A Week in Nigeria: 3 August

Highlights from Reuters coverage of Nigeria over the last seven days

MTN Nigeria was back in the news this week for different reasons

In this week’s round-up: MTN awarded financial services licence while tackling tax issue, Islamists reportedly kill around 100 people as Boko Haram insurgency hits 10-year anniversary and Shi’ite Muslim group suspends protests after ban.

  • A piece of equipment that will process crude oil for Nigeria’s Dangote refinery set sail from China, oil company Sinopec said. The 650,000 barrel per day (bpd) refinery near Lagos is set to be Africa’s largest, and could transform the country from a fuels importer to a net exporter. For the type of refinery the company is building, the atmospheric tower is the primary unit processing crude oil into fuels, Citac analyst Jeremy Parker told Reuters. It will likely take at least a month to reach Lagos. Billionaire Aliko Dangote, who built his fortune on cement, said last year that he planned to finish building the $12–14 billion refinery in 2019 and to start production in early 2020. Most analysts and observers said the ambitious project would take longer in order to begin pumping out fuels such as diesel and gasoline. Citac expects the refinery to start producing fuels in 2023.
  • The Nigerian central bank has been intervening in the currency market over the past two weeks to keep the naira stable as foreign investors took profits after yields fell on the local debt market, Reuters was told. The naira was quoted at 362.80 to the dollar on the currency market for investors, weaker than the level around 361 level where it has traded for much of this year, said a dealer, who trades currency for the local unit of an international bank. Pressure has been building on the currency amid a dwindling supply of dollars. It now takes more than a week to fill customer orders. Nigeria operates a multiple exchange rate regime. It maintains an official exchange rate of 306 naira to the dollar, supported by central bank. The traded rate of 362.80 is the one widely quoted by foreign investors and exporters. The central bank does not disclose how many dollars it injects into the currency market. We are currently seeing more outflow than inflow … but the central bank has been intervening,” the trader said. “The moment the central bank doesn’t provide support, people may start to panic.” Nigeria’s central bank has cut back on open market auctions to attract foreign investors in its bonds, a policy shift aimed at stimulating lending to boost an economy stuck with low growth after a recent recession. The trader said some offshore clients were taking profits and that summer holidays in Europe could also account for the low volumes.
  • One of Nigeria’s main oil and gas trade unions said on Friday it had suspended planned industrial action related to a staffing dispute with U.S. oil major Chevron. OPEC member Nigeria is Africa’s largest oil producer and crude sales bring about 90% of foreign exchange, but the moribund state of refineries means it imports most refined fuel. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) had accused U.S. oil major Chevron of sacking hundreds of Nigerian workers and altering contracts, both of which it said were in violation of an agreement. On Thursday, the union issued a statement in which it said it was prepared to take industrial action if certain demands, including the return to work of all “NUPENG executives”, were not met by Chevron within 7 days. But, in its new statement, NUPENG said it had suspended the planned industrial action following talks brokered by the state oil company that were held on Thursday and Friday.