Coronavirus: Prepare for trouble, NNPC boss tells Nigerians

Date:

…CBN to fund local drugs production, specialist hospitals

…It’s wake-up call to life without oil — Finance Minister

…To drastically reduce budget

…How outbreak’s delaying completion of Lagos-Ibadan rail project — Amaechi

As top Federal Government officials battle to find ways to minimise the impact of the oil price crash on the Nigerian economy due to the global coronavirus crisis, the Group Managing Director (GMD) Mr. Mele Kyari, Nigerian National Petroleum Corporation, NNPC, has alerted Nigerians to prepare for trouble. Oil prices have fallen to about $32 per barrel, while Nigeria’s Federal Government’s 2020 budget was benchmarked at $57 per barrel. Kyari spoke at the Consultative Roundtable on the economy organised by the Central Bank of Nigeria, CBN, in Abuja, yesterday. Even at that low price, he revealed that demand for crude had fallen so much, to the extent that 50 cargoes of Nigeria’s crude had not found buyers. He said:  “For the oil market, all of us here are aware of what happened – the Black Monday. It also signifies the importance of oil in the global economy. ‘’Oil affects everything.  When the oil market collapses, everything collapses. And oil market collapses in two ways: one is low prices and the other is 2008 -2010 when the global crisis was caused by very high oil prices. “Right now, we are getting oil from the least expected places.   We have plans, we can take our production to three million bpd but we must produce at low prices.

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“Today, I can share with you that there are 12 LNG cargoes globally, it has never happened. LNG cargoes that are stranded have no call because there is absolute collapse in demand, associated with coronavirus. “It is also affecting the liquid crude. As at today, for Nigerian crude, we have about 50 cargoes that have not found landing. It means the traders have bought them but they don’t know where to take them to. And this is true of other jurisdictions. “As at yesterday, Iran dropped its price by $5 (per barrel); Saudi Arabia dropped price by $8 (per barrel.), so when you have oil price at $30 and you drop it by $8, it means that you are selling it at $22 and that is a huge problem. “In Saudi Arabia, their average production cost is about $4 or $5 pbl. Today, the best of our production is about $17 pbl. Today, there are countries which cost of production is categorized at $30 pbl and we are one of them.   If the oil price is $30 or $32 pbl and you are producing at the cost of $30, you are out of business. “Therefore, depending on the potential of coming out of the impact of this coronavirus for a long time to come, at least three months, so   prepare for trouble for at least three months, even if prices come back today, you have a backlog of production cost.” CBN to fund drugs production, specialist hospitals — Emefiele In his address, the CBN Governor, Mr. Godwin Emefiele, disclosed that the apex bank would fund local drugs production and the establishment of specialist hospitals in the country. This, he said, would be the bank’s immediate response to the coronavirus which has made some countries to ban drugs export. His words: “On our part as central bank, what we put on the table is that we will extend our intervention. Given the impact of coronavirus, I hear some countries have decided to ban the export of pharmaceuticals. “At this time, we in Nigeria CBN will now be looking at our pharmacists and pharmacologists and say it is high time they stopped dispensing in hospitals. We will now begin to do what they learnt in schools – the formulation of drugs and the development of pharmaceutical industries will now form part of our intervention activities. “We will also be looking at the possibility to see that we reduce the drain on our foreign exchange, where we find that people travel abroad for common medical checks. We are going to intervene heavily in the health sector to see how we can support the efforts of government to see to it that we develop specialist hospitals to handle ailments that would have taken our people out of the country and constitute a drain on our FX resources. “Central Banks in key markets across the globe have responded by reducing policy rates in order to stimulate growth, while measures are being taken by fiscal authorities to build resilient buffers to contain the spread of the virus. “The CBN fortunately had already embarked on similar measures which have resulted in significant reduction in lending rates, as part of our efforts to boost growth. Working with the fiscal authorities, we will not hesitate to deploy additional measures to strengthen our buffers and insulate the Nigerian economy from the global headwinds.” It’s a wake-up call to life without oil — Finance Minister …To drastically reduce budget In her remarks, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, described the oil price crash as not only a shock but also a wake-up call to a life without oil. She called for the collaboration of fiscal and monetary authorities as well as private sector operators in order to weather the harsh realities of the oil price crash. “The sudden and unexpected drop in crude prices to just over $30, comes as a shock and great surprise. These strong headwinds would reinforce the wake-up call to a life without oil. But that should not spread panic and speculation in our economy. ‘’We need to put our hands together to weather the storm. We need to work together to take the opportunities provided by this very harsh reality. ”We are working as a government to strengthen our macroeconomic fundamentals, which today are far stronger and more robust than in 2014-2016.

