A Week in Nigeria: 7 December

The re-arrest of activist Omoyele Sowore by security agents, hours after he was released, took place in a courtroom in the capital Abuja
  • Lawmakers passed a record 10.59 trillion naira ($35 billion) budget for 2020, paving the way for a likely return to the international debt market next year as the country struggles to shake off the impact of a recession. The budget assumes a deficit of 1.52% of the estimated gross domestic product — representing around 2.18 trillion naira — to be financed through foreign and domestic borrowing. In 2019, the debt office said it did not tap the international debt market because of time constraints before the end of its budget cycle. The West African country held its last Eurobond sale in 2018, its sixth outing, where it raised $2.86 billion. Nigeria emerged from a 2016 recession the following year but has struggled to boost growth. Ratings agency Moody’s downgraded the country’s outlook to negative from stable on Wednesday, citing an increased risk to government revenue. The budget assumes crude production of 2.18 million barrels a day and an oil price of $57 per barrel. Nigeria is Africa’s top oil producer. The spending plan, which includes a value-added tax increase from 5% to 7.5%, is up from the 8.83 trillion-naira budget for 2019 and tops the previous record spending plan, the 9.12 trillion-naira budget for 2018. Buhari last week asked parliament to approve a request for $23 billion in foreign borrowing for infrastructure projects. It was not immediately clear if that sum was included in the budget passed by lawmakers. The budget was passed by the Senate, parliament’s upper house, followed by the lower house a few hours later. Lawmakers increased the budget from the 10.33 trillion-naira spending plan that Buhari presented them in October. Their revised plan must be approved by Buhari before he signs the budget into law. But, given that both houses of parliament are headed by loyalists from the president’s party, the budget is unlikely to undergo further changes. The speed with which lawmakers passed the spending plan was among the various observations made by social media users.
  • Lawyers for the Nigerian government on filed “new and substantive” allegations of fraud with a British court in its ongoing fight against an arbitration award now worth more than $9 billion, a spokesman for the attorney general said. The government has been fighting efforts by the firm, Process & Industrial Developments (P&ID), to enforce the award for a failed gas project, and now is also seeking to overturn the underlying award, the spokesman said. As the window to appeal the arbitration award expired, one of the only ways to overturn the award itself is to prove fraud or corruption in the foundation of the contract, legal experts told Reuters. Attorney General Abubakar Malami and other government officials have repeatedly said that an investigation this year by the country’s anti-graft unit had uncovered proof of fraud. “The challenge argues that the (contract) was procured on the basis of fraud and corruption, while the subsequent arbitral process was riddled with irregularities and deliberately concealed from the rest of the government,” Malami’s spokesman said in an emailed statement. The attorney general’s office calculates the total to be roughly $9.7 billion. Details on the evidence uncovered were not available as the spokesman said that court filings and documents are sealed until they are referred to in open court. “Nigeria’s new filings with the English Court is an act of desperation to try to undo the Court’s sound conclusion that P&ID’s $10 billion award is enforceable,” P&ID said, adding that the award is now worth $10 billion due to interest accrued. The 2010 deal called for P&ID, which was set up solely for the project, to build a gas processing plant, and for the government to supply it with gas. It collapsed without any construction taking place, though P&ID said it spent $40 million on a design and feasibility study. P&ID initiated arbitration in 2012, and in 2017, a UK tribunal awarded P&ID $6.6 billion, plus interest, based on what it could have earned over two decades.
