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Sunday, 03 March 2019
Russia’s oil producers cut their output deeper in February as the nation strives to implement an agreement with OPEC following criticism that it was moving too slowly.
The country produced 43.3 million tons of oil last month, according to preliminary data from the Energy Ministry’s CDU-TEK unit. That’s equivalent to 11.336 million barrels a day, down 82,000 barrels per day from the October baseline of the OPEC+ deal,  calculations show.
Russia’s Energy Ministry earlier this week said February output was 97,000 barrels a day lower than in October. Bloomberg’s calculation of the country’s cuts also differed from official figures in January. The difference may be explained by the methodology, as the ministry uses an individual conversion ratio from tons to barrels for each field, while Bloomberg uses a unified ratio of 7.33 barrels a ton.
The nation curtailed its January supply by about 47,000 barrels a day from the baseline, according to the Energy Ministry. Russia pledged to gradually implement a 228,000 barrel-a-day reduction and maintain it until the end of the first half.
While members of the Organization of Petroleum Exporting Countries have largely stuck to their output caps, compliance among their non-OPEC allies, of which Russia is the biggest, has been less strict. Nevertheless, Russia remains committed to its obligations and will reach the targeted level of cuts by early April, Energy Minister Alexander Novak said this week in an interview with Gazeta.Ru.
The nation’s largest producers, who met with Novak to discuss the OPEC+ pact, said Friday they are cutting their output in line with the ministry’s requirements. “We said we are fully complying, the work is being done,” Pavel Fedorov, Chief Financial Officer for Russia’s largest oil company Rosneft PJSC, said after the meeting.
Published in Business

U.S. President Donald Trump said he had asked China to immediately remove all tariffs on U.S. agricultural products because trade talks were progressing well.

He also delayed plans to impose 25 percent tariffs on Chinese goods on Friday, as previously scheduled.

“I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions,” Trump said on Twitter, pointing out that he had not raised tariffs on Chinese goods to 25 per cent from 10 per cent on March 1 as planned.

“This is very important for our great farmers – and me!” Trump said.

Farmers are a key constituency for Trump’s Republican Party, and the U.S. president’s trade war with China has had a heavy impact on them. Beijing imposed tariffs last year on imports of soybeans, grain sorghum, pork and other items, slashing shipments of American farm products to China.

U.S. Agriculture Secretary Sonny Perdue said this week that U.S. trade negotiators had asked China to reduce tariffs on U.S. ethanol, but it was not immediately clear whether Beijing was willing to oblige.

Trump’s post on Twitter came several hours after the U.S. Trade Representative’s office said that it would delay the scheduled hike in tariffs on $200 billion worth of Chinese goods.

The notice, due to be published in the Federal Register next Tuesday, says it is “no longer appropriate” to raise the rates because of progress in negotiations since December 2018. The tariff would remain “at 10 percent until further notice.”

In a statement on Saturday, China said it welcomed the delay.

Speaking at a separate briefing in Beijing, a Chinese government official said both countries were working on the next steps, though he gave no details.

“China and the United States reaching a mutually-beneficial, win-win agreement as soon as possible is not only good for the two countries but is also good news for the world economy,” said Guo Weimin, spokesman for the high profile but largely ceremonial advisory body to China’s parliament.

A tariff increase to 25 percent from 10 percent was initially scheduled for Jan. 1, but after productive conversations with Chinese President Xi Jinping, the Trump administration issued a 90-day extension of that deadline.

Trump had said on Sunday he would again delay the increase because of progress in the talks.

