Nigerian Minister - Nigerians in Diaspora Will Be Forced Out of Jobs and will Come Back Home

The Minister for Labour, Adetokumbo Kayode, reckons that the global recession will force Nigerians in Diaspora out of a job and send them running back to Nigeria.

The Minister, speaking with members of the Labour Correspondents Association of Nigeria (LACAN), in Abuja, believes that a lot of Nigerians will be rushing home from abroad after losing their jobs, and declared that the Federal Government had envisaged this, and is already preparing to receive them back home.

According to the Minister, a buffer was already being put in place to reduce the shock and difficulties their influx would have, and as a result the government has made the issue of job creation as a matter of priority.

"We want to take the issue of job creation as a matter of priority and development in Nigeria. There will be a national summit coming soon with a work plan. It is not just going to be a talk-show and just one of the programmes, especially now that the economic crunch is here." said the Minister.

"We know that a lot of Nigerians are going to be coming home from abroad because the foreign jobs they used to do are no longer there. With the new policy abroad, foreigners shall be forced to leave for the citizens to take over and when there is no job there, you are finished when you cannot pay your bills, your mortgages."

Well it is about time that the government took the issue of job creation seriously, but then again isn't it what it was supposed to be doing in the first place?

One wonders what the millions of already unemployed Nigerians feel about the government scrambling to create an economic buffer for the few thousands of Nigerians that are most likely to relocate back home.

Considering that the Nigerian economy is not exactly immune to the global slowdown, and companies in Nigeria, are also laying off people, it will be interesting to hear exactly what the government plans are.

Federal Government Rules Out Bailout for Financial Sector

The Federal Government yesterday ruled out bailing out the financial sector yesteday Remi Babalola, minister of state for finance, disclosed yestedray that the government has been made to believe that the banking industry is strong to withstand the meltdown ravaging foreign banks.

He also stated that the government was more focused on delivery on wider economic stimulus rather than focus on the financil sector but did not rule out the possibility of a bailout, if the need did arise for it.

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Nigeria to roll out it own Economic Stimulus

President Umaru Yar'Adua has directed all relevant government agencies to immediately work out incentive packages that would help cushion the impact of the global economic crisis on Nigerians.

This follows the recommedations of the Presidential Steering Committee on the Global Economic Crisis, which met last Tuesday, to work on a number of palliative measures for the short, medium and long terms.

According to a spokesman for the President, Olusegun Adeniyi, the stimulus will include "a package of incentives that will ginger production, increase the purchasing power of the ordinary man on the street and help generate employment opportunities. In the medium and long term strategies, aside infrastructural development, the government is looking in the direction of agriculture through commercial farming clusters and value chain, not only for food security but for employment generation. In the oil sector, the local content guidelines are being reviewed as a component of the reforms to give more leverage to our people."


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Nigeria’s Naira May Fall 15% If Crude Weakens, Citigroup Says

Citigroup believes that Nigeria’s naira may weaken as much as 15 percent this year should the price of oil, which accounts for 90 percent of the country’s export earnings, decline to an average $35 a barrel in 2009.

According to David Cowan, an economist at Citigroup Nigeria's currency may slump to about 173 per dollar by year-end. It is currebtly being traded at 150.25 per dollar.


Nigeria’s currency lost almost a quarter of its value following a Nov. 26 decision by the central bank to limit sales of dollars to commercial banks to protect its $52 billion of reserves as oil revenue shrank and foreign investors sold the nation’s assets. Oil has slumped almost 72 percent since its July record of $147.27 a barrel, cutting Nigeria’s export earnings.


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12 Steps: Energy - The Nigerian Natural Gas Industry

OGJ estimates that Nigeria had over 180 trillion cubic feet of proven natural gas reserves, more than three times the proven oil reserves, as of January 2007, making it the seventh largest natural gas reserve holder in the world and the largest in Africa. A U.S. Geological Survey (USGS) study however estimates that the gas reserves potential in Nigeria could be as high as 600 trillion cubic feet.

