Oil Prices Surge, Stocks Slump

File Photo of OPEC.

 

Oil prices surged on Monday as OPEC+ kept to its plan to not boost output further, while US and European stocks slumped amid worries over inflation and higher interest rates.

US oil prices soared to their highest level since November 2014 after OPEC and key allies — known as OPEC+ — decided to stick with their planned moderate increase next month, despite the recent surge in prices.

Meanwhile, the price of the main international contract, Brent oil, jumped above $82 a barrel before finishing at $81.26 a barrel.

“The decision by OPEC+ to add the expected 400,000 barrels per day in November triggered a market reaction, as traders are now more boldly coming out from their cautious positions and pricing in a confirmed, tighter supply market,” said Bjornar Tonhaugen, head oil markets at Rystad Energy.

Some economists are worried that sustained oil prices of $80 per barrel could undermine the recovery of the global economy, already under strain from snags in supply chains.

“Producing nations, and namely OPEC+, have to be careful not to allow prices to inflate too much, otherwise we may see an adverse reaction that could negatively impact post-pandemic economic growth,” Tonhaugen said.

Gains in European equities evaporated and US stocks sank as oil prices continued to rise after the OPEC+ announcement.

Analysts pointed to higher yields in government bonds as a drag amid expectations for tightening monetary policy.

The tech-rich Nasdaq led the market lower, slumping 2.1 percent as highflyers such as Amazon and Apple lost around two percent or more.

Facebook sank nearly five precent, weighed down by a major outage on its services as well as heightening scrutiny of its operations after whistleblower Frances Haugen told television news show “60 Minutes” the company repeatedly chose “profit over safety” in managing the omnipresent social media company.

 

Evergrande Worries

In Asia, shares mostly rose, but Hong Kong sank on fears about troubled property giant China Evergrande, which suspended trading in its shares.

The crisis at Evergrande, which is drowning in a sea of debt worth more than $300 billion, has roiled markets in recent weeks on fears that its failure could spill over into the wider Chinese economy and possibly further.

The firm said in a statement that the halt in the trading of its shares was called, “pending the release by the company of an announcement containing inside information about a major transaction”.

The news came as reports said Hopson Development Holdings planned to buy a 51-percent stake in its property services arm.

However, traders remain concerned Evergrande will miss payments on bond obligations, putting it in default.

Hong Kong stocks, already under pressure owing to concerns about China’s crackdown on a range of industries including tech firms and casinos, sank more than two percent.

Tokyo fell 1.1 percent — a sixth straight loss — while Taipei was also in negative territory.

– Key figures around 2050 GMT –

Brent North Sea crude: UP 2.5 percent at $81.26 per barrel

West Texas Intermediate: UP 2.3 percent at $77.62 per barrel

New York – Dow: DOWN 0.9 percent at 34,002.92 (close)

New York – S&P 500: DOWN 1.3 percent at 4,300.46 (close)

New York – Nasdaq: DOWN 2.1 percent at 14,255.48 (close)

London – FTSE 100: DOWN 0.2 percent at 7,011.01 (close)

Frankfurt – DAX: DOWN 0.8 at 15,036.55 (close)

Paris – CAC 40: DOWN 0.6 percent at 6,477.66 (close)

EURO STOXX 50: DOWN 1.0 percent at 3,996.41 (close)

Tokyo – Nikkei 225: DOWN 1.1 percent at 28,444.89 (close)

Hong Kong – Hang Seng Index: DOWN 2.2 percent at 24,036.37 (close)

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.1623 from $1.1596 at 2100 GMT on Friday

Pound/dollar: UP at $1.3608 from $1.3546

Euro/pound: DOWN at 85.37 pence from 85.60 pence

Dollar/yen: DOWN at 110.93 yen from 111.05 yen.

AFP

US Oil Price Collapses To $0.01/Barrel

Indigenous Firms Plan To Increase Oil Output

 

The US benchmark crude oil price collapsed on Monday, falling to one cent a barrel amid an epic supply glut caused largely by the coronavirus pandemic’s hit to demand.

After beating the record low multiple times, West Texas Intermediate (WTI) for May delivery continued to sink to the unheard of price of a penny a barrel, before inching up to $0.27 at about 1815 GMT in New York.

Sellers of the May contract have just one more day to find buyers, but with storage in short supply, they are struggling to find takers.

The WTI contract for June delivery is trading at a still-low $22 a barrel.

