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Nigeria Set for Highest Oil Exports to Europe

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Nigeria is set to export the highest volume of crude oil to Europe in June following production outages being experienced by producers in the UK’s North Sea oilfields, according to oil traders.

This is coming as the Organisation of Petroleum Exporting Countries (OPEC) is expected to roll over a deal on cutting crude supplies at a meeting next week and discuss deepening the production curbs that have been in place since January 1, 2019.

Reuters reported that Nigeria is set to export about 905,000 barrels per day (bpd) to the continent this month, the most since a roughly five-year high of about one million bpd in November 2018.

Nigeria’s exports to Europe hit a five-year high of one million barrels per day in November 2018 but slumped to 677,000 – 700,000 barrels per day in the last seven months.

Norwegian and UK offshore fields in the North Sea normally provide a steady supply of lighter crude to refineries feeding northern Europe’s major economies and are traditionally more competitive than Nigerian grades due to their proximity.

But planned maintenance on Norway’s Ekofisk oilfields this month slashed exports to just one cargo from the usual 10-15.
Also, Flotta, another of the 12 North Sea fields, was said to be closed for repairs over two weeks in late May.
Supply of the five North Sea crude grades that underpin the dated Nigeria’s Brent benchmark is set to fall to around 720,000 bpd in June, from 948,000 bpd the month before.

The contamination of a pipeline carrying Russian Urals crude in April interrupted flows to central and eastern Europe for a month and left stocks in need of replenishment.

Higher volumes to Europe have provided an unexpected boon, with Nigerian exports to the United States on the wane for a decade due to increased US shale oil production, and demand relatively steady in Nigeria’s key markets India and Indonesia.

“(Europe) always tends to act as the clearinghouse at a lower value than the East,” one trader selling Nigerian crude said.
Though European gasoline margins have been middling and especially poor among southern European refiners, several factors may mesh in coming months to support Nigerian differentials, which stand near multi-year highs.

Traders said the possibility of a permanent shutdown to the fire-stricken Philadelphia Energy Solutions refinery in the city, though it was a consistent importer of Nigerian crude, would increase demand for gasoline refined in Europe.

Nigeria’s Egina, heavy sweet crude from a new offshore field, has proved consistently popular among refiners in northwest Europe.

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Inflation drops to 11.02%

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The Consumer Price Index (CPI), which measures inflation, maintained a downward trajectory to 11.02 percent (year-on-year) in August compared to 11.08 percent in July, according to the National Bureau of Statistics (NBS). The latest CPI data showed that inflation fell to its lowest in three-and-a-half years, a level last seen in February 2016.

However, the disinflation continued despite several policy pronouncements on restrictions on the import of some food items, minimum wage as well as the recent border closures.
The NBS, in the CPI report for August, released yesterday, said: “The border was only closed 20 August 2019 with only 11 days of 31 days for any significant impact to be felt either way on prices.

“The inflation rate is also the average prices for the whole month and not only the price of goods and services in the last few days of the month.
“Furthermore, the harvest season and existing weak consumer demand and their natural effect to slow down food and other prices will also play a major role in determining the direction of inflation.

“Against this backdrop, in August 2019, all major indices slowed except urban inflation year-on-year.”
The 0.06 per cent drop in inflation was facilitated partly by food inflation, which dropped to 13.17 per cent in August compared to 13.39 per cent in the preceding month.
The food index was moderated by muted increases in prices of oils and fats, meat, bread and cereals, potatoes, yam and other tubers and fish.

However, given the continuous stability in the exchange rates, core inflation, which excludes the prices of volatile agricultural produce, also dropped to 8.68 per cent within the reviewed period; down by 0.12 per cent when compared with 8.8 per cent in July, the NBS stated.

According to the NBS, the highest increases were recorded in prices of cleaning, repair and hire of clothing, repair of household appliances, hospital services, glassware, tableware and household utensils, passenger transport by air and repair and hire of footwear.

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Cashless policy goes Nationwide in 2020

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The Central Bank of Nigeria (CBN) yesterday announced that the full implementation of the cashless policy will become effective from March 31, 2020.

Nigerian Central Bank, Abuja, Nigeria. Image shot 2007. Exact date unknown.

This is just as the banking sector regulator has announced a review of the process for merchant settlement, which it said was to further promote a cashless economy and enhance the collection of applicable government revenues. It disclosed these in two separate circulars that were signed by the Director, Payments System Management Department at the apex bank, Mr. Sam Okojere, copies of which were posted on its website last night.
In the circular titled: “Re: Implementation of the Cashless Policy,” that was addressed to all banks, it announced the commencement of charges on deposits in addition to already existing charges on withdrawals.

