Measures and regulations.

“The challenges in this sector, however, goes beyond inaccurate measurement to the refusal of the oil companies to pay for statutory and pre-shipment exercise fees. The inability of the federal government to block some loopholes and drain pipes in the oil and gas sector which ought to have saved valuable funds that could be channeled into key projects in critical productive sectors is of great concern.”

He insisted that for the nation, as a means of cushioning the effect of the fall in the oil price on the country’s economy, there must be accurate measurement of the crude oil being produced at a particular point in time and  such measurement must be done directly from the wellhead.

This, he explained, will enable government to fight economic saboteurs and ensure that the nation generates much more income.

He said: “Wellhead is where crude oil originally come from and without measurement directly from this point, the country will not get the quantity of the oil produced, stolen, sold and used accurately. Legal metrology concerns measurements that directly affect consumers and ensures the quality and credibility of measurements that are used directly in regulation and in areas of trade.

“The legal metrology web portal is a credible and reliable database for oil and gas exports/imports data to foster proper reconciliation of revenues from oil and gas as required by the Pre-shipment Inspection Act. It is important to note that the existence of the Weight and Measure Web Portal will help to institutionalise a culture of transparency, accountability and prudence in the conduct of oil and gas business and issuance of export permit in Nigeria.”



The new domestic price of $3.30 approved for gas supply to power plants by the Nigerian Electricity Regulatory Commission (NERC) and changes in other key factors that are often considered by NERC when setting electricity tariff may lead to another increase in rates paid by consumers for electricity services across the country, THISDAY has learnt.

The paper learnt on Thursday in Abuja that while the new gas price has been scheduled to commence in December 2014 by the Ministry of Petroleum Resources and NERC; the development, in addition to changes in exchange rate, inflation rate and generation capacity which are often considered by NERC in setting the tariff within the Multi Year Tariff Order (MYTO) framework may force adjustments in electricity rates in the country.

NERC had at a public consultation on its minor review of the MYTO-2 in Abuja disclosed that the ministry of petroleum resources in collaboration with it has agreed to a gas price of $2.50/million British thermal unit (mbtu) and transportation cost of $.80 effective from December 2014.

A presentation that was made by Roland Achor of NERC’s Tariff and Rates Division at the meeting, showed that while the current inflation rate in the country was put at 8.3 per cent, the commission had in MYTO-2 projected a 13 per cent inflationary rate, the rate in previous review in June was however 7.8 per cent, showing a slight difference of 0.5 percent.

Similarly, the commission benchmarked $1 to N178 as exchange rate but the rates obtained by it from the Central Bank of Nigeria (CBN) as at September when the review was done showed $1 to N156.

The new domestic gas price which will now be factored into the tariff showed a $1 difference from NERC’s earlier $2.30 assumption while the average generation capacity in the review was pegged at 3,657 megawatts (MW), about 1,905mw different from its 5,556mw projection and 251mw slight increase over its last June benchmark of about 3,406mw.

NERC’s Commissioner for Market Competitions and Rates, Mr. Eyo Ekpo, however, said the commission would aggregate the review results and after inputs from the stakeholders, announce the new tariff structure in December in anticipation of its commencement in January.

In expression of their fears, electricity consumers and power firms at the consultation said that the new price and other factors, notwithstanding may trigger a significant increase in the new MYTO-2 review.

They opined that there was no gas price increase in June 2014 when the commission reviewed the tariff and had slightly increased tariff.

With this $1.00 increase in gas price, they noted that there is the possibility of a significant increase in the tariff far from what consumers may expect.

The Vice-Chairman of NERC, Mohammed Bello, said in his remarks that consumers complain of paying too much for electricity while they are yet to see improvements. He however said: “But I believe that this is the process by which power supply will improve.”

It will be recalled that NERC announced the last tariff review in June 2014 when energy cost increased from N1 to N5 for various distribution companies. The Chairman of NERC, Dr. Sam Amadi, had explained then that the review considered the prevailing inflation rate, exchange rate, gas price and available generation capacity.


News & Happenings / 25-yr-old driver arrested with drums of crude oil
« on: November 20, 2014, 08:28:17 AM »
The Nigerian Navy, Naval Outpost Onitsha located in Odekpe, Ogbaru Local Government Area of Anambra State, has arrested a 25-year-old driver, Nwaoye Onyekwere, from Ebonyi State with 13 drums of unrefined petrol, loaded in a Ford bus.

