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2018-01-08 19:10:00

NIGERIA'S FUEL DEFICIT

NIGERIA'S FUEL DEFICIT

BLOOMBERG - Nigeria, Africa's biggest oil producer and a member of OPEC, has suffered fuel shortages over the past few weeks. They complicated transport and hurt economic activity and, in the words of President Muhammadu Buhari, ensured that for many Nigerians the Christmas holidays were "anything but merry and happy." His administration says it's working overtime to end the queues that have formed at gasoline stations throughout much of the country. Nigeria is about the only major African economy to experience frequent fuel scarcities.

1. What's the reason for the shortages?

Part of the problem is that, despite pumping 1.8 million barrels a day of crude, Nigeria has to import almost all its fuel because of the decrepit state of its refineries. But in that, it isn't alone: Most countries in Africa lack refineries. A bigger problem is that Nigeria caps gasoline prices, often at levels below retailers' costs. The cap today is set at 145 naira, or $0.40, a liter, which would translate to $1.52 per gallon. That makes the west African nation one of the 10 cheapest places in the world to buy gasoline and compares to a global average of $1.12 and a U.S. average of $0.73 per liter, according to GlobalPetrolPrices.com.

Cheap Fuel

Nigeria is among the world's 10 cheapest places to buy gasoline

 

2. Does that mean fuel retailers can't make money?

They could when the current cap was set, in May 2016. Back then, Brent crude traded at less than $50 a barrel. It's since risen about 40 percent, to $68, which has made it more expensive for retailers to buy refined fuel. Neither does it help that Nigeria bases the cap on its official exchange rate of 305 naira per dollar, which few retailers can access, given that the market rate is almost 20 percent weaker at 360. Many have stopped importing, leaving that job almost entirely in the hands of the state oil company, the Nigerian National Petroleum Corp., a task it is struggling with and was never designed to do on such a scale.

3. What's being done to solve the problem?

Maikanti Baru, the head of NNPC, and other Nigerian officials including Emmanuel Kachikwu, minister of state for petroleum resources, say they're clamping down on anyone hoarding fuel or selling it above sanctioned prices. They've ramped up the amount of gasoline sent to depots across the country and called for Nigerians to cease panic buying. They've said the shortages will be over soon and that increased demand in the run-up to Christmas was to blame. But one thing they and Buhari are adamant about is that prices won't be increased. Queues at service stations have eased in Lagos, the main commercial hub, and Abuja, the capital. But the shortages are still severe in many other cities, including Kano in the north.

4. What would be so bad about raising the price of gas?

Fuel prices are a hugely sensitive issue in Nigeria. Given the poor state of schools and hospitals, many citizens feel that cheap fuel is about the only benefit they get from their government. When Goodluck Jonathan, Buhari's predecessor, tried to end subsidies and hike prices in 2012, nationwide protests crippled the country, forcing him to backtrack. Buhari, 75, who won elections in 2015 by appealing to Nigeria's poor masses, increased prices the following year only after weeks of shortages forced his hand. He will be loathe to do it again, especially with elections coming up in early 2019 and his popularity already dented by a weak economy and rising unemployment.

5. What's the damage to Nigeria's economy?

Previous fuel crises were bad enough to hit gross domestic product. A bigger impact might be on inflation, given the resulting increase in transport prices. Buhari's team met with officials on Jan. 2 to figure out a long-term plan to prevent any future shortages, but he's unlikely to find solutions in the absence of allowing fuel prices to rise -- at least until current efforts to revamp old refineries and investments in new ones start paying off.

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Earlier:

 OPEC'S TRIUMPH
2017, December, 29, 11:35:00

OPEC'S TRIUMPH

PLATTS - The issuance of a combined 2.8 million b/d cap on formerly exempt members Libya and Nigeria at the organization's November 30 meeting means that OPEC as a whole now has a notional collective ceiling of 32.74 million b/d, when all the members' quotas are added up. From January-November, compliance was 108% according to S&P Global Platts, one of the six secondary sources used by the organization to monitor output.

 

 NIGERIA'S CHALLENGES
2017, December, 27, 12:20:00

NIGERIA'S CHALLENGES

IMF - Overall growth is slowly picking up but recovery remains challenging. Economic activity expanded by 1.4 percent year-on-year in the third quarter of 2017—the second consecutive quarter of positive growth after five quarters of recession—driven by recovering oil production and agriculture.

