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The Nigeria Extractive Industries Transparency Initiative said that Nigeria lost at least $16 billion in ten years due to non-review of the 1993 Production Sharing Contracts with oil companies.
This was one of the highlights of the latest report by NEITI released in Abuja Sunday. It was tagged “The Steep Cost of Inaction”
It said that the losses were recorded between 2008 and 2017.
The study done in conjunction with Open Oil, a Berlin-based extractive sector transparency group, found that the losses could be up to $28 billion if, after the review, the federation were allowed to share profit from two additional licenses.
NEITI, therefore, called for an urgent review of the PSCs to stem the huge revenue losses to the federation.
It added that the review was particularly important for Nigeria because oil production from PSCs had surpassed production from Joint Ventures with PSCs now contributing the largest share to federation revenue.
“Between 1998 and 2005, total production by PSC companies was below 100 million barrels per year while JV companies produced over 650 million barrels per year.
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“By 2017, total production by PSC companies was 305.800 million barrels, which was 44.32 per cent of total production.
“Total production by JV companies was 212.850 million barrels, representing 30.84 per cent of total production.” It said.
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Egypt Ranks 2nd Amidst World Emerging Economies.
CBN signals end to official rate regime for naira
The Central Bank of Nigeria (CBN) may soon allow the naira to freely find its value, with a possible depreciation on the official rate, usually pegged at about N305/$, an update on its website has indicated.
The development is signaling an end to the most criticised foreign exchange rate window, which has been used mostly for government’s critical businesses that affect the public, particularly the importation of petroleum products.
If the move sees light of day, it will mean that the value of the naira at the official window is depreciated with its concomitant closure of the peg.
Yesterday, the apex bank, as opposed to the usual publication of the fixed exchange rate, opted to publish that “the rate will be market-determined.”
According to a report, the President of Shippers Association of Lagos State, Jonathan Nicol, said the Nigeria Customs Service had allegedly directed importers to pay for duties at the rate of N326 per dollar against the official rate of N306, citing an order from the CBN.
Also yesterday, the interbank rate depreciated by 0.2 per cent to N360.43 per dollar at the close of trading, while the parallel market remained steady at N360 per dollar.
A move toward a market-determined exchange rate would be welcomed by investors, who have long accused government of some level of capital controls and bemoaned multiple exchange rates.
The Chief Executive Officer of Nigerian Investment Promotion Council, Yewande Sadiku, was quoted as saying the apex bank was in talks with other agencies to move to a single rate for the nation’s currency.
For an economic analyst at Ecobank, Kunle Ezun, “putting that on the website means the central bank is gradually moving towards a single exchange-rate window. It is making the exchange rate more liquid to attract more inflows.”
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