AFP

Oil Pushes Higher, But There Are Doubts About Output Cut Deal

(FILES) This file photo taken on September 20, 2019 shows employees of Aramco oil company working in Saudi Arabia’s Abqaiq oil processing plant. Saudi Aramco shares hit the lowest level since their market debut today, as Gulf bourses were hit by a panicky sell-off amid Iranian vows of retaliation over the US killing of a top general. Fayez Nureldine / AFP

 

Oil prices rose Monday after top producers agreed to massive output cuts, but gains were capped as doubts grew about whether the move was enough to stabilise coronavirus-ravaged energy markets.

US benchmark West Texas Intermediate was up about five percent at $23.94 a barrel in Asian afternoon trade, after earlier rallying almost eight percent.

Brent crude, the international benchmark, also fell slightly from an earlier strong rally to trade 4.2 percent higher at $32.83 a barrel.

READ ALSO: OPEC Members Except Mexico Agree To Output Cuts

While the rises were healthy, they were limited compared to the double-digit jumps and falls of recent weeks, with analysts concerned there will be still be massive oversupply in the market as the virus pandemic throttles demand.

OPEC producers dominated by Saudi Arabia and allies led by Russia thrashed out a compromise deal Sunday after Mexico had balked at an earlier agreement struck on Friday.

The videoconference summit agreed to a cut of 9.7 million barrels per day from May, according to Mexican Energy Minister Rocio Nahle, down slightly from 10 million barrel reduction envisioned earlier.

OPEC Secretary General Mohammad Barkindo called the cuts “historic” — and the agreement appeared to mark an end to a bitter price war between Riyadh and Moscow.

Oil markets have been in turmoil for weeks as lockdowns and travel restrictions imposed to combat the outbreak batter demand, while the Saudi-Russian row compounded the crisis.

But analysts were left disappointed at a cut that will go nowhere near to making up for the expected demand loss due to the pandemic, forecast at anywhere between 15 and 30 million barrels a day.

Storage tanks worldwide are also rapidly filling up.

“The deal is a little less than the market expected,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, told Bloomberg News.

“The hard work lies ahead given that the market is very sceptical that OPEC+ are actually going to be able to come up with their near 10 million barrels a day of production cuts.”

AxiCorp’s Stephen Innes added: “There remain concerns the agreement could be a day late and a ‘barrel short’ to prevent a decline in prices in the coming weeks as storage capacity brims”.

AFP

G20 Energy Ministers Scramble To Finalise Oil Output Deal

 

(FILES) This file photo taken on September 20, 2019 shows employees of Aramco oil company working in Saudi Arabia’s Abqaiq oil processing plant. Saudi Aramco shares hit the lowest level since their market debut today, as Gulf bourses were hit by a panicky sell-off amid Iranian vows of retaliation over the US killing of a top general. Fayez Nureldine / AFP

 

G20 energy ministers held virtual talks Friday as major oil producers scrambled to finalise output cuts to shore up prices, with Mexico announcing a deal with the United States that could end an impasse.

Mexico was the lone holdout in an OPEC-led agreement reached after marathon overnight talks that would see output slashed by 10 million barrels per day in May and June.

The standoff had cast doubt on efforts to bolster oil prices, pushed to near two-decade lows by the demand-sapping coronavirus pandemic and a Saudi-Russia price war.

The G20 talks, hosted by top exporter Saudi Arabia, are expected to seal the deal more widely with non-OPEC countries in the group including Mexico, the United States and Canada.

Under the OPEC deal, Mexico was expected to cut production by 400,000 barrels per day but the country resisted during the overnight talks and demanded the reduction be limited to 100,000.

Speaking to reporters later Friday, Mexico’s President Andres Manuel Lopez Obrador said he had reached an agreement with his US counterpart Donald Trump to cut production by 100,000 bpd.

He added that Trump had agreed to cut US production by 250,000 bpd “as compensation” for Mexico.

There was no immediate comment from Trump, and it was unclear whether the OPEC oil cartel and its allies would agree to the Mexico-US deal.

The production cut agreement hinges on Mexico’s consent for it to take effect, the Organization of the Petroleum Exporting Countries said early Friday after an hours-long meeting.

Riyadh, which currently holds the G20’s rotating presidency, has said the G20 talks were aimed at ensuring “market stability”.

Russian Energy Minister Alexander Novak urged the G20 ministers to act in a spirit of “partnership and solidarity”, according to a local television station.

