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Cassava: The abandoned goldmine, $5bn export target

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Cassava: The abandoned  goldmine, $5bn export target

Sixteen years after the Federal Government set up the Presidential Committee on Promotion of Cassava Export with an annual target of $5billion, Nigeria, the world’s largest producer of the crop, is yet to tap opportunities which countries with less endowment are reaping in foreign exchange earnings. PAUL OGBUOKIRI writes

 

Cassava, an untapped goldmine

Sequel to the economy diversification policy of President Muhammadu Buhari administration, cassava crop has been identified as the country’s key agro industrial produce that could generate about N20trillion revenue to the country if harnessed.
This claim by cassava growers in Nigeria under auspices of Nigeria Cassava Growers Association (NCGA), came as it has been disclosed that the crop has multi-purpose usage, which cuts across different sectors of the economy, including the power industry, health care services, foods and beverages, among others.

According the president of NCGA, Segun Adewumi, the crop has tremendous export potentials because of its diverse industrial use and ever rising demand in China, EU countries and many others.
According to him, the high quality of Nigerian cassava was attested to by Chinese firms at the launch of the Presidential Initiative on Cassava (PIC) production for export in 2001, “it was observed that global attention by buyers was on Nigeria with several purchase orders received from firms from China, EU countries, South Africa, Bostwana, Nambia and Zambia.”

Sunday Telegraph learnt that soon after the launching of PIC, a Chinese company, during the visit of then chairman of the presidential committee, Idris Waziri to China expressed its readiness to buy 45 million metric tonnes of cassava chips from Nigeria annually; this was far above Nigeria’s production capacity as at then.

Adewumi said that the implication is that if Nigeria was pro-active towards the presidential initiative, there was a ready international market to absorb the 150 million metric tones of Nigeria’s cassava annually. He said apart from China and EU countries, Nigeria has opportunities in other markets in Japan, Singapore, United States, Philippines, Korea, and Malaysia among others that were all waiting for the cassava.

“ With this, the government would have realize its dream of diversifying the economy by surpassing the $5billion export target set in 2001,” he said.

Also speaking, Professor Pat Utomi, political-economist, said that given the huge market in cassava, Nigeria needs to focus on expanding its industrial use of cassava and further prepare the crop as an export product for the world market which is largely on chips and pellets for feeds, starch and industrial uses.

He noted, however that the interesting thing is that the agriculture promotion policy of the Buhari’s administration is said to be addressing issues of marketing, infrastructure, research and development and private sector stimulus.
He further said that it is also hoped that the Central Bank of Nigeria’s Anchor Borrowers Programme funding would encourage cooperative farming which was the strategy of Thailand’s success story in cassava farming.

 

Cassava farmers struggling

President of NCGA, Segun Adewumi said the association is targeting the production of additional two million tonnes of cassava for industrial use in the next cropping season.
He said in an interview with NAN that the association had presented a proposal to the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) to cultivate additional 100,000 hectares for cassava production to meet the target this year.
Adewumi explained that the large-scale production of cassava would boost the local manufacturing of some industrial cassava derivatives.

‘‘We have made a proposal to NIRSAL to aggregate additional 100,000 hectares for cassava production and that will give us an additional two million tonnes of cassava for industrial use in the next cropping season.”

He however said that the association is waiting for the government to roll out its plan for 2018 before they will start telling people to go and plant, so that they will not plant and there will be no market.

Adewumi appealed to the government to roll out sustainable programmes that would cover the entire cassava value chain so that when cassava is planted, it would be marketed.
‘‘The government should roll out programmes that will convince the cassava growers that if they plant, they won’t run into the hitch of how to sell it.

‘‘Once the government rolls out its programmes and we see that we are protected; we will align to it to make sure when the farmers produce, they will be able to sell,’’ he said.

However, Sunday Telegraph learnt that though the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, last year assured that the government would revive the cassava breas programme; there is no indication at the moment that something has been done. This is even as the farmers who were told to feed the programme with massive cassava production are backing out as the market is not encouraging.

Also, an official of the Cassava Growers Association of Nigeria, Austin Maduka, said that “currently there is no genuine cassava market in Nigeria but under the CBN Anchor Borrowers’ window, some cassava off-takers have emerged.”
He believed that there were still lots of issues that government needed to resolve to make cassava production lucrative for farmers.

Lip-service at boosting industrial use of cassava

The Federal Government seems not to have made enough effort towards ensuring that the economy generates the tremendous opportunities in cassava export market even though the country is the world largest producer of the crop, producing over 47 million metric tonnes annually followed by Thailand with 30million metric tonnes.

Though indications were that while Nigeria has zero share of world cassava market, and the country has not made any effort to realize its $5 billion annual export target, she has further abandoned her 10 per cent cassava flour initiative, even as her paltry N54 billion local industry demand for the produce is threatened this year by the recent flood disaster in the country.
Conversely, Thailand which is the second largest producer of the crop after Nigeria rules the global trade on cassava; accounting for 80 per cent of world export of the produce, while two other Asian countries Vietnam and Indonesia account for 8 per cent and the remaining 12 per cent are shared by the rest of the world.

