Nigeria Content Online

The federal government is committed to
provide a conducive legal, social and fiscal environment for the
private sector to invest in the mining sector, with private sector as
key players and attention to be given to the small scale operators.
Minister of Mines and Steel Development, Musa Mohammed Sada, stated
this at the official commissioning of Multiverse Plc, a quarry plant
located in Alagutan village, Abeokuta-Ajebo Road, of Ogun State, at the
weekend. He noted that the availability of mineral resources has
remained a visible feature of the nation’s economy, hence, the arduous
task of mining and transforming them into useful economic values should
be consistently pursued.

More entrepreneurs needed

“Government is
committed to provide a conducive legal, social and fiscal environment
for the private sector to invest in the mining sector, while the
private sector will be the key player, government will pay attention to
the small scale operators,” he said. In view of this, the minister
called for the entrenchment of a broad-based mining culture and the
adoption of a realistic mining strategy whose operational framework is
responsive to the raw-material needs of our economic development. “Such
strategy has provided implementable blue-print in some countries like
China, Ghana and India in the sphere of mineral resources exploitation
and management,” he said. “At this stage of our development, we need
more entrepreneurs to take advantage of the opportunities in the solid
minerals sector.”

The Managing Director of the Multiverse, Ayedun Fasina, said the
commissioning of the 1.2million metric tons per annum ultra-modern
quarry was a dream come true. “We plan to replicate this modern quarry
of 1.2million metric ton per annum in the remaining five geo-political
zones of the country within the next two years,” he said, while
pleading with the federal government to assist in putting in place a
special fund for the mining sector, “which we believe has the same
capacity like the oil sector to contribute significantly to the country
GDP.” He said one of the cardinal objectives of the company is to
generate employment for the teeming youth. “The company has
metamorphosed from one man business to a public quoted company with
over 4,000 shareholders and asset base of N3-7billion within a five
year period,” he said.

Eight
developing economies including Nigeria, Iran and Pakistan aim to reach
a preferential trade agreement by next year to try to double trade and
deepen economic cooperation, government officials said on Thursday.

Heads of state and
ministers from the Developing Eight Countries (D8) — Iran, Nigeria,
Bangladesh, Egypt, Indonesia, Malaysia, Pakistan and Turkey – met in
Nigeria to discuss developing business ties and reducing trade barriers.

“While the role of
government as a catalyst and enabler of economic growth remains
pivotal, the primary driver of this process must be the private
sector,” Nigerian President Goodluck Jonathan told the summit in the
capital Abuja.

Trade between the
member nations of the D8, which was created in 1997 to try to foster
economic cooperation between developing nations, is estimated at around
$68 billion a year, or about three percent of global trade.

Delegates said the
grouping had failed to meet its potential because only Iran and
Malaysia had ratified a trade agreement, the outlines of which were
agreed several years ago. Other nations disagreed on which goods would
be subject to reduced tariffs.

“The trade
statistics among D8 countries may appear positive but this success may
be mainly due to existing bilateral trade initiatives rather than …
the cooperation of the D8 as an organisation,” Malaysian Deputy Prime
Minister Muhyiddin Yassin said.

The main traded
goods within the bloc include petroleum products from Nigeria,
petrochemicals and edible oils from Malaysia, consumer goods, cars and
basic raw materials such as rubber.

“The aim is to
double trade in the next five years,” Abdul Qadir Memon, Pakistan’s
deputy secretary at the commerce ministry, said on the sidelines of the
meeting, attended by Iranian President Mahmoud Ahmadinejad and Turkish
President Abdullah Gul.

“The most important step is the preferential trade agreement which
we are aiming to operationalise by Jan 1, 2011, that is the target date
… We thought that by 2006 we would have been able to implement the
agreement but unfortunately there have been delays,” he said.

The Nigeria National Petroleum Corporation (NNPC) and its
partners, China State Engineering Construction Corporation (CSECC), have
commenced the preliminary design of the proposed Greenfield refinery to be
located in Kogi State.

The Nigerian National Petroleum Corporation (NNPC) led a team of
Chinese investors and engineers to appraise the physical environment of the
proposed location of the refinery and kick start preliminary project design
activities on Thursday.

The Chinese investors, the world’s sixth largest engineering
construction company, and China’s biggest, recently signed a memorandum of
understanding (MOU) with the NNPC to finance about 80 per cent of the $23
billion (about N3.45 trillion) plan to construct three Greenfield refineries in
the country, with combined refining capacity of about 750,000 barrels per day
(bpd).

The CSCEC, an arm of the China National Offshore Oil Corporation
(CNOOC), specialising in the construction of nuclear plants, space rockets,
refineries, petrochemical plants, landmark real estates and airports, will
provide technical expertise to the project.

