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Nigerian govt considers crude oil transport via trucks. Here’s why

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The Nigerian government has put in place a virtual crude oil evacuation plan that involves moving petroleum from the production site to injection and storage sites, and then finally to export ports, using trucks and barges.

It stated that the Alternative Crude Oil Evacuation Systems were put in place to prevent pipeline disruptions and outages from delaying output, causing losses, or having any other unfavourable effects.

This was revealed in a recent presentation entitled “Stability in the Nigerian Energy Sector: Integrated Strategies for Infrastructure, Transportation, and Security,” which was received by our correspondent in Abuja on Sunday. It is from the Nigerian Upstream Petroleum Regulatory Commission.

Nigeria loses trillions of naira a year to pipeline damage and theft of crude oil; this event prompted the government to explore virtual methods of delivering the commodity.

Nigeria’s largest threat to its oil earnings is likely industrial-scale crude oil theft. A thorough investigation into the actions of organized groups and security forces using advanced methods to steal crude oil throughout the nation was mandated by the Senate last year.

According to Senator Ned Nwoko’s motion, which presented statistics on the losses Nigeria incurs from oil bunkering and pipeline vandalism, was the impetus for the decision. Nigeria lost N2.3 trillion to oil theft in 2023 alone, according to Nwoko.

The NUPRC stated that to address this, the government needed to support Alternative Crude Oil Evacuation Systems, which involve moving the commodity via trucks and barges as opposed to pumping it through pipes. It said that the Nigerian Upstream Petroleum Regulatory Commission has maintained its commitment to putting targeted efforts and other measures into place to address vandalism and crude oil theft through cooperation with industry stakeholders.

It said, “Through increased surveillance and deployment of security forces, the upstream industry has in recent times increasingly enhanced the protection of oil and gas infrastructure from criminal syndicates who often target oil and gas installations to siphon off crude oil for illegal sale.

“The activities of the syndicates have led to revenue losses for the government, oil companies and other stakeholders, increased cost of production, as well as far-reaching environmental consequences and demarketing of the nation’s global competitiveness.

“The commission has therefore promoted the implementation of Alternative Crude Oil Evacuation Systems to avoid production deferment and losses and other undesirable consequences as a result of pipeline disruption and outages.

“This virtual means of evacuation mainly involves the utilisation of barges and trucks for the transportation of crude oil from the point of production to injection/storage points for eventual transportation to export terminals,” the commission stated in the document.

According to the Nigerian Extractive Industries Transparency Initiative (NEITI), the country lost 619.7 million barrels of crude oil valued at N16.25 trillion ($46.16 billion) to theft between 2009 and 2020.

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Nigeria’s GT Holding plans $750 million capital increase

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Nigerian banking group, Guaranty Trust Holding Plc, wants to raise up to $750 million in capital and will ask its shareholders for permission to do so next month. It will join other banks in increasing their capital to meet new goals.

The Central Bank of Nigeria set minimum capital standards for banks last month. This is meant to make the country’s financial system stronger and give lenders a bigger chance to help the economy grow.

According to Guaranty Trust Holding Plc, Guaranty Trust Bank is one of the best banks in Nigeria. The company said on Friday that it would seek shareholders for permission to raise the money at a meeting on May 9. In the last few weeks, competitors Access Holdings and FBN Holdings have both said they want to raise money. To meet the new level set by the central bank, more than 20 banks in Nigeria will need to get more capital within two years.

A statement from the CBN in March said that commercial banks with foreign licenses must now have a minimum capital base of N500 billion.

The recapitalization is a big boost that will help these banks compete in the world market for money. Regional banks must have at least N50 billion in capital, while national banks with permission must have at least N200 billion.

The apex bank said that lenders need more buffers to help Nigeria’s economic growth goals, especially since the local naira has lost a lot of value since June of last year.

Credit rating agency Fitch said on Wednesday that over the next two years, Nigerian banks will likely issue a lot more shares of stock and merge with other banks, since some small or medium-sized lenders may have trouble getting cash.

Nigeria’s banking system has been through several crises, with the worst ones happening in 2008 and 2009. The number of banks dropped from about 90 in 2005 to 24 by 2006 and to 20 commercial banks by the end of 2011. This was because of a program of recapitalization and consolidation.

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Ethiopia might devalue currency to secure IMF loan

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Ethiopia may need to decide on a big currency devaluation soon to get a rescue loan from the International Monetary Fund (IMF).

In December, East Africa’s most populous country went bankrupt, making it the third African country in as many years to not pay its debts. The country already had high inflation.

Ethiopia hasn’t gotten any money from the IMF since 2020, and its last loan deal with the fund fell through in 2021. In late 2022, the federal government and a rebellious regional authority made a deal to end a cold war that had been going on for two years.

Although the IMF has not said that currency reform is necessary for its backing, it however maintained that progress was made during its most recent visit. However, the Fund usually favours flexible, market-determined exchange rates. Ethiopia has requested $3.5 billion of support from the IMF, sources told Reuters last year.

The birr currently trades at between 117 and 120 per dollar on the black market, which is more than double the official rate of about 56.7. This is because there is a constant lack of foreign cash and the exchange rate is tightly controlled.

“It seems that the Ethiopian authorities have found accepting the demands of the IMF hard,” said Abdulmenan Mohammed, an Ethiopian economic analyst based in Britain.

“The Ethiopian authorities are worried about the devaluation of the birr, (which) would have serious negative economic repercussions, including soaring inflation… and surging foreign currency denominated debts in terms of birr.”

Early in 2021, Ethiopia asked the G20’s Common Framework to restructure its debt. This was set up in response to the COVID-19 pandemic to include new creditor countries like China and India. Other African countries like Tunisia and Zambia also suffered a similar fate with their foreign debt at the time.

As of the end of March, Ethiopia’s foreign debt totals $28.2 billion. According to Boston University’s Chinese Loans to Africa Database, the country’s biggest bilateral creditor, China, agreed to stop collecting its debts in August 2023. From 2006 to 2022, China promised to give the country $14 billion.

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