The Naval outpost also seized 15 bags of substance, suspected to be marijuana, weighing approximately 150 kilogramme but could not arrest the fleeing suspect.

Addressing newsmen before handing over the items to the Nigerian Security and Civil Defence Corps, NSCDC, and National Drug Law Enforcement Agency, NDLEA, the Commanding Officer of the outpost, Navy Captain Michael G. Oamen, said: “The patrol team discovered some men engaged in an illegal operation of bunkering petroleum products, and on sighting the naval patrol, they hurriedly abandoned their activities and jumped into a waiting boat and escaped from the scene of the crime.

“However, they abandoned a Ford bus with number plate APP 39XK Lagos, loaded with 13 drums of 200 litres of crude oil with a driver who was sleeping in the vehicle.

“The bus was loaded with the 13 drums and the driver was subsequently detained and taken to our base for further investigation.

“Without prejudice to the outcome of the investigation, it is believed that the products are petroleum products from an illegal refinery, and it is worthy of mention that the activities of operators of illegal refineries are detrimental to the environment and the economy of the nation.”

On the seized weeds suspected to be marijuana, Oamen said: “On November 15, at about 2.33a.m., a naval patrol on routine inspection of various beach landings along the River Niger observed an unusual gathering at the Mike Okigbo sand beach at Niger Street located close to the Onitsha Main Market Road.

“On closer inspection, they discovered that some men were offloading bags from a boat unto the jetty.

“My men fired warning shots and they retreated deeper into the River and jumped into a waiting flying boat. We made efforts to pursue them, but they went into a populated area.”

- See more at: http://www.vanguardngr.com/2014/11/25-yr-old-driver-arrested-drums-crude-oil/?#sthash.WEbVhc04.dpuf

News & Happenings / PENGASSAN rejects FG’s austerity measures
« on: November 20, 2014, 08:06:39 AM »

Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, yesterday, in Lagos, called on the federal government, to reduce drastically, the number of political appointees and aides and the cost of maintaining them instead of imposing an unnecessary austerity measures on Nigerians.

PENGASSAN’s President, Mr. Francis Johnson, in a statement argued that the high number of political appointees and aides to the Presidency, the ministers, state governors and their commissioners were simply draining the nation’s resources and putting pressure on the economy.

Johnson cautioned the federal government, especially the federal ministry of finance against stifling the economy through withholding of funds for human and developmental projects, but to tighten the noose around all avenues of leakages and wastages.

The statement said, “the cost of governance in Nigeria is too high and irrational and if we are looking for ways to cut cost, I think the first place to exemplarily focus on is in the direction of reducing the numbers of political appointees to the barest minimum.

“The huge amount we spend in paying these aides can be used on developmental projects and boosting of the nation’s economy. The governors, ministers and federal and state legislators should also be made to reduce their aides to a sizeable number that our economy can bear and whatever is gotten from this exercise should be used in supporting and bolstering the economy.”

PENGASSAN called on the government to develop other sectors along with the extractive and manufacturing industries as a way of diversifying the national economy from its over dependence on oil revenue.

…Lagos APC too

Meantime, the Lagos State chapter of the All Progressives Congress, APC, has accused the Peoples Democratic Party, PDP, led Federal Government for subjecting Nigeria to economic ruins in 16 years of relentless oil boom.

APC contended that the present austerity measures reeled out by the Minister of Finance, Ngozi Okonjo Iweala just two months after the reversal of a 16 year oil windfall showed that the PDP is devastating and cannot be trusted with the fate of any country seeking development and progress.

Lagos State Publicity Secretary of the APC, Joe Igbokwe, in a statement yesterday, described the measure as lamentable.
, saying that the PDP federal government in !6 years laid no solid foundation and built no worthwhile project that could help Nigeria survive the present economic crisis occasioned by drop in oil price.

- See more at: http://www.vanguardngr.com/2014/11/pengassan-rejects-fgs-austerity-measures/?#sthash.7fgG6R5S.dpuf

NIGERIA’S finance minister yesterday proposed lowering the assumed benchmark oil price for the country’s 2015 budget to $73 per barrel from the $78 proposed in September, due to the recent sharp fall in global crude prices.

