Nigeria Content Online

President
Goodluck Jonathan has said that the launch of the gas project will
result in a foreign direct investment of about $10 billion over the
next three years.

He
also said when fully implemented, the entire gas master-plan agenda
will result in $25 billion worth of investments in gas processing,
transmission, and downstream gas utilisation projects, positioning the
country as the regional hub for gas-based industries on fertilizer,
petrochemical, and methanol manufacturing.

Speaking
at the launch of the project with the theme ‘Gas Revolution – the
Rebirth of Nigeria’s Industrialization’ at the banquet hall of the
presidential villa yesterday, Mr. Jonathan said the initiative will
result in 500,000 other direct and indirect jobs that involve
logistics, construction, tourism, and agriculture by 2014.

Beyond
the quantum of foreign direct investment, the president said the
economic impact of this agenda will be enormous in terms of employment
and wealth creation, estimating over 100,000 engineering design and
construction-related jobs will be created from about 2012 and beyond to
deliver all these plants.

Multiplier effect

“The
focus is to catalyze a major industrialisation of the country by
seeding in a few anchor investments that have the highest potential to
have far reaching secondary multiplier effect on the economy.

“The
investment being launched today will result in foreign direct
investment of about 410 billion over the next 3 years. The full
implementation of the entire gas master-plan agenda will result in
about $25 billion worth of investments in gas processing, transmission,
and downstream gas utilization projects,” Mr. Jonathan said.

He
also said the full application of the National Content Law means that
another significant portion of jobs will be created for the Nigerian
teeming population.

“Full
application of the National Content Law means that as we stimulate
these opportunities, a significant portion of the jobs created will be
for Nigerians. When we are done, we hope to have created a Nigeria that
we all would be proud of, a nation in which our youth can clearly see
the roadmap to engagement and self-worth as they get gainfully
employed. This is not just a plan, this is now in action,” he said.

More food

The
president disclosed that more food will be produced affordably and a
huge portion for export with the establishment of fertilizer industries
According to him, the revolution is coming with the replacement of the
use of kerosene and fire woods with LPG (Liquified Petroleum Gas) for
household cooking’s and work towards the elimination of gas flaring
that has been wasted in several years past.

“We
can only be successful if our actions impact on the common man in
Nigeria. The agricultural revolution arising from the fertilizer and
blending plants will create affordable food for Nigerians and a lot
more for export.

“The
LPG agenda will touch the lives of many households, as cheaper and
cleaner LPG displaces kerosene. The disposable income that arises from
the savings will result in the purchase of more goods and services,
boosting GDP,” Mr. Jonathan said.

The
minister of petroleum, Diezani Madueke, said the gas-based industries
refers to only those who utilise gas not fuel, as feedstock. These
include fertilizer, petrochemicals, and methanol.

Nigerian crude oil
grades hovered below two-and-a-half year highs on Wednesday, with
traders adding that the initial rush to buy substitutes for lost Libyan
exports is over. “I think the Libyan shortfall is now fully priced into
Nigerian grades and I see no reason for any upside,” said an oil
trader, with a focus in West Africa. Demand for Nigerian volumes has
been strong because these light, sweet grades are among the best global
substitutes for Libyan exports. Nigerian oil exports are set to fall
slightly to around 2.03 million barrels per day (bpd) in May from a
planned 2.06 million bpd in April. Some discussion was heard at
premiums of up to $1.20 above official selling prices on some grades.
Nigeria raised the official selling price on its benchmark Bonny Light
and Qua Iboe grades to $3.40 a barrel above dated Brent. The Brent
Crude closed yesterday at $115.61 per barrel.

The Egyptian pound traded as weak as 5.9605 to the U.S. dollar on Thursday, its lowest level since January 2005.

Bankers expect the
currency to come under pressure in the coming days as foreign investors
sell shares on the Egyptian stock exchange, which reopened yesterday
after political unrest kept it closed for more than seven weeks.

The value of equities at the Nigerian Stock Exchange (NSE) yesterday rebounded appreciably after negative performances.

The NSE market
capitalisation of the 194 First-Tier equities closed on Wednesday at
N8.077 trillion, after opening the day at N7.983 trillion, reflecting
1.18 per cent or N94 billion gains. The market had last week plunged to
N7.775 trillion due to low investors’ confidence, resulting in high
selling pressure.

Analysts at GTI
Capital, a stock broking firm, attributed the significant growth to
“the release of financial statements of some highly capitalised banks
which stimulated massive bids by investors on bank subsector,” adding
that the move has “created positive effects on the market in general.”

They said the
market should further rebound from its current position if other banks
start reporting positive financial results during this quarter.

Gainers increase

A total of 45
stocks appreciated in price on Wednesday, higher than the 43 recorded
the previous day, while 18 stocks depreciated in value higher than the
15 of Wednesday.