There has been a steady growth in the amount of proven natural gas reserves in country, with the amount almost doubling over a period from 1992 to 2006, with most of new discovery occurring in deep water basins. More significantly gas reserves discovered, were as a result of exploration of oil as there has not been any dedicated gas exploration of any kind carried out in the country.

The biggest natural gas initiative in the country is the Nigeria Liquefied Natural Gas Limited (NLNG), is jointly owned by Nigerian National Petroleum Corporation (49%), Shell (25.6%), Total LNG Nigeria Ltd (15%) and Eni (10.4%). It was incorporated in 1989 and began exploration and production in 1999.

In 2008, company added a sixth unit to its natural gas export plant, located on Bonny Island in the southern Niger Delta, lifting annual shipments by a fifth to 22 million tonnes. The $1.6 billion unit took three years to build and should raise annual sales of liquefied natural gas (LNG) from the whole complex to about $6 billion, while a seventh unit is expected to be completed by 2011 depending on a Final Investment Decision (FID) scheduled for 2009.

The facility is currently supplied from dedicated natural gas fields, but it is anticipated that within a few years half of the natural gas feedstock will consist of associated (currently flared) natural gas from existing oil fields.

Additional LNG facilities in Nigeria are also being developed. In January 2005, Chevron announced it was looking into constructing the $7 billion OK-LNG plant at Olokola, Ondo State. In March 2007, NNPC awarded a construction contract to France-based Technip and the project includes connecting the LNG plant to oil and natural gas reserves in the Niger Delta through a network of pipelines. Once expected to produce its first LNG in 2001, OK-LNG is now expected to come on stream in 2015 according to a report released in October, 2008.

In December 2005, ConocoPhillips, Chevron and Agip met with NNPC to sign a shareholders agreement for the establishment of the $3.5 billion Brass River LNG plant. The project, which includes two LNG trains, is also now expected to come on stream in 2015.

Both the Brass and OK-LNG have been hit by independent oil companies (IOCs) reaction to the government’s decision to meet local demands for gas products before exports are made. This has led to the IOCs holding back on making further investments, as they believe they would recoup their investments more quickly by exporting to the more competitive markets in Europe and North America.

Chevron is working on the Escravos Gas-to-Liquids (EGTL) project and completion of the project was scheduled for 2009. However, in January 2007, work on the EGTL project came to a halt after a breakdown in negotiations over its cost, which had shot up to from $2.5 billion to $5.4 billion. Plans for the project included linking the Escravos pipeline system with the West African Gas Pipeline (WAGP) for natural gas export to Benin, Togo and Ghana.

There has been a global increase in the demand for natural gas, more so as it is seen as a cleaner alternative to other fossil fuels such as oil and coal. The Nigerian government is seeking to harness the potential natural gas has to offer by;

• Improving domestic use; mainly through the use of gas for the production of electricity.
• Consolidating its position as a regional player; By supplying gas to other African countries through the West African Gas pipeline project and the Trans-Saharan Gas project.
• Rapidly growing LNG exportation: Nigeria has the second fastest growing LNG capacity in the world after Qatar.

To help it achieve its goals the Nigerian government has developed the Nigerian Gas Master Plan (NGMP), along with other initiatives. The plan aims to;

1. Increase Market Share and Penetration: Fully exploit the potential gas has to offer by increasing sales and market penetration in the domestic, regional and international markets.

The government intends to protect supply to the domestic market, through the introduction of the Domestic Gas Supply Obligation regulation, which mandates that a certain portion of gas production be set aside for the domestic market. This is to prevent a scarcity of the gas products in the local market through the actions of Joint Ventures operating in the sector, who might want to sell majority of their products in more competitive international markets.

2. Establish a Competitive Gas Industry: By improving Nigerian gas industry’s competitiveness by implementing an integrated infrastructure strategy to support domestic, regional and export markets; and attracting new players; and ensuring the commercial viability of investments.

As part of its strategy, the government has approved a sector based gas pricing framework which divides the domestic market into three categories, encompassing the power sector; strategic gas-based industries that use gas as feedstock (fertilizer, methanol); and wholesale distributors, with a different pricing model developed for each of the categories.