This is even as cassava is mainly used as a staple food in Nigeria today; Thailand has gone far beyond that in utilising cassava as an industrial produce. Thailand has a well developed cassava industry driven by value addition to export cassava products besides satisfying her domestic market. Thailand takes advantage of her regional Asian market to be the largest exporter of cassava chips and pellets to China and India. It also dominates the market of European countries with cassava products especially as livestock feeds, sweeteners, organic acid, alcohols, modified starch, sugar alcohols, pearls and tapioca.

Furthermore, Thailand’s cassava chips rules the global market for the production of bioethanol as an alternative energy for liquid fuel. For example, China has made huge investment on biofuel programme which has increased the demand for Thailand’s cassava products. The increase is likely to continue as the world earnestly looks forward to liquid fuel option being controlled by the OPEC cartel. Quietly, Thailand is giving the world alternative liquid energy as a future market. Thailand is an agrarian country like Nigeria but less endowed like Nigeria, but Thailand knows how to exploit its resources to empower her people and makes inroad into the global market. Today, Thailand is a fast emerging economy of the world through its agriculture

Cassava bread initiative abandoned

The cassava bread initiative seeks to include at least 10 per cent composite cassava flour into baking flour for bread and other products in order to reduce massive wheat importation.

Between 1987 and 1990 the Federal Government banned importation of grains (including wheat), thus drastically reducing consumption of wheat products. In order to reduce the import bill on wheat, the Federal Government compelled flour mills to include cassava flour in all flour produced in Nigeria in the ratio of 90 per cent wheat flour and 10 per cent cassava flour as against the use of 100 per cent whole wheat bread conventionally consumed. The policy was institutionalized in 2004 while its implementation was to commence in January, 2005. Implementation of this policy would require 200,000 tonnes of cassava flour out of which only about 10,000 tonnes can be supplied.

Sequel to failure of the initial effort, the Obasanjo administration reintroduced the programme and it was on the table during the Yar’Adua and Jonathan administrations.

The Jonathan administration launched re-launched the programme with N10billion funding support in 2012 but the programme has been in comatose since 2015.

However, on their part, members of the Master Bakers and Caterers Association said that they are ready to embrace the 10 per cent cassava flour supplement. They said that the revitalization of the Cassava Bread Initiative would inject about N255 billion into the economy annually if implemented by the Federal Government.

The Publicity Secretary of the association, Mr. Joseph Ubah, had told Sunday Telegraph that “if we must make progress in this country, there must be continuity in our policies.

“Nigeria will be earning over N255 billion annually if 10 per cent cassava flour is included in bread; Nigerian bakers are even capable of increasing the percentage of cassava flour in bread to 20 per cent. Then, we will be talking of generating about N510 billion annually, which will be added to our Gross Domestic Product (GDP) if this initiative is revived,’’ he said.

Conclusion

To put Nigeria on a sound pedestal for global competition, the country needs to bridge the existing global divide in cassava processing and utilisation by upgrading the use of cassava into primary industries such as starch, ethanol, chips, and flour in order to provide an industrial base for further diversification of the economy. The value addition could make cassava to become industrial raw material that may well serve for the production of finished products of commercial interest to the western countries and; hence, become Nigeria’s source of foreign exchange on a sustainable basis.

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  1. Vince Dehl

    December 31, 2018 at 1:54 pm

    Hi, I think your site might be having browser compatibility issues. When I look at your blog in Opera, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, great blog!

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Business

Nigerian soybean oil market value hits N353.1bn

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BREAKTHROUGH

Nigeria has become the largest producer of soya beans in sub-Saharan Africa

 

 

V

alue of Nigerian soybean oil seed in global market reached N353.1billion ($967. 5million) between January 2018 and October 2019.

Currently, the global price of the oil is $450 per tonne as at November 2019.

 

 

Already, soybean oil has become the major ingredient in the production of chicken feed across the country as poultry farmers now depend on it to feed their birds.

 

 

Data by Index Mundi, a global trade portal, revealed that the country had produced 2.15 million tonnes of the oil seed.

 

 

Findings by New Telegraph revealed that the importation of soybeans by Nigeria had come down to zero because of huge investments in production of the beans through the anchor borrower scheme introduced by the Central Bank of Nigeria (CBN).

 

 

In 2018, the country produced 1.05million tonnes of the beans, while a total of 1.10million tonnes was produced in the last 10 months from the 1.29 million tonnes production harvested between 2018 and 2019.

 

 

The local tonnage of the beans has made the country become the largest producer of the beans in sub-Saharan Africa.

