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Forex: Speculation, Round-tripping, Account For Naira’s Continuous Fall

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Chief Executive Officer, Confederated Facilitators Limited (CFL) Group of companies, Lai Omotola has opined that the soaring dollar to naira rate, with adverse effects on Nigeria’s economy is not being driven by market forces but by wealthy elite businessmen whom he tagged, ‘market cabals’

He bared  his mind at a media parley organised by his company in commemoration of its 25th anniversary.

According to him, “I have never seen elite business people whose only business they do is to speculate on their currency. That’s the only business they do. All of them, in everything they are doing, the underlying factor is that they are speculating.

“And this is how they do it. They may have a manufacturing plant, no doubt about it. For instance, the manufacturing plant needs $10 million, so they need to buy dollars. But the truth of the matter is that nobody is investigating if their actual need is $10 million or if they need something lesser than what they say they need.

“So, most likely, they only needed $1 million, but they will collect $10 million. They will send the $1 million to their supplier, convert the remaining $9 million to Naira, and go and sell it to the black marketers. Now, when you have a gap of over N300 in the exchange rate and you are selling $9 million, you are making N270 million without having a staff or investing anywhere, but just taking dollars in and out.”

“That business is sweeter than cocaine, which is why all of them are locked into it, and that is why Naira today is moving towards N1,200 for a dollar. When this present government was floating the Naira, it was to make the difference between the Naira at the official market and the parallel market not to exceed N2. That’s the meaning of floating. But this government has forgotten that when you float the Naira, there is no dollar in the Central Bank of Nigeria, CBN, to back that Naira.

“And it’s a matter of demand and supply. Anything in life, if today more people are looking for a particular substance than what is available, the price of the substance would go up. It is fundamental economics. If fewer people are looking for it, the value will depreciate. That’s the issue of demand and supply. So when you now allow the Naira to float, when you don’t have enough dollars, guess those with the dollar. It’s with the market cabals, ”he said.

He added, “Nigeria’s economy is not powered by market forces. There is nothing called market forces in Nigeria’s economy. Nigeria’s economy is powered by market Cabals. Regulating the currency has moved from the hands of the CBN to the hands of the Market Cabals. Let me tell you how they operate. For instance, they know that Nigeria requires $100 million to have that floating that will keep the difference between the official rate and parallel market at N2.

“And the cabals are the ones that have the $100 million. So they will only release $50 million into the economy. Now, when you release $50 million, demand for the dollar will become much higher, and the supply will become lower, thereby influencing and increasing the price of the dollar to Naira. CBN cannot intervene because there is no dollar.

“So the market cabals always have dollars with them. And they work in circles. They have dollars with them, they are the ones supplying dollars to the market, and they make a hell of a profit from the circles. So which business can be better than that?”

He said in other nations, the need for dollars is only for raw materials, school fees payment, or other productive things. But in Nigeria, two things contribute to the need for dollars; corruption, which is bribery, and speculations.

He noted that productive need for the dollar is not up to 40 per cent, “and that is where the challenge is. How do you fight against this kind of behavioural pattern?

“So our business elites that have funded politicians to win an election that are doing this type of not too-tidy business are the ones that have held our Naira in captivity. And as long as they are in charge, it will be difficult for the Naira to gain strength against the dollar.

“The worst part of it is that if the government goes today, pump $20 billion into the economy, 80 per cent of that money will end up in their hands, and they will continue to use it in an unproductive means because they want that dollar to Naira gap to continue to exist.”

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Adoption of AI Feature as NIPetGE Pays Courtesy Call at NNPC Ltd

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Enhanced adoption of artificial intelligence and other digital technologies to improve operations in Nigeria’s oil and gas industry is taking the centre stage in relevant circles.

The issue came up strongly when the President-elect of the Nigerian Institute of Petroleum and Gas Engineers NIPetGE, Prisca Kanebi, paid a courtesy call at the Nigerian National Petroleum Company Limited (NNPC Ltd), Abuja.

Biztellers reports that the Kanebi led delegation was received by the Group Chief Executive Officer of the NNPC Ltd, Bayo Ojulari, represented by the Executive Vice President, Gas, Power and New Energy, Olalekan Ogunleye.

