GRBusiness
High cost of fund, harsh operating environment too much for us- MAN
In spite of the claims by the federal government that the ongoing economic diversification effort was yielding positive results, high cost of funds, week infrastructure and harsh socio-economic and political environment have continued to hobble the manufacturing businesses in Nigeria, culminating in the lack-lustre performance of the sector.
It was gathered that the Nigeria’s manufacturing industry sub-sector has continued to record increases in unsold inventory, low capacity utilisation, and declining investment, with adverse consequence on the sector, according to ThisDay report.
The implication, it was learnt, was that instead of making meaningful contribution to growth and development, like in other parts of the world, it was at the brink of recession.
The latest annual report of the Manufacturers Association of Nigeria (MAN), which was released at the just-concluded 46th Annual General Meeting (AGM) of the association in Lagos, at the weekend, showed that the sector did not record any growth in the 2017 business year, despite the current efforts to position the sector for Africa and global competitiveness.
According to the report, “high lending rate remained a major challenge to the manufacturing sector in the period under review.”
A survey by MAN showed that the cost of lending to the manufacturing sector stood at 23.05 per cent in the second half of 2017, which was almost the same figure with 23.3 percent recorded in 2016.
This however, showed a 0.37 per cent improvement when compared with 22.65 per cent in the preceding half of the year.
Overall, the report showed that the cost of fund to the manufacturing sector, averaged 24.1 per cent in 2017, showing 1.4 per cent point increase over 22.7 per cent recorded in 2016.
MAN also noted that unsold inventory of finished goods produced members rose to N161.53 billion in the second half of 2017 from N35.42 billion recorded in the corresponding period of 2017 , indicating N126.11 billion increase over the period.
It also showed an increase of N1.94 billion or 1.2 per cent when compared with N159.59 billion recorded in the preceding half.
According to the report, over all, unsold inventory of manufactured goods in Nigeria totalled N321.12 billion in 2017 when compared with N90.43 billion in 2016, representing an increase of N230.77 billion or 255.19 percentage point.
The report also recorded a decline in manufacturing investment at the end of 2017 with estimated cumulative manufacturing investments from 2013-2017 at N4.63 trillion based on data generated from a survey conducted by the association.
In the second half of the year, investment declined to N176.69 billion from N448 billion recorded in the corresponding period in 2016, showing a decline of N272.25 billion or 60.6 per cent over the period. According to MAN, it also declined further by N152.59 billion or 46.3 per cent when compared to N329.28 billion achieved in the preceding half of the year.
Overall, manufacturing investment recorded during the year under review totalled N508.98 billion compared with N614.55 billion achieved in 2016; an indication of N105.57 billion or 17.2 per cent decrease over the period.
On the manufacturing production value, MAN’s report said that in the second half of 2017, it was estimated at N4.81 trillion as against N5.02 trillion recorded in the corresponding half of 2016, “thereby indicating N0.21 trillion or 4.2 per cent decline over the period.”
The report stated that it increased by N0.5 or 1.1 per cent when compared with N4.76 trillion recorded in the preceding half of the year .
However, production in the manufacturing sector totalled N9.48 trillion in 2017 as against N8.78 trillion total of 2016, thereby indicating N0.7 trillion or 8 per cent increase over the period.
MAN also decried the continued existence of multiple taxation, saying that it is one of the factors against the industrialisation of the country.
It called for the commencement of the implementation of the harmonised taxes and levies, which should be monitored strictly by the Joint Tax Board (JTB) with a view to enforcing compliance by states and local governments.
The report argued that the government should expand the tax net to capture non-tax paying firms, “particularly those operating in the informal sector and not top increase the tax burden on the already tax compliant businesses.”
On power, MAN said that electricity supply to the manufacturing sector averaged nine hours per day in the second half of 2017 against eight hours and five averages of the corresponding half of 2016 and the preceding half respectively.