Published in World
Zimbabwe’s currency devaluation last week has led to a more realistic exchange rate, yet thin trading implies the new official interbank market isn’t as free as officials suggested.
The central bank announced on Feb. 20 that its quasi-currencies -- bond notes and their electronic equivalent -- would no longer be valued at parity to the dollar and would be traded on an official interbank market.
Since then, the bond notes, now known as RTGS dollars, have weakened to 2.5 against the greenback, while the black market rate has appreciated almost 9 percent to 3.36 per dollar, according to marketwatch.co.zw, a website run by financial analysts in Harare. The tight trading band on the interbank market -- rates have ranged between 2.5001 to 2.5042 this week -- indicates trading isn’t totally free. The RBZ seems to be the only supplier of dollars, with just $7.7 million traded as of Thursday, a person familiar with the matter said.
The gap between Zimbabwe's formal and parallel FX rates is still wide
There’s also been some improvement, again modest, with equities.
The dollar squeeze roiled the stock market, with locals piling into it to hedge against inflation, which is officially 57 percent but may be as high as 270 percent, according to Steve H. Hanke, a professor of applied economics at Johns Hopkins University in Baltimore. That caused foreign investors such as Cape Town-based Allan Gray Ltd. -- which struggle to get their money out of the country because of capital controls -- to write down their holdings to more realistic levels. They measure how out of whack prices are by taking the difference between the Harare and London shares of Old Mutual Ltd., Africa’s largest insurer.
The Harare stock has sunk 18 percent this week to $7.50, which in Zimbabwe’s skewed markets is a sign that the liquidity crisis is easing. It’s now 4.5 times the price of that in London, when converted to dollars, down from 6.3 in January.
Old Mutual shares are 4.5 times more expensive in Zimbabwe than London
Investors won’t be confident the foreign-exchange crisis is over until Zimbabwe’s formal and informal currency rates and the so-called Old Mutual implied rate all converge.
Published in Bank & Finance
The only successful applicant for the Black Industrialist Programme in Limpopo is taking the department of trade and industry to court because he didn’t receive his promised R14.2 million grant.
Murendi Properties was listed in the department’s annual incentive report up to March last year as the only beneficiary of the scheme in Limpopo.
Murendi’s project was an expansion of a building supply retail company and manufacturing plant for roof tiles, for which the Industrial Development Corporation (IDC) had also approved a R30 million loan.
IDC loans, together with grants from the department, have been the bedrock of the much-publicised Black Industrialist Programme.
The owner of Murendi, Mphendziseni Makhesha, said in an affidavit that the department’s behaviour, which he termed “dilatory” – meaning that it was an act intended to cause delay – had threatened the whole project and could result in 34 retrenchments out of total staff of 90.
He applied to the department for the grant in 2016 and it was initially approved in October 2017.
Makhesha claims that the department has stopped talking to the company altogether after initial hiccups with its BEE certificate, an issue Makhesha says was rectified.
According to his affidavit, he had procured certificates from two different unregistered verification agencies – effectively getting defrauded – before getting a certificate from a proper agency.
The court application is targeted at Trade and Industry Minister Rob Davies and the director-general of the department, Lionel October. The relief demanded is that the department be forced to pay the R14 million grant it had approved.
The IDC has already paid out “almost all the amounts it approved”, the state-owned funder told City Press.
“This is to enable the company to commission its new plant, albeit at a reduced scale in the absence of the department of trade and industry’s grant. This was done to enable the company to start servicing its obligations to the IDC once the repayment obligations kick in.”
Makhesha has also already put down R7 million of his own money to settle an earlier debt owed to the National Empowerment Fund.
The department’s deputy director-general: incentive development and administration, Malebo Mabitje-Thompson, told City Press the industrialist scheme worked better than most incentives the department had deployed.
Mabitje-Thompson, however, implied that there was something wrong with the Murendi grant and the department was opposing the case.
“As part of our commitment to zero tolerance to corruption, we will defend any action against the department in court where we believe that governance processes have been breached,” said Mabitje-Thompson.
The department has already filed notice that it would oppose the application, implying that it believed there was a breach of governance of some sort.
The department did not elaborate beyond generic terms.
“Once an application is approved and the investment is under way, inspectors are dispatched to verify the investment and performance information submitted for any claim. In the event that misleading information is submitted, the project is cancelled,” Mabitje-Thompson said by email.
There had been no suggestion that the department intended to cancel the project, said Makhesha. However, it did have Murendi investigated to establish the veracity of its BEE credentials.
The agency tasked with the investigation, the SA National Accreditation System, however, applied the newer codes of good practice for the construction industry.
Makhesha said that this was absurd because his company was not a construction company and, even if it was, the construction codes did not even exist when he applied for the funding.
“There can be absolutely no lawful basis on which the department can avoid its obligation to honour the grant,” said Makhesha.
Mabitje-Thompson said that the programme as a whole had shown a “remarkable conversion rate from investment decision to start of production”.
“To date, 130 projects have been approved; R1 billion has been disbursed.”
The IDC said that it had funded “close to 300 deals involving 291 black industrialists” since the programme was launched in 2014.
Published in Business
The Eastern Cape is anxious about possibly losing its R80 billion oil refinery project to Richards Bay in KwaZulu-Natal.
For more than a decade, the initiative, known as Project Mthombo, was planned for location at Port Elizabeth’s Coega special economic zone. But this, as well as a possible investment by Saudi Arabia in the project, could soon be lost because of the Durban/Gauteng oil pipeline that is already in existence.
Oscar Mabuyane, the Eastern Cape MEC for finance, economic development, environmental affairs and tourism, said there was uncertainty about the project because a decision had yet to be made.
“It is clear that there are two sites being explored: the Coega site that government has worked on for some time now, as well as the Richards Bay site, which has been added to the equation,” he said. “Our argument is that government has already incurred costs in developing the Coega site, so this could result in fruitless expenditure.”
Mabuyane believes that, more than an economic project, the initiative also carries political clout in that it will take bold political decision making to keep Project Mthombo in the Eastern Cape. And, he believes, doing so will also address a potential fuel security risk.
Project Mthombo was mooted by PetroSA as its answer to South Africa’s persistent fuel supply problems, given the refinery’s projected output of 300 000 barrels a day of crude oil. As things stand, South Africa’s fuel demands make the country vulnerable to imports, and it is hoped that this project goes some way towards mitigating that.
“People use the argument of Richards Bay’s connection to Durban and Johannesburg via an already existing Transnet pipe that pumps oil from that side,” said Mabuyane. “But from a security point of view, it is a risky situation. If something happens there, what then? How do you connect to Johannesburg? We have an opportunity as government to look at the situation broadly and open our minds.”
He said the private sector could easily fund a pipe connection between Port Elizabeth and Johannesburg.
Mabuyane said the project, as currently mooted, was solid and was the result of a 15-year investment by government.
“Project Mthombo is massive. It is unprecedented.
It is one project that connects about five regions in the province, including municipalities such as Sarah Baartman, Buffalo City, Amathole, Chris Hani and Nelson Mandela Bay.
“When you talk about the project you also talk of the biofuel project in Cradock, and the opportunity from that.
“We believe that it is a project that will be really catalytic, in the literal sense of the word. Driving it from here means that its impact and expansion – and how it connects with almost every participating region in the province – will be felt by many, and its potential of attracting more than 27 000 jobs cannot be ignored.”
Mabuyane expressed the view that government should work with the province and stop sending mixed signals about the project as it was “high time” that there was this kind of investment in the Eastern Cape.
Mabuyane said that, for too long, the province had been isolated, and government needed to change this.
“We believe that a lot needs to be done to lift our province to the level of other provinces, so that it can also participate in the country’s GDP.
Published in Business
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