Ngozi Okonjo-Iweala said falling oil prices would impact Africa’s largest economy and top oil producer, requiring the government to cut non-essential spending and raise more revenues.

“The benchmark we proposed before now was not realistic,” Okonjo-Iweala told journalists in Abuja.

“We think that for now, let us bring the benchmark price down to $73 then have a series of additional measures so that at each price it falls to, we would be able to kick in appropriate measures to keep this economy going,” she said.

Brent crude prices, the index against which Nigeria’s oil is set, has fallen more than 30 per cent since July. Nigeria depends on crude exports for over 70 per cent of government revenues.

The fall has triggered a selloff in Nigeria bond and stock markets, hurting the local naira currency which is down almost eight per cent this year despite the central bank spending billion of dollars of reserves to defend it.


 It was with nostalgic feeling for participants at the 2014 Cocoa Summit in Abuja, when the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, went down the memory lane to recall the great exploits the South West and cocoa producing states were able to achieve through the revenues earned from cocoa sector before the discovery of crude oil.

Adesina told the august gathering, "I was born in Ibadan and I cannot forget cocoa house. As a young boy, I used to take walks with my dad to the tall building, the tallest in Africa at that time. I was fascinated the day my father told me that this edifice was built by farmers. I asked him "are they millionaires? He said "cocoa farmers are the kings of farmers." Nigeria soon lost that position and pride of place when it discovered crude oil and agriculture took the back seat."

However, it was heart-warming recently when critical stakeholders drawn from the producers input suppliers, traders, exporters, indigenous and multinational companies, cocoa processors, among others, converged to brainstorm on how to resuscitate the sector and make "Nigeria a global powerhouse in cocoa production."

To underscore the seriousness of the two-day summit, the Ministers of Agriculture and Rural Development and his counter part from Industry, Trade and Investment were in attendance to lend the Federal Government's support aimed at restoring the past glory of the cocoa sector.

The present administration had before now developed Cocoa Value Chain under the Agricultural Transformation Agenda (ATA) to shore up the country's cocoa output which has been very low in the international market. According to Adesina, "Global demand for cocoa is rising rapidly with increased income growth and demand in India and China. Demand is projected to far outstrip supply with an expected deficit of one million metric tonnes of coco beans by 2020.

"While Ivory Coast's cocoa has grown to over 1.4 million metric tonnes and Ghana at over 720,000 metric tonnes in the last decade, cocoa output in Nigeria had remained low at about 250,000metric tonnes, until recent efforts which are turning this around."

Corroborating Nigeria's backwardness in cocoa production, the Minister of Industry, Trade and Investment, Olusegun Aganga, said "The total global value of exporting raw cocoa is approximately $10 billion a year; the total value from chocolates alone, all made from cocoa, is over $100 billion a year, while the total value of all finished goods made from cocoa is estimated to be as high as $200 billion a year, all drawing from the same $10 billion raw cocoa beans produced.

"With the situation today, about 76 per cent of total cocoa produced is from Africa, but less than five per cent of the wealth in the value chain is retained here. After many decades of dominating cocoa production, it is worrying that we still remain price takers, and capture so little value. This is not right, and this is what we have set out to change".

Currently, Nigeria is the fourth largest producer of cocoa in the world, after Ivory Coast, Ghana, Indonesia. It merely produces and exports cocoa raw beans, without paying adequate attention to processing of cocoa to produce chocolates. "The global confectionary market is worth $80billion per year. West African farmers, with Nigeria being the fourth largest producer of cocoa in the world, grow 70 per cent of the world's cocoa, but receive 3-6per cent of the final consumer price for a bar of chocolate.

"Nigeria should be processing chocolate instead of exporting raw beans. This requires investments in chocolate manufacturing companies and transforming the Export Enhancement Grant (EEG) to value addition. Expansion Grant to boost industrial processing of cocoa into cocoa liquor, cocoa cakes, cocoa powder, cocoa butter and chocolates."

Stakeholders have also pointed out that Nigeria's cocoa sector is un-coordinated at present, apart from the challenges of low yields, poor farm management, lack of tissue culture to propagate new clones, weak extension services, low grade and standards, among others.