According to the circular, the charges, which take effect from today, would attract three percent processing fees for withdrawals and two percent processing fees for lodgements of amounts above N500,000 for individual accounts.

Similarly, corporate accounts would attract five percent processing fees for withdrawals and three percent processing fee for lodgements of amounts above N3,000,000.
The statement, however, disclosed that for now, the charges on deposits shall apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers states as well as the Federal Capital Territory.

In a related development, the CBN in a separate circular titled: “Review of Process for Merchants Collections on Electronic Transactions,” announced that with effect from September 17, 2019, it has approved for banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions as stipulated by regulations.
The circular also announced a downward review of the Merchant Service Charge (MSC)from 0.75 percent capped at N1,200 to 0.50 percent capped at N1,000.

The CBN had in April 2017, suspended the nation-wide implementation of the cashless policy which commenced this month.
It had then stated that the existing policy before the announcement of the new policy would remain in place in Lagos, Ogun, Kano, Abia, Anambra, Rivers, and Abuja.

“You will recall that a directive was issued on the nationwide implementation of the cashless policy vide our circulars with reference numbers BPS/DIR/GEN/CIR/04/001 dated February 21 and BPS/DIR/GEN/CIR/04/002 dated March 16.

“Please note that the new withdrawal and deposit processing fee charges above the threshold, as contained in the circulars referenced above, are hereby suspended until further notice. The position of the policy shall now revert to the status quo ante.

“The new policy already applied effective April 1, 2017, as contained in the circulars in the reference above should be reversed and the old charges be applied. All necessary refunds should be made accordingly,” the CBN had explained then.

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FG Retains $55 Benchmark Despite Oil Price Spike

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The Federal government yesterday ruled out revising upward the $55 per barrel oil price benchmark adopted for the 2020 budget despite a spike in the value of the commodity in the global market in the aftermath of Saturday’s drone attacks on Saudi Arabia oil facility that wiped out about five percent of global supplies.


Oil prices yesterday continued on the upward swing in the wake of the attacks launched against Saudi Arabia facility by Iran-backed Houthis movement in Yemen; rallying at about $72 a barrel.

At $72 per barrel, crude oil posted its biggest intra-day percentage gain since the Gulf War in 1991, after the attack on Saturday shut more than five million barrels per day (bpd) of output, or over five percent of global supply. Oil prices had hit a six-month high of $71. 95 a barrel by Sunday, a day after the attack.

Meanwhile, President Muhammadu Buhari has deplored the attacks on Saudi oil refinery and pledged Nigeria’s solidarity with its co-member in the Organisation of Petroleum Exporting Countries (OPEC).

OPEC has also begun an assessment of the impact of the drone assaults on the market in a bid to fashion out its response.
But the federal government said it would adopt a cautious approach to the situation, fearing that the oil price surge might not be sustainable on the long run.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, yesterday said the federal government was not in a hurry to embark on an upward adjustment in the benchmark price of oil for the proposed 2020 budget following the attacks on Saudi Arabia’s oil facility.

Ahmed, while responding to questions from journalists at a media briefing on the forthcoming Nigeria Economic Summit (NES) in Abuja, described the attacks on the Saudi Arabian oil facility as disturbing.
She expressed apprehension that if a country like Saudi Arabia with such sophisticated security system could suffer such attacks, then Nigeria might be vulnerable.
According to her, the federal government will continue to monitor the situation in the global oil market and respond appropriately should the need arises.

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Buhari constitutes Economic Advisory Team

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President Muhammadu Buhari has constituted an eight-member Economic Advisory Council (EAC) to replace the current Economic Management Team (EMT).

A statement Monday by Femi Adesina, Special Adviser to the President (Media & Publicity), said the newly constituted council, chaired by Prof. Doyin Salami, will report directly to the President.
Other members of the council are Dr. Mohammed Sagagi (Vice-Chairman), Prof. Ode Ojowu, Dr. Shehu Yahaya, Dr. Iyabo Masha, Prof. Chukwuma Soludo – Member, Mr. Bismark Rewane and Dr. Mohammed Adaya Salisu, Senior Special Assistant to the President, Development Policy, who will serve as secretary.

The statement said “The Economic Advisory Council (EAC) will advise the President on economic policy matters, including fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies.

“The EAC will have monthly technical sessions as well as scheduled quarterly meetings with the President. The Chairman may, however, request for unscheduled meetings if the need arises.”

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