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Nigeria is set to peg its daily oil output at 1.412 Million barrels per day from the average 1.87mbd.

The production cut will take effect from May-June 2019.
Petroleum Minister, Timipre Marlin Sylva said Nigeria is taking the shaving as a result of the 9.7m barrels output cut reached by OPEC+ on Sunday.
The global cut which is graduated till 2022, will see oil producers reduce output by 8 million barrels between July and December 2020.

From January 2021 till April 2022, output will be reduced by six million barrels.
Nigeria is set to peg crude production in like manner.
After the 1.412m output level in May-June, Nigeria will also peg output at 1.495 Million Barrels per day in July-September.
Then from January 2021 till April 2022, output will go up to 1.579 Million Barrels per day.
“This is in addition to condensate production of between 360-460 KBOPD of which are exempt from OPEC curtailment’, Sylva said.

Nigeria joined its other OPEC+ counterparts on Easter Sunday to reach the production pegging decisions.
“The intervention of the United States of America resulted in Mexico agreeing to a cut of 100 KBOPD and to be complemented by an additional 300 KBOPD by US Producers”, Sylva disclosed.
“This will enable the rebalancing of the oil markets and the expected rebound of prices by $15 per barrel in the short term.
“This also promises an appropriate balancing of Nigeria’s 2020 budget that has been rebased at $30 per barrel”, Sylva added.

The Federal Executive Council (FEC) on Wednesday approved a N1.5 trillion cut from this year’s budget, Finance, Budget and National Planning Minister Mrs. Zainab Ahmed, told reporters after the FEC meeting.
 
She described the budget cut as one of the measures approved by the federal government to stabilise the economy.
 
Last week, President Muhammadu Buhari constituted a committee to assess the impact of the outbreak of Novel Coronavirus (COVID-19) pandemic, as well as the crash of crude oil price, on the Nigerian economy and propose measures to sustain the economy.
 
However, the Minister of Finance said her committee had briefed the FEC on the measures it had come up with, adding that the presentation was approved.
 
She said the measures were arrived at, considering the current economic realities, adding that government would be working on a worst scenario oil benchmark of $30 per barrel at 2.18 million barrels per day.
 
Some of the measures, according to her, include: a cut down on the size of the federally funded upstream projects by N457 billion; reduction of projected revenue from excise duty; cut down on capital expenditure by 20per cent; a reduction of recurrent expenditure by 25 per cent; a ban on recruitment except for essential services and the review of social investment programme among others.
 
Some other measures approved were the reduction of projected revenue from privatisation by 50 per cent and the suspension of recruitment exercise in the civil service.
 
The minister said: “I’m pleased to report that just yesterday His Excellency has approved a number of measures for us to implement. These measures include the introduction of PMS price modulation mechanism. The reason being that at the low crude oil price of $30 to $32 per barrel, there’s no under – recovery.
 
“The under-recovery is right now zero, in fact, we are at an over-recovery stage, meaning the PMS price will be reduced to reflect the reduced price of the crude oil in the international market.
 
“Mr. President also approved that we should cut down on the size of the federally funded upstream projects of the petroleum sector. The reason being we want to be able to get more revenue, by less reduction from NNPC.
 
“The reduction of the crude oil price from the $57 per barrel that we budgeted to $30 means that we are going to get so much less revenue, almost 45 per cent less than we planned and because of that we have to amend a lot of projections in the budget as well as in EMTEF to reflect our current realities.
 
“The President also agreed that we should do a scenario to reflect what the actual position will be with a $30 crude oil price, that is we were to anticipate what will be the worst case scenario and we’ve worked on that scenario and this scenario necessitates that quite a number of expenditures needed to be cut down, even as we review how we can enhance revenues that are not directly affected by the crude oil price decline.
 