The Regional Director, United Nations Industrial Development Organisation (UNIDO), Dr. Patrick Kormawa, said despite growing efforts by many African governments and private sector to move the sector forward, they have been constrained by lack of appropriate financing, technical and management deficiencies and limited market access opportunities. He urged the stakeholders to further examine and come up with workable strategies to address the problems inhibiting increased value addition to cocoa in Nigeria.

In his submission, the Chairman, Cocoa Processors Association of Nigeria (COPAN), Dimeji Owofemi, underscored the importance of the establishment of the Commodity Board as well as the need to encourage the youth to embrace local processing of cocoa through empowering them.

Nigeria's cocoa is purchased by a few multinationals and unregulated buyers who offer low prices for farmers and over 90 per cent of the cocoa also loses on the global market as it is not branded, as different types and grades of cocoa are sold off, leading to a huge discount on cocoa from Nigeria.

Speaking further on the challenges confronting the sector, Agriculture Minister identified "the absence of marketing institutions around cocoa in Nigeria, which have led to uncertainties around policies and supportive systems that have for decades stifled the potential of cocoa sector. To correct this anomaly, he announced that the Federal Government would soon float Cocoa Corporation of Nigeria (CCN) to fill the institutional gap created following the dissolution of Cocoa Marketing Boards by the past administrations in Nigeria.

While shedding light on the core mandate of the proposed CCN, he said the CCN will be a private-sector driven but public-sector enabled institution, professionally run, and with a mandate to put in place and support international best practices and institutional arrangements that will ensure global competitiveness, long-term sustainability and growth of the Nigeria cocoa sector.

"The mission of the CCN will be to support, coordinate, facilitate and regulate the growth of a sustainable, commercially vibrant cocoa value chain. Effective coordination among all sectors in the cocoa sector will increase the industry's contribution to Nigeria's revenue base and, ultimately, lead to job creation, a more robust rural economy, and an improved quality of life for our cocoa farmers.

"The CCN will be a vehicle to grow Nigeria's share of the world cocoa market as we target to control at least 20 per cent of the market by 2020. We know that this is achievable because we have the natural, human, financial and intellectual resources to make this happen. We also have the political will to provide an enabling environment for the operation of the value chain actors to reach the target," he said.

In addition, to ensure short and long term financing mechanisms as well as protect Nigerian farmers and processors, the minister proposed the setting up of N100billion Cocoa Sector Development Fund to finance the rehabilitation and expansion of cocoa plantations across current and potential new growing states, expand access of farmers to agricultural inputs, support the CCN and support the upgrade of cocoa processors. The fund, he explained would also support the provision of chocolate drinks to schools to boost health, domestic consumption and value addition.

It should be noted that Cocoa Value Chain under the ATA, has the goal of expanding Nigeria's cocoa output by 500,000metric tonnes by 2015 and achieving one million metric tonnes within 10 years. Its strategy hinges on "massive rehabilitation of Nigeria's old cocoa plantations, improvement of productivity and expansion of cultivated areas as well as value added processing.

As part of the achievements recorded in the sector in the last three years, the Nigerian Cocoa Research Institute has released eight new cocoa hybrids that give yields to 2.5mt (five times current yields of farmers) and mature two and half years. Similarly, over 1.4 million pods of these hybrids, according to Adesina, have been distributed to farmers.

To this end, cocoa output has grown from 250,000mt to 370,000mt in the last three years and it is projected that more than 600,000mt would be produced by 2016. In addition, Nigeria's revenue in cocoa has increased over this period. In the words of agric minister, "The renewed boost in cocoa production under the ATA has led to the expansion of non-oil export earnings from cocoa from $900million in 2012 to $1.2 billion in 2013 and expected to grow to $1.3 billion in 2014."

In the light of all these, many stakeholders have called on the government at all levels to pay priority attention to this sector, in view of the current dwindling fortunes of crude oil, occasioned by the fall in its price in the global market.

The non-oil sector, particularly cocoa sector, could salvage the economy that is perched on the edge of precipice, as a result of running of monolithic economy following the discovery of oil. For the stakeholders at the Summit, the time to create opportunities and enabling environment for new wealth generation for the country through cocoa sector is now.


