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PENGASSAN Fingers Military In 600,000-barrel Daily Stolen

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The Petroleum and Natural Gas Senior Staff Association of Nigeria has said that the military should be held responsible for the high rate of crude oil theft in the country.

This was made known at the Senate’s investigation into oil lifting and theft on Wednesday, which was chaired by Senator Akpan Bassey.

The National President of PENGASSAN, Festus Osifo, said oil theft was a collaborative crime between military personnel assigned to protect oil installations and the locals running illegal refineries.

He alleged that the military and other security agencies were aiding and abetting criminals to steal the crude with the active connivance of the regulatory agencies in charge of the nation’s petroleum industry.

Osifo, therefore, challenged the regulatory agencies and various security outfits to be alive to their responsibilities in order to solve the problems.

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READ ALSO: PENGASSAN Blames Fuel Scarcity On Lack Of Forex

He specifically alleged that men of the Amphibious Brigade in Port Harcourt and their counterparts in the Navy, in connivance with superior officers at different times, joined the locals in the theft.

Osifo alleged, “One of the greatest problems we have, which nobody has highlighted, is that there is strong connivance of our security forces in the crime. There is no doubt about this. From our Army to our Navy officers, we have information that they pay their superiors to post them to some areas in the Niger Delta.

“I can authoritatively inform this committee that men of the Nigerian Army and the Navy pay their superiors to be posted to Niger Delta. Even when the former Commander of the Amphibious Brigade in Port Harcourt was removed, many of the men in the command resisted being posted out due to the ‘lucrativeness’ of their operational areas.

“I think the people who have a solution to this problem are not even the ones sitting here. They are the ones you will invite behind the camera”.

Also, the Executive Commissioner, Corporate Services and Administration in Nigerian Upstream Petroleum Regulatory Commission, Mr Jide Adeola, said about 600,000 barrels of crude oil were stolen per day.

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He said, “As of today, Nigeria produces 1.23million barrels of crude oil per day as against 1.8million barrels targeted, leading to total revenue loss, as of today, of $2.1billion or N877billion.”

Worried by the submissions, the Chairman of the Committee, Akpan Bassey, said he had never seen “economic sabotage of this magnitude and it must be stopped.”

“The required political will through the instrumentality of legislative intervention shall surely be done after meeting other critical stakeholders like the Nigerian National Petroleum Corporation Limited, the Military, etc,” he noted.

The Senate also lamented that the country was losing over 900,000 barrels per day to oil thieves, stressing that the massive oil theft would crumble the economy.

Bassey said if the ongoing theft was not immediately stopped, it would also frustrate the implementation of the Petroleum Industry Act passed into law last year by the National Assembly.

Speaking at the investigative hearing on the experience of the committee during its oversight visit to major platforms in the Niger Delta, the senator expressed shock over the humongous loss of national oil revenues due to oil theft and sabotage.

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Bassey stated that the committee discovered that pipelines carrying crude oil could not be identified because they were covered with no right of way, making it difficult to monitor these pipelines.

He told the stakeholders that the shortfall in the country’s oil revenues was not caused by oil theft alone but also by the inability to have evacuation access, effective metering and monitoring by operators as well as the unwillingness of security agencies to checkmate the incidents.

He lamented that the Bonny Terminal, which hitherto produces 60,000 barrels per day, had not produced a single barrel for the past seven months.

Also speaking at the occasion, the Senate President, Senator Ahmad Lawan, who had declared the investigative hearing open, said it was the view of the Senate that oil theft impacted negatively on the country’s oil production and revenues, hence its decision to set up the committee to come up with a workable template to arrest the situation.

READ ALSO: Fresh Fuel Scarcity Looms As PENGASSAN Threatens To Shut Down Installations Over Oil Theft

Lawan, who was represented at the occasion, also charged stakeholders to come up with a plan to end this national challenge.

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He said, “It is regrettable that the criminals are perpetrating the unfortunate crime with the active connivance of stakeholders, including security personnel.

“The Senate will stop at nothing to unveil the criminals behind the crime and that is why we set an ad hoc committee to unravel the thieves and come up with workable solutions to end the menace, before December this year.”

A member of the committee, the senator representing Kano South senatorial district, Senator Kabir Kaya, noted that while Nigeria’s OPEC quota was 1.8 million BPD, the country currently produces 1,2 million BPD, showing a shortfall of 600,000 BPD. He challenged the stakeholders and the operators to find a solution to this problem.

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Only Seven Banks Can Meet CBN Recapitalisation Requirements – Report

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No fewer than 17 out of the existing 24 Deposit Money Banks may be unable to meet the Central Bank of Nigeria’s capital requirement if it is increased from its current N25bn, according to a report by Ernst and Young.

The new report, titled “Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation”, noted that if the apex bank raised the capital base of commercial banks in the country by 15-fold from the current N25bn, only seven banks may survive.

The CBN Governor, Olayemi Cardoso, had in several fora stated that the apex bank would consider an increase in the minimum capital base of banks in the country as part of its efforts to strengthen their capacity to support Nigeria’s drive to become a $1tn economy by 2026.

The current capital base is stratified based on the type of banking license – banks with regional, national and international licenses are currently expected to maintain a minimum capital base of N10bn, N25bn and N50bn, respectively.

READ ALSO: JUST IN: CBN Begins Sales Of Dollars To BDCs

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The proposed increase in the capital base is coming nearly two decades after the CBN’s 2004 banking reform, which led to an increase of the then prevailing capital base from N2bn to N25bn.