“So, we are looking at enhancing production to make sure that at the minimum the 2.18 million barrels that is in the budget as production volume is realised and NNPC has directives to that effect. We also need to adjust Customs revenue, which has been budgeted for at N1.5 trillion, but we are adjusting it downwards because we anticipate that trade volumes will reduce and once trade volumes reduce, Customs revenue will be significantly impacted as a result.
 
“We also have approvals to reduce the projected revenue from privatisation proceeds by as much as 50 per cent because, again, with the slowdown in economic activities, we are anticipating that the sale of independent power plants might not be fully realized as planned for in the budget.
 
“On the expenditure side, the President has approved that we should cut down the capital expenditure budgeted by 20 per cent across ministries, departments and agencies and also a 25 per cent cut of all government owned enterprises and these include the ones that are in the national budget: the ones that we included in the 2020 Budget, but also the ones that we didn’t include in the 2020 Budget. All of these MDAs will have their recurrent expenditure and capital expenditure cut down by 25 per cent.
Nigeria’s annual inflation rose to 12.20% in February, making it the sixth month in a row the figure would escalate, the National Bureau of Statistics declared on Tuesday.
 
The new rate approaches the 12.48% posted in April 2018, the highest point.
 
Earlier in January, inflation had stood at 12.13% on account of the advancing momentum of the costs of goods and services.
 
The new inflation rate emerges as Nigeria grapples with the sweeping adverse effects of border closure on consumer spending.
 
The food price index hit 14.90% in February up from 14.85% the month before, a development the statistics office pinned down to the soaring costs of bread and cereals, fish, meat, vegetables and oil and fats.
 
As a protectionist measure to spur local food production, the Nigerian government last August shut its borders to a section of the food import market, notably rice.
 
But such an ambitious reform is coming at a price too huge for many to bear as economic pundits have noted the heavy strain it puts on disposable income as one of its teething problems.
 
The Monetary Policy Committee of the Central Bank of Nigeria (CBN) is to meet next week and is anticipated to set a new interest rate as part of its agenda.
 
The CBN had earlier given the assurance to curb inflation in 2020 by making its monetary policy as stable as possible.
For three years, U.S. President Donald Trump touted a stunning run-up in the stock market as evidence of his success in the White House. In the space of three weeks of coronavirus crisis, most of those gains have evaporated.

As the coronavirus pandemic spreads fear of a recession, the stock market’s rise under the Republican president, a major part of his case for reelection in November, is now less than half of the gain of his predecessor and rival Barack Obama at the same point in his presidency.

At its peak on Feb. 19, the S&P 500 .SPX was up 58% from when Trump unexpectedly beat Democratic rival Hillary Clinton in November 2016. As of Thursday, Trump’s stock market was up just 17%. The S&P 500 gained 41% in same number of days after Obama was elected president in 2008.

Measuring from Trump’s inauguration on Jan 20, 2017, the S&P 500 is now up less than 10%, compared to a gain of 70% under Obama during the same span of his first term.

Trump, who has repeatedly boasted on Twitter and to reporters of the stock market’s performance in recent years, on Thursday played down the carnage wracking Wall Street.

Nigeria may be heading for its second recession in nearly four years after crude oil prices crashed to $30 per barrel in the international market.
 
The fresh meltdown in the global oil market is expected to threaten the country’s 2020 budget implementation, especially funding of capital projects.
 
President Muhammadu Buhari had while presenting the 2020 budget estimate adopted a conservative oil price benchmark of $57 per barrel and daily oil production estimate of 2.18 mbpd
 
The oil prices crashed as much as 30 percent within seconds of the market opening on Sunday evening after Saudi Arabia launched an aggressive price war over the weekend, driving crude to its lowest level in four years.
 
Brent crude, the international benchmark, against which Nigerian oil is priced, dropped from $45 a barrel to $31.52 a barrel in one of the biggest one-day drops in its history.
 
The huge sell-off follows the collapse of Saudi Arabia’s oil-cutting alliance on Friday, with Russia refusing to make deeper cuts to output despite the sharp hit to demand from the coronavirus outbreak.
 
