Nigeria has agreed to pay the $200 million security deposit ordered by Justice Christopher Butcher of the Commercial Court in London in September in the ongoing gas dispute case between Nigeria and Process and Industry Development Limited, the firm has learnt. The British court had ordered the FG to pay $200 million security payment in the court’s account while its granting request to stay execution in the award of $9.6 billion awarded in favour of P&ID. According to a statement from the firm, the Nigerian government’s legal team said during a hearing at the London court on Friday that Nigeria would pay the $200 million security deposit. It also said that the Nigerian legal team acknowledged that President Buhari has authorised the steps to provide a bank guarantee for the $200 million in security that was ordered by the English Court in September. Moreover, the Ministry of Finance has received approval to proceed with obtaining the bank guarantee; it has submitted a request to the Central Bank of Nigeria to proceed with procuring the bank guarantee; the CBN has submitted a request to an unnamed foreign correspondent bank to issue the bank guarantee from London and provide the relevant information to the court. The FG through the Office of the Attorney General of the Federation had filed an appeal before the London court to stop the order of September 2019 to pay the $200 million security deposit and the $9.6 billion Tribunal Award in favour of P&ID. The Minister of Information and Culture, Lai Mohammed, who was part of the FG’s delegation to London late September, had said that the FG had begun the process of filing an appeal against the $200 million security deposit. Apart from the $200 million, Mohammed said the government would be able to seek a refund of the $250,000 it was asked to pay to P&ID if the appeal succeeded. Last week, the Attorney General of the Federation and Minister of Justice, Abubakar Malami, confirmed that the FG had filed the appeal. However, P&ID’s statement on Saturday, following a hearing at the London court indicated that the appeal had failed