According to a statement made available on Sunday, discussions at the meeting focused on the future of Nigeria’s hydrocarbon industry amid global energy transition concerns, technological changes and sustainability targets.

ALSO READ: NNPC Ltd, IOCs Raise Crude Supply to Local Refineries by 103% in 4 Months

The statement indicated that the NNPC Ltd acknowledged the role of NIPetGE in policy advocacy, technical development and innovation within the sector.

Speaking during the meeting, Kanebi highlighted recommendations from the institute’s recent conference, including the proposed establishment of a national centre for intelligent energy systems to support the deployment of artificial intelligence, the Internet of Things and robotics across the petroleum value chain.

She also commended the Federal Government’s decarbonisation efforts and reiterated the institute’s support for policies aimed at improving sustainability in the industry.

The institute also recommended the creation of a hydrocarbon-linked emissions trading system to allow Nigeria to take part in global carbon markets.

The institute also proposed fiscal incentives to support local manufacturing and service delivery in the oil and gas sector, as well as the expansion of the Energy Transition Plan to include measurable upstream decarbonisation targets backed by tax credits.

Other proposals included increased public-private partnerships in emission control infrastructure, carbon capture projects and hybrid renewable energy initiatives.

Both organisations also stressed the need for stronger collaboration between industry and academic institutions to improve professional capacity and align petroleum engineering practice in Nigeria with international standards.

The institute further disclosed that its bill seeking chartered status had passed second reading and was progressing towards a third hearing at the National Assembly.

It added that NNPC Ltd pledged support for future collaborations with the institute on initiatives aimed at improving efficiency and innovation in the energy sector.

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FHC Orders NUPRC to Comply with PIA

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Local Firms Lead Revival of Idle Oil Wells – SPE

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Nigeria’s indigenous oil and gas companies are reopening dormant wells and ramping up production from assets acquired from international oil companies (IOCs) to boost crude oil output.

The Society of Petroleum Engineers (SPE), Nigeria Council, made the assertion through its Chairman, Francis Nwaochie, on the sideline of the Offshore Technology Conference (OTC) which ended at the weekend in Houston, Texas.
Nwaochie said indigenous operators were already taking advantage of opportunities created by disruptions in the global energy market to increase production from existing assets.

According to him, local firms that recently acquired onshore and shallow water assets from IOCs were aggressively reviving inactive wells and maximizing available infrastructure to raise output levels.

“What we are seeing now is that indigenous companies are reopening wells from the assets they acquired from the IOCs. Some of them have almost doubled production from those existing assets,”.

He explained that the renewed focus on dormant wells and existing facilities had become critical at a time the global oil market was facing supply shortages triggered by geopolitical tensions in the Middle East.

The SPE Nigeria Council Chairman noted that Africa, particularly Nigeria, was well positioned to benefit from the supply gap because of the continent’s relative stability compared to some other oil-producing regions.

“There is a huge opportunity for Africa right now. The focus is gradually shifting to Africa because of the volatile environment in many other producing regions.”

He stated that indigenous operators were leveraging digital technologies, financing opportunities and local expertise to improve production efficiency and optimise existing fields.

He added that stronger implementation of local content policies was also helping to create a more stable operating environment for oil and gas investments.

“Local content is very critical. Once communities and local companies clearly understand their roles and benefits, then you create peace across the industry. Business only thrives in peaceful environments.”

ALSO READ: Nigerian Navy Recovers Large Cache of Illegal Refined Petroleum Products

Nwaochie also stressed the need for Nigeria to move beyond crude oil production and begin developing indigenous technologies for the energy industry.

According to him, SPE Nigeria Council was actively supporting innovation and technology development among young Nigerian engineers and researchers.

He disclosed that the association was engaging the National Universities Commission(NUC) on reforms to engineering curricula in universities to better prepare graduates for the future of the energy industry.

“One of our major focuses in SPE is technology development. We should not only import machines and equipment, we must begin to develop our own technologies locally.”

Nwaochie revealed that SPE was already supporting local innovators working on technologies such as remotely operated underwater vehicles (ROVs), noting that indigenous technology development will strengthen Nigeria’s economy and deepen local participation in the oil and gas sector.

“We may not get everything right immediately but we must start somewhere. That is how countries that dominate the global energy industry built their capacities.”

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