Adebayo Ibirogba, Group General Manager, Greenfield Refineries
of the NNPC, at the weekend presented the graphic detail of the project to
Ibrahim Idris, the Kogi State governor, during a visit to Lokoja, the state
capital.

Mr Ibirogba in his presentation, said that on completion, the
proposed Greenfield refinery would be integrated with an industrial hydrocarbon
park designed to convert natural gas and refined petroleum products into
hydrocarbon derivatives.

New industries

He said that the proposed refinery would attract new industries
to the state, apart from the dredging and maintenance of sufficient navigable
drafts on the River Niger.

He said the commencement of preliminary design activities of the
project would afford the engineering partners the opportunity to appreciate the
physical environment of the proposed location, adding that this would
facilitate the formal take off of pre-construction activities.

Urging the Kogi State government to participate in the
development of the project as a co-investor, assuring that aside financial
returns, he said the facility would help create job opportunities for up to
3,000 workers during the construction phase, and an estimated 2,000 workers to
run the industrial complex on completion.

A Certificate of Occupancy for a 450-hectare stretch of land
across the bank of the River Niger in Itobe village, Ofu Local Government Area
of the state, as a proposed site for the refinery, was presented by the
governor to the visitors during the visit. Mr Idris assured them that the state
government was prepared to provide a conducive environment for the smooth
operation of the refinery, while assuring the security of lives and equipment.

Yu Zhende, the leader of the Chinese delegation and Vice
President of CSECC International division, said the corporation was ready for
the economic partnership, while CSECC will not only assist in sourcing for
funds on competitive terms for the project, but is also expected to ensure that
bona fide Chinese investors take up at least 25 per cent of the equity holding
in the project, in line with the terms of the MOU.

When completed, the Kogi State Refinery is expected to produce
about 300,000 metric tons of Liquefied Petroleum Gas (LPG) per annum.

The NNPC projects that the availability of such a volume of LPG will trigger
a massive increase in the consumption of cooking gas as the preferred domestic
household fuel, replacing firewood, charcoal and kerosene.

Nigeria’s
consumer inflation eased to 10.3 percent year-on-year in June from 11.0
percent the previous month, its lowest level for more than two years,
the National Bureau of Statistics said on Friday.

Growth
in food prices, which form the bulk of the inflation index basket in
Africa’s most populous country, also eased, to 12.0 percent
year-on-year from 12.3 percent in May.

The
growth in consumer prices, is the lowest monthly year-on-year increase
since May 2008, when it rose to 9.7 percent, according to figures from
the statistics office.

“Once
again, despite ample domestic liquidity, Nigerian inflation surprises
with a year-on-year fall,” said Razia Khan, head of Africa research at
Standard Chartered.

“For now, it supports an unchanged monetary policy stance, but the central bank will still need to watch future risks closely.”

Nigeria’s
benchmark interest rate has been on hold at 6 percent for more than a
year as the central bank prioritises stimulating growth in sub-Saharan
Africa’s second-largest economy despite the inflationary risks.

The
monetary policy committee noted again at its last meeting just over 10
days ago that inflation remained a potential concern, but this is the
second month in a row that headline inflation has eased.

The statistics bureau said the rise in the food index, was caused
mainly by slight increases in the prices of some staples like yam,
potatoes and meat as well as fruit and beverages.

The claim by Dora
Akunyili, the information minister, and Olusegun Aganga, finance
minister, that Remi Babalola, minister of state for finance, was
misquoted in media reports about the raging controversy over alleged
insolvency of the Nigerian National Petroleum Corporation (NNPC) is a
curious one.

Their argument
flies in the face of rationality, considering that since last year, Mr.
Babalola consistently expressed a conviction supporting the
corporation’s insolvent state.

The 2007 oil and
gas industry audit report by Nigerian Extractive Industries
Transparency Initiative (NEITI) last year, uncovered unwholesome
discrepancies in NNPC’s accounts. About N600 billion was captured as
total unreconciled balances for either unremitted revenues for crude
exports, disbursements for subsidy petroleum products, or expenses
under the joint venture operations for the period.

NNPC’s management
agreed with the Federation Accounts Allocation Committee (FAAC) to
negotiate the figure to about N450 billion, after ignoring several
calls for reconciliation and provision of a payment plan. Last
December, FAAC issued an ultimatum demanding for the plan latest 12
January.

No repayment schedule

But at the end of
the January meeting in Abuja, Mr. Babalola told journalists that the
corporation merely gave a repayment framework without detailing a
repayment schedule, resulting in another ultimatum. However, rather
than respond, the committee was invited to a workshop on ‘Understanding
the Operations of the Oil and Gas Industry in Nigeria.’