Associated Bus
Company and Vitafoam Nigeria topped the price gainers’ table with an
increase of 5 per cent each, to close at 63 kobo and N5.25 per share,
respectively. Dangote Flour and Stanbic IBTC Bank followed in the chart
with an increase of N4.98 each, to close at N17.48 and N9.27 per share.

On the flip side,
Evans Medical and C & I Leasing led on the price losers’ chart with
a loss of 5 per cent and 4.96 per cent respectively, to close at N1.14
and N1.34 per share. Costain West Africa and Avon Crowncaps followed
with a decrease of 4.94 and 4.92 per cent, to close at N5.96 and N6.57
per share.

Banks maintain lead

The Banking
subsector maintained its lead as the most active with 203.101 million
quantities of shares, valued at N1.665 billion. The subsector’s volume
was largely driven by shares of Unity Bank, Guaranty Trust Bank, First
Bank, and Access Bank.

Trading activities
in the Insurance subsector was second highest yesterday, with 18.394
million shares valued at N20.011 million. Volume in the subsector was
boosted by deals in shares of Unity Kapital Assurance, Continental
Reinsurance, and Custodian and Allied Insurance.

The Conglomerates
subsector was third with 13.903 million shares valued at N225.985
million. Transnational Corporation, PZ Cussons Nigeria, and Unilever
Nigeria boosted volume in the subsector yesterday.

Meanwhile, the Council of NSE recently promoted 26 members of staff
to a new level. Wole Tokede, spokesperson of the NSE, said, “The
promotion exercise shows that four senior managers were promoted to the
position of principal managers.”

Kenya expects
overall spending in 2011/12 and its budget deficit to narrow from last
year and for development expenditure to rise, its finance minister said
on Wednesday.

Overall spending is
seen at 975.8 billion shillings in 2011/12, or 31.7 per cent of Gross
Domestic Product (GDP), from a revised 883.9 billion shillings this
year, equivalent to 32.7 per cent of GDP.

Private sector
operators have faulted the claim of the Federal Government that the
country’s economy has experienced growth in the last two years.

The operators, who
were reacting to the minister of national planning, Shamsudeen Usman’s
declaration that Nigeria has moved 10 steps upwards in world’s
development, said that this has not translated to improvement of the
lives of the average Nigerian.

David Iweta, the
president of Warri Chamber of Commerce, Industry, Mines and
Agriculture, described the growth as “artificial”, saying that it has
not translated into the real sector, creating more employment
opportunities.

The prices of some
essential commodities such as sugar and cooking oil have shot up in
Kano, a survey by the News Agency of Nigeria has shown.

The survey at
various markets in the metropolis on Wednesday, showed that the price
of sugar and cooking oil recorded significant increases over the past
three months.

A bag of Dangote
sugar, which sold for N8,500 few months ago, costs N11, 500, while a
bag of BUA sugar sells for N11,000 as against N8,000.

The price of a
20-litre container of groundnut oil, increased to N6,500 from N5,500,
just as a 25-litre jerrycan of palm oil shot up to N5,500 from the
initial N3,700.

The recent public
presentation of the book, ‘The Ogbunigwe Fame’ by Felix Oragwu brought
up memories of the technological innovations that kept the Biafran
dream alive from 1967 to 1970.

During the vicious
civil war, Biafra was blockaded and starved of access to resources
ranging from domestic goods to industrial products. Necessity thrust
upon Biafra the need to innovate and to create. It was in this mode
that the nascent nation built and ran crude oil refineries and also
produced missiles or bombs, then known as ‘ogbunigwe’ or ‘Ojukwu
buckets’. These efforts were driven by the inescapable urge for
survival.

In the past few
years, there has been an emergence of what many term ‘bush refineries’
in the oil fields of the Niger Delta. These are spots in the swamps and
creeks where local people, mostly youth, produce petroleum products
using crude oil obtained from either already leaking pipelines or from
spots broken into by crude oil thieves.

These refineries
pose serious health hazards to their operators as they have no clue
about the toxic nature of the products and do not have any sort of
protective clothes, boots, or gloves. These young folks bear the
extreme heat from the flames of the belching dragons in order to
produce litres of semi-refined products that pose additional threats to
the end users.

Many deaths related
to kerosene explosions have been recorded and these may have resulted
from the use of the uncontrolled products from these contraptions. The
dire poverty in the oil region is often cited as justification for the
existence of these bush refineries.

Regrettably, the
response from the government, as well as from the political parties
seeking control of the federal government after next month’s elections,
is nothing beyond the provision of physical infrastructures in the
region. While these are essential, the most urgent need of the region,
and indeed the entire nation, is the detoxification of our environment.