News & Happenings / Bayelsa youths attack Agip pipeline, oil well
« on: November 17, 2014, 04:50:13 PM »
UNIDENTIFIED youths, weekend, launched multiple attacks on a pipeline and oil well belonging to Nigerian Agip Oil Company, at Okoroma, Nembe Local Government Area of Bayelsa State, over a disputed security surveillance contract in the area.

According to community sources, the youths who launched the attack were masked and armed with explosives suspected to be dynamites.

The affected facilities, it was learned, include Oil Well 7 and Obama Oil Field pipeline connecting Brass area of the Nigerian Agip Oil Company, NAOC.

The attacks were carried out late night on Wednesday and Thursday.

The indigenes and elders of the community, according to sources, have launched an independent investigation into the incident.

- See more at: http://www.vanguardngr.com/2014/11/bayelsa-youths-attack-agip-pipeline-oil-well/?#sthash.jIVjixMh.dpuf

News & Happenings / Slum in Oil Prices - a Progressive Way Out
« on: November 15, 2014, 08:50:06 AM »
Awash in the great tide of politics, we must not forget why politics can be a noble endeavor. It leads to governance. When done correctly, governance can reform a nation and improve the lot of the people. In the hands of the ignorant and the mean, governance cast abundant misfortune upon a nation and upon the welfare of its citizens.

This commentary concerns governance and policy more than it does politics. I offer it to generate debate on an important economic issue. No matter who is in power, we must do whatever is in our capacity to steer the nation away from economic woe. The people have suffered too much hardship already. Neither side of the political divide should seek to purchase transient advantage at the high price of dousing the people in greater economic calamity. Thus, I suggest this progressive's position on how best to shape economic policy during this period of falling oil prices. I state this hoping those in charge will take pertinent advice from any quarter. My prayer is that they are not so stubborn as to adhere to a strategy that will deepen the economic misery of our people even when better policy measures are proffered.

I confess to writing this also for a reason essentially political but non-confrontational. It accentuates the distinction between the conservative PDP and the progressive APC. The nation faces momentous elections when next year turns to its second month. The choice is a stark one; but many people do not believe as such. The differences are vast especially regarding economic policy. On the one side, the PDP champions a conservative, elitist economic model based on the theory that wealth money must first go to the already rich and well-heeled who shall determine how small a fraction of it will trickle-down to the rest of society.

On the progressive side, we believe government can fillip economic growth and development in such a way that brings the fairness of prosperity to all of society. We don't seek to penalize those who already have but we will do our utmost to remove from the clutch of poverty the bulk of our people. We seek to turn the hungry suffering of our poor and working classes into a dignified livelihood that provides a dignified existence for all.

Global oil prices have fallen from over 100 dollars a barrel to approximately 80 dollars per barrel. This slide has caused a corresponding drop in government's dollar revenues. With this, the federal government claims it has less money at its disposal and the paucity of dollars necessitates austerity measures. Most people accept this position as gospel; debate about its correctness has been nil. Yet, the stakes are much too high to assume this subjective position as an economic certitude or uncritically accept its propriety. What they proclaim as policy is not based on any unassailable economic principle. It is statement of economic bias that beckons to the wealthy while auguring unnecessary hardship for most Nigerians.

Look at jobless and poverty levels as well as the diminished status of our middle class. After viewing these statistics, most objective economists would conclude Nigeria is mired in a long-term, secular depression. Forget the rosy GDP numbers. They signify a great economic and financial segregation between those who have and others who have not. If we continue with the policy preferences of the current administration, the haves shall become the "have-mores" and the "have-nots" shall become the "have even less."

The vast majority of the claimed GDP growth has fallen into the laps of those already enjoying obvious luxury. The rest of the people are left to gaze at the enormity of the income and wealth chasm separating them from the cabal orchestrating the discordant political economy. While a small group flourishes, the rest of the nation subsidizes their economic bounty. A tight confederacy rides an economic skyrocket while the bulk of the people languish in the swamp. For one group, the economy is effervescent. For the other, it is catatonic. Nigeria is one nation with two economies.

For this government to speak of austerity is to further enrich the affluent while casting the average Nigerian into greater hardship and deeper socio-economic depression. As with the Euro zone the past five years since the global financial crisis, austerity has not solved the dire economic weakness of the nations that employed this sickening remedy. All austerity has done is tighten the grip of the wealthy on the economy while weakening the position of the middle class and the poor.