At the conference
opening, attended by finance ministry officials, Accountant General of
the Federation (AGF), as well as their counterparts from the 36 states
and the Federal Capital Territory (FCT), Abuja, along with
representatives of revenue agencies, Mr. Babalola told reporters that
the delay in settling the debt was as a result of NNPC’s poor cash flow
situation.

“There are no
lingering contentions. The corporation has since acknowledged that it
owes. We (the FAAC) do not have a problem with the NNPC. There would be
a problem if the debtor did not agree he owes,” he said.

Asked why he
claimed there was no problem when NNPC has consistently refused to
neither pay up nor give a repayment schedule, despite several demands,
Mr. Babalola reiterated the cash flow problem of the corporation.

After the workshop,
nothing was heard about the committee’s effort to get NNPC to pay the
debt, till last May when the FAAC meeting was stalled, following
indications that available revenue in the Federation Account was
inadequate to take care of the budgeted monthly distributable revenue
for April as well as the arrears for augmentation of allocation for the
first quarter of the year.

At the end of the
June meeting, Mr. Babalola, as FAAC chairman, again restated NNPC’s
insolvency, following allegations that the committee may have been
compromised into complacency against pressurising for the debt payment,
more than six months after the December ultimatum.

Bleeding Corporation

“The issue
(payment) has lingered because the corporation is still bleeding as a
result of challenges,” Babalola said, adding, “The Group Managing
Director that took FAAC through all the corporation’s challenges and
promised to come up with a repayment plan, was changed barely after a
month. Another one came, that was also changed for a new one.

“We also know that
NNPC has some challenges, including subsidies on petroleum products
supplies that are not being replenished, making it to be bleeding, and
very difficult for it to meet certain obligations. The issue is not
about decision to pay or not.

“The truth, as we
know in the Federal Ministry of Finance as at today, is that NNPC’s
cash flow warrants that we work with them till it is able to stand on
its own as a business entity. We need to be holistic about these
issues, considering that we need to also look at NNPC’s claim that
government owes it an amount that is in multiples of what it is owing
the Federation Account,” he said.

Denying allegations
that FAAC’s concession to participate in the NNPC’s workshop was
indicative of the existence of a deal to soften its stance on the debt
payment, Mr. Babalola said last month that the exercise was “a training
session to enable members understand some technical issues in the
petroleum industry affecting NNPC’s operations, and not the
corporation’s inability to repay the N450billion.”

Describing FAAC’s
approach on the issue as a display of “unusual maturity and
understanding, considering NNPC’s peculiar operational environment,” he
wondered why he would be accused of complicity, as he was the one that
took NNPC management to the presidency over the indebtedness.

“Certainly, this
(alleged deal) is not correct. One needs to understand the operations
of the NNPC. One cannot be producing a product that costs N60 and
selling at N40, and would not be bleeding. It does not make sense,” he
said.

Curiously, NNPC’s
reasons sounded like a rehash of the arguments often canvassed by Mr.
Babalola, who has always said that the NNPC is insolvent and incapable
of discharging its obligations.

“NNPC’s current liabilities exceed its current assets by N754billion
as at 31 December, 2008. The corporation would not be able to pay the
N450billion owed the Federation Account, unless the Federal Government
reimburses the N1.154trillion it spent on subsidy expenses incurred for
petroleum products supplies and distribution since 2003,” it said.

Reviewed
guidelines on margin lending in the stock market will be released by
next month. Arunmah Otteh, the director general of the Securities and
Exchange Commission (SEC) said the organisation and the Central Bank of
Nigeria (CBN) will jointly issue the guidelines in a bid to correct the
negative impact of margin lending on the capital market.

Speaking
in Lagos at a press briefing at the weekend, Ms. Oteh said the
Financial Services Regulation Coordination Committee (FSRCC), which
comprises SEC, CBN, National Pension Commission, Nigerian Stock
Exchange, National Insurance Commission, Corporate Affairs Commission,
and the Ministry of Finance, have been deliberating on the margin
guidelines.

According
to her, there have been deliberations on the margin guidelines due to
its importance in the market meltdown that happened in 2008.

“We
have got feedback from all and have taken it into account. Our board
have reviewed the draft margin guidelines, CBN board have also reviewed
it, and the minister of finance is going through it and we do expect
that by the beginning of August we will issue the right and specific
guidelines to ensure that what we experienced does not happen again,”
she said.

A
margin loan is a facility given to an investor for the purpose of
buying securities and is secured by the investors’ collateral, which is
usually a portfolio of securities. An investor uses a margin loan when
s/he does not have enough money to buy securities and to take advantage
of a potentially profitable rise in securities prices.