 

 

Findings also show that Olam, an agro- business company, emerged as the largest buyer of Nigerian soybean from local farmers and traders.

 

The company had created an export market for the country’s beans and it accounts for the bulk of soybean export because of the surplus to domestic needs.

 

 

Prior to 2016, there was no export market for the bean.  The sudden rise in the local production has led to a crash in its importation.

 

 

Data from the National Bureau of Statistics (NBS) revealed that a total of N14.2 billion soybeans were exported in the last one year, following 60 per cent increase in production.

 

In the past, the country was only able to produce 731,000 tonns between 2015 and 2016.

 

 

Before the huge production, statistic by the Nigerian Ports Authority (NPA)’s shipping position revealed that the country imported some 825,000 tonnes of the beans from United States between 2015 and 2017 as infant food manufacturers in the country depended on the beans as alternative to cow milk because of its high nutritional value.

 

 

In 2017, the country took delivery of some 47, 476 metric tonnes through the Lagos Port Complex in Apapa.

 

 

Within the period, MV Noro Shanghai and MV Marina L. berthed with 30,476 metric tonnes and 17,000 metric tonnes of soybeans respectively.

 

 

Also, it imported 275,000 tonnes annually in 2015. Between 2014 and 2013 the country imported 121, 000 tonnes and 100,000 tonnes respectively to support local demand.

 

 

Meanwhile, the Poultry Association of Nigeria (PAN) had complained that the beans price had skyrocketed and the commodity had disappeared from the market.

 

It explained that SALMA Oil Mills in Kano, Grand Cereals in Jos, ECWA Feeds in Jos, AFCOT Oil Seed Processors now depended on the commodity for their production.

 

 

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US curbs: Huawei to give staff $286m bonus

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US curbs: Huawei to give staff $286m bonus

Chinese telecoms giant Huawei Technologies said on Tuesday it will hand out 2 billion yuan ($286 million) in cash rewards to staff working to help it weather a U.S. trade blacklisting.

The world’s largest telecoms equipment provider has said it has been trying to find alternatives to U.S. hardware after the United States all but banned it in May from doing business with American firms, disrupting its ability to source key parts, reports Reuters.

The cash is a mark of recognition for work in the face of U.S. pressure, Huawei’s human resources department said in a notice to staff seen by Reuters. It will also double pay this month for almost all its 190,000 workers, a company spokesman said.

The cash rewards will likely go to research and development teams and those working to shift the company’s supply chains away from the United States, the spokesman said.

Details of Huawei’s plan were first reported by the South China Morning Post on Tuesday.

Many in the U.S. government believe that Huawei’s equipment, particularly its 5G networks, pose a security risk, because of the company’s allegedly close ties to the Chinese government. Huawei has denied the Chinese government plays any role in its operations.

Although granted reprieves from much of the U.S. exclusion, Huawei had been working to find alternatives after it witnessed the crippling effect of U.S. sanctions on its smaller Chinese rival ZTE Corp (000063.SZ) in early 2017.

The company is also the world’s second largest maker of smartphones and a surge in shipments of devices helped it to report a 27% rise in third-quarter revenue last month.

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Aviation

South African Airways may cut more than 900 jobs

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South African Airways may cut more than 900 jobs

South Africa’s struggling state-owned airline South African Airways (SAA) could cut more than 900 jobs as it restructures to stem severe financial losses, the airline said in a statement.

SAA said it had started consultations with its more than 5,000 staff and was talking to labour unions.

The airline has not made an annual profit since 2011 and is grappling with severe funding difficulties and an inefficient and ageing fleet of airplanes, reports Reuters.

South African officials have been searching for an investor to take a stake in the airline, but their efforts have so far been unsuccessful.

“We urgently need to address the ongoing loss-making position that has subsisted over the past years. That is why we are undergoing a restructuring,” said SAA acting-Chief Executive Zuks Ramasia.

“No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected.”

In a dramatic fall from grace over the past decade, SAA has lost its place as Africa’s biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers.

Analysts have long said its workforce should be cut to bring it in line with regional competitors.

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ICT / e-World

US state attorneys general meet to discuss Google antitrust probe

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US state attorneys general meet to discuss Google antitrust probe

State attorneys general are meeting on Monday in Colorado to discuss their probe into whether Google’s business practices break antitrust law, according to two sources knowledgeable about the meeting.

Perhaps about a dozen states were expected to send representatives to the meeting, one of the sources said.

The gathering was expected to be similar to one held in New York in October, where state and federal enforcers from the Justice Department and Federal Trade Commission discussed their probe of Facebook (FB.O), reports Reuters.

The probe of Google, a unit of Alphabet Inc (GOOGL.O), is being led by the Texas attorney general’s office. That office did not respond to a request for comment, and a spokesman for the Colorado attorney general’s office declined comment.

Google had no comment about the meeting in Colorado but pointed to a blog post from September in which an executive, Kent Walker, said that the company has “always worked constructively with regulators and will continue to do so.”