Austerity weakens aggregate demand, deflating an economy already fatigued and against the ropes. Those with hefty portfolios, profit as the value of their holdings appreciates by the very dynamics of deflation. Those who don't have, find money even dearer to come by. Jobs and commerce disappear. Debt climbs. Deflation turns a noble but poor household into a committee of beggars and street urchins. The austerity that the current Administration offers is an insensitive, myopic policy that lends primacy of favor to meaningless accounting figures instead of to the material wellbeing of the people. Austerity undermines our economic pillars and breaks the spirit of the people. Austerity is the merchant of pessimism and hopeless futility. If you desire a nation of thralls, by all means continue this bleak path. If we want a nation of prosperity and economic justice, a different course is our due.

Listen carefully to the position of the Jonathan Administration as articulated by the finance minister and you shall collide into the barricades of illogic and its weighty consequences. The claim is that government is low on funds because the lower price of oil means fewer dollars are being collected from oil sales. This sounds logical but for one fundamental point. The dollar intake is basically irrelevant to determining the amount of naira the government commands and places into the political economy. This fundamental point reveals the government's position to be the antiquated relic of a past era. It is the way of the gold standard which ceased to exist over forty years ago. As such, government's stance is based more on superstition than on the actual functioning of modern economy with a sovereign fiat currency of its own.

The last I looked, Nigeria operates a Naira-based economy not a dollar-based one. There is no legal or moral restriction strictly limiting the amount of Naira in the system to match the amount of dollars collected via oil sales. More importantly, there is no economic justification for the close linkage implied by the government. If we take its position at face value, the Jonathan Administration is advocating that we effectively place the Naira and thus our fiscal policy on a "dollar standard." The world jettisoned the gold standard in 1971 because it proved unworkable, reducing the policy space in which governments could pursue fiscal programs promoting full employment and social welfare. We should likewise reject this government's imposition of a dollar standard on our nation's fiscal operations.

Under the gold standard, a national government took pains not to incur budgetary deficits that exceeded the dimensions of its gold reserves. This was because the currency had no value by itself. Its value was based on the convention that the currency was backed by the nation's gold holdings. Those governments that ran deficits had to pay those debts in gold. Given that gold supplies were always and everywhere finite and exhaustible, a nation had to keep its deficits within the confines of its ability to pay debts in gold. Because of this straitjacketing effect, nations would abandon the gold standard during harsh economic times in order to give them the fiscal freedom to rejuvenate their economies. This was the case during the Great Depression with the major economic powers. This should be the case with Nigeria today since the bulk of our people live in conditions redolent of the Great Depression or any other depression for that matter.

Our government persists that it must limit fiscal outlays to the amount of dollars the nation holds. Similar to the operation of the discarded gold standard, following this path is to strap ourselves to austerity and the chronic deflation of austerity produces. Worse, it serves to enthrall the fiscal policy of our sovereign nation to the monetary policy of another country. That nation plies monetary policy to serve its interests and not the economic interests of Nigeria. I am baffled why this government would give such power over the fate of our economic wellbeing to another nation that does not incorporate our interests into its decisional processes. This government makes our nation the economic servant of another so that government may turn about to make the Nigerian people its economic servant. While there is a certain logic to this dynamic, it is a perverse and debilitating one.

Because we operate a sovereign fiat currency the federal government issues at its sole discretion, the federal government can never be rendered insolvent in Naira. This means it can run Naira fiscal deficits indefinitely. The only outer bound is to ensure the fiscal expansion does not incur damaging inflation rates. There is no logical reason to peg the flow of Naira into the economy to the flow of dollars received. The correct perspective is not to mechanistically restrict Naira expenditure to dollar intake. This would be tantamount to those crippled with economic blinders forcefully leading those who can see we are heading for disaster. It points to deflation, recession and worse. The better methodology is to ascertain, then achieve, the level of Naira expenditure needed to expand the economy and create jobs without causing inflation to rise to dangerous levels. This is how broadly-shared prosperity is generated in a sustainable manner.