“I hope that (the meeting) will help restore some much-needed stability to oil markets,” said Fatih Birol, the head of the International Energy Agency (IEA).

“The extreme volatility we are seeing in oil markets is detrimental to the global economy at a time when we can least afford it.”

– ‘Storm clouds’ –
The deal marked a possible end of the price war between Russia and Saudi Arabia, which Bloomberg News said had agreed to slash output to around 8.5 million bpd.

The impact of the cuts on prices was not immediately clear as the global oil markets were shut on Friday for the Easter weekend.

But Stephen Innes, an analyst at AxiCorp, said the supply cuts were “less than the market hoped for” given the hit to demand from coronavirus lockdowns throughout the world.

“The deal currently tabled will only partially offset oil price distress, but that’s what it was supposed to do. Still, the storm clouds for oil prices will only completely dissipate when lockdowns are lifted,” he said.

Rystad Energy also said the cuts were not enough to restore market equilibrium.

“The proposed 10 million bpd cut by OPEC+ for May and June will keep the world from physically testing the limits of storage capacity and save prices from falling into a deep abyss, but it will still not restore the desired market balance,” the energy research firm said.

– ‘Hemorrhaging’ industry –
Oil prices have slumped since the beginning of the year due to the COVID-19 pandemic.

“Our industry is hemorrhaging; no-one has been able to stem the bleeding,” OPEC Secretary General Mohammad Barkindo said ahead of the OPEC-led meeting, bemoaning companies already filing for bankruptcy and the tens of thousands of jobs that have been lost.

Compounding the problem, Riyadh and Moscow had both ramped up output in a bid to hold on to market share and undercut US shale producers.

While the US is not in the OPEC or OPEC+ groups, it is supportive of a reduction in supply in order to stabilise prices and breathe new life into its shale industry.

Trump had expressed optimism about the prospects for an agreement — even as the talks appeared to be at an impasse.

Fresh from a conference call with Russian President Vladimir Putin and Saudi leader Crown Prince Mohammed bin Salman, Trump told a press briefing at the White House Thursday that a deal was “close”.

Shale has transformed the US into the world’s top producer, but the industry cannot sustain its high cost base as prices collapse.

Yet the US oil sector appears reluctant to trim production, having extracted a near-record 13 mbpd in the final week of March. This fell to 12.4 mbpd last week.

At the same time, the global supply glut — already weighing on oil markets before the coronavirus crisis — has stretched oil storage capacity to its limits, forcing many producers to scale back output.

Top Oil Producers To Consider Fresh Cuts As Trade War Hits Prices

Indigenous Firms Plan To Increase Oil Output

 

Top oil producers will consider fresh output cuts at a meeting this week, but analysts are doubtful they will succeed in bolstering crude prices dented by the US-China trade war.

The OPEC petroleum exporters’ cartel and key non-OPEC members want to halt a slide in prices that has continued despite previous production cuts and US sanctions that have squeezed supply from Iran and Venezuela.

Analysts say the OPEC+ group’s Joint Ministerial Monitoring Committee, which monitors a supply cut deal reached last year, has limited options when it meets in Abu Dhabi on Thursday.

UAE Energy Minister Suheil al-Mazrouei said on Sunday the group would do “whatever necessary” to rebalance the crude market, but admitted that the issue was not entirely in the hands of the world’s top producers.

Speaking at a press conference in Abu Dhabi ahead of the World Energy Congress, to start Monday, he said the oil market is no longer governed by supply and demand but is being influenced more by US-China trade tensions and geopolitical factors.

The minister said that although further cuts will be considered at Thursday’s meeting, they may not be the best way to boost declining prices.

“Anything that the group sees that will balance the market, we are committed to discuss it and hopefully go and do whatever necessary,” he said.

“But I wouldn’t suggest to jump to cuts every time that we have an issue on trade tensions.”

While cuts could help prices, they could also mean producers lose further market share, analysts say.

“OPEC has traditionally resorted to production cuts in order to shore up the prices,” said M. R. Raghu, head of research at Kuwait Financial Centre (Markaz).

“However, this has come at the cost of reduction in OPEC’s global crude market share from a peak of 35 percent in 2012 to 30 percent as of July 2019,” he told AFP.

The 24-nation OPEC+ group, dominated by the cartel’s kingpin Saudi Arabia and non-OPEC production giant Russia, agreed to reduce output in December 2018.

That came as a faltering global economy and a boom in US shale oil threatened to create a global glut in supply.