Texas sent the search and advertising giant a subpoena on Sept. 9 asking for information about its online digital advertising business, which generates most of Google’s revenue and where Google is a dominant player.

Google faces two other major inquiries – a U.S. Justice Department investigation and a probe by the House of Representatives Judiciary Committee – both of which have broad reviews of the big internet companies underway.

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Aviation

Boeing: 737 MAX should resume commercial flights in Jan; shares jump

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Boeing: 737 MAX should resume commercial flights in Jan; shares jump

Boeing Co on Monday said it expected U.S. regulators to approve the return to commercial service of its grounded 737 MAX jet in the coming weeks, and its shares jumped as investors grew more hopeful the planemaker had addressed software problems at the heart of two fatal crashes.

Boeing said it expected the U.S. Federal Aviation Administration (FAA) to issue an order approving the plane’s return to service next month, but added it now expected commercial service to resume in January. Boeing shares rose 5% on the company’s outlook.

As recently as last week, Boeing said it expected flights could resume by the end of December. On Monday, the company said it was possible that resumption of MAX deliveries to airline customers could begin in December but said getting approval for training changes would take more time, reports Reuters.

American Airlines and Southwest Airlines said Friday they were pushing back resumption of 737 MAX flights until early March. Major airlines have said they will need at least a month to complete training and install revised software before flights can resume.

“We expect the Max to be certified, airworthiness directive issued, ungrounded in mid-December. We expect pilot training requirements to be approved in January,” said Boeing spokesman Gordon Johndroe.

He added that “our airline customers will need more time to return their fleets to service and to train all 737 pilots, therefore they have announced schedule updates into March.”

The FAA reiterated that the agency has “set no timeframe for when the work will be completed.”

Last week, Reuters reported that U.S. and European regulators had not been able to complete a software documentation audit because of significant gaps and substandard documents. The FAA must complete that audit before a key certification test flight can be scheduled.

“We are taking the time to answer all of their questions,” Boeing said Monday. “We’re providing detailed documentation, had them fly in the simulators, and helped them understand our logic and the design for the new procedures, software and proposed training material to ensure that they are completely satisfied as to the airplane’s safety.”

Boeing also said it has completed one of five milestones needed: a multi-day eCab simulator evaluation with the FAA to ensure the software system performs as intended even if there is a system failure.

On Friday, the FAA told U.S. lawmakers a preliminary review by a blue-ribbon panel found Boeing’s design changes to a key safety system to be safe and compliant with regulations.

The next step will be a multi-day simulator session with airline pilots from the around the world.

The FAA said previously it will need 30 days from the time of the certification flight before it could unground the plane and flights could resume.

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Matters arising over new PSC Act

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Matters arising over new PSC Act

The Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill assented to by President Muhammadu Buhari has caused an upheaval in Nigeria’s oil industry. Adeola Yusuf reports

 

The Nigeria’s proverbial oil and gas tree was, last week, shaken to its root by two events that happened.

First, which happened to Nigeria from far away London, the United Kingdom (UK), was President Muhammadu Buhari’s signing the bill, an Act, which amends the Deep Offshore (and Inland Basin Production Sharing Contract).

This was promptly followed, some hours after, by the news of plans by French super major, Total, to exit from Oil Mining Lease (OML) 118.

While the industry players and watchers are yet to establish an official link between the two events, Total immediately appointed Investment bank, Rothschild, to manage the $750 million asset sale in Nigeria.

Opinions have been pouring on the new PSCs law in no small measure; all trying to justify or repudiate the move, altering the entire firmament of the industry.

NEITI’s opinion

The recent PSC Amendment Bill, which was assented to by President Buhari would usher in significant improvement in oil revenue for Nigeria, the Nigeria Extractive Industries Transparency Initiative (NEITI) said.

The agency commended the Presidency and the National Assembly for the speedy manner, the amendment process was handled. The bill was signed by President Buhari in London just a few days after it was passed by the lawmakers.

Executive Secretary of NEITI, Waziri Adio, said in Abuja that the amendment of the law was long overdue.

“We commend the 9th National Assembly and the Presidency for breaking the jinx with the prompt action taken to amend the law in record time,” Mr. Adio said.

The development, he said, was quite consistent with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.

He recalled that in March 2019, NEITI had published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which revealed that Nigeria lost between $16 billion and $28.61 billion in ten years for failure to review the terms of the agreement in 2008 as required by the law governing the PSCs.

The official said there were two notable triggers for the review of the Act in 2004 when crude oil price crossed the $20 per barrel mark, and in January 2008 after 15 years of the 1993 PSCs.

Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004 spelled out the conditions under which the PSCs should be reviewed.

The provisions of the Act stipulates that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the government of the federation shall be adjusted under the PSC.

The essence of the adjustment of the sharing formula was to ensure that the Production Sharing Contracts shall be economically beneficial to the government.