As we have often
argued, the average Nigerian will take care of her basic needs if the
physical environment supports her livelihood-generation efforts. This
means that the urgent first step is an audit of the environmental
situation of the region, as could possibly be exemplified by the
current study of Ogoni by the United Nations Environmental Programme
(UNEP).

A factor that could
be perpetuating the bush refineries is the dislocation of the social
infrastructure of the region. This includes the loss of communality,
the rise of individualism, and the deep corruption that has been
entrenched by key players in the oil industry sector. These systemic
ruptures must be structurally addressed.

We cannot ignore
the efforts of security agencies in combating the menace of the illegal
refineries. But merely combat posturing only gives the trigger-happy
security men cover for extortion and further human rights abuses of an
already traumatised people.

However, it must be
acknowledged that the continued operation of these bush refineries is a
disservice to the local people and a huge shame to the government.

‘Ghost’ bush refineries

Going by figures
from the Joint Military Taskforce operating in the Niger Delta,
hundreds of these bush refineries have been destroyed. By mid-December
2009, the JTF reported that there were over 1000 “illegal refineries”
in the Niger Delta and that within two months to that time they had
destroyed 600 of the refineries in different parts of the region.

Sarkin Bello, the
General who commanded the JTF at that time, made an important point
that just as other ills had started in one part of the nation and
spread to other parts, there was a chance that such refineries may pop
up in other areas of the country – especially those through which oil
pipelines passed.

Months later, Mr.
Bello bemoaned the resurgence of the bush refineries, as was widely
reported in the mass media. It was not exactly surprising when a
fortnight ago, the JTF announced that they had detected 500 bush
refineries in the Mbiama area on the border between Rivers and Bayelsa
States.

It was not
surprising because the refineries have been operating more or less
brazenly, with law enforcement agents sometimes accused of exacting
tolls or illegal taxes from the operators. So they probably destroyed
600 in 2009 and the ghosts of the levelled plants resurrected soon as
the security agents left the scene. These bush refineries are huge
tourist attractions for foreign journalists and you do not need a space
rocket to gain access to their locations.

We have heard some
politicians claim that the bush refineries cannot be eliminated because
the youth cannot find alternative avenues of employment. Quite
specious, that form of reasoning. It is illustrative of the ineptitude
of persons in power who ought to provide employment and keep people
away from practices that are harmful to them, the environment, and the
economy.

There are untold
dangers related to operating these bush refineries. The poor youth who
work these refineries, covered in crude, standing in the searing heat
and continually inhaling toxic elements can hardly be in a position to
enjoy the fruits of their labour. These refineries may put some kobo in
their pockets, but they are essentially condemned to poor health and
truncated lives.

It is a shame that
a government that trumpets amnesty for people who took up arms against
state structures would not consider extending the same largesse to
these poor lads who are killing themselves. Could they not benefit from
some technical education and other benefits extended to the militants?

A point that we
must underscore is the fact that despite the large number of these bush
refineries and the fact that they refine products that are illegally
obtained, their operations do not lead to a reduction of the crude oil
output of Nigeria. Why is this? It is simple to see.

Large-scale illegal
bunkering with international dimensions has gone on unchecked for
decades and many top guns obviously benefit from it. The large-scale
crude oil theft in Nigeria has gone on alongside the continual meeting
of the production quota of the nation.

The bush refiners
may have been inspired by the fact that between the oil wells and the
export terminals is a bottomless pit in which thievery is highly
rewarded. Efforts at halting the petty stealing for bush refining will
not be successful if the cancer of mass oil theft by the high and
mighty is not tackled.

In its bid to
diversify Nigeria’s foreign reserve base, the Central Bank of Nigeria
(CBN) has begun training of staff and operators in trading in the
Chinese Yuan.

Lamido Sanusi, CBN
governor, has always made a case for diversifying the country’s foreign
exchange reserve, with a small shift into Asian currencies, in
particular the Chinese Yuan.

“If anything is
changing from a strategic perspective, it is that we’re looking towards
the Asian currencies. If you look at surpluses in China and if you look
at where the RMB (Yuan) is today and the likely future direction of the
Chinese economic policy … we believe some position in RMB would be
good,” he told Reuters last year.

Nigeria’s foreign
exchange reserves, which currently stands at $34.9 billion, is held
more than 80 per cent in US dollars, 10 per cent in Euros, and the rest
in other investments including gold.

Introducing Chinese Yuan

The introduction of
the Chinese Yuan forms part of the CBN strategy to reduce demand for
dollars and thus reduce pressure on the naira. In a circular to
operators on March 7, the CBN offered free training to authorised
currency dealers.

“The Commerz Bank
Representative Office (Nigeria) Limited has offered to train staff of
the CBN and senior level treasury officers of Nigerian banks on the
Chinese Yuan,” the circular stated.