The 2004 banking reform was characterised by massive mergers and acquisition activities, which ultimately resulted in the reduction of the number of banks in the country from 89 to 25 banks.

In the last few months, FBN Holdings, Wema Bank and Jaiz Bank had proposed Rights Issues, while Fidelity Bank announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue.

Ernst and Young, a global financial services company, said in the report that some banks may depend on different recapitalisation options, which include mergers and acquisitions, initial public offerings, placements and/or right issues and undistributed profit (retained earnings) despite financial soundness indicators show that Nigerian banks were largely safe and resilient as of 2023.

According to the report, the recent plan by the CBN to increase the capital base of banks will lead to a series of mergers and acquisitions as witnessed during the last recapitalisation exercise in 2004/2005.

READ ALSO: FG Breaks Silence On Alleged Suspension Of Student Loan

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The report read partly, “The recent plan by the CBN to increase the capital base of banks could again lead to M&A activities but not as widespread as was the case in 2004/2005 given the relatively solid financial positions of the banks today as well as the occurrence of several M&A activities in the banking sector over the past 10 years.

“While the CBN governor did not indicate the magnitude of the proposed hike in the capital base, we have assumed what the proposed increment will be based on three different scenarios underpinned by current macroeconomic conditions. On the back of that, we were able to determine the number of banks (across the three licence types) that may fall below the new minimum capital thresholds.

“In a worst-case scenario, i.e., given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital.”

The report noted that the plan to recapitalise banks was premised upon the recent devaluation of the naira in 2023.

It explained that the exchange rate as of 2005 during the last exercise in 2005 stood at N132.9/$ but the naira currently exchange for over N1400/$.

According to the firm, this implies that the recapitalisation may require a capital multiplier of 10 or more based on the exchange rate differentials.

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“On this basis, a worst-case scenario given a 15x capital multiplier for 24 banks will be considered based on the type of banking licenses held. We have benchmarked the current capital of these banks against the current capital requirement and four recapitalization scenarios,” it noted.

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Naira Continues Appreciation Against USD At Forex Market

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The Naira ended last week on a positive note as it continued its appreciation against the US Dollar at the foreign exchange market.

FMDQ data showed that the Naira appreciated to N1,602.75 on Friday from N1608.98 recorded on Thursday.

This represents a N6.23 gain compared to the N1,608.98 recorded the previous day.

The development comes despite the USD transactions plunged by 44.7 per cent to $137.43 million from $248.75 million on Thursday.

At the parallel market, the Naira traded between N1,610 and 1,620 per USD.

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READ ALSO: Naira Depreciation Continues Against USD At Forex Market Days After Binance Exit

DAILY POST reports that all through last week, the Naira had settled at an average of N1,608 per USD.

On Thursday, the Central Bank of Nigeria in a circular warned that commercial banks should desist from profiting through Naira revaluation.

Recall that between June last year and March 15 2024, CBN had floated the Naira twice which saw the Country’s currency trading at N1,602.75 per USD from N460 in May 2023.

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JUST IN: Nigeria’s Inflation Hit 31.70% In February – NBS

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Nigeria’s inflation rate rose to 31.70 per cent in February from 29.90 per cent recorded in January 2024.

This figure indicates an increase of 1.80 per cent, the National Bureau of Statistics said in its latest CPI and inflation report released on Friday.

This indicates that in February 2024, the rate of increase in the average price level was more than the rate of increase in the average price level in January 2024.

The report read, “In February 2024, the headline inflation rate increased to 31.70 per cent relative to the January 2024 headline inflation rate which was 29.90 per cent.”

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Comparatively, on an annual basis, February 2024’s inflation rate was 9.79 per cent higher than the 21.91 per cent recorded in February 2023.

Also, the month-on-month headline inflation rate in February 2024 reached 3.12%, an increase of 0.48% from January 2024’s rate of 2.64%.

This indicates that the pace at which average prices rose in February 2024 exceeded the rate of price increase in January 2024.

The NBS further stated, “Looking at the movement, the February 2024 headline inflation rate showed an increase of 1.80 percent points when compared to the January 2024 headline inflation rate. On a year-on-year basis, the headline inflation rate was 9.79 percent points higher compared to the rate recorded in February 2023, which was 21.91 percent.

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“This shows that the headline inflation rate (year-on-year basis) increased in the month of February 2024 when compared to the same month in the preceding year (i.e., February 2023).

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“Furthermore, on a month-on-month basis, the headline inflation rate in February 2024 was 3.12 percent, which was 0.48 percent higher than the rate recorded in January 2024 (2.64 percent).

The latest inflationary surge is despite tightened monetary policy by the Central Bank.

At the latest Monetary Policy Meeting, the apex bank increased the benchmark interest rate by 400 basis points to a record 22.75 per cent.

Justifying reasons for the hike, the CBN Governor, Olayemi Cardoso, explained that members considered various scenarios including whether to hold or hike policy and concluded that inflation could become more persistent in the medium term and pose more regulatory issues if not well-anchored.

Thus, members voted for a significantly high policy rate hike to drive down the inflation rate substantially.

He mentioned that the meeting extensively discussed various distortions in the foreign exchange market, particularly the impact of speculators exerting upward pressure on the exchange rate, leading to a significant pass-through effect on inflation.

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The consensus reached involved a substantial policy rate hike aimed at effectively reducing inflation.

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