More revenue

The official expressed confidence that with the amendment of the law, revenue generation for the federation in the PSC arrangement in the oil and gas industry will witness significant improvement.

The Deep Offshore and Inland Basin Production Sharing Contracts Act was enacted on March 23, 1999, with its commencement backdated to January 1, 1993.

Bickering before review

Of late, the Federal Government, through the Office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami, had been making a case for the recovery of over $62 billion from the international oil companies.

These are arrears of revenues that should have accrued to Nigeria over the years that oil sold above $20 a barrel.

Malami had accused the IOCs of frustrating efforts in the past for the government to negotiate the review of the PSC.

The morning after

Mass sack last Thursday loomed in Nigeria’s oil industry as more international oil companies mulled pull out from Nigeria’s oil bloc stakes.

The move, which came a few days after President Buhari assented to the bill, New Telegraph gathered, is to worsen the over 3500 job loss suffered by the Nigeria’s oil industry between 2016 and 2019.

French super major, Total, which pioneered the fresh exit plan from Oil Mining Lease (OML) 118, this newspaper gathered on Thursday, has appointed Investment bank, Rothschild, to manage the $750 million Nigeria’s asset sale.

Total is not the only international oil company that has stakes in the OML 118. The stake owners include Royal Dutch Shell 0- the operator, Exxon Mobil and Eni. While Royal Dutch Shell owns 55 per cent stake in the OLM 118, Exxon Mobil has 20 per cent, Eni and Total both own 12 per cent in the oil block.

There has been exchange of correspondences between the IOCs offices in Nigeria and their headquarters situated in their mother countries over this move, this newspaper can report authoritatively.

“While a lot of these correspondences centred on implications of the new law guiding Production Sharing Contracts (PSCs) to our bottomlines, our officers here in Nigeria have been tasked to take resolutions on the new bill as an emergency,” a top management staff of one of the oil majors told this newspaper.

Stating that there would be need for re-adjustment in revenues forecast and projections made on investments in Nigeria before the bill, he maintained that there would be “realignment in spending and possible right-sizing to reflect the new reality.”

Job loss fear

There has been mass sack of over 3,500 workers in Nigeria’s oil industry between 2016 and 2019, data compiled by this newspaper showed.

While the country’s economic recession was allegedly responsible for the sack of about 3,000 in 2016, the United States (U.S.) super oil major, Chevron, allegedly sacked 500 staff working on various projects of the company in Nigeria in 2019.

The two major unions in the oil and gas sector, Nigeria Union of Petroleum and Natural Gas (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), then, threatened to go on strike saying over 3,000 of their members were affected during the 2016 mass sack.

Total group is already looking for buyers for one of its major oil blocks in Nigeria. The oil company wants to sell off its 12.5 per cent stake and has already contracted an investment bank to manage the sale process of the deepwater oilfield.

Total’s 12.5 per cent stake in the deepwater oilfield, Oil Mining Lease 118, is estimated to worth $750 million. Part of the oil block includes Bonga field which began production in 2005.

According to report, the Bonga field has produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak. And with the $10 billion development of the Bonga Southwest field, production output is expected to grow.

OML 118 stakes

The decision to sell its stake in the OML 118, which is located some 120 kilometres (75 miles) off Niger Delta, is coming amidst Total’s expansion in Africa. The company was also reportedly planning to sell $5 billion of assets around the world by 2020; the sale of its stake in OML 118 is part of the assets’ sale.

The company appointed Investment bank, Rothschild to manage the sale process on its behalf.

Shell Nigeria Exploration and Production Company (SNEPCo), it would be recalled, invited interested bidders for the development of the Bonga South West Aparo (BSWA) oil field in February 2019.

It was reported that the project’s initial phaseincludes a new Floating, Production, Storage and Offloading (FPSO) vessel, more than 20 deep-water wells and related subsea infrastructure. The field lies across Oil Mining Leases 118, 132 and 140, about 15km southwest of the existing Bonga Main FPSO.

But Shell disclosed days after that the directive by the Nigerian government to foreign oil companies to pay $20 billion in taxes owed would delay the final investment decision (FID) on its Bonga Southwest deepwater oilfield.

OML 119 as a complement

What the government might lose in OML 118, it appears that it might gain from OML 119.

The Nigerian National Petroleum Corporation (NNPC) has publicly opened bids from the 14 companies for the financing and redevelopment of the oil bloc – OML 119.

The latest is that ten of the 14 firms jostling for the redevelopment financing deals for the oil  bloc are jittery over fate of their bids as four bids have already suffered “technical” disqualification.

The ill-fated bids submitted by four companies during an open bid round penultimate Friday, New Telegraph gathered exclusively yesterday, could not fly after a preliminary screening showed that the firms could not meet up with the financial requirement for the funding deals.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, it would be recalled, publicly opened bids from the 14 companies for the financing and redevelopment of Oil Mining Lease (OML) 119.

