A Week in Nigeria: 31 August
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Nigeria says it won’t relinquish assets in $9 billion dispute, Benin border partially closed over rice smuggling, and more than 50 people abducted as bandits raid village in northwest.
- Nigeria will not relinquish assets to a firm registered in the British Virgin Islands following a court ruling related to a $9 billion gas project dispute, the information minister said. Lai Mohammed made the comments while addressing journalists alongside the finance minister, attorney general and central bank governor in the capital, Abuja. Earlier this month a judge in London granted Process and Industrial Developments Ltd (P&ID) the right to attempt to seize some $9 billion in assets from the Nigerian government over an aborted gas project. The $9 billion sum would be one of the largest financial penalties imposed on Nigeria, representing 20% of the currency reserves of Africa’s largest economy and top oil producer. “The federal government is taking all necessary steps to appeal the decision of the UK Court, to seek a stay of execution of the decision, to defend its rights and to protect the assets of the people of the Federal Republic of Nigeria,” said Mohammed. And the attorney general said he believed the contract signed by a previous administration with P&ID, a little-known firm founded by two Irish businessmen specifically for the project, was “designed essentially to fail right from conception”. He said there was a need for a criminal investigation into the circumstances behind the deal. Many people took to social media to share their thoughts.
- “This award is unreasonable, an assault on every Nigerian and unfair,” said the finance minister, Zainab Ahmed, during the press conference. The situation has raised eyebrows and prompted many questions: why has a UK court ruled that a tiny gas company can attempt to seize Nigerian government assets? What is at risk of being seized? Is $9 billion an unusually large award? And what are Nigeria’s options? We published a comprehensive explainer to answer these questions and others.
- Nigeria has partially closed its western border with Benin to curb rice smuggling that is threatening the country’s attempt to boost local production, the government said. President Muhammadu Buhari’s administration wants Nigeria to be self-sufficient in rice and has imposed import controls but these have kept prices high and led to smuggling from Benin into Nigeria. President Buhari has introduced policies since taking office in 2015 that are aimed at curbing imports to boost local production and conserve foreign exchange reserves. He said rice smuggling across the western border threatened his policy of self-sufficiency. “The country has saved huge sums of money which would otherwise have been expended on importing rice using our scarce foreign reserves,” Buhari was quoted as saying in a statement issued by his spokesman. “We cannot allow smuggling of the product at such alarming proportions to continue.” The statement did not say when the border was partially closed. Buhari also said there would be a meeting with Benin and Niger, Nigeria’s northern neighbours, to determine measures to check smuggling across the borders. He said the border closure was limited to allow security forces stem the trend and that he would consider fully re-opening the border in the future. The government has said Nigeria’s imports of rice and wheat together cost almost $4 billion a year but its 190 million people rely on imports for most of what they consume due to limited manufacturing capacity.
- In a related story, also tied to efforts to bolster local production, the central bank told lenders to stop processing milk imports on a credit basis, according to bankers. Nigeria spends between $1.2 billion to $1.5 billion annually to import milk, the central bank says. The central bank last month said it would ban access to foreign currency for the imports to spur local production, though it did not say when the ban would come into force. In a circular to lenders this week, the central bank said milk imports will no longer be eligible under payment terms known as “bills for collection” which allowed the importer to buy on credit. Importers would need to fund their naira accounts and open letters of credit, bankers said. Bankers said the central bank wanted to streamline payment modes for milk imports. Industry groups had been lobbying the government against the bank’s planned dollar curb, arguing that domestic milk production was not enough to meet local demand. In 2015, the central bank restricted access to forex for 41 items which it said can be produced in Nigeria.
- More than 50 people, including pregnant women and children, were abducted in a raid on a village in northwest Nigeria, seven residents told Reuters. The attack on Wurma village in Katsina, northwest Nigeria, began around 11:30 p.m. on Tuesday night. Police pegged the number of those abducted at 15, adding that 10 of them were freed unharmed following a gun battle with police. But multiple residents told Reuters that many more were taken. Alhaji Musa, whose two daughters were among those taken, said more than 100 bandits were “shooting from all angles” who “operated for about three hours with nobody to challenge them”. Seven residents, and one man who was abducted but released by the attackers, said at least 53 people were taken, including pregnant women, babies and children. Some residents had already received ransom requests from the abductors, the sources said. The attackers also took sheep, goats and food, they added.
