Nigeria may face economic ‘Tsunami’ from next year when demand for its crude oil, which represents over 80 percent of its national income, is predicted by Organization of Petroleum Exporting Countries (OPEC) to decline by about 300,000 barrels per day (bpd).
OPEC predicted similar decline in demand for crude oil from the other 11 member oil-cartel by the same quantum of bpd.
The prediction is predicated against the backdrop of surging supply from non-OPEC producers, particularly the United States (US).
The US was said to have overtaken Saudi Arabia and Russia to become the world’s biggest producer of oil as extraction of energy from shale rock strengthens the nation’s economy, Bank of America Corporation said in a report last week.
With efforts towards lifting the almost 40-year-old ban on crude oil exports in the US gaining attraction, Nigeria and other oil-exporting West African countries are at risk of losing a share of the global crude oil export market when US crude exports come online.
In its monthly oil market report, released yesterday, OPEC said that it expected demand for crude produced by its members to fall to 29.4 million bpd in 2015, down from 29.7 million bpd estimated for this year.
“The above forecasts suggest a demand for OPEC crude of 29.4 million bpd in 2015, a decline of 300,000 bpd from the current year,” OPEC said.
“Therefore, even if next year’s world economic growth turns out to be better than expected and crude oil demand outperforms expectations, OPEC will have sufficient supply to provide to the market,” the cartel said.
OPEC said its crude oil production fell by 79,000 bpd to 29.7 million bpd in June from 29.78 million bpd in May, according to secondary sources. Iraq led the crude oil output decrease, while crude oil production from Saudi Arabia and Nigeria experienced an increase in June.
Production from Nigeria last month, according to secondary sources, was 1.911 million bpd, up from 1.868 million bpd in May. Based on direct communication, only Nigeria had no data for its crude oil production in June.
Non-OPEC supply is expected to grow by 1.3 million bpd in 2015 to average 57 million bpd. OECD Americas is expected to see the highest growth, with contributions from the US and Canada, followed by Latin America, due to the increase in Brazilian production.
World oil demand in 2015 is forecast to grow by 1.2 million bpd to average 92.3 million bpd, higher than the growth of 1.1 million bpd estimated for 2014. For the first time since 2010, OECD oil demand is expected to grow, increasing by 40,000 bpd, with America being the only OECD region exhibiting growth.
Following the significant decline in crude imports to the US from Nigeria in the past few years, on the back of shale oil production boom, crude exports from Nigeria and other West African countries to Europe have been steadily increasing since 2010 from 870,000 bpd to 1.42 million bpd last year, according to shipbroker Gibson, in its recent report.
But there has been a persistent overhang of West African crude oil cargoes on the market since May.
Trade is said to have been slow due to lower demand from Asia and Europe. [myad]

The Nigerian Senate has dismissed claims by a former Central Bank governor, Sanusi Lamido Sanusi that $20 billion (N3.2 trillion) oil revenues had been diverted from government coffers.

Lamido Sanusi had accused the Nigeria National Petroleum Corporation, NNPC of failing to transfer the amount to government treasury.

In a report published May, the Senate’s finance committee, which probed the allegation, said it found no evidence that the huge sum had been diverted or stolen, and described Mr. Sanusi’s claim as “incorrect” and “misleading”.

“There was never any unremitted $49.8 billion,” the committee, headed by Ahmed Makarfi, said.

The committee said funds not accounted for by the NNPC- which must be paid to government- stood at $927 million.

The amount includes $218 million; another $262 million being expenses the corporation could not satisfactorily defend in respect of Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost; and Capital Expenditure; and $447 million being balance of Royalty and Petroleum Profit Tax to the federation account.

The Senate adopted the committee’s findings yesterday, as its general assembly considered full details of the recommendations.

The decision let the NNPC and the petroleum minister, Diezani Alison-Madueke, off the hook, albeit temporarily, as an independent forensic audit authorised by the government, is awaited.

At the debates Thursday, the Senate President, David Mark, advised Nigerians to refrain from hasty conclusions as the committee had demonstrated that no money was “missing”, but only “unaccounted” for.

“Based on the facts we presented, I want to appreciate the details in this report,” Mr. Mark said. “Whether it is funds yet to be remitted or funds yet accounted for, I think we shouldn’t play politics with it.”

“As the committee pointed out, it’s unaccounted for and not missing,” he added.

Claims of the missing money became public in a leaked memo from Mr. Sanusi to President Goodluck Jonathan September 2013.

In the letter, the then CBN chief said as much as $49.8 billion oil receipts was missing.

He admitted, later, the figure was less, but said it would not be lower than $20 billion. The federal government denied the allegation, even before an investigation.

The government later admitted it could not account for $10.8 billion, but a meeting between the CBN, finance ministry, petroleum ministry and other officials, failed to reconcile the figure.

