Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

Nnamdi Ebo | NewsBlog

In my NewsBlog Nnamdi Ebo, I provide perspectives on news, events and analysis of unique stories, and I also offer original content, articles and photos; with contributions from some of the best minds.

 

NNPC needs overhaul as Dangote plans gas pipelines

The just released government-ordered PwC audit of the NNPC reveals that Nigeria’s state oil firm needs total overhaul, and Africa’s richest man, Aliko Dangote, plans to build pipelines to boost Nigeria’s gas in order to quadruple the supply of gas . . .

Nigeria’s state oil firm needs complete overhaul, audit says.

A government-ordered audit into Nigeria’s powerful state oil company found that it needs to be completely and urgently overhauled, after corruption scandals and suspect spending have tarnished its reputation.

Outgoing president Goodluck Jonathan’s administration hired PriceWaterhouseCooper to audit the Nigeria National Petroleum Company (NNPC) in 2014, after the firm was accused of misappropriating roughly $20 billion (18.3 billion euros) in public funds through 2012 and 2013.

The accusation came from then central bank governor Sanusi Lamido Sanusi, who was sacked after he made the charge publicly.

The PwC audit did not entirely support the allegations levelled by Sanusi, who has since become the Emir of Kano, Nigeria’s second most powerful Islamic cleric.

The audit found that NNPC only paid $50.81 billion into the federation account out of the $69.34 billion it received from crude sales in 2012 and 2013.

It said the outstanding balance of $18.53 billion was spent on various operational costs, many of which were frivolous and wasteful.

“We therefore recommend that the NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the corporation cannot be sustained,” PwC said in its 199-page report.

Perhaps the most crucial finding is that NNPC carried out this operational spending without proper approval.

The firm was supposed to have collected the money from crude sales and deposited it in the federal government account. The decision to re-allocate the funds for operations then technically rests with the federal government.

NNPC’s many critics have argued that so-called operational spending lies at the heart of the firm’s corrupt practices.

NNPC . Headquarters Abuja

Photo: The NNPC Corporate Headquarters in Abuja, Nigeria’s federal capital.

Contracts for procurement or infrastructure improvement are awarded to powerful cronies, money is paid but the service is either not provided or carried out shoddily by local firms with weak credentials, critics and previous independent reports have said.

Jonathan will leave office on May 29 after losing last monh’s presidential elections to Muhammadu Buhari, the first time an incumbent has been voted out by the opposition in Nigeria’s history.

Many analysts said Jonathan’s failure to stem corruption played a huge role in his election defeat.

Resentment over graft in Nigeria, Africa’s top oil producer, is most heavily focused on the energy sector, with few in the nation of 173 million benefiting from its vast resource wealth.

In the run-up to the elections, Jonathan’s government released a portion of the audit, a move likely aimed at dismissing Sanusi’s claims concerning a $20 billion theft.

The segment of the audit previously released said an NNPC subsidiary, the Nigerian Petroleum Development Company, only owed the government account $1.48 billion.

The $18.53 billion figure concerning questionable spending was not disclosed before the vote.

Buhari pledged to release the full audit after taking office, but Jonathan apparently decided to pre-empt the move.

AFP

Dangote Plans To Build Pipelines To Boost Nigeria’s Gas

Dangote

Photo: Aliko Dangote, Africa’s richest man.

Africa’s richest man courts Blackstone to boost Nigerian gas

Aliko Dangote, Africa’s richest man, plans to quadruple the supply of gas to Nigeria by building pipelines that may be backed by Carlyle Group LP and Blackstone Group LP, the world’s two biggest private-equity firms.

Dangote, who has a net worth of $15 billion according to the Bloomberg Billionaires Index, will invest $2.2 billion to $2.5 billion in two sub-sea 550-kilometer (341-mile) pipelines running from Nigeria’s oil and gas-producing Niger River delta region to the commercial hub of Lagos, Dangote, 58, said in an interview on April 25. The pipes will increase the amount of gas available in Africa’s biggest economy to 4 billion standard cubic feet per day from 1 billion, he said.

While Nigeria has gas reserves of about 180 trillion cubic feet, more than any other African country, most of what’s produced is flared or exported because of a lack of infrastructure to transport it to local companies and households. Boosting domestic supply will help increase electricity generation in a country where power cuts are common and about 70 percent of electricity plants are fueled by gas, according to Dangote.

“Having an additional 3 billion scf will sort out all the gas issues we have today in Nigeria,” he said in the lounge of his house in the Victoria Island district of Lagos, overlooking a half moon-shaped swimming pool. “It’s badly needed.”

Dangote, who has interests ranging from cement to sugar and oil refineries, plans to start laying the pipelines before the end of the year, he said. The first one should be ready by mid-2017.

Private Equity

The International Finance Corp. is considering an investment in the pipelines as are Blackstone and Carlyle, Dangote said. Neither buyout firm responded to e-mails requesting comment. Desmond Dodd, a Johannesburg-based spokesman for the IFC, declined to comment by e-mail on Monday.

“We have a lot of companies that are very interested in participating,” Dangote said.

Blackstone and Carlyle said in August they would partner with Dangote Industries Ltd., the holding company for the billionaire’s operations, to invest in sub-Saharan Africa. Blackstone said its Johannesburg-based partner Black Rhino would jointly invest as much as $5 billion with the company on energy and other infrastructure in the region.

The pipelines could be used by oil producers in Nigeria that currently have little incentive to sell gas from their fields in the country, including Royal Dutch Shell Plc. and Exxon Mobil Corp., Dangote said.

No Infrastructure

“If today they process that gas, there’s no infrastructure to remove it, there’s no pipeline,” he said. “We’re trying to build that infrastructure.”

Nigeria’s economy, which gets 90 percent of export earnings and two-thirds of government revenue from oil, has been hit by the 40 percent fall in Brent crude prices since June. The naira has weakened 18 percent against the dollar in that period, while the Nigerian Stock Exchange All Share Index is down 20 percent.

Dangote, who controls Dangote Cement Plc., Nigeria’s largest listed company, has seen his wealth fall $3.4 billion this year, more than anybody else aside from Warren Buffett, according to the Billionaires Index.

His investments in oil and gas include a $9 billion refinery near Lagos, which will be able to process 650,000 barrels a day when completed. The company got a license from the government earlier this year and will export refined fuel to the rest of sub-Saharan Africa as well as sell it locally, Dangote said.

“We will be in the market with our petroleum products by the first quarter of 2018,” he said.

Investors’ Concerns

Dangote Cement, which has a market value of $15 billion and a free float of 7 percent in Lagos, will be ready to list its shares in London by the end of 2016, Dangote said. It is addressing investors’ concerns in the meantime about the composition of its board and other corporate governance issues, he said.

“There are a lot of criteria we’ve met,” he said. “Our aim is to create a world class company. That’s why we’re going to London. It’s not purely because we’re looking for money.”

Dangote Cement shares were unchanged at 175 naira at 12:12 p.m. in Lagos on Monday. The stock is down 13 percent this year, more than the Nigerian stock index, which has fallen 1.4 percent. Profit declined 21 percent last year after a bigger tax bill and higher import costs caused by the weaker naira, the company said last month.

Dangote’s companies will increasingly focus on exports from Nigeria, including of cement, fertilizer, petrochemicals and refined fuel.

“But 2018, in the worst case, the Dangote Group will be able to export about $8 billion to $10 billion worth of goods,” he said. “We are totally transforming the business to be export-orientated.”

BloombergBusiness

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