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Drastic reduction in budget She said the Federal Government would drastically reduce its N10.594 trillion 2020 budget, at the end of the review directed by President Muhammadu Buhari. Her words:  “There is no doubt that the combination of crude oil price crash and coronavirus will put severe strain on our budget revenue, forex and many sectors. We are drastically reviewing the budget as well as redoubling our effort to raise revenue and plug the leakages, intensify engagement and support of sub-national entities and the private sector in our economic recovery and growth programmes.” We lost N30bn to Apapa gridlock— Dangote In his remarks, Africa’s richest man, Alhaji Aliko Dangote, said three companies in his group lost N30 billion profit to Apapa gridlock last year. He, therefore, challenged the Federal Government to take every step necessary to improve  the nation’s infrastructure in order to reduce the cost of doing business in the country. Dangote said:  “Cost of doing business can actually affect anybody. To tell you the truth, government lost so much to Apapa gridlock last year. Three of our companies lost over N30 billion, from which the government will collect tax that we would have paid. “When you look at the economy of Asia, it’s mainly focused on export but we have a large domestic market of about 200 million people, apart from the rest of the ECOWAS market where our imports last year was almost $47 billion. “We cannot have over 200 million people going at an average population growth of about 2.7% and then we are importing some of the things we are consuming here. I think we need to be more serious, so we can stop just talking about diversification. “I don’t know why but it is possible people are not really committed to it.   Since I came to Lagos in 1979, people have been talking of diversification and up till today, we are still talking about diversification.

 

‘’I think we need to really look at how we handle this. I’m sure we will find solutions to how we would make our country a producing country.  If you look at it today, with the kind of projects that we are doing, we are importing almost every single thing.” How outbreak’s delaying completion of Lagos-Ibadan rail project — Amaechi Also, Minister of Transportation, Rotimi Amaechi, yesterday explained how coronavirus outbreak was affecting the speedy completion of Lagos-Ibadan expressway. Amaechi said the project would have been completed in May but for the ongoing coronavirus pandemic across the globe. According to him, completion in may will no longer be feasible because the contractors handling the project are employees of the China Civil Engineering Construction Corporation, CCECC. He said: “Lagos-Ibadan would have been ready in May.

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Unfortunately, nearly all of them that went for the Chinese New Year were quarantined by their government. Their government said they cannot come back until they find a solution to the Coronavirus. “It is only those who didn’t travel that are here and, therefore, the speed of the construction has reduced.’’ In November 2019, the Minister of Transportation, Rotimi Amaechi assured that the project would be delivered by April 2020. He, however, took to his Twitter handle in January 2020 to lament the pace of work done by the contractors. “Looking at the state of work in Apapa, completing the project in April doesn’t seem feasible, especially the extension of the rail line to the seaport. ‘’We’ll, however, continue to work and redouble our efforts to complete the project and meet set targets,’’ he had tweeted in January 2020. The Minister also lamented that Nigerians have politicised the project, stressing  that “everybody wants a railway in his village without bothering to ask, what is the relevance of railway in my village?”

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The World Health Organisation in February, raised its global risk assessment of the new coronavirus to its highest level after the epidemic spread to sub-Saharan Africa and financial markets slumped. The virus has spread around the globe, emerging on every continent except Antarctica, prompting many governments and businesses to try to stop people from traveling or gathering in crowded places. It has killed more than 2,800 people and infected over 84,000 worldwide — the vast majority in China — since it emerged apparently from an animal market in the central Chinese city of Wuhan late December 2019.

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Chukwuma Amaechihttp://evergreennewsonline.com
A Certified Senior Editor/Creative Writer @Evergreennewsonline Media, Graphic Designer, Chemical Engineer, & a Radical Entrepreneur

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