OML 119 is a twin offshore block made up of Okono and Okpoho Fields located approximately 50 kilometers offshore south-eastern Niger Delta.

“As we speak, four of the 14 bids can not fly because even from the preliminary screening they have been technically knocked out for their inability to meet up with the financial requirement for the financing deal,” a source close to the deal said.

Noting that this development might have sent jitters down the spines of 10 other bidders, the source maintained that the NNPC “conducted an open bid because of its resolve to ensure that only those who are genuinely qualified are allowed to secure the deals.”

OML 119 is operated by the Upstream subsidiary of the corporation, the Nigerian Petroleum Development Company Limited (NPDC).

Speaking at the public opening of bids for the Funding and Technical Services Entity (FTSE) which held penulrimate Friday in Abuja, the GMD, according to a statement, said that OML 119 was one of the corporation’s critical projects.

This project, the statement issued by Acting Group General Manager, Group Public affairs division, Samson Makoji, read, “aligns wholly with the Federal Government’s aspirations of boosting crude oil and gas production, growing reserves, and monetizing the nation’s enormous gas resources.”

The GMD who was represented by the Chief Operating Officer, Corporate Services, Engineer Faruk Sa’id, stated that the selection process for the potential FTSE was transparent and in strict compliance with extant laws and overriding national interest.

He added that it was also in tandem with the Economic Recovery and Growth Plan (ERGP) and the TAPE agenda of the NNPC.

In his remarks, the Group General Manager, Supply Chain Management, Mr. Abdulhamid Aliyu, assured the companies that the selection process would remain transparent and fair.

Last line

The signing of PSC act shows that government can achieve anything if it is so desired to achieve. However, the investors/ concessionaire/oil companies must be carried along in the review as they are critical stakeholders that need co-operation rather than confrontation on any issue of national development.

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‘How local content underscored Nigeria’s crude cost’s cut’

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‘How local content underscored Nigeria’s crude cost’s cut’

The Federal Government will deepen the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act as it is an effective strategy for lowering Nigeria’s high crude oil production cost, Minister of State for Petroleum Resources, Chief Timpre Sylva, has said.

The minister, according to a statement, stated this at the conclusion of his first working visit to NCDMB’s head office in Yenagoa, Bayelsa State, its new 17-storey headquarters building and other project sites.

Emphasising that government’s primary target in the sector is to significantly reduce the unit cost of producing per barrel of crude oil, Sylva, the statement issued by the NCDMB corporate affairs unit, stated that “local contractors tend to be cheaper than expatriates and international contractors and that’s why we want to encourage Local Content and give more opportunities to local contractors. By extension we will reduce the cost of doing business in the oil and gas industry in Nigeria.

“Local content is part of cost reduction strategy. That’s why I came here, to encourage more local participation in the activities of the industry.”

The minister also lauded the NCDMB for epitomising its mandate by using an indigenous contractor to develop its new headquarters.

He described the edifice as world class and a clear demonstration of the capacity of Nigerians contractors. Such superlative performance on projects would pave way for the engagement of other local contractors in the oil and gas and construction sectors, he suggested.

”When you have seen one contractor perform this good, you are encouraged to patronize more local contractors,” he said.

He expressed confidence that the new NCDMB structure would attract a flurry of oil industry activities to Bayelsa State, adding that “problem we have had over the years was that the region where oil production takes place did not have proper structures to promote lots of events.

That why you see oil and gas events going to Abuja and Lagos. But when you have a befitting facility here, going forward there will be a lot of oil and gas related activity in the Niger Delta.”

The minister commended the NCDMB for the numerous achievements it had recorded in the implementation of the NOGICD Act.

He said: “I am quite impressed with what they have done in a very short time of existence. The new headquarters building is a testament to that impressive performance and of course, you have the 10 megawatts independent power plant. It is a modular plant that can be increased up to 25 megawatts.”

In his remarks, the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, confirmed that local content implementation lowers the cost of crude oil production, particularly in the long run.

He listed other key elements that contribute to high crude oil production cost in Nigeria to include security and infrastructural challenges as well as protracted contracting cycle.

He affirmed that several Nigerian oil service companies had executed several projects at costs much lower than their international counterparts.

He also clarified that countries like Brazil, Malaysia and Norway that had practiced local content in their oil sector for decades had long enjoyed significant cost reduction in their per barrel cost.

Wabote also explained that local content served as an opportunity cost for the Federal Government to empower its citizens and get them involved in the activities of the oil and gas industry.

He added that local content guaranteed security of supply in the industry, recalling that local service companies and skilled Nigerians personnel ensured that operations of the oil and gas industry continued apace during the height of restiveness in the Niger Delta region a few years ago, when most foreign companies and their staff had pulled out.

