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Dangote group set to supply Nigeria with foreign exchange

Nigeria’s first private refinery to become source of foreign exchange

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Dangote group is set to become another source of foreign exchange for Nigeria as soon as the company’s refinery, petrochemicals and fertiliser projects come on stream.

This potential reversal of roles was disclosed by Governor of the Central Bank of Nigeria (CBN) Mr. Godwin Emefiele, after he toured the ongoing Dangote Refinery, Petrochemicals, Fertiliser projects and Dangote deep-water jetty in Lagos over the weekend. 

The CBN governor premised his comment on the huge forex earnings expected to accrue from export of petrochemical and fertiliser products from Dangote refinery and fertilizer plants by the time the fertilizer plant begins operations in May this year, and the refinery in 2020

Nigeria’s economy is heavily dependent on its oil sector for foreign exchange. With huge potential  as the 12th largest oil-producing nation in the world, an estimated 37.2 billion barrels of crude oil deposits and seventh in the world in terms of gas reserves of about 187 trillion cubic feet, the country is the only member country of the Organisation of Petroleum Exporting Countries (OPEC) that depends on imported refined petroleum products

With four refineries, giving a combined capacity of 445,000 barrels per day (bpd) , many believe the country has no business relying solely on importation for her domestic consumption. 

Reports indicate that corruption has made it difficult to get these refineries working to full capacity. 

With Nigeria’s first private refinery coming on board soon, the Governor of Nigeria’s central bank is optimistic that the refinery and fertiliser projects will create thousands of jobs , check importation of fuel by the Federal Government and in turn save government huge forex currently being spent on fuel import.

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Zimbabwe announces end to foreign currency use amidst spiraling inflation

President Emmerson Mnangagwa has promised to introduce a proper national currency soon

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Zimbabwe announces end to foreign currency use amidst spiraling inflation
John Mangudya, Governor of Reserve Bank of Zimbabwe, the central bank. (AFP)

Zimbabwe announced on Monday that it would abandon the use of foreign currencies which replaced the local dollar that was swiped out by hyperinflation ten years ago.

The country is facing another bout of sharply rising prices, with official inflation now at nearly 100 per cent — the highest since the hyperinflation era.

Zimbabwe’s central bank said in a statement that official legal tender would be only the two local currencies — bond notes and “RTGS” — that were introduced as US dollar banknotes dried up.

The US dollar, South African rand and other foreign currencies “shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe,” the bank said.

“Bond notes and RTGS dollars are at par with the Zimbabwe dollar.”

Bond notes were introduced in 2014, while electronic RTGS (Real Time Gross Settlement) dollars came earlier this year.

President Emmerson Mnangagwa has promised to introduce a proper national currency soon.

Related: Zimbabwe’s president, Emmerson Mnangagwa promises new currency

Bond notes and RTGS dollars have in theory been worth the same as US dollars, but have fallen sharply in value.

Zimbabwe’s economy has been in ruins since hyperinflation peaked at 500 billion per cent in 2009 under president Robert Mugabe.

Mnangagwa’s efforts to attract investment and create jobs have struggled since he came to power in 2017.

Related: Zimbabwe’s inflation soars, stocks hit record high

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Morocco’s Sole oil refinery struggles to stay afloat

A self-declared “national front” is leading the charge to salvage refining company SAMIR

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morocco's oil refinery SAMIR struggle for survival

Three years after it was liquidated for racking up billions of euros worth of debt, Morocco’s sole oil refinery and the one-time economic flagship is struggling to attract a buyer and survive. A self-declared “national front” – comprising employees, economists and union leaders – is leading the charge to salvage refining company SAMIR, while a trade court desperately seeks a new owner.

They face a tough battle, including a court deadline of July 18 to seal the refinery’s fate. The firm was liquidated in 2016 after it was unable to honour some four billion euros ($4.5 billion at current prices) in borrowing. The refinery was set up in 1959 by the Moroccan government and sold in 1997 to the Corral group, a Saudi-Swedish enterprise that holds a majority stake of more than 67 per cent.

Work at the refinery, which had a capacity of more than 150,000 barrels a day, had already wound down a year before it was dissolved. But nearly 800 employees remain on the payroll, albeit on slashed salaries scratched together from company coffers and creditors.

The workers’ fate now hangs in the balance, according to staff representative Houcine El Yamani, who has spearheaded efforts by the “national front” to salvage the facility. “We have made tremendous efforts” to pressure the state into reviving SAMIR since work stopped in 2015 at the plant in Mohammedia, between Rabat and the economic hub Casablanca, El Yamani said.