Previous supply cuts have mostly succeeded in bolstering prices.

But this time, the market has continued to slide — even after OPEC+ agreed in June to extend by nine months an earlier deal slashing output by 1.2 million barrels per day (bpd).

Trade war

The new factor is the trade dispute between the world’s two biggest economies, whose tit-for-tat tariffs have created fears of a global recession that will undermine demand for oil.

Saudi economist Fadhl al-Bouenain said the oil market has become “highly sensitive to the US-China trade war”.

“What is happening to oil prices is outside the control of OPEC and certainly stronger than its capability,” Bouenain told AFP.

“Accordingly, I think OPEC+ will not resort to new production cuts” because that would further blunt the group’s already shrunken market share, he said.

European benchmark Brent was selling at $61.54 per barrel Friday, in contrast with more than $75 this time last year but up from around $50 at the end of December 2018.

The deliberations also coincide with stymied production from Iran and Venezuela and slower growth in US output, meaning that supplies are not excessively high.

“US shale output growth does not have the same momentum as in previous cycles, and OPEC production is at a 15-year low, having fallen by 2.7 million barrels per day over the past nine months,” Standard Chartered said in a commentary last month.

“We think that the oil policy options for key producers are limited, for the moment,” the investment bank said.

No decisions will be taken at Thursday’s meeting, but it should produce recommendations ahead of an OPEC+ ministerial meeting in Vienna in December.

Rapidan Energy Group said the alliance might need to cut output by an additional one million bpd to stabilise the market.

But the problem will be deciding which member countries will shoulder the burden of any new cuts.

Saudi Arabia, which is the de facto leader of OPEC and pumps about a third of the cartel’s oil, took on more than its fair share last time around.

It has also undergone a major shake-up in its oil sector, announcing the replacement of energy minister Khalid al-Falih with Prince Abdulaziz bin Salman in the early hours of Sunday morning ahead of a much-anticipated stock listing of state oil giant Aramco.

Bouenain said he believes that Riyadh is likely to resist taking on further cuts, given the impact on the kingdom’s revenues.

Raghu said that “without a favourable resolution to the dispute, OPEC’s production cuts will not result in a sizeable uptick of oil prices.”

AFP

Trump Thanks Saudi Arabia For Lower Oil Prices

n this file photo taken on May 20, 2017, US President Donald Trump (R) and Saudi Deputy Crown Prince Mohammad bin Salman al-Saud take part in a bilateral meeting in Riyadh. Trump on November 21, 2018, thanked Saudi Arabia for lower oil prices — a day after pledging the US would remain a “steadfast partner” of the kingdom despite the murder of a prominent journalist. “Oil prices getting lower.  MANDEL NGAN / AFP

US President Donald Trump thanked Saudi Arabia on Wednesday for lower oil prices — a day after pledging the US would remain a “steadfast partner” of the kingdom despite the murder of a dissident journalist.

“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82,” he tweeted.

“Thank you to Saudi Arabia, but let’s go lower!”

The remarks came a day after Trump linked his decision to continue backing the petro-state — despite Crown Prince Mohammed bin Salman’s alleged involvement Jamal Khashoggi’s death — to his desire to keep oil prices low.

“If we broke with them, I think your oil prices would go through the roof. I’ve kept them down,” he told reporters at the White House.

“They’ve helped me keep them down. Right now we have low oil prices, or relatively.”

Oil recovered slightly on Wednesday after slumping more than six percent, with traders fretting that Saudi Arabia may not deliver on planned production cuts.

Trump’s support for Riyadh has been taken by some observers as a move to prevent them from lowering output at the December meeting of OPEC and non-OPEC members.

The gruesome murder of Khashoggi, a US resident and Washington Post columnist who vanished after being lured into the Saudi consulate in Istanbul on October 2, has hugely embarrassed Washington.

The killing torpedoed a PR campaign led by the crown prince to show that the conservative Islamic state has embarked on a new reformist path.

“The United States intends to remain a steadfast partner of Saudi Arabia to ensure the interests of our country, Israel and all other partners in the region,” Trump said in an earlier statement on Tuesday.

AFP

Oil Price Jumps To Four-Year High, Nears $81

Brent oil soared Monday close to $81, reaching the highest level since November 2014 after OPEC and other global producers snubbed pressure from US President Donald Trump to dampen prices.