Providing details on the new NCDMB facility, the executive secretary reiterated that it would be ready in December 2019 but relocation of staff will be in phases.

He stated that the project recorded huge impact on the local community.

According to him, “when we started, we took about 50 youths from the host communities and trained them in carpentry, masonry, laying of tiles and other skills. Today, those youths are working on the facility and because of the skills they have acquired the contractor will take them to other projects.

”In terms of corporate social responsibility, we worked with the contractor and built a town hall for the Swali community which we commissioned last year.  Many members of community also supplied sand, granite and other inputs. They have been an integral part of the construction.”

The executive secretary also informed that NCDMB had developed a sustainability plan for the facility, which includes renting out some of the floors to reputable oil and gas organizations.

“Currently, we have two applications from operating companies,” he noted.

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Business

Nigeria, others fret as OPEC’s oil projection suffers slide

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Nigeria, others fret as OPEC’s oil projection suffers slide

2023 forecast falls to 32.7m barrels a day

 

The Organisation of Petroleum Exporting Countries (OPEC) at the weekend fretted as its oil demand projection slide by about seven per cent over the next four years, slumping to an average of 32.7 million barrels a day in 2023.

OPEC slashed estimates for the amount of oil it will need to pump in coming years, projecting that its share of world markets will shrink until the middle of the next decade amid a flood of U.S. shale supplies.

The producer group expects that demand for its oil will slide by about seven per cent over the next four years, slumping to an average of 32.7 million barrels a day in 2023, according to its annual report.

That could compel the OPEC and its partners — who have already curbed output this year to prevent a glut — to reduce supplies even further, or at least compete more fiercely among themselves for a diminishing portion of global markets.

The organization cut forecasts for demand for its oil each year from 2019 through 2023 by an average of about 5 million barrels a day, or roughly 16 per cent, though the numbers have been affected by membership changes. Qatar left the group at the beginning of this year.

OPEC will remain under pressure from rising U.S. oil output. America has become the world’s top oil producer through developing hydraulic fracturing, commonly known as “fracking,” in states such as Texas and North Dakota.

“The main driver of medium-term non-OPEC supply growth remains overwhelmingly U.S. tight oil,” OPEC said in its latest World Oil Outlook, using another term for shale oil.

By 2025, U.S. shale-oil output will climb more than 40 per cent to reach 17 million barrels a day, or 3.1 million a day more than OPEC projected in last year’s report. American oil will account for a fifth of global daily output at that time.

But the U.S. deluge will also be supplemented by supplies from regions which had either seemed in decline or uneconomical in an era of constrained crude prices, such as offshore Norway and Brazil, as well as Canada, Guyana and Kazakhstan.

OPEC and its partners are due to meet next month in Vienna, and will consider whether to deepen their current output cutbacks to avert another glut in 2020, according to the organization’s Secretary-General, Mohammad Barkindo.

Russia, the most important of OPEC’s allies, has been more cautious in signaling what needs to be done.

Some members of OPEC+, including Russia, are still falling short on their pledged cutbacks. But the coalition has considerable incentive to double down on its efforts: oil prices, currently just above $60 a barrel in London, are too low for most OPEC nations to cover government spending, including Saudi Arabia, the group’s biggest member.

Riyadh may also need higher prices as it sells part of state-owned oil giant Saudi Aramco, in what may prove to be the world’s biggest-ever initial public offering.

Yet the findings of this latest report could make them consider whether the strategy is backfiring, by propping up investment in U.S. shale drilling and perpetuating an oil oversupply.

Many analysts have said the group should have heeded the warning of former Saudi oil minister Ali al-Naimi, who predicted that by making room for shale, OPEC would be trapped in an endless spiral of production cuts.

OPEC’s current share of the global market is about 35 per cent, a level it sees dwindling by 2025 to 32 per cent, according to the report.

At the same time, the report does offer OPEC some solace if it chooses to stay the course. U.S. shale output growth will slow from the middle of the next decade, and then begin to decline from 2029 onward. OPEC’s share of the global market will rebound to 40 per cent by 2040.

Although it sees challenges from rival supplies, OPEC’s outlook shows less concern about demand. The report projects that global crude consumption will continue to grow until at least 2040, rejecting the idea increasingly circulating among investors and oil companies that demand will “peak” as countries move away from fossil fuels to avert catastrophic climate change.

While OPEC did lower demand forecasts, it said the reduction reflects a weaker economic backdrop rather than a shift away from carbon. Global oil demand will increase at a “healthy” rate of 1 million barrels a day until 2024, when it will reach 104.8 million barrels a day, then expand at a slower pace, to hit an average of 110.6 million a day in 2040.

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Business

AfDB converts $1.5bn energy fund to concessional facility

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AfDB converts $1.5bn energy fund to concessional facility

The African Development Bank (AfDB) has made a U-turn on the $1.5 billion Sustainable Energy Fund for Africa (SEFA) as it converted the fund to a concessional finance facility.