A gas infrastructure blueprint has also been approved by the government, which will provide the backbone for the Nigerian gas grid. The blueprint, which was developed to provide for flexibility and scale ability of supply, and cost effectiveness, will see the creation of a gas infrastructure that concurrently supports the supply of gas to the domestic, regional and export markets.

The government believes that the proposed network of infrastructure, will improve the country’s ability to increase gas supplies rapidly and flexibly, and putting the country in a better position to respond to growth in demand both domestically, regionally and for export.

Joining the GECF
The government hopes the plan will lead to fully develop a market driven gas industry by 2014. Nigeria also became one of the founding members, along with 17 other countries, of the newly formed Gas Exporting Countries Forum (GECF), which was formally established on December 23, 2008 in Moscow, Russia.

GECF is expected to function in the same way as OPEC, regulating and controlling natural gas production in the international market and will be strictly guided by the framework and agreement which bind member states together. Members are also expected to share a common purpose to maximise value to their various nations while working towards ensuring a stable gas market that delivers fair price to both consumers and suppliers.

Analysts are of the view that Nigeria's membership of GECF is a step in the right direction in developing and exploring the country's long abandoned natural gas reserves as well as creating an alternative source of revenue for Nigeria outside crude oil revenue. It is also hoped, the member ship would also bring about a quick end to wasteful practice of gas flaring in the country.

The government’s current plans for the gas industry should bring needed improvements to a much neglected sector, what remains to be seen is if the government will execute it plans properly, or it will just fizzle out be like other government backed projects.

Nigerians Spend US $8.2 million on Power Generators in First Week of The Year

According to the Nigerian Vanguard, Nigerian businesses in an apparent response to the worsening power situation in the country, spent a whopping $8.2 million (about N1.180 billion) on importation of power generating sets in the first week of January.


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Bail Out of Banks Not Neccessary - CBN Hits Back

Following our story yesterday about the SEC director general calling for a bail out of banks, the CBN has hit back, saying that the a bank bail out was unneccessary, rubbishing the comments made yesterday.

A spokeman for the CBN, Deputy Director of Corporate Affairs of the CBN, Festus Odoko stated that the banks were well capitalised to deal with the fall out of the nearly N400 billion loan given to stockbrokers being defaulted.

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Call made for American-styled Bailout for Nigerian Banks

The Director-General of the Nigerian Stock Exchange Commission (SEC), Mr. Musa Al-Faki, yesterday called on the Nigerian government to take over the sick banks and companies quoted on the Nigerian Stock Exchange (NSE).

Al-Faki also called for the prosecution of the CEOs of identified sick banks and firms for contributing to the crisis engulfing the stock capital market which had lost N2.08tn (US $13.8 billion) in January 2009 alone.

Al-Faki blamed the banks for giving unsecured loans of close to N400 billion to stockbrokers to dabble in the stock market. Stockbrokers however, are now defaulting on the loans, tiggering a sub-prime mortgage type credit crisis that is threatening to bring down the Nigerian capital market.

The SEC DG believes that the bail-out strategy, as implemented in other countries, would restore confidence in the market and buoy prices.

However the CBN believes that Nigeria banks have sufficient enough capital to weather the current storm, though for long they might be able to do that remains to seen.

Nigerian Finance Minister - Economy at Critical Juncture

Yesterday at the inauguration of the National Economic Management Team (NEMT) in Abuja, the Minister for Finance admitted that the Nigerian economy was at a critical juncture as the the global economic slowdown has brought about a sharp drop in the market capitalisation on the Nigerian Stock Exchange; reduced budgetary revenues; falling external reserves and marked Naira depreciation.

This should hardly surprising as many economic commentors, including myself raised the issue last week on how the Nigerians should brace themselves for tough times ahead.

The admission is a step in the right direction but it will be more interesting to see what solutions the new team comes up with to salvage the economy and how quickly they come with the goods. Even the most optimistic of economists do not believe that the global economy will rebound this year, and even if it does, most are expceting an almost flatline growth in the next few years. This will ultimately affect the demand for oil, Nigeria's chief earner.

Hopefully the team will focus on reducing the country's dependence on oil receipts and come up with viable ways to diversify the economy.