Mr. Sanusi was removed from office by President Jonathan in February, accused of “financial recklessness”, in a move many believed was to punish him for exposing government corruption.

Under mounting public pressure, the government announced an independent forensic audit of the NNPC, a government agency that constantly comes under allegations of graft- many of not investigated.

Despite ordering audit firm, PriceWatersCooper, to carry out the probe, the government has insisted no funds were missing. In an interview in May, Mr. Jonathan said if such an amount went missing, the United States of America would have known.

But while the government failed to account for the outstanding $10.8 billion for days, leading to repeated reschedule of Senate investigative hearings into the case, the NNPC and the petroleum ministry later claimed the money formed part of subsidy payments for petrol and kerosene, and cost for oil pipeline maintenance.

Asked to provide supporting documents, officials took weeks to do so, prompting the finance minister, Ngozi Okonjo-Iweala, who said she could not vouch for them, to call for a forensic audit.

The outcome of the audit is still expected.

But the Senate said Thursday it accepted the conclusions of the finance committee that Mr. Sanusi’s claims were misleading.

The Senate, however, rejected a recommendation of the committee that fuel subsidy be removed.

“On the case of subsidy, if subsidy has to be removed, let us enlighten the people and take a final decision,” Mr. Mark said. [myad]

To most analysts, President Goodluck Jonathan’s name will be written in gold for his administration’s pragmatic efforts at reviving the Nigerian Railway Corporation (NRC) which has been comatose for nearly 30 years.

A moving train on the 68 percent completed railway track of the Abuja – Kaduna fast train project launched by Vice President Namadi Sambo in Abuja

They note that the feat is even more evident with the president’s recent inauguration of two Diesel Multiple Units (DMUs) train sets and six air-conditioned passengers’ coaches at the NRC terminus in Lagos.

The president, who was represented by Vice-President Namadi Sambo, said that the inauguration of the coaches had signaled the commencement of the 25-year transport sector development plan for the country.

“This is part of the concerted efforts of our administration to steadily improve the railway rolling stock. It is the beginning. Within the next few months, more rolling stocks will be delivered.

“My presence here today is to further show the full resolve of this administration to bring Nigeria at par with modern railway services available globally by constantly upgrading our rolling stock.

“The ongoing railway rehabilitation will continue, because of adequate funding from regular budget and SURE-P intervention.

“The step is aimed at resuscitating and revitalising Nigerian railway which had suffered neglect for decades,” Jonathan said.

He said that the strategic transformation project included the rehabilitation of the existing narrow gauge, the construction of new standard gauge rail line and maintenance.

“ With the support of the Senate Committee on Land Transport, the House of Representatives Committee on Land Transport and the efforts of the NRC management, the goal will be realised,” he said.

Echoing the president’s optimism, the Minister of Transport, Sen. Idris Umar, assured that most of the rail transport projects across the country would be completed by the end of the year.

“I wish to assure the President, the Vice-President and all Nigerians of our determination to ensure the completion of ongoing railway projects across the country, “ he said.

Besides, Alhaji Bamanga Tukur, the Chairman, NRC Board of Directors, attributed the economic development of any nation to the effective and functional operation of the rail system.

“The survival and indeed the extent of development of any economy depend very significantly on the extent of development and efficiency of its transportation system.

“Our intention is to improve on the infrastructure of the NRC to ensure it increases passengers and freight movements, “ he said.

In the same vein, Gov. Babatunde Fashola of Lagos State, said new trains and coaches would improve the transport system in the state for the benefit of all residents.

Fashola, who was represented by the Deputy Governor, Mrs Adejoke Orelope-Adefulire, said the state needed rail infrastructure for its teeming population.

“It is a very welcome development to our nation, Nigeria and to the Centre of Excellence, Lagos State. No doubt, we require this infrastructure.

“We appreciate it and we will continue to give every moral support that the corporation requires as we now have complementary services in the transport system of Lagos State, “ the governor said.

Shedding more light on the progress so far achieved in the railway transformation agenda, Mr Adeseyi Sijuwade, the Managing Director of NRC, also said that significant part of the Eastern Line rehabilitation would be completed by the third quarter of 2014.

“The corporation would continue to pursue its vision, mission, and core values to attain its mandate of carriage of passengers and goods in a manner that is safe, reliable and affordable,” he said.

The Jonathan’s administration also inaugurated the revitalised Lagos-Jebba rail lines, a project which cost the government over N12 billion.

To add value to the initiative, the NRC had also launched its Mass Transit Train Service (MTTS) in Lagos.

Available records show that the corporation has deployed 11 trains, carrying close to 15,000 passengers daily within the Lagos metropolis.

Commuters say the introduction of the intra-city train service in Lagos has reduced the cost of transportation in the area.

For instance, a returned trip from Agege – Ebute Metta under the MTTS now costs less than N150, as against the more than N1,000 it would have cost  by taxi, while  it now costs about N180 only by train service from Lagos to Abeokuta.

