Reps Order Halt Of Refineries Privatisation
The committee’s chairman, Hon. Ahmed Yerima (APC, Bauchi), who gave the order yesterday in Abuja during an interactive session with the managements of the NNPC and Bureau of Public Enterprises (BPE) on the planned privatisation of three refineries in the country, said the process was in breach of relevant laws.
Earlier in his submission, the group executive director, Refineries, at the NNPC, Mr Anibor Kragba, had said the NNPC had no powers to privatise any of its refineries and that they were only seeking funds to get the refineries back to work.
Kragba, who represented the minister of state for petroleum resources and group managing director of the corporation, Dr Ibe Kachikwu, said they decided to put up some publications in certain national dailies on the matter in an effort to have joint investment ventures with interested companies.
For his part, the acting director-general, BPE, Mr Vincent Akpotarie, said the refineries that were privatised had been reversed in 2007, but that there were moves towards the end of the former President Goodluck Jonathan’s administration for fresh privatisation of the refineries, which failed.
He added that the BPE was worried about joint venture agreements because of past experience where such ventures failed.
The committee chairman however said: “I think there’s a clear violation of the law in seeking investments based on what the BPE DG said.”
Also, members of the committee raised eyebrows when the NNPC representative apparently failed to provide satisfactory answers to some of their inquiries.
This development prompted the committee to immediately adjourn its sitting until such a time when Kachikwu will be able to appear before it to provide full explanation on the matter.
“I suggest we call off the meeting and you stop all procedures of privatisation, and we are going to report this to the House. It is a total violation of the BPE Act,” Yerima declared.
Crude oil hits $50pb as US stockpiles fall by 4.2m barrels
Oil prices yesterday rose towards $50 a barrel — a level they have not hit in seven months — as U.S. crude inventories fell more than expected.
U.S. commercial crude stockpiles fell by 4.2 million barrels to a total of 537.1 million in the week through May 20, the U.S. Energy Information Administration reported.
On Tuesday, the American Petroleum Institute reported that crude inventories fell by 5.1 million barrels, compared with expectations for a 2.5 million-barrel decline.
Total motor gasoline stocks rose by two million barrels, while distillate fuel oils fell by 1.3 million barrels, EIA said.
U.S. crude oil production also continued to tick down, EIA’s weekly data showed.
Brent crude futures were up 73 cents at $49.34 a barrel by 10:33 a.m. ET (1433 GMT), while U.S. crude futures rose 60 cents to $49.22 a barrel.
A series of outages around the world, such as wildfires in Canada and a spate of violence in Nigeria’s oil-producing region, has helped cut global oil supply by nearly four million barrels per day this month.
Although these hitches are temporary, they have contributed to a drop in the supply glut that has plagued the market for nearly two years.
“We are definitely moving out of this surplus situation that we’ve been living in since mid-2014. There will still be some time, maybe six months of surplus, but then we’re basically into rebalancing,” SEB head commodities strategist Bjarne Schieldrop said.
“There have been losses in equities and especially emerging markets (this month) and still oil is up, so it’s definitely about oil fundamentals, rather than tailwinds from equities and currencies,” he said.
As traders watch oil, markets starting to hear different drummer.
Strikes across France that crippled output from most of the country’s eight refineries have had little impact so far on crude oil prices, but rather helped lift refining margins for diesel and gasoline.
Some of the U.S. drawdown was caused by falling imports due to the fires in Canada which cut production by about 1.5 million barrels per day, said Ben Le Brun, market analyst at Sydney online brokerage OptionsXpress.
Some crude producers restarted operations on Tuesday in Canada’s energy heartland.
“A strong U.S. economy is (also) good for oil consumption and demand,” Le Brun said.
Masanobu Hamada, general manager of the crude oil trading department at JX Nippon Oil & Energy Corp, said the current price rise was due to supply disruptions.
“Unless there is a halt in supply, the market lacks material (strength) to go higher because the inventory levels are high,” Hamada said.
Stocks near 5-month high after CBN forex shift
Stocks soared to near a 5-month high on Wednesday with banks leading the charge, driven by hopes that a more flexible foreign exchange policy will boost dollar supply and lure back foreign investors.
On Tuesday, the central bank said it would adopt a flexible exchange rate policy, a shift from a peg for the naira seen as overvalued, which had hampered growth and investment.
The main stock index was up 3.36 per cent at 28,143 points at 1057 GMT, to levels last seen on Jan. 5, ending a selloff by foreign investors who had quit due to currency curbs and worries they would get caught in the middle of a naira devaluation.
Nigerian and foreign companies active in the oil-producing country have been laying off staff as they struggle to get hard currency to fund imports for spare parts and their products.
“The cheering news is that the central bank has come to realise that we need a flexible exchange rate regime rather than the fixed regime,” said Ayodeji Ebo, head of research at Afrinvest.
The introduction of a flexible interbank market from a de facto peg of around N197 would boost investors’ confidence and create more dollar liquidity, Ebo said.
But the currency parallel market was frozen, with the naira remaining unchanged at N346 to the dollar, as traders were confused over how the new rules would be implemented. The central bank has only said it will give guidance within days.
“The relevance of the coming reform will hinge on just how much flexibility is allowed,” said Alan Cameron at Exotic Partners. “To the sceptics among us, this will simply sound like a re-hash of the same old material we’ve been hearing about since December 2015.”
President Muhammadu Buhari said last December there would be a more flexible system but took no action. Since then he has vehemently rejected any naira devaluation.
Giving an indication of where traders see the naira going once the rules become clearer the one-month non-deliverable forward fell 3.1 per cent to N226.30.
Prior to Tuesday’s news, traders had put together bids to submit to the central bank’s weekly dollar sale on Thursday but were now awaiting the guidance on the rate, dealers said.
Analysts expected the interbank market to take a cue from the N285 to the dollar now used by the government to calculate fuel imports. It had lifted prices to N145 ($0.73) a litre from N86.5 before to eliminate a costly subsidy scheme.
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