Previous guidelines

The
Financial Services Committee had last May issued guidelines that banks’
aggregate exposure to margin lending shall not exceed 10 percent of
total loans and advances. It also stated that banks shares shall not be
used in margin lending. Operators were also expected to observe at all
times, a maintenance margin limit of 120 percent and also expected to
put in place a robust framework for margin trading, which should
include definition of margin and internal rules and procedure for
trading, consistent with regulatory requirements.

Olusegun
Aganga, minister of finance, said the problem of margin lending in the
past was that there were no strong guidelines in place. “Margin loan is
one of the things that brings liquidity to the market. People build
business around leverage.”

Mr.
Aganga said the error of the past was in not identifying the level at
which to mark and sell off the margin when the stock prices went down
below a predetermined level. “If they don’t pay, you sell off,” he
said, adding that what happened provided an opportunity for learning.
“We seem to have learnt from it. So now, let us put it into action and
let us move forward.

Whistle blowing

The
finance minister said it was time for market operators to take
responsibility for whatever goes wrong in the market and to expose the
peers who are known to commit infractions.

“The brokers collectively decided it was time for them to take
responsibility as a trade organisation. They need to take whistle
blowing as an important part of what they do. If they want to have
credibility, if they want the market to have credibility, then they
must behave in a way that promotes the integrity of the market,” Mr.
Aganga said.

The Air Transport
Services Senior Staff Association of Nigeria has expressed worries that
Nigeria may not attain the much coveted Category One status as a result
of “the high level of deficiencies” in the country’s aviation sector.

Speaking to
aviation correspondents during a press conference at the Murtala
Mohammed Airport (MMA), Lagos over the weekend, Benjamin Okewu,
president of the union said government’s failure to provide a national
carrier for the country will inhibit the attainment of the status.

“As far as my own
understanding is concerned, we can’t have category one, no matter how
we paint it to the world that Arik is a national carrier. We have told
them that we are in the International Travel Federation (ITF), and we
have told them that we don’t have a national carrier,” he said.

Mr Okewu argued
that the Nigerian Civil Aviation Authority (NCAA) should have carried
out a thorough certification of airlines in the country before it
invited officials from the International Civil Aviation Organisation
(ICAO) and the United State Federal Aviation Authority (US FAA) to
Nigeria last week as regard the issuance of the Category One Status.

The association’s
president said Arik Air is a flag carrier, adding that no country in
the world had attained the much coveted qualification with a flag
carrier.

“They are
positioning Arik as a national carrier but the truth of the matter is
that Arik is not a national carrier. It is a flag carrier and there is
no way you can attain Category one without having a national carrier
and we have made it known to the government. This is actually painful
no matter how they look at it,” he said.

Last week, the
civil aviation regulatory body in the presence of officials from US FAA
at the authority’s headquarters annex in Lagos, issued the first Air
Operator Certificate (AOC) to Arik Air, on the grounds that the carrier
has met all details requisite for the qualification.

On attainment of
Category One status, indigenous carriers in the country will be able to
fly directly from Nigeria to the United States of America, hence saving
travelers the stress of flying from Nigeria to another country before
getting a flight to America.

Aviation Minister interfering with sanctions

Commenting on the
minister of aviation’s 90 days in office, Mr Okewu said the minister,
Fidelia Njeze, came into office with appreciable zeal to work, but is
currently going the way of her predecessors by interfering with
sanctions to erring airlines by the NCAA.

According to Mr
Okewu, airlines that fail to remit prescribed charges to designated
aviation authorities are defrauding the sector, as he called for the
invitation of the Economic and Financial Crimes Commission (EFCC) to
investigate the matter.

“Passenger Service
Charge (PSC) is collected on behalf of NCAA by the airlines and when
you collect you don’t remit, the word is fraud. That is why we said the
government should look at it and the EFCC should come in because this
has been ongoing and people are not doing anything about it,” he said.

The issue of
airlines indebtedness to various agencies in the aviation sector has
been ongoing, with some of the carriers showing reluctance in the
prompt and accurate remission of charges meant for the agency.

Mr Okewu, however,
frowned at the inability of the Federal Airports Authority of Nigeria
(FAAN) to install air field lightings at the 18L (18left) runway of MMA
for over three years, stressing that it is unfortunate for the
authority to have a lot of engineers in its workforce but keep
employing the services of contractors.

“Go to FAAN today, they have more than ten qualified engineers; but
why is it that for every project they want to execute, they give it to
contractors?” he asked. “It is in the process of giving out these
contracts that they have all these political implications and these are
the major issues that are affecting to the operations of FAAN.”