 

 NIGERIA NEED INVESTMENT $5.5 BLN
2017, November, 14, 18:00:00

NIGERIA NEED INVESTMENT $5.5 BLN

REUTERS - Nigeria will move ahead with plans to borrow $5.5 billion from foreign investors after the Senate on Tuesday approved President Muhammadu Buhari request for the move.

 

 NIGERIA NEEDS TIME
2017, September, 15, 08:50:00

NIGERIA NEEDS TIME

Emmanuel Kachikwu, Nigeria’s minister of state for petroleum resources, told the Financial Times that the west African nation’s energy sector was still suffering from years of violent disruptions and needed more “recovery time” before joining a supply deal agreed last year between some of the world’s biggest oil producers.

 

 NIGERIA'S OIL PRODUCTION: 2.2 MBD
2017, September, 4, 12:25:00

NIGERIA'S OIL PRODUCTION: 2.2 MBD

The figure of around 2.2 million to 2.3 million b/d includes about 300,000 to 400,000 b/d of condensates, which implies that its current crude oil production is at the coveted 1.8 million b/d mark.

 

 WBG - AFRICA'S ECOMOMIC DIFFICULTIES
2017, April, 12, 17:30:00

WBG - AFRICA'S ECOMOMIC DIFFICULTIES

Nigeria, South Africa, and Angola, the continent’s largest economies, are seeing a rebound from the sharp slowdown in 2016, but the recovery has been slow due to insufficient adjustment to low commodity prices and policy uncertainty. Furthermore, several oil exporters in the Central African Economic and Monetary Community (CEMAC) are facing economic difficulties.

 

 IMF HAS NIGERIA
2017, March, 31, 18:35:00

IMF HAS NIGERIA

With oil receipts dominating fiscal revenue and exports, the Nigerian economy has been hit hard by low oil prices and falling oil production. The country entered into a recession in 2016, with growth contracting by 1.5 percent. Annual inflation levels doubled to 18.6 percent, reflecting hikes in electricity and fuel tariffs, a weaker naira and accommodating monetary conditions (broad money expanding at 19 percent y-o-y). Even with a significant under-execution in capital spending, the consolidated fiscal deficit increased from 3.5 percent of GDP in 2015 to 4.7 percent of GDP in 2016, because of significant revenue shortfalls.

Tags: NIGERIA, OIL, FUEL,

Chronicle:

NIGERIA'S FUEL DEFICIT
2018, January, 22, 08:20:00

RUSSIAN NUCLEAR POWER - 2017

WNA - Apart from adding capacity, utilisation of existing plants has improved markedly since 2000. In the 1990s capacity factors averaged around 60%, but they have steadily improved since and in 2010, 2011 and 2014 were above 81%. Balakovo was the best plant in 2011 with 92.5%, and again in 2014 with 85.1%.

NIGERIA'S FUEL DEFICIT
2018, January, 22, 08:15:00

INDIA'S NUCLEAR POWER - 2017

WNA - India has a flourishing and largely indigenous nuclear power programme and expects to have 14.6 GWe nuclear capacity on line by 2024 and 63 GWe by 2032. It aims to supply 25% of electricity from nuclear power by 2050.

NIGERIA'S FUEL DEFICIT
2018, January, 22, 08:10:00

CHINA'S NUCLEAR POWER - 2017

WNA - Mainland China has 38 nuclear power reactors in operation, about 20 under construction, and more about to start construction. The reactors under construction include some of the world's most advanced, to give a 70% increase of nuclear capacity to 58 GWe by 2020-21. Plans are for up to 150 GWe by 2030, and much more by 2050.

NIGERIA'S FUEL DEFICIT
2018, January, 22, 08:05:00

U.S. - RUSSIA'S NUCLEAR

PLATTS - "The domestic uranium mining industry needs US government assistance to survive the foreign onslaught -- particularly from Russia and Kazakhstan -- that has undermined the US uranium industry while new players -- particularly China -- will soon make the situation worse," Energy Fuels and Ur-Energy said in a petition they jointly filed with the department.

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