At 0840 GMT, Brent North Sea crude for delivery in November soared to a peak of $80.94 per barrel. That was the highest level since November 12, 2014.

The benchmark Brent contract later stood at $80.85, up $2.05 from Friday’s close.

New York’s main contract, West Texas Intermediate (WTI) or light sweet crude for delivery in November, added $1.52 to $72.30 after earlier striking a two-month pinnacle.

Oil leaped after the world’s top producers decided to maintain output during a meeting in Algeria at the weekend.

A committee comprised of the Organization of the Petroleum Exporting Countries (OPEC) cartel and non-OPEC producers said it was satisfied with the current market outlook, which represented “an overall healthy balance between supply and demand”.

However, Saudi Arabia’s influential oil minister Khalid al-Falih left the way open to a future production hike, as supplies tighten due to the US imposing sanctions on Iranian oil from November this year.

“Saudi Arabia and Russia confirmed that they not raising output — and this is bad news for President Trump as he wants a lower oil price that is good for business,” said CMC Markets David Madden.

“Last week, Mr. Trump verbally attacked OPEC and some traders thought we might see an increase in supply from the United States’ Middle Eastern allies.

“The Algiers meeting did not bring about an increase in output — and that is fuelling the rally.

“Fears that supply will be hit when the US sanctions on Iran kick in come November are pushing up oil prices.”

OPEC in December 2016 concluded an agreement with non-member states — including Russia — to reduce output in order to arrest sliding prices.

Sunday’s meeting in Algiers brought together OPEC oil ministers and non-OPEC signatories to the 2016 agreement, as they seek to extend their cooperation.

Trump has repeatedly called for a hike in production by countries other than Iran to reduce oil prices.

AFP

National Economic Council Approves FG’s Strategies To End Recession

Adeosun, GovernorsThe National Economic Council has approved President Muhammadu Buhari’s strategies to pull the economy out of recession.

This was done during its meeting in Abuja, chaired by the Vice President, Professor Yemi Osinbajo.

The council of ministers and governors debriefed the Finance Minister, Mrs. Kemi Adeosun and the Minister of Budget and National Planning, Mr Udoma Udo Udoma as well as the CBN Governor, Godwin Emefiele on the strategies to take the country out of the woods.

Briefing State House correspondents after the closed-door meeting, the Deputy Governor of Ogun State, Yetunde Onanuga, said that the Central Bank would henceforth adopt best options to manage the situation.

Other areas of urgent intervention were also agreed upon by the council to immediately inject larger funds into the economy, including meaningful diversification and more stringent importation cuts.

Intervention of affordable housing was also among urgent issues discussed, which the council said a target of one billion naira fund has been set up to create a blended pool of long term funds for housing development finance and mortgage provision aimed at delivering 500,000 housing units annually.

The council commended members of the National Economic Team for their diligence and hard work.

The council’s declaration comes barely 24 hours after the Deputy Senate President, Ike Ekweremadu, asked President Muhammadu Buhari to reshuffle his cabinet and redeploy the Minister of Finance and the Minister of Budget and National Planning from their present ministries.

Senate-Ike-Ekweremadu
Deputy Senate President, Ike Ekweremadu

As the Senate began debate on the state of the economy on Wednesday, Ekweremadu said that he was not impressed with the performance of the two ministers and believes they would perform better in other ministries.

Nigeria’s economy had slipped into recession after a report of the National Bureau of Statistics showed that the nation’s GDP contracted by 2.06% in the second quarter of 2016.

The report came just as militant activities have resurged in the Niger Delta, causing the revenue of the nation which comes largely from crude oil sales to drop.

The price of crude, which had dropped in the international market, already taking its toll on the nation’s economy was compounded by the attacks on oil installations in the Niger Delta.

Negative Growth Since 2012
The Minister of Finance, Mrs Kemi Adeosun, had recently said that the country had been in negative growth since 2012 with the hope that it would avoid recession but since the reality of the recession has dawned on the nation, the government was prepared to address it.

Kemi-Adeosun-Minister-of-Finance-Nigeria-on-Economy
Minister of Finance, Mrs. Kemi Adeosun

She said that the tactical plan of the Nigerian government to address its economic challenges would not change in spite of the official confirmation that the country had gone into a recession.

Mrs Adeosun was the guest of Channels TV’s breakfast programme, Sunrise Daily on Tuesday, September 20, where she explained that the solution to Nigeria’s problem remained the same from years past.

