By Adedapo Adesanya
Crude oil prices erased previous losses and jumped 3 per cent on Tuesday despite the announcement by the United States Administration that it would make available 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to ease prices.
Brent crude rose by $2.87 or 3.6 per cent close at $82.57 per barrel while the US benchmark, West Texas Intermediate (WTI) gained $2.04 or 2.66 per cent to trade at $78.79 per barrel.
The market was met with news on Tuesday with the announcement by US President Joe Biden that the Department of Energy would release 50 million barrels of oil from the SPR.
This was done in a coordinated effort with other major oil-consuming nations, which have complained of the biting effect of higher crude prices.
The SPR release from the United States is being carried out in conjunction with other major energy-consuming nations, including China, India, Japan, the Republic of Korea, and the United Kingdom.
India said it would release 5 million barrels, while Britain said it would allow the voluntary release of 1.5 million barrels of oil from privately held reserves.
Details on the amount and timing of the release of oil from South Korea, Japan and China were not announced with Japan set to release detail of its plans on Wednesday.
Despite the seemingly big number, 50 million barrels, the US release actually equals around two and a half days of American petroleum consumption, which was at 20.5 million barrels per day in the pre-pandemic 2019.
The other countries are going for much smaller releases, and the message seems to be that major oil consumers are coordinating efforts to try to lower high prices, while the Organisation of the Petroleum Exporting Countries and allies (OPEC+) refused to ramp up production.
To understand why the move didn’t immediately have an effect, market analysts said the effect on prices was likely to be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.
It was also pointed out that one-off sales from strategic reserves cannot do much to move oil prices significantly lower.
Despite this, the market still has to contend with the return of virus restrictions in Europe which could still be a threat to global energy demand from a resurgent COVID-19.
Also, a stronger US Dollar poses a threat to the market as the currency held near a 16-month high on Tuesday after Federal Reserve Chair Jerome Powell was picked for a second term, reinforcing market expectations that US interest rates will rise in 2022.
Investors Trapped as Standard Alliance, Niger Insurance Lose Operating Licences
By Dipo Olowookere
The operating licences of Standard Alliance Insurance Plc and Niger Insurance Plc have been revoked by the National Insurance Commission (NAICOM).
Although no specific reason was given for the withdrawal of the licences of the underwriting firms, the regulatory agency for the insurance sector in Nigeria disclosed that the revocation became effective Tuesday, June 21, 2022.
“This is to notify all insurance stakeholders and members of the public that the National Insurance Commission has cancelled the certificates of registration of Standard Alliance Insurance Plc, RIC – 091 and Niger Insurance Plc, RIC – 029 with effect from the 21st day of June 2022,” a statement issued on Tuesday, June 28, 2022, by the Head of Corporate Communications and Market Development at NAICOM, Mr Rasaaq Salami, stated.
In the meantime, the two insurance companies would be run by receivers/liquidators announced by the agency.
“The commission has appointed Sanya Ogunkuade Esq of Plot 217, Upper Grace Plaza, 3rd Floor (Left Wing), Shetima Munguno Crescent, Behind Julius Berger Equipment Yard, Utako, Abuja as the receiver/liquidator for Niger Insurance Plc, while Kehinde Aina Esq of Aina Blankson LP, 5/7, Ademola Street, SW Ikoyi, Lagos has been appointed the receiver/liquidator for Standard Alliance Insurance Plc,” the statement further said.
Concluding, NAICOM advised all stakeholders “to forward their enquiries to the respective receiver/liquidator for each company for their necessary action,” assuring them “of the safety and protection of their interests.”
Business Post reports that Standard Alliance and Niger Insurance are both listed on the Nigerian Exchange (NGX) Limited and with this action of NAICOM, shareholders of the firms are trapped as they may not be able to recoup their investments in the companies.
Shares of the insurance companies closed flat at 20 kobo each today, with investors trading 1,530 units of Niger Insurance shares on Monday and no trade recorded for Standard Alliance Insurance as it has been on suspension since July 2019, according to data obtained by this newspaper from the exchange on Tuesday.
Niger Insurance has shares outstanding of 7,739,479,368 units and a market capitalisation of N1.6 billion, while Standard Alliance Insurance has 12,911,030,586 units valued at N2.6 billion.
Both companies will have their stocks delisted from the bourse in the coming days.
Nigeria Must Adopt Dual Circulation Economy to Prosper—Sekibo
By Aduragbemi Omiyale
The Managing Director of Heritage Bank Plc, Mr Ifie Sekibo, has advised the federal government to adopt a dual circulation economic strategy like China to attain prosperity.
A dual circulation economy involves growing exports and expanding domestic demands from locally produced items by building higher consumption almost at the same time.
For Mr Sekibo, this strategy will work well in Nigeria because the country has the population to soak the pressure.
Speaking at an event organised by The Men’s League of Christ Church Port Harcourt, Rivers State, he also stressed that the government must address security challenges and leadership issues as they remain very critical for the success of the economic model.