The resuscitation of the train service has also reduced the cost of transportation from Lagos to Kano, which now costs less than N1,800 as against between N4,000 and N5,000 by car or bus.

Industry watchers also believe that the completion of Lagos-Maiduguri standard gauge will make it cheaper and faster to move goods and services from Lagos to the north-eastern part of the country.

The Federal Government also signed a N67 billion contract for the rehabilitation of the 2,119 kilometres three Eastern rail lines.

This comprises the 463 km rail line from Port Harcourt to Makurdi; 1,016 km rail line from Makurdi to Kuru, including spur line to Jos and Kafanchan; and 640 km rail line from Kuru to Maiduguri.

Available records showed that appreciable progress had been  made in the completion of the 1,657km Eastern line from Port Harcourt to Maiduguri.

Besides, the administration says it has also procured 25 new locomotives from General Electric and refurbished 366 coaches and wagons, among others.

This is in addition to the 20 units of oil tank wagons, five railroad emergency vehicles,  60 tonnes overhead workshop cranes and three rail inspection vehicles.

Records further showed that the Iddo terminus station, Ebute Metta junction station, Ilorin station, Kaduna junction station, Kano station, Port Harcourt station, Enugu station, Jos station and Gombe station were also being remodeled.

Vice-President Namadi Sambo, recently performed the official track laying of the Abuja-Kaduna fast train line, signifying the complete modernisation of the railway system in the country.

Sambo, who performed the ceremony at the Idu area of Abuja, said that the project was part of President Goodluck Jonathan’s people oriented projects aimed at touching the lives of Nigerians.

According to him, the funding of the project was enhanced through the SURE-P.

He said that the project was also co-funded with the 500 million dollars concessionary loan from China Exim Bank.

“Therefore in our efforts to ensure adequate funding for the Transformation Agenda, government has created the enabling environment for the private sector to play significant roles.

‘’This administration is determined to concession the railway facilities upon completion.

‘’Similarly, opportunities abound for Foreign Direct Investments in this important sector,” he said.

Sambo commended Messrs China Civil Engineering & Construction Company (CCECC) Nigeria Limited, the project handlers for its efforts at ensuring timely completion of the project.

Throwing more light on the project, Umar said that the project was part of the strategic plan to rejuvenate, modernise and revitalise the rail transport system.

According to him, the Kaduna-Abuja rail project is the first segment of the Lagos to Kano standard gauge rail line, adding that when completed and operational it will enable people to live in Kaduna and work in Abuja.

He said that the project had reached 68 per cent completion, including earthworks, hydraulic structures, railway bridges; box bridges; precast T-beams for bridges; and over pass bridges.

Umar said that seven new standard gauge lines were also being proposed under the Public-Private Partnership arrangement.

He listed them as the 322km Lagos-Benin City line, 500km Benin-Abakiliki line, 673km Benin- Obudu Cattle Ranch line, 615km Lagos-Abuja high speed line, 520km Zaria-Birnin- Koni line, 533km Ega nyi-Otukpo and the Ega nyi-Abuja line.

Umar assured that the Abuja-Kaduna railway project would be completed by December 2014.

On challenges facing the project, the minister said that efforts were being made to ensure that the two major constraints- water interference at km 19, and certain estates built along the rail lines at Kubwa were addressed by the relevant authorities in the FCT.

On his part, Mr Shi Hongbing, the Managing Director of CCECC, assured that the project would be completed on schedule.

He also said that the project had employed over 4,000 Nigerians and would on completion, provide jobs for over 5,000 Nigerians who would be trained in various skills relating to the operations and maintenance of facilities.

To further complete the modernisation of the railways, the Federal Government had also earmarked more than N10 billion from its 2014 SURE-P share to fast-track the completion of the Abuja Rail Mass Transit project.

Appraising the progress of work so far, the Minister of Federal Capital Territory (FCT), Sen. Bala Mohammed, said that the project would cost the government more than 823 million dollars.

This, he said, would cover the cost of final design and construction of Lots 1 and 3, respectively, which is approximately 60.67 kilometres.

To ensure its early completion, the minister said that the Federal Government had obtained a concessional loan of 500 million dollars from the China Exim Bank.

According to him, an estimated 700,000 passengers are projected to ride the Abuja Light Rail (ALR) on daily basis, when the first phase of the project takes off in 2015.

Nonetheless, analysts have advised the government to allow more private sector participation in the railway modernisation programme in order to ensure sustainability.

They note that more pragmatic efforts should be intensified to link the FCT and neighbouring states with standard gauge lines, while the ongoing light rail project should be extended to the satellite towns, particularly Nyanya, Mararaba and Karu to reduce vehicular gridlock.