The board of governors, AfDB, a document of the bank sighted by New Telegraph showed, has approved the conversion of the Sustainable Energy Fund for Africa (SEFA), which it administers into a “special fund” to amplify its development impact by allowing it to access a wider range of financial instruments.

Currently, SEFA supports small and medium-scale renewable energy and energy-efficiency projects through early stage interventions that enhance project bankability and access to private sector investments.

“Under the new dispensation, the fund will focus its interventions on green mini-grids to accelerate energy access to underserved populations green base load to support clean generation capacity and energy efficiency to optimise energy systems and reduce energy intensity,” the AfDB document read.

“This support will be provided through technical assistance and concessional investments that will improve the bankability of projects across innovative technologies and challenging geographies and crowd-in more commercial investments into the sector,” the bank maintained.

The special fund will provide critical support to African countries to accelerate the transition towards greener and more sustainable power systems, the bank’s acting Vice-President, Power, Energy, Climate and Green Growth, Wale Shonibare, said.

He said the special fund’s ability to provide various financial instruments would unlock more private sector investments in new technologies and businesses.

First established in 2012, SEFA is anchored in a commitment of $121 million by the governments of Denmark, United States, United Kingdom, Italy, Norway and Spain.

To date, it has committed $76 million across 56 projects in 30 countries.

The fund’s investments are expected to leverage over $1.5 billion in investments in new capacity and connections across Africa.

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Aviation

Bird strike resurgence poses challenge to airline operators

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Bird strike resurgence poses challenge to airline operators

…spurs over N5bn loss annually

 

The resurgence of bird strikes in Nigerian aviation industry and its economic losses to airlines, which is put at approximately N5billion annually, has become a source of worry to operators.

Although bird strike is a global phenomenon, many factors such as the nation’s carelessness to the environment culminating in over grown bushes and other untidy behaviours around the aerodromes are escalating the activities of birds and animals around airport areas.

A bird strike is a collision between an airborne animal, usually a bird or bat and a manmade vehicle, usually an aircraft. The term is also used for bird deaths resulting from collisions with structures such as power lines, towers and wind turbines.

Bird strikes are a significant threat to flight safety, and have caused a number of accidents with human casualties. There are over 13,000 bird strikes annually in the US alone.

However, the number of major accidents involving civil aircraft is quite low and it has been estimated that there is only about 1 accident resulting in human death in one billion (109) flying hours.

The majority of bird strikes (65%) cause little damage to the aircraft; however the collision is usually fatal to the bird(s) involved.

In monetary terms, it is estimated that about $1.2 billion per annum is lost to bird strike by the global aviation industry. In the United States of America about $650 million is lost annually as a result of bird strike.

Bird strike incidents usually affect the engines of aircraft, which cost about $1.5 million (N547.5 million) to replace, depending on the type and capacity of the aircraft involved in the incident. This is apart from the cost of shipping the engine into the country.

Nigerian airlines experience at least 12 bird strike incidents annually, our correspondent gathered. He reported that in the past 24 months, there has been no fewer than 28 bird strike incidents recorded across the country’s airports.

Statistics of the incidents obtained by New Telegraph indicates that the airlines encountered 14 bird strikes during take-offs and another 13 on landings, with half of the incidents happening at the Murtala Muhammed International Airport, Lagos.

Virtually all domestic airlines have experienced one form of damage to their engines or nose wheel. Ethiopian Airline landing gear was hit by a massive bird last week Thursday but caused just minimal damage.

In the past two months, at least two Nigerian carriers experienced major bird strike incidents that severely damaged the aircraft’s engines, costing the airlines and their insurers millions of dollars to replace the engines.

Air Peace is the hardest hit as many of its airplane engines had been damaged, Arik, Aero, Dana, Azman and others are becoming almost a monthly occurrence.

Spokeswoman for the Federal Airports Authority of Nigeria (FAAN), Mrs. Henrietta Yakubu, told our correspondent that the agency was looking at making sure it eradicate or reduce this threat of bird ingestion to aircraft or animal incursion into the runway and so the need to disperse the discovered roost before it became worst.

Being a pilot and a frequent flyer along the MMA axis, she disclosed that the Managing Director of FAAN, Captain Rabiu Hamisu Yadudu, like other pilots, have been aware of the roost for some time as they see it when they take off or land due to the fact that the habitat is directly under approach flight path of aircraft that are inbound runway 18L Murtala Muhammad Airport.

A source, who pleaded anonymity, attributed high incidence of bird/wildlife strikes in to the attraction of many species of wildlife to the airports due to the presence of thick bushes, waste dumps and farmlands around the airports.

He called for adequate funding of the airports by the acquisition of modern safety equipment in the airports, stressing that this will also allow adequate maintenance of vehicles, proper habitat management, adequate fencing and regular training and retraining of bird/wildlife hazard control officers.

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