“Our plans haven’t changed. We need to stimulate the economy and we are going to do so largely by redirecting expenditure from recurrent into capital because we believe that capital expenditure will create jobs and create more productivity in the economy in the long run and help us to diversify,” she said.

She maintained that getting out of recession remains dependent on how productive the economy becomes as well as how well it can create jobs. “we’ve got to invest in our capital infrastructure,” she said.

Set To Inject Funds
The Minister had few days earlier said that the government was set to inject an additional 350 billion Naira ($1.1 billion) into the economy and raise $1 billion from Euro-bonds by mid-December to ease the recession.

She had told reporters in Abuja that the additional funding, on top of the initial 420 billion Naira released in May, was primarily for capital expenditure projects that would also involve support from local banks and transaction partners.

“We are raising money. As you know the Euro-bond capital raise is on.

Udoma-Udoma
Minister of Budget and National Planning, Mr Udoma Udo Udoma

“We are about to appoint advisers so we we will be raising additional $1 billion.

“Two weeks ago we approved the external borrowing plan and that was very important,” the Minister said.

While local investors feel neglected despite being in greater majority than the foreign investors for which the government is looking to attract back to Nigeria, the Minister for Budget, Senator Udoma Udoma, had reassuring words.

“We are determined to make it easier to do business in Nigeria and we believe that, working together with the private sector, we must surely transform this economy,” he told businessmen during a quarterly business briefing at the Presidential Villa with private sector stakeholders.

Ending Recession: Our Strategy Has Not Changed – Adeosun

Kemi adeosun, recession, Finance Minister, CBNThe Minister of Finance, Mrs Kemi Adeosun, says the tactical plan of the Nigerian government to address its economic challenges has not changed in spite of the official confirmation that the country had gone into a recession.

Mrs Adeosun was the guest of Channels TV’s breakfast programme, Sunrise Daily on Tuesday, September 20, where the conversation centered on the state of the Nigerian economy.

She recalled that the country had been in negative growth since 2012 with the hope that it would avoid recession but since the reality of the recession has dawned on the nation, the government is prepared to address it.

“Our plans haven’t changed. We need to stimulate the economy and we are going to do so largely by redirecting expenditure from recurrent into capital because we believe that capital expenditure will create jobs and create more productivity in the economy in the long run and help us to diversify,” she said.

The Finance Minister noted that the solution to Nigeria’s problem has been the same and getting out of recession remains dependent on how productive the economy becomes as well as how well it can create jobs.

“To do so, we’ve got to invest in our capital infrastructure,” she maintained.

Emergency Powers

There have been talks about the executive arm of government sending a bill to the legislature seeking executive powers for the President to help drag the economy out of recession and Mrs Adeosun explained the rationale behind the bill.

She said: “There are a number of bottlenecks that we have already identified and which we think that given where we are, it might be worthy looking at how to unlock them.

“For example, we have pumped a fairly large amount of capital into the economy through various ministries, departments and agencies, some of whom have deployed it very quickly and are ready for more and we are about to release another tranche of 350 billion.

“But there are some ministries that have been slowed down by the procurement processes. It is about transparency versus speed. We want open tenders because that gives us the best price and that is what also gives opportunities to Nigerians to bid for and to get government contracts.

“If it is taking four to 16 weeks to get through the bureaucracy, at this point in time we think we can’t afford those delays. So we need to say ‘look, procurement laws are made for usual times and these are unusual times, can we look at relaxing some of the condition?’

“Similarly there is a transaction we are working on at the moment which is a very pivotal transaction with General Electric – they want to run freight on our own rail system which will create huge number of jobs across the country.

“But it’s bogged down in rules that say you’ve got to do this and that you’ve got to advertise and keep it up for a while. We don’t have that time.

“So there are some areas where I think it would be useful to have some legislative amendments.”

The Worst Is Over

The Minister also agreed with an earlier statement by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele that the worst of the recession was over.

She explained that the level of problems that the economy has had to deal with  – ranging from the drop in oil price to the Niger Delta crisis that led to drop in oil production quantity are indeed the worst that could only have been imagined.

“So our worst case scenario in terms of our planning has already happened and I think that is probably what he was trying to say.

“From now on, the only way really is up. The only way is recovery, the only way is forward,” she assured Nigerians.

Low Interest Rates

As Nigerians await the outcome of the Central Bank’s Monetary Policy Committee (MPC) meeting, the Minister of Finance hoped that the committee would lower key interest rates.