It however, noted that power outage in the sector has remained consistently at four times since the second half of 2016, adding that the manufacturing sector alternative energy utilisation in the second half of 2017 declined to N51.35 billion from N66.96 billion expended in the corresponding period in 2016, representing N15 61 billion decline over the period.
MAN added that there was also decline of N14.17 billion, when compared with the N66.03 billion recorded in the preceding half.
Also, expenditure on alternative energy utilisation in the sector totalled N117.38 billion in 2017 as against N129.95 billion recorded in the previous year-2016, indicating a decline over the period.
According to MAN, the decline in the expenditure of alternative was a result of the slight improvement
MAN had early last week raised the alarm that Nigeria’s manufacturing was on the verge of recession, expressing the dismay that despite the government’s position that the country’s economy had exited recession , the manufacturing sector has been recording zero growth.
…OML 13 Asset Eyes 80,000 bpd by End of 2025
In a major boost for Nigeria’s crude oil production, revenue generation and economic growth efforts, the NNPC Ltd has officially unveiled its latest crude oil grade, the Utapate crude oil blend, before the international crude oil market.
It would be recalled that in July, 2024, NNPC Ltd and its partner, the Sterling Oil Exploration & Energy Production Company (SEEPCO) Ltd introduced the Utapate crude oil blend, following the lifting of first cargo of 950,000 barrels which headed for Spain.
During a ceremony held at the Argus European Crude Conference taking place in London, United Kingdom, on Wednesday, the Managing Director, NNPC E & P Limited (NEPL), Mr. Nicholas Foucart described the introduction of the Utapate crude oil blend into the market as a significant milestone for Nigeria’s crude oil export to the global energy market.
“Since we started producing the Utapate Field in May 2024, we have rapidly ramped up production to 40,000 barrels per day (bpd) with minimum downtime. So far, we have exported five cargoes, largely to Spain and the East Coast of the United States; while two more additional cargoes have been secured for November and December 2024, representing a significant boost to Nigeria’s crude oil export to the global market,” Foucart told a packed audience of European crude oil marketers.
He added that since its introduction into the global market, the Utapate crude oil blend has enjoyed a positive response from the international crude oil market, due to its highly attractive qualities.
Foucart said the Oil Mining Lease (OML) 13, fully operated by NEPL and Natural Oilfield Services Ltd (NOSL), a subsidiary of SEEPCO Ltd, boasts a huge reserves of 330million barrels of crude oil reserves, 45 million barrels of condensate and 3.5 tcf of gas.
“We have a number of ongoing projects to increase our production from the current 40,000bopd to 50,000bopd by January 2025 and 60,000bopd to 65,000bopd by June 2025. Essentially, we are targeting opportunities to increase production to 80,000bopd by the end of 2025,” Foucart added.
He said the Utapate crude oil terminal is sustainable, affordable and fully compliant with the rigorous environmental regulations and sustainability principles especially those aimed at reducing carbon emissions and other ecological effects.
Also speaking, the Managing Director of NNPC Trading Ltd (NTL), Mr. Lawal Sade said the pricing structure of the Utapate crude oil blend is similar to that of Amenam crude as it is a light sweet crude which is highly sought after by refiners across the world due to its low sulphur content, efficient yield of high-value products, API gravity and other similarities.
He said in bringing the new crude oil blend to the global market, NNPC Ltd wanted to optimise value for both its producers and counterparties across the globe.
He added to ensure predictability and sustainability of supply, the NNPC Trading intends to run a term contract on the Utapate crude oil blend cargoes, principally targeting off-takers from the European and the US East Coast refineries.
Produced from the Utapate field in OML 13 in Akwa Ibom State in Nigeria, the Utapate crude oil blend is similar to the Nembe crude oil grade. It has a low sulphur content of 0.0655% and low carbon footprint due to flare gas elimination, fitting perfectly into the required specification of major buyers in Europe.
The NNPC E&P Ltd and NOSL partnership is also committed to operating in a manner that is safe, environmentally responsible, and beneficial to the local communities.