- Nigeria’s biggest telecoms firm MTN launched a mobile money transfer service, targeting those without bank accounts, and said it plans to become a payment services bank once it obtains approval from the central bank. The success in east Africa of M-Pesa, the mobile money unit of Kenya’s Safaricom, has convinced investors and the industry that financial services are the next growth area for the telecoms sector, where prices for basic services are falling. Nigeria said last year it would allow telecom companies to provide banking services, aiming to give millions of Nigerians without bank accounts access to mobile money services. MTN Nigeria was awarded a licence by Nigeria’s central bank in July to provide financial services. Majority owned by South Africa’s MTN Group, the company runs Nigeria’s biggest mobile phone network serving around 56 million people. MTN Nigeria’s CEO Ferdi Moolman said its Yello Digital Financial Services Limited (YDFS) unit would extend access to simple money transfer services and other financial services. More than half of Nigeria’s population do not have a bank account.
- There were several oil stories this week. Nigeria lost as much as 22 million barrels of oil to theft in the first half of this year, a problem that is a threat to the country’s economy, state oil company NNPC said. The stolen oil amounts to more than 120,000 barrels per day (bpd), or roughly 6% of Nigeria’s nearly 2 million bpd output. Oil accounts brings in 90% of Nigeria’s foreign exchange and the bulk of government revenue. But the oil pipelines that snake through the swampy, oil-rich Niger Delta region are targets for theft and sabotage. Godwin Obaseki, the governor of Edo state and chairman of the ad-hoc Committee of the National Economic Council on Crude Oil Theft, Prevention and Control, said the 22 million barrel figure could double by the end of the year if nothing was done to combat theft. In its June monthly report, NNPC said there was a 77% rise in oil pipeline vandalism. That report noted 106 pipeline breaches in June, up from just 60 in May. Many of the breaches are points where thieves can off siphon oil and either sell it illegally or refine it in so-called artisanal refineries that are often little more than drums boiling oil into rudimentary fuels.
- A gas pipeline in Nigeria’s Delta state was shut down on Friday following a breach, according to state oil company NNPC and local authorities. Locals in Otu-Jeremi in Ughelli South area of Delta state reported an explosion on the pipeline, though NNPC said the pipeline was shut down following a leak. Police said they were investigating the situation. The pipeline flows from Oil Mining License 34, which is owned by Nigeria Petroleum Development Co, a subsidiary of NNPC, and Nigerian company ND Western. OML 34 produces an average of 390 million standard cubic feet per day of gas, and 17,000 barrels per day of oil and condensates. Gas processed from the field goes into the Escravos-Lagos Pipeline, which feeds Egbin power plant, the largest in Nigeria.
- And OPEC oil output rose in August for the first month this year as higher supply from Nigeria and Iraq outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran, a Reuters survey found. The 14-member Organization of the Petroleum Exporting Countries has pumped 29.61 million barrels per day (bpd) this month, the survey showed, up 80,000 bpd from July’s revised figure which was the lowest OPEC total since 2014. The survey indicates Saudi Arabia is not deviating from its plan of restraining output by more than called for by an OPEC-led supply deal to support the market. Despite calls this year from U.S. President Donald Trump on OPEC to raise output, the producers renewed the supply pact in July. OPEC’s supply curbs should eventually start to support the price of crude, which has fallen from a 2019 high above $75 a barrel in April to $61 on Friday on concern about slowing oil demand and economic growth, analysts at Commerzbank said. OPEC, Russia and other non-members, known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 this year. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members and exempting Iran, Libya and Venezuela. The biggest supply boost of 80,000 bpd came from Nigeria which is seeking a higher OPEC quota and in August continued to produce above its target by the largest margin. The second-largest rise of 60,000 bpd came from Iraq, which boosted exports from both its northern and southern outlets according to the survey.