Saudi Arabia, Opec’s de facto leader, has responded by slashing prices and indicating it will instead raise output. The move is seen as an attempt to take on Russia as well as squeezing other high-cost producers out of the market, including parts of the US shale sector.
 
It is reminiscent of the attempt to win back market share in 2014 during the last price war, but this time it comes as demand is seen falling because of the impact of the coronavirus, which has crimped air travel and the wider economy.
 
“It is very rare for a demand collapse to coincide with a supply surge,” said Bob McNally at the Rapidan Energy Group. “It is the most crude price-bearish combination since the early 1930s. The price collapse has just begun.”
 
Goldman Sachs, one of the most influential banks in commodity markets, on Sunday lowered its price forecast for Brent to $30 a barrel for the second and third quarters, and warned there could be dips to $20 a barrel in the coming weeks.
Nigeria’s former Minister of Finance, Dr. Ngozi Okonjo-Iweala has been consulted by the South Africa’s government to help rescue the nation out of recession.

South Africa is currently experiencing economic downturn as it entered its second recession in two years, and Okonjo-Iweala is the woman the nation has consulted to help rescue it from the shackles of recession.

Statistically,  South Africa said the economy shrank 1.4 per cent in the fourth quarter, following a revised 0.8 per cent contraction in the third quarter. Agriculture declined 7.6 per cent, transport 7.2 per cent, construction 5.9 per cent, electricity 4 per cent and retail 3.8 per cent, the data showed.

The former minister tweeted on Saturday, saying that she met with President Cyril Ramaphosa, and members of the Presidential Economic Advisory Council in Pretoria to discuss the way forward.

“With President Ramaphosa, members of cabinet, and members of the Presidential Economic Advisory Council in Pretoria discussing sources of growth for the South African economy and win-win economic interactions with the continent,” she tweeted.

With President Ramaphosa, members of cabinet, and members of the Presidential Economic Advisory Council in Pretoria discussing sources of growth for the South African economy and win-win economic interactions with the continent.

Nigeria overtakes South Africa as Africa’s biggest economy.

As if a recession wasn’t enough bad news for South Africa, it’s now confirmed as the continent’s second-largest economy.

The answer to the question of whether South Africa or Nigeria, the two countries that account for almost half of sub-Saharan Africa’s gross domestic product, is the biggest economy on the continent has long depended on which exchange rate you use for the West African nation. But now both the official naira rate of 306 per dollar and the weaker market exchange rate of around 360 that almost all investors use put Nigeria tops.

Nigeria’s economic growth beat forecasts in the fourth quarter, helping its economy to expand the most in four years in 2019 as oil output increased and the central bank took steps to boost credit growth. GDP in the West African country stood at $476 billion or $402 billion, depending on the rate used.

South Africa’s economy went in the opposite direction.

It slumped into a second recession in consecutive years, contracting more than projected in the fourth quarter as power cuts weighed on output and business confidence. For the full year, expansion was 0.2%, the least since the global financial crisis, and even less than the central bank and government estimated. Based on an average rand-dollar exchange rate of 14.43 for the year, GDP was $352 billion.

Projections show Nigeria’s economy will continue to grow faster. While the International Monetary Fund cut its forecast for Nigeria’s 2020 growth to 2% from 2.5% last month due to lower oil prices, South Africa’s GDP is forecast to expand only 0.8%.

The National Bureau of Statistics (NBS) said on Monday the Nigerian economy recorded a 2.27 percent growth last year compared to 2018 when it posted 1.91 percent growth.

In its Nigerian Gross Domestic Product (GDP) Report Q4 and Full Year 2019 report, the Bureau said the nation’s economy recorded an expansion rate of 2.55 percent in the fourth quarter of 2019, when compared with the 2.38 percent recorded in the corresponding period of 2018.

The 2.55 percent growth recorded during the period and enlarged by 0.27 percent quarter on quarter made it the country’s highest quarterly growth in post-recession times.

