The Nigeria National Petroleum Corporation (NNPC) has said that the claim that international oil companies operating in Nigeria owe the Federal Government over $60billion with respect to Production Sharing Contracts is hard to succeed.
The Chief Operating Officer, Upstream, NNPC, Mr Roland Ewubare, in an interview published in NNPC News, stated this when asked if it was possible to recover the $60bn said to have been lost to the delay in the review of the PSC law after the price of oil rose above the $20 stipulated by the law.
The Tide recalls that in November last Year, President Muhammadu Buhari signed the bill that amended the Deep Offshore (and Inland Basin Production Sharing Contract) Act after its passage by the National Assembly.
The Attorney General of the Federation, Malami Abubakar, had repeatedly asked the IOCs to pay $62bn (over N20tn) owed to the Federal Government with respect to the PSCs.
Ewubare said the NNPC had in the past tested the proposition around the possibility of getting the money from the IOCs.
He said the corporation sought legal advice and got legal opinions in writing from legal experts.
He said, “The crux of those opinions is that we slept on our right – we had the right to ask and we didn’t ask and so it is gone.
“The second position was that what we really lost was not quantifiable dollars and cents or naira and kobo but an opportunity to make that money and that it is hard to make a legal claim that will succeed on the basis of an opportunity that was lost.”
According to Ewubare, the other aspect is that at some point in the course of engagement, there was an argument around the PSCs and the NNPC took certain steps that it believed, based on its interpretation of the law, were justified.
He said, “Those steps resulted in a dispute which went to arbitration because the argument of the other party was that NNPC has gone ahead to try to correct the anomaly through self-help by taking more barrels of oil than it was entitled to.
“At the arbitration, NNPC has won against Esso Exploration and Production Nigeria Limited and they are going on appeal. So, clawing back that money is not quite a straight-forward affair.”
The nation’s oil and gas production structure is majorly split between joint ventures onshore and in shallow water with foreign and local companies and the PSCs in deepwater offshore, to which most of the IOCs have shifted their focus in recent years.
COVID-19: CBN Grants Two-Week Market Holidays To BDCs
The Central Bank of Nigeria (CBN) has granted a two- week market holidays to the Bureaux De Change operators.
This followed a request by the Association of Bureaux De Change Operators of Nigeria to the CBN for the regulator to grant it market holidays, given the ongoing challenges faced in local and global economies due to the impact of the Coronavirus (COVID -19) pandemic.
In a notice to BDC operators and directors, ABCON President, Alhaji Aminu Gwadabe, said the CBN’s approval meant that sales of foreign exchange to BDCs is now suspended till further notice.
Gwadabe also advised the public not to go into panic buying, hoarding and partronasing the street traders as the CBN has enough reserves to sustain supplies when the BDCs return to operations.
The CBN had also acknowledged the contributions of BDCs in promoting stable exchange rate in recent months despite challenging circumstances facing the Forex market due to drop in crude oil prices.
Gwadabe advised members to observe strict guidelines on the preventive measures on the dangers of the COVID 19, wear their mask, gloves, and frequent washing of hands.
“We also want to advise members to strictly comply with their regulatory obligations on their daily operation. If you are trading, be cautious not to fall under the hand of security agencies. Don’t be involved in giving black market rates,street trading as doing so might create regulatory breach,” he said.
Gwadabe said that CBN/NFIU were tracking large movements of funds within the financial sector and noted the need to be cautious.
“Once again, accept our continuous assurances on serving you better as we continue to ponder on lasting solutions to the growing challenges facing our operations amongst them, crowd management, expansion of scope of our buisiness, lesser penalties, automation, among others,” he stated.
…Suspends Cheque Clearing Amidst Lockdown
The Central Bank of Nigeria (CBN) has suspended clearing of cheques until further notice following the lockdown in Lagos, Ogun and FCT to contain the spread of COVID-19 pandemic.
The suspension was announced in a circular to Deposit Money Banks and the Nigeria Interbank Settlement System (NIBSS) by the Director of Banking Services at CBN, Mr Sam Okojere.
President Muhammadu Buhari had, on Sunday ordered a lockdown in Lagos, Ogun and the FCT with effect from 11 p.m. on Monday, March 30 FCT), as a response to contain the coronavirus (COVID-19) pandemic.
The bank explained that in view of these developments and in furtherance to the Bank’s effort to ensure hitch-free clearing and settlement activities, the CBN had therefore suspended it until further notice.
The apex bank further stated that the clearing of cheques instruments in the Nigerian clearing started from March and for the avoidance of doubt, no fresh cheque instrument would be allowed to pass through March 31.
The CBN noted that only returned cheque would be treated on the said date.
“However, settlement activities for electronic instruments will continue to hold during this period of suspension”, it said.
Nigeria’s Economy Fragile Before COVID-19 Pandemic –Finance Minister
The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that prior to the outbreak of the coronavirus pandemic, the Nigerian economy was already fragile.
She said this in a statement issued by her Special Adviser on Communication, Mr Yunusa Abdullahi, on Monday in Abuja.
Ahmed, according to the statement, said this during her meeting with the leadership of the National Assembly where she spoke on implications of the global economic crisis on Nigeria.
The coronavirus pandemic had led to unprecedented disruptions to global supply chains, a sharp drop in global crude oil prices, turmoil in global stock and financial markets, the lockdown of large swath movements of persons in many countries, among others.
These outcomes have had severe consequences on households’ livelihoods and business activities, resulting from drop in global demand, declined consumer confidence and slowdown in production.
But the finance minister said that prior to the outbreak which had led to decline in crude oil prices, the Nigerian economy was already fragile, vulnerable and deteriorating.
She said the global economic downturn had forced international oil prices to drop to as low as $22 per barrel.
The minister said international travels and trade had been severely disrupted, while demand for goods and services is deteriorating as a result of the social distancing policies.
This, she said had led to financial markets uncertainty which had resulted into capital flows’ reversal from emerging and frontier markets such as Nigeria.
She said, “Increasing pressure on the naira and foreign reserves as the crude oil sales receipts decline and the macroeconomic outlook worsens.
“Central Bank of Nigeria, just as in other countries, has resorted to quantitative easing, by reducing interest rates to support economic activity and governments announcing fiscal stimulus plans for healthcare and social safety nets.”
She said the government was working on a fiscal stimulus package to cushion the impact of the crisis on the most vulnerable individuals and communities.
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