News Agency of Nigeria. [myad]

45-year-old Umar Kwairanga from Gombe State , with over 21 years cognate experience in banking, pension, manufacturing and trading, is returning home to chair and give leadership to the board of AshakaCem that was incorporated when he was virtually five years old. Nigeria’s AshakaCem is now a subsidiary of Lafarge, one of the world’s leaders in cement production.

As Chairman of the Board of Ashaka Cem, he knows that he is now a global player in an industry with a market size estimated to hit $394,553 million dollars by 2016.

Last April the merger of the Swiss company Holcim and Lafarge, a French company was announced. With capacity of producing some 400 million metric tons of cement per annum, the new company has become the largest producer of cement in the world, beating the combined 345 million metric tons output of Anhui Conch and CNBM, two major Chinese cement producers.

In the same month Kwairanga’s AshakaCem was holding a ground-breaking ceremony in Gombe for its planned capacity expansion from 850 tons to four million tons per annum contributing its quota to the 400 million-ton capacity of its parent company.

Cement, which is made from clay and limestone, is a key building material which is used basically as a binder. One of the major drivers for cement market is steady and consistent growth in construction industry not only in Nigeria but globally. There is no doubt that Nigeria is witnessing a boom in the construction industry. There is clearly a huge demand in the country if one looks at the race among many state governments and private developers to close the housing deficit in the country. Projects such as the Centenary City in Abuja, which President Goodluck Jonathan recently commissioned and other landmark projects in the Federal Capital Territory are a testimony to the kind of positive development the Nigerian construction industry is witnessing.

What does the AshakaCem expansion mean for the economy of Gombe State, the people of the state, the community round the sprawling industrial complex and to Nigeria in general? The answer to that lies in the fact that the company is injecting about N120 billion in this expansion exercise to build a new cement factory with installed capacity of 2.5 million tons per annum and a 64mw power generating plant. The fund for the project will be sourced from the Central Bank of Nigeria’s Industrial Intervention Fund. This project will throw open employment opportunities to the Nigerian youth as the company operates an equal opportunity policy. It will substantially increase AshakaCem workforce from its current 640 staff level by almost double that figure. It will also boost staff morale and increase motivation because of the huge opportunity for manpower development.

In today’s age of environmental protection advocacy, AshakaCem is treading carefully and is systematically addressing the associated environmental concerns such as relocation of local communities away from its quarries.

Cement occupies a very important position in world economy that today its consumption per head of population is an index for measuring economic development. This is true when we look at the statistics. As a result of the global financial crisis affecting Europe, most of its cement producing countries, such as Italy and Germany, have lost their ranking, while most of the progressing countries, in terms of ranking, are the emerging markets. For example, in 2013 Brazil moved to the fifth position from 15th; Turkey from 10th to 6th and Vietnam from 17th to 8th position. And China until the merger of Lafarge and Holcim this year was the leading producer with 230 million tons in 2013 followed by another emerging market, India with 280 million tons.

Asia pacific is the largest consumer of cement in the world followed by North America and Europe. Based on types of cement, white cement is largely used to increase the visual appearance of construction. Portland cement is used in commercial, residential, industrial, and public infrastructure. Mortar is used in brick works and road surfaces. Blended cement is heavily used in ready-mix concretes.

Some of the major players operating in the global cement market include LaFarge-Holcim (France/Swiss), Anhui Conch (China), Cemex (Mexico), Heidelberecement (Germany), Italcement (Italy), Ultratech (India), Eurocement (Russia).

Although Africa contributes only five percent of the global output of cement, the expansion of cement companies such as AshakaCem is a beacon of hope for Africa. And it is consistent with the forecast made by the global Portland Cement Association, PCA, that the world cement consumption is expected to record sustained growth during 2013-2016. According to PCA, growth is expected to be characterised by weaker economic conditions in China and many of the industrialised economies’ cement markets. World cement consumption is expected to grow 3.6% in 2013, 4.0% in 2014, and remain near 4.0% growth during 2015-2016.

With three degrees in Business Administration and Finance, Umar Kwairanga the Sarkin Fulani of Gombe, understands global finance and its dynamics. He has found a way to manage his tight schedule between his various businesses. Currently the CEO and Managing Director of Finmal Finance Services Limited, he is also a director in many other companies.

His involvement in policy and strategy formation in the public sector through participation in intellectually challenging projects such as the Vision 2020 business support group and technical working group and active membership of the board of Gombe State Investment and Property Development has by no means equipped Kwairanga for his new position at AshakaCem.

No doubt the favourable conditions in the construction industry in the emerging markets in sub-Saharan Africa represented by Nigeria’s rising economic boom is fuelling the growth AshakaCem is recording. Equally contributing to the growth is quality of leadership of its board under Kwairanga in particular and the management of the company in general.

Mr. BASHIR HASSAN, a public affairs analyst, wrote from Abuja. [myad]