Such efforts include sit-ins and press conferences.  “We still have hope of finding a solution,” he added. A “national front” report submitted last year to Moroccan authorities denounced the 1997 privatisation of the refinery as a “big sham” and the sale to Corral as “totally lacking in transparency”.

“The Corral group did not respect any of the terms of the contract (including pledges to invest funds to develop the refinery), dragging the sole national refinery into an infernal spiral,” said the report. The drop in global oil prices in 2014 affected SAMIR, but the “national front” says bad management was the main factor behind the firm’s woes, as debts mounted and attempts to satisfy creditors failed.

Sold to scrap

After its liquidation in March 2016 by a Casablanca court, a committee of trustees was set up to find a buyer and safeguard jobs for employees. “Around 30 international groups showed an interest,” but nothing materialised, El Yamani said.

The “national front” also said the government could have been more pro-active. “In the absence of any government action, the refinery’s assets risk being sold to scrap by the kilogramme,” the coalition of employees, economists and union leaders said in its report.

Minister of Energy and Mines, Aziz Rebbah, dismissed claims that the government has no interest in salvaging the oil refinery. “We have nothing against it,” he said. “If a buyer comes forth we will examine the proposal,” he added. Morocco is totally dependent on oil imports and the winding up of SAMIR’s operations has left the North African country more reliant than ever on imports of refined oil products.

A report earlier this year by the International Energy Agency noted that “the closure of the country’s only refinery… has clear implications for the security of oil supply” in Morocco. The court that liquidated SAMIR three years ago has extended a deadline to keep the refinery open a dozen times.

The last extension expires on July 18, when SAMIR will know if it has a buyer or if it will be sold “in bits and pieces”, according to Moroccan media reports. As the battle for SAMIR’s survival plays out, another legal fight is underway between the refinery’s main shareholder, Saudi-Ethiopian billionaire Mohammed Al Amoudi, and the government.

Al Amoudi – who was arrested in Saudi Arabia in 2017 as part of a vast anti-corruption campaign – is demanding $1.5 billion in compensation from Morocco over SAMIR’s demise, according to Moroccan news website Media24.

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National Oil Company warns that any attempt to disrupt the sector would escalate unrest

“Any deliberate disruption of oil sector operations will severely impact national revenue streams, potentially render NOC in contravention of contractual obligations

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Libya's National Oil Company in the capital Tripoli. The Oil company warns against shutdown as it it will escalate conflict

Libya’s National Oil Company has warned that any bid to tamper with the sector could escalate unrest in the country after the parliamentary speaker called for a halt to production. In a statement issued late Saturday, NOC said it “is concerned by recent calls for the shutdown of national oil production”.

“Any deliberate disruption of oil sector operations will severely impact national revenue streams, potentially render NOC in contravention of contractual obligations, and create further division in the country.” Libya has been in conflict since the 2011 uprising that ousted and killed dictator Moamer Kadhafi, with rival administrations vying for power and to control its oil wealth.

The conflict has been exacerbated since April when commander Khalifa Haftar, who is based in the east of the country where most oil fields are located, launched an offensive against the capital Tripoli. The city is the seat of the internationally recognised Government of National Accord (GNA), while the elected parliament which supports Haftar is based in eastern Libya.

Last week parliamentary speaker Aguila Saleh Issa said oil production must cease, accusing the GNA of using oil revenues to finance the militias fighting Haftar, in an interview with an Egyptian news channel.

The country’s oil company, which is headquartered in Tripoli, has repeatedly insisted on its neutral status and refused to be drawn into the conflict. “This crucial source of income to the state, vital to all Libyans, must remain de-politicised and uninterrupted,” NOC said on Saturday.

But it also called for “economic transparency – including the equitable distribution of oil revenues nationally – to be embraced by all parties as an integral element of Libya’s future stability, and any lasting political settlement”. Libya’s oil revenues are managed by the country’s central bank, which is also based in Tripoli.

Both Haftar and the eastern parliament have repeatedly said that oil revenues are not evenly distributed and accuse the GNA of using the funds to finance its militias. Last month UN envoy Ghassan Salame said that Libya – which produces more than a million barrels of oil a day – was “committing suicide” and plundering its oil wealth to pay for the war.

On Saturday he met Haftar to discuss the Tripoli offensive and ways to “accelerate the transition towards reaching a political solution” in the country, the United Nations said.

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