In this way, the nation's economic engineers should focus primarily on allocating value and opportunity to our underutilized labor force and our idle, yet potentially productive capital in a way that promotes wealth creation and expansion of aggregate demand. It is this sustainment of aggregate demand that empowers the nation to rescue itself from the whirlpool of economic contraction. This avenue is more benign than the one the federal administration now advocates. Their way calls for us to forget growth and for government to preoccupy itself with allocating economic misery among those segments of the population too poor and weak to contest the immiserating actions of government against them.

In the face of recessionary headwinds, government should run countercyclical fiscal policy by using its Naira sovereignty to fund fiscal deficits. The deficit is not simply for the sake of running a deficit; the funds cannot be spent on nonproductive matters. It must be used to fuel infrastructural and other projects that not only employ great numbers of people but enhance the overall productivity of the economy. The funds must be used to backstop state governments in a nonpartisan manner so that each state government may continue to pay salaries and pursue projects essential to that state's economic critical path.

To accomplish this, the federal government needs to reverse the inimical "dollarization" of the national economy in two ways. First and most importantly, it must abandon the outdated peg of fiscal policy and expenditures to the dollar intake. The one actually has no correspondent nexus to the other. Any commanding connection we give it is an artifice not an economic necessity. Related to this, we must reverse a trend that has gained momentum under this government. Among government-aligned elites, the fad has been to conduct domestic business transactions in dollars. Policy must "nairasize" the economy by requiring all domestic transactions occur in our legal tender. As this is done, the government's infinite ability to issue Naira will come to outweigh the limitations inherent in the overuse of the finite supply of another nation's currency for transactions wholly internal to our domestic economy.

Inflation is the major risk of running budget deficits to spur growth. We can contain inflation to acceptable levels by ensuring additional government expenditures are for items that can be supplied domestically, particularly labor. Naira paid to poor and working class people mostly circulates in the domestic economy, spurring additional local commerce and production. This is because their consumption patterns do not approach the level of import expenditures associated with their wealthier compatriots. Related to this, we must decrease our level of superfluous imports.

These measures will place downward pressure on the Naira. Devaluation will not be destructive but it will be noticeable. For most nations, such devaluation would be welcomed as it would make export industries more competitive, thus creating jobs and export earnings in the process. However, this will not be the case initially for us because of the moribund state of our industrial sector. Here, government would need to initiate crash programs aimed at enhancing those domestic industries perched on the borderline of international competitiveness.

In the end, the policy I propose is not without risks, inflation being the chief concern. Yet, if wisely prosecuted, the rewards of job creation and economic growth allocated among the bulk of the populace outweigh the inflationary risk. More to the point, the policy now pursued bears no risks at all. It is certain to toss the average man's economy into a stagnation that will resemble the onset of a major recession. Saving the people from this unnecessary plight is sufficient imperative to eschew the policies of old and embrace the progressive course.

I offer this advice, this warning, because the people have suffered enough hardship. I offer this advice in the slim hope those in power will ignore the messenger and objectively weight the quality and humane nature of the message. If so, they will spare the people the grief visited upon a vulnerable people when their government blindly imposes last century's policies in a modern setting inappropriate to the old strictures. Regardless of our partisan affiliations, let us consecrate this land by dedicating ourselves to the betterment of the poor, weak, and needy members of our national family. Let this moment not pass like so many others where we have demanded that the most vulnerable among us bear the greatest weight of the national burden. Let us give them the hope, change and dignity they deserve and human decency demands. This is how we make the nation great. When I speak of a common sense revolution, this is what I mean.


News & Happenings / Halliburton in talks to acquire Baker Hughes
« on: November 14, 2014, 05:05:04 PM »

Halliburton Co. is in talks to buy Baker Hughes Inc. in a deal that would combine two of the largest and oldest names in the energy business amid plunging oil prices. By eliminating a competitor, Halliburton, already the world’s second-biggest provider of oilfield services, would gain market clout that would help insulate it from a sustained market decline. A combination of Halliburton with No. 3 Baker Hughes would be a little more than half the size of larger rival Schlumberger Ltd.

“The two gorillas in the room are getting together,” said Ed Hirs, who lectures on energy economics at the University of Houston. “Halliburton and Baker Hughes would have been competing more strenuously to maintain market share in the downturn, but this will make that easier.”