However, some operators are sceptical about how much the introduction of the Yuan would take the pressure off the dollar.

Akin Oladeji,
managing director of Futures and Bonds Limited, a financial advisory
and trading services firm, believes trading in Yuan would deepen the
foreign exchange market.

“As you are aware, Nigeria is gradually becoming a major trading point with Chinese, hence more investment will be encouraged.

“There will be more
volatility in pricing, since the currency trading power will be tied
indirectly by the purchasing power of dollar,” Mr. Oladeji said.

He said demand for the dollar will reduce to the extent of demand for Yuan.

“However, this will not be immediate since there will be lag effect for adjustments to market dynamics,” he further said.

No significant effect

Razia Khan,
regional head of Research, Africa, Global Research, at Standard
Chartered Bank in London, also said the introduction of the Yuan may
not significantly affect the dollar demand on the long run.

“Is the Yuan fully
convertible at the international market? So, the demand for dollar is
not going to be affected by introducing the Yuan,” she said at a news
briefing in Lagos last week.

A currency trader, who did not want to be named, said so far, the CBN has not demonstrated enough willingness to pull it.

“Has CBN told anybody that it is going to sell Yuan at the WDAS? They have never sold anything but dollars at the WDAS.

“So if they make
Yuan an authorised currency doesn’t really mean anything. I am not even
sure the Yuan is fully convertible. It is not a big deal,” he said.

The inflation
numbers for February are in, and they do surprise. Prices, it seems,
are not growing as fast as they did two months ago. According to the
new numbers, consumer prices in the country rose by 11.1% in the year
to February, down from 12.1% in the year to January. Why? The most
basic problem with inflation statistics in the country is its failure
to tell a coherent story.

Before the 12.1% in
January, the Composite Consumer Price Index (CPI) was 11.8% in
December, and 12.8% in November. Try as hard as you may, it is well
nigh impossible to make sense of these movements, still less predict,
on this basis, the inflation trajectory over three months.

In an election
year, there were reasons galore to imagine that government spending was
going to be a major source of pressure on domestic prices. Pork-barrel
politics is almost unavoidable in a democracy as young as ours, and
with its lack of proper political party/electorate connections. The
structure of government spending is an additional consideration. For a
while now, the bulk of it has been on consumption.

So, if government
was going to spend more in an election year, invariably it was going to
do this at a time when its failure to spend money to improvie domestic
productive capacity has limited supply responses across every sector of
the economy. Moreover, did it matter for relative prices in the local
economy that this is a government that has, since coming into office,
made a poor fist of staying within its spending commitments? Maybe!

The new inflation
numbers upend this logic. Strange though this is, it would seem that
government has not spent as much as most commentators had anticipated.
That somehow, its spending has been sufficiently sterilised.
Alternatively, that because domestic prices have become insulated from
government over-spend, and with both consumer spending and business
investment in the doldrums, inflation is well contained.

There is a
different possibility. Monetary policy may just be working a lot better
than we give the process credit for. Beginning at its September 2010
meeting, the Central Bank of Nigeria’s rate setting committee (the
Monetary Policy Committee – MPC) signalled a lower appetite for
inflation when it added 25 basis points to the policy rate to move it
from 6.0% to 6.25%.

This concern with
“continued high inflation rate” was re-visited at the MPC’s November
meeting, where, even though it agreed to keep the policy rate unchanged
at 6.25%, it included “fiscal consolidation and the continuation of
comprehensive economic and structural reforms to remove supply-side
bottlenecks,” as necessary conditions to relieve the build-up of
pressure on domestic prices. January this year, MPC members voted 11 to
1 to put up the policy rate by another 25 basis points. “Perceived
inflation risks in the near term” was again the main worry of the
monetary tightening process.

Giving this effort,
what chance is there that the CBN’s signals may have worked to moderate
the adverse effects of fiscal excesses on domestic prices?

The apex bank
itself will not pretend that it has a firm enough grip on the
relationship between its base rates and domestic prices, that it then
takes comfort from any of this. The best that can still be said is that
by tinkering with its policy rate, the CBN can nudge interbank rates
along certain tracks for some distance.

But by how much it
can do this is still moot. Anyway, the CBN’s efforts cannot matter that
much, given that the industry through which its rate increases ought to
affect domestic prices, has very tenuous linkages with the real economy.

That said, there
are still questions arising from the inflation numbers. The National
Bureau of Statistics indicates that “Average monthly food prices rose
by 2.9% in February 2011 when compared with January 2011 figure. The
level of the Composite Food Index was higher than the corresponding
level a year ago by 12.2%. The average annual rate of rise of the index
was 13.9% for the twelve-month period ending February 2011”.

Thus, prices did
come under pressure, and significantly too. What the new numbers allude
to is that compared with the figure for the corresponding period last
year, domestic prices have not risen as fast.