Mrs Adeosun believes that this will help stimulate the economy, especially as the government plans to boost the economy without increasing debt servicing costs.

At the last committee meeting in July, the benchmark Monetary Policy Rate was raised from 12 percent, to 14 percent, while the Cash Reserve Ratio and Liquidity Ratio were both retained, at 22.50 per cent and 30 per cent each.

The CBN is also expected to give an update on new flexible forex market.

FG To Diversify Nigeria’s Revenue Base

Kemi AdeosunFinance Minister, Kemi Adeosun says the main economic strategy of the Buhari administration is to reset the Nigerian economy to have a more diverse revenue base and to cut wastage in government’s spending.

She was the guest of Channels Television’s Sunrise Daily on Thursday where she provided answers to several question bordering on the management of the country’s economy and plans to solve its current economic challenges.

She reaffirmed an earlier statement by President Muhammadu Buhari that the government inherited an empty treasury, in addition to a high debt profile and these have made things difficult.

She said that the previous administrations in Nigeria failed to build savings while the country enjoyed massive revenue from high price of oil globally and this put the country in a tight condition when the oil price fell.

She noted that Nigeria’s sole dependence on oil made the impact much tougher on the economy and the citizens.

“What we are now trying to do is reset the economy so that we never end up in this situation again; and how do we do that? We have to have a more diversified economy, a more diversified revenue base.

“If you look at oil, its only 13% of our GDP but it represent 70% of government’s revenue which means if anything happens to oil, it affects everybody.

“The question we are trying to now resolve is; the remaining 87% of GDP, why is it contributing so little to government’s revenue? If we are able to have those other revenues which are much more stable, predictable and less volatile, then if the oil price goes down, we’ll be able to maintain some level of stability.”

Another area the government is looking at is to ensure that when monies are spent, they are spent effectively.

“We have looked at what government has been spending money on; only 10% was spent on capital while 90% was spent on recurrent items like salaries, traveling, training and so on and those things don’t grow the economy, capital (expenditure) is what grows your economy.

“This budget that is being finalized has a 30% commitment to capital and we have said we want to maintain that commitment,” she said.

She mentioned power generation, roads, rail, housing as some of the areas where the capital expenditure would cover as these are the core areas that create jobs and empower the citizens to develop the economy.

She also spoke about efforts to encourage governors to replicate these measures in their states.

Nigeria’s Forex Reserve Rises By $40 million       

Forex ReservesNigeria’s forex reserve rose by 40 million dollars in March on a 30-day moving average basis to 27.9 billion dollars.

This is on the back of oil price climb to 40 dollars a barrel.

In an analyst note released on Tuesday by the investment bank FBN Quest, the modest increase in the reserve was also attributed to the government’s plugging of leakages in revenue and finances.

During the month under review, Central Bank’s foreign currency sales remain unchanged at 200 million per week to commercial banks while importers were also surveyed to have cut back on orders, adopting a realistic position on forex supply at the Central Bank.

Fuel Scarcity Hits Nigerian States

Fuel ScarcityQueues for the purchase of fuel have continued to emerge at various fuel stations across Nigeria, with intending buyers wasting hours at different fuel stations.

Many commuters spent many hours waiting on Monday. Some five hours others over eight hours.

When Channels Television crew visited some petrol stations across the oil rich nation, the queues continued to mount and some operators, who spoke off-camera, could not explain the cause of the fuel scarcity.

An attendant at a filling station in Bariga, Lagos, told Channels Television’s crew that the station had not sold petrol for the past three days, as tanks were dry and queues were mounting because they could not load products from the depot after exhausting the ones they had in their reserve.

Some of the petrol stations have increased their pump price from the official price of 87 Naira per litre to 100 Naira and above.

This move has attributed to higher cost of the product at the Nigerian National Petroleum Corporation’s depot.

The fuel scarcity has begun to inflict pain on motorists, and commuters who are sometimes left stranded at major bus stops and motor parks, while fares have been increased to some destinations. In most cases, fare has doubled.

In the meantime, the NNPC has asked members of the public not to engage in panic buying, as the corporation was working with all downstream industry stakeholders to eliminate the noticeable artificially induced fuel queues in some fuel stations.

On February 27, the NNPC said it added 688 million litres of petrol in the market to cushion the artificial scarcity witnessed in some states.

The corporation’s spokesman, Mr Ohi Alegbe, in a statement, said panic buying might be the reason for the artificial fuel scarcity.