On sectoral basis, the oil sector witnessed a 4.59 percent expansion in the year, higher than the 0.97 percent posted in 2018.

The oil sector accounted for 8.78 percent of the entire Nigeria’s real GDP in 2019.

However, the non-oil sector contributed 91.22 percent to real GDP in 2019.

On industry basis, the mining and quarrying industry, which was dominated by crude oil and natural gas, accounted for 8.85 percent of the total GDP in 2019, lower than the 10.68 percent posted in 2018.

Its annual expansion rate for 2019 was 4.43 percent, greater than the 1.11 percent recorded in 2018.

The agriculture industry, largely driven by crop production, contributed 25.16 percent to real GDP, higher the 25.13 percent posted in 2018.

Its annual growth rate was 2.36 percent, higher than the 2.12 percent reported in 2018.

The manufacturing industry was responsible for 9.06 percent of real GDP last year compared to the 9.20 percent recorded the previous year.

Its real annual growth rate was 0.77 percent in 2019.

The Electricity, Gas, Steam and Air conditioning Supply industry constituted 0.39 percent of real GDP in 2019.

However, it recorded a negative annual growth which stood at -4.86 percent in 2019.

The construction industry accounted for 3.72 percent of real GDP in the year under review.

Its annual growth rate was 1.81 percent in 2019.

The trade industry was responsible for 16.01 percent of real GDP in 2019, lower than the 16.44 percent posted in 2018.

The Accommodation and Food Services Industry contributed 0.89 percent to real GDP in 2019.

Its full-year growth was 2.85 percent.

The Information and Communication Industry accounted for 13.04% to real GDP higher than the 12.22 percent posted in 208.

Its annual growth rate was 9.17 percent.

The Transportation and Storage Industry contributed 1.48 percent to real GDP last year.

Its annual growth rate was 10.73 percent in 2019.

The Arts, Entertainment and Recreation Industry accounted for 0.23 percent of real GDP in 2019 higher than the 0.22 percent posted in 2018.

The annual growth rate for 2019 was 4.12 percent.

The Finance and Insurance Industry was responsible for 3.01 percent of real GDP in 2019 compared to the 3 percent posted in 2018.

Its annual growth rate was 2.56 percent.

The Administrative and Support Services Industry constituted 0.02 percent of real GDP in 2019.

Its annual growth rate was 1.96 percent in 2019, higher than the -0.18 percent recorded in 2018.

The Professional, Scientific and Technical Services Industry contributed 3.57 percent to real GDP in 2019, lower than the 3.71 percent it posted in 2018.

The Education Industry accounted for 2.47 percent to real GDP last year.

Its annual expansion rate was 0.80 percent, higher than the negative growth of 0.03 percent in 2018.

The Public Administration Industry contributed 2.06 percent to real GDP in 2019.

Its annual growth rate was -4.01% compared to the -2.05 percent recorded in 2018.

The Human Health and Social Services Industry accounted for 0.66 percent of real GDP in 2019.

The Other Services Industry was responsible for 3.37 percent of real GDP in 2019.

The Federal Government of Nigeria has revealed her plan to borrow N2 trillion from the current N10 trillion pension funds to finance the development of infrastructure.

#WorldPressNews learnt that this was disclosed at the National Economic Council (NEC) meeting presided over by the Vice President, Yemi Osinbajo, on Thursday in Abuja.

Briefing newsmen at the end of the NEC meeting in Abuja, Kaduna State Governor, Mallam Nasir el-Rufai, stated that the decision of the Federal Government to pull N2 trillion out of the pension funds was reached by a NEC sub-committee.

According to El-Rufai, the country will never be able to address its road infrastructure deficit with the current budgetary allocation for road construction and maintenance. He explained that with the N200 billion in the 2019 budget and N169 billion in 2020 budget, roads cannot be properly fixed.