The Utapate field development plan, executed between 2013-2019 and approved in October, included converting wells and facilities from swamp/marine to land-based operations.
The plan involved a multi-rig drilling campaign for 40 wells and the development of significant infrastructure such as production facilities, storage tank, a subsea pipeline and an offshore loading platform to facilitate crude oil evacuation and loading.
The entry of the Utapate crude oil blend into the market is coming barely a year after the NNPC Ltd announced the launch of Nembe crude oil, produced by the NNPC/Aiteo operated Oil Mining Lease (OML) 29 Joint Venture (JV).
This remarkable achievement signals the commitment of the NNPC Ltd to increasing Nigeria’s crude oil production and growing its reserves through the development of new assets.
Energy
NNPC Ltd Set to Supply 100mmscf/d Gas to Dangote Refinery
…10-year Deal to Boost Local Production, Revamp Industrial Growth, reports Ikenna Oluka
The NNPC Gas Marketing Limited (NGML), a subsidiary of the Nigerian National Petroleum Company (NNPC) Limited, has successfully executed a Gas Sale and Purchase Agreement (GSPA) with Dangote Petroleum Refinery and Petrochemicals FZE.
The agreement, signed by the Managing Director, NGML, Barr. Justin Ezeala and the President/CEO of the Dangote Group, Aliko Dangote on Tuesday at the Corporate Head Office of Dangote in Falomo, Lagos State, outlines the supply of natural gas for power generation and feedstock at the Dangote Refinery, in Ibeju-Lekki, Lagos State.
This major milestone is in line with President Bola Ahmed Tinubu’s policy of utilizing Nigeria’s abundant gas resources towards revamping the nation’s industrial growth and kickstarting its economic prosperity.
This development, which sees a huge investment of this nature penned with zero capital expenditure (CAPEX) outlay, has been described by many as unprecedented in the history of NGML or any gas Local Distribution Company (LDC) in the country.
Under the terms of the agreement, NGML will supply 100 million standard cubic feet per day (MMSCF/D), 50MMSCF/D being firm supply and the rest 50MMSCF/D interruptible natural gas supply to the refinery for an initial period of 10 years, with options for renewal and growth.
This collaboration is a significant step toward ensuring the operational success of the Dangote Refinery and enhancing Nigeria’s domestic gas utilization.
NNPC Ltd, through NGML, its gas marketing subsidiary, continues to lead efforts in promoting the use of domestic gas to support industries and businesses nationwide.
The agreement represents a milestone for both NNPC Ltd and Dangote Refinery, aligning with their shared commitment to boosting local production and providing vital products for the benefit of all Nigerians.
It is also a further proof of NGML’s unwavering commitment to business excellence and fulfilling NNPC Ltd’s core mandate of ensuring Nigeria’s energy security through the execution of strategic gas projects across the country.
Women in Maritime Africa (WIMAfrica), in a significant step forward for female representation in the Maritime field, held a strategic meeting with SIFAX Group at the SIFAX headquarters on November 12th, 2023.
The two organizations aim to foster mentorship, sponsorship, and skills development programs that will empower women to pursue and excel in maritime careers, where female representation remains below 1%. Key figures from WIMAfrica, including Continental Vice President Mrs. Carolyn Ufere and Nigeria’s President Mrs. Rollens Macfoy, emphasized the need for corporate partnerships to expand access to training and professional networks for women. SIFAX’s Coordinating Director, Mrs. Wunmi Eniola-Jegede, expressed the Group’s commitment to gender inclusivity and highlighted the presence of women in leadership roles across its various sectors.
In closing, WIMAfrica extended an invitation for SIFAX Group to support its upcoming conference in Lagos, themed “New Economy and Moving Forward for the Next Generation,” which seeks to inspire young women to explore maritime career paths like engineering and marine security. The collaboration between WIMAfrica and SIFAX Group marks a crucial move toward an inclusive future in Africa’s maritime industry.
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