  • Pirates kidnapped 19 crew members from a crude oil tanker off Nigeria in an area where acts of piracy are on the rise, an official with the ship’s operator said. The loaded vessel, the Nave Constellation, was attacked 77 nautical miles off Bonny Island on Tuesday and 18 Indians and one Turk from the crew were seized, the official said. Seven other crew members remain on board the vessel. Neither the vessel nor the cargo were damaged, the official said. The shipping industry has warned in recent months about the increasing dangers faced by seafarers in the Gulf of Guinea, particularly around Nigeria, including kidnappings by pirates. The International Maritime Bureau said in October the Gulf of Guinea accounted for more than four fifths of crew kidnappings globally. Maritime security officials say that over the past year there has been a growing shift by pirate gangs in the Gulf of Guinea and especially Nigeria towards kidnapping crews rather than stealing cargoes, to try to extort ransom from ship owners. The head of Nigeria’s Maritime Administration and Safety Agency Dakuku Peterside, said authorities were working to ensure the crew are secured and those abducted, released. He said the vessel owners had operated for 10 days in Nigerian waters without contacting harbour masters or Nigerian authorities. The Hong Kong-flagged supertanker, capable of carrying up to 2 million barrels of oil, is operated by Greek shipping company Navios Tankers Management.
  • And Nigeria’s minister of state for petroleum said the country is committed to full implementation of agreements among OPEC and non-OPEC members. Timipre Sylva, speaking ahead of an OPEC meeting in Vienna, said he had told Saudi Energy Minister bin Salman that Nigeria’s compliance had improved substantially since August. Prince Abdulaziz serves as chairman of the OPEC and non-OPEC joint ministerial monitoring committee. Oil producers led by Saudi Arabia and Russia agreed on Thursday to cut output by an extra 500,000 barrels a day in the first quarter of 2020. That would take their target to 1.7 million bpd, or 1.7% of global demand. Saudi Energy Minister Prince Abdulaziz bin Salman said effective cuts could be as much as 2.1 million bpd as Saudi would carry on cutting more than its quota. But the producers stopped short of pledging action beyond March. OPEC sources said Riyadh, which has been cutting more than required to help OPEC+ meet its overall target, was pressing Iraq and Nigeria to improve their compliance with quotas. Full compliance could provide an additional reduction of up to 400,000 bpd. “Saudi Arabia is pushing for deeper cuts to try and shore up prices. However, deeper compliance is imperative and hence the deal will last only for one quarter so that they can assess compliance then,” said Amrita Sen, co-founder of Energy Aspects. Several analysts gave their assessment to Reuters of what deeper cuts mean for the market.
  • The African Development Bank (AfDB) approved a $210 million loan to help Nigeria upgrade its dilapidated electricity transmission and distribution network. The loan to Transmission Company of Nigeria (TCN) will support the construction of 330KV double circuit quad transmission lines and sub-stations across the country, the bank said in a statement late on Friday. The AfDB funded project will run across seven states and will improve the capacity of the power grid where it is most constrained. Nigeria privatised most of its power sector in 2013 but retained control of its monopoly grid, operated by TCN. Most of the country’s power generation is from thermal power stations that use gas. The creaking power grid has often been blamed for hobbling growth in west Africa’s largest economy. AfDB’s acting vice president for Power & Energy, Wale Shonibare said implementing the project would increase evacuation from the south towards the north, where power supply is limited. The project would also improve power export and regional power system integration to the West African Power pool, especially through Niger and Benin interconnections, he said. The country’s power output stands at around 4,000 MW, the Nigeria Electricity System Operator has said. Total power generation capacity is about 7,000 MW but the transmission network cannot cope if plants operate at full tilt. Nigeria’s privatized power sector typically does not use meters to provide invoices, bill collections are low and energy tariffs have remained fixed for three years. The effect, say industry experts, is that electricity distribution companies recover so little revenue from customers that they pay less than a third of what they owe to generating companies — leaving the sector with ballooning debts.

--

--

--

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Russian Army Destroys Paintings By Famous Ukrainian Folk Artist

Edhi’s Principles of Progress

Macron’s election may be a turning point for the EU — but Euroscepticism is not dead and buried yet

Getting A Passport in Zimbabwe

Role of NGOs in child welfare

American Sh*thole

Ariana is airlines of which country

UK inquiry into Litvinenko's poisoning death wraps up

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Alexis Akwagyiram

Alexis Akwagyiram

Nigeria bureau chief for Reuters. Ghanaian family, British accent. Ex-BBC, before that newspapers.

More from Medium

An Uncle’s Love

loading… tired.

A Love Letter to Cincinnati

Quitting is not something I do.