“In 2019 budget, N200 billion was budgeted for construction and maintenance of federal highways. In 2020, the budget is N169 billion. If we continue this way, we will never be able to fund highway infrastructure. We need to unlock funds to construct and maintain highways.“We will never be able to construct and maintain highways with N200 billion every year. Highway infrastructure and maintenance can only be done with long term funds.”

Speaking on the rationale to borrow from the N10 trillion pension fund, El-Rufai stated that the decision followed an interim report earlier presented to the council, and the decision to borrow N2 trillion from the pension fund was in compliance with the Pension Reform Act 2004, which empowers the government to borrow 20% of the fund to address national issues.

According to him, various countries of the world such as Chile and South Africa funded their infrastructure growth by borrowing money from workers’ pension funds. El-Rufai also stated that with Nigeria’s pension funds largely dominated by youths in their 30s, who still have several years ahead of retirement, utilising the funds for infrastructure would not generate any problem.

Other infrastructures mentioned by the El-Rufai included rail and power projects. According to him, the committee had identified three areas (rail, road and power) where the pension funds would be invested, He added that the borrowing would be done through bonds with private companies investing in road and rail infrastructure and paying within a period of 20 years.

While lamenting on the moribund state of infrastructures in the country, El-Rufai stated that in the last three years, the Federal Government had invested N1.7 trillion in the power sector, without any meaningful effect. According to him, the committee has thrown open consultations on how to fix the endemic crises plaguing the power sector, by inviting memoranda from the general public.

The latest move by the government shows revenue crisis in Nigeria continues to linger. In spite of Nigeria’s burgeoning debt profile, which currently stands at over N26.2 trillion, the figure is expected to hit a new height in 2020.

The Federal Government’s (FG) hope of achieving a seamless implementation of its 2020 budget suffered a set back Wednesday following the release of the Organisation of Petroleum Exporting Company’s (OPEC) January 2020 Monthly Oil Market Report.

The OPEC’s publication details the position of Nigeria’s crude production for last December, putting the average daily output for December at 1.57 million barrels per day (bpd), down from the November 2019 figure, standing at 1.66 million bpd.

OPEC’s data is rigorously achieved by checking statistics submitted by member nations against findings by secondary sources for the purpose of objectivity and validity.

OPEC’s secondary sources said oil output in the country for the month of November 2020 was in conformity with its quota of 1.77 million bpd. In the wisdom of the FG, Nigeria’s average daily production for December had been slashed by 11.3% of its quota in order to reduce supply.

The idea was to spur an increase in the price of crude in the price in the global oil markets, a path that Iran similarly towed about the same time last year.

Financial think-tanks at Lagos-based Financial Derivatives Company Limited (FDC) said “Nigeria is more sensitive about production than price. A lower oil output would affect the actualisation of budgeted revenue projections as oil revenue accounts for 31.35 per cent of the total revenue projected.”

Considering the significant percentage that revenues from oil receipts constitutes in government’s fiscal plan for this year and government’s counter-productive positioning in global oil market, it is safe to say that executing this year’s budget, would suffer a setback.

Brent, against which Nigeria’s Bonny Light is benchmarked, hit $70.74 on 6 January in the wake of US-Iran conflict but now hovers around $64.45. Equally, West Texas Intermediate (WTI) climbed to as high as $64.72 same day even though it had fallen $58.23 as 0f 07:54 West African Time (WAT) this morning.

OPEC, together with its partners – Russia and OPEC+, had concluded to slash production by another 500,000 bpd in addition to the current 1.2 million bpd between January and March.

The country’s quota fell to 1.75 million bpd this month under the OPEC+ partnership agreement to intensify Nigeria’s production cuts through March, S & P Global Platts revealed.

According to the OPEC report, a surge in oil demand growth this year will be neutralised by a sharper increase in non-OPEC supply, another fact the Nigerian government should take a cue from.

It mentions that “continued accommodative monetary policies, coupled with an improvement in financial markets, could provide further support to ongoing increases in non-OPEC supply.” Cuts by OPEC+ are needed to achieve stability in the market, the report further says.

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