Baker Hughes rose 15% on Nov. 13 to $58.75 a share in New York, giving the company a market value of more than $25 billion. Halliburton rose 1.1% to $53.79, giving it a market value of about $46 billion.

The deal will probably be closely scrutinized by federal antitrust regulators, especially where the two companies’ businesses overlap most in North America.

With Baker Hughes, Halliburton fills a gap in its portfolio of oilfield services: technology to boost production in aging wells. Halliburton also gets Baker Hughes’ prized oil tools business.

‘Global Footprint’

“These oilfield services companies need to have a global footprint of a complete portfolio of products and services,” Richard Spears, V.P. at Tulsa, Oklahoma-based industry consultant Spears & Associates said in a phone interview. “Schlumberger has it; a Halliburton-Baker Hughes combination would mimic the Schlumberger footprint.”

In a Nov. 13 statement, Baker Hughes said it is in “preliminary discussions” with Halliburton about a “potential business combination.” If negotiations are successful, a deal could be announced as soon as next week, said one person familiar with the matter, asking not to be identified discussing private information.

Halliburton doesn’t comment on market speculation, Emily Mir, a spokeswoman at Halliburton, said in an email.

Halliburton initiated talks by contacting Baker Hughes several weeks ago, said one of the people with knowledge of the talks. Both companies are hired by oil and natural gas explorers to drill wells and provide services such as hydraulic fracturing, which cracks rock to let petroleum flow more freely.

Anti-Trust Questions

Discussions of late have focused on potential anti-trust issues and Halliburton has explored options such as setting up a unit to hold assets it’s willing to divest, this person said. If the deal is completed, Halliburton and Baker Hughes will probably announce to regulators a willingness to sell assets to overcome anti-trust concerns, the person added.

Halliburton may have to divest more than 20% of Baker Hughes to clear regulatory scrutiny, this person added.

Combined, the companies would dominate the $25 billion U.S. onshore fracing market with a 39% market share, more than double the size of its next competitor, Schlumberger, according to Spears & Associates.

Challenging Schlumberger

Schlumberger’s lead outside the U.S. and Canada would be considerably weakened by a Halliburton-Baker Hughes deal. Schlumberger’s international sales of $8.3 billion in the third quarter, more than double that of a stand-alone Halliburton, would outstrip a combined Halliburton-Baker Hughes by less than one third if a merger happened.

It’s unlikely the deal could make it through the U.S. Department of Justice without “something having to be carved off,” said Edward Muztafago, an analyst for Societe Generale in New York.

Baker Hughes would be Halliburton’s largest acquisition, topping a 1998 purchase of Dresser Industries Inc. for about $8 billion, data compiled by Bloomberg show. Halliburton’s $14 billion in deals has lagged Schlumberger’s $27 billion in takeovers, the data show.

The takeover could be the largest of a U.S. oil services company, data compiled by Bloomberg show, and potentially the largest in the energy sector since Kinder Morgan Inc. said in August it would acquire all of Kinder Morgan Energy Partners LP, Kinder Morgan Management LLC and El Paso Pipeline Partners LP in a series of transactions valued at about $44 billion.

Sinking Prices

Oil prices dropped to four-year lows on Nov. 13 as booming U.S. crude production combines with a shrinking forecast of demand growth. Lower prices could curtail drilling, meaning lower sales for Halliburton and its peers.

Prices should bottom out next year and begin climbing again, Dave Lesar, CEO at Halliburton, said Oct. 22 in an interview from his Houston headquarters.

Both companies have century-old pedigrees in the business. Baker Hughes has its roots in billionaire Howard Hughes Jr.’s empire, started by his father in 1909. Hughes Tool Co. merged with Baker International in 1987.

Halliburton was started in 1914 when Earl P. Halliburton borrowed a team of mules along with a wagon, a pump, and a cement-mixing box to start a business cementing oil wells.

Halliburton reported third-quarter earnings that climbed 70% from a year earlier, and is expected to boost earnings 30% this quarter. The company, which has doubled its quarterly dividend over the past two years, reported cash of $2 billion at the end of the third quarter.

Baker Hughes said earnings rose 10% in the third quarter.

Credit Suisse Group AG is advising Halliburton on the talks while Goldman Sachs Group Inc. is advising Baker Hughes, one of the people said. Representatives for both banks declined to comment.


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