At the programme themed What do Nigerians Want,? Mr Sekibo said, “On a higher note, I think one of the things that we need to achieve as a country is the issue of functional and value-adding identity management, which is still far away from us, although, some people know that we have BVN, NIMC and a few other identity capture systems they have not been as functional and value-adding, like the social security number that most people in advanced economies carry.”
The Heritage Bank chief, who was represented by the Divisional Head of Strategy and Business Solutions of the bank, Mr Segun Akanji, further explained that to achieve a prosperous economy, Nigeria needs to find ways and means by policies to build a dual circulation economy which thrives on three pillars.
According to him, the country needs to focus on building a dual circulation economy where it can expand domestic production and demand by making sure that the masses are employed.
“We need to make our people productive and stop putting subsidies in unproductive zones. When you give subsidies to people with inadequate or no income, they really cannot add value to the economy, and money has a way of flowing away due to the import of consumables from other countries and because of this, a larger portion of every consumption or cash given as subsidy gets out of the country,” Mr Sekibo stated while delivering a paper titled The Economy Nigeria Needs to Break Forth.
The bank’s helmsman further explained that to expand the domestic production, the government must give the private sector support to drive employment creation, technology, which is riding on innovation and manufacturing must be in place and, the population which is an added advantage must be well educated.
He highlighted the need to examine how the country could add value to primary production for global export, emphasizing on reduction of over-dependence on foreign markets but rather increasing local production for export, whilst also increasing demand for local products.
Mr Sekibo further affirmed that if states could function as proper federating units and take the lead of the competitive comparative advantages therein, wealth creation would be achieved that would bring about the desired changes.
Also speaking at the event, the former Governor of Anambra State and presidential candidate of the Labour Party (LP) in the 2023 general elections, Mr Peter Obi, agreed with Mr Sekibo that the country must address the issues of insecurity and leadership deficiency in order to prosper.
He lamented the huge indebtedness of the country, which he blamed on unproductivity due to the inimical situation of a high unemployment rate resulting in over 80 million Nigerians being jobless.
According to him, cumulative failure of the government over the years plunged Nigeria into insecurity, noting that other factors include the failure to migrate from sharing formula to production formula and lack of will to transform the power sector and the need to focus and support the micro, small and medium enterprises (MSMEs).
On his part, a clergyman, Pastor Ituah Ighodalo, harped on the need for leadership change, arguing that what the country needs now are leaders who have a vision and are ready to sacrifice for the common man, stating, “things must be done differently”.
Also speaking, Prof. Oyelowo Oyewo submitted that the police, power provision and railway must be decentralised as this will make states to be less dependence on the centre.
He maintained that regions are closer to the people and will boost security, the economy and the sense of belonging by the populace. He also identified data and planning as key factors in ensuring that programmes are tailored towards the people.
$13bn Trans-Saharan Gas Pipeline to Boost Nigeria’s Gas Exports
By Adedapo Adesanya
Nigeria is set to boost its gas development initiative through exports to Europe after reaching a new milestone in further opening the domestic and regional gas market via the construction of the multi-billion Trans-Saharan Gas Pipeline (TSGP) alongside Algeria and Niger.
The oil ministers of the three countries — Mr Mahamane Sani Mahamadou, Minister of Petroleum for the Republic of Niger, Mr Mohamed Arkab, Minister of Energy and Mines, Algeria, and Mr Timipre Sylva, Minister of State for Petroleum Resources of Nigeria as well as the Director Generals of national oil companies (NOCs) of the three African countries met to discuss the implementation of the TSGP on June 20, 2022, in Abuja.
During the meeting, which follows the signing of the Niamey Declaration during the 3rd Forum of the Economic Community of West African States in February 2022, parties established a task force and roadmap for the development of the TSGP.
It was disclosed that the TSGP project will mark a new era of improved regional cooperation in Africa, enhancing gas monetization and exports while scaling up exports to Europe via Algeria.
Not only will the $13 billion project drive socioeconomic growth by unlocking massive investments across the energy sector, but it will also help create jobs in various industries including energy, petrochemicals and manufacturing whilst optimizing energy production and positioning Africa as a global energy hub.
A steering committee made up of the three Ministers and Director Generals of the NOCs, established during the two-day meeting, will be responsible for updating the feasibility study for TSGP and will meet at the end of July 2022 in Algiers to discuss how to progress with the TSGP project.
With energy poverty increasing across the African continent due to limited investments in energy projects, delays in exploration, production and infrastructure rollout, the COVID-19 pandemic, and global energy transition-related policies, the TSGP project will bring in a new era of energy reliability for Africa.
With the 4,128 km pipeline running from Warri in Nigeria to Hassi R’Mel in Algeria via Niger, the pipeline will not only create a direct connection between Nigeria and Algeria’s gas fields to European markets but will bring significant benefits to Nigeria.
The pipeline will enable up to 30 billion cubic meters of natural gas to be traded yearly enhancing regional and international energy trade.
With gas emerging as the energy of the future, the TSGP project will play a critical role in positioning Nigeria, alongside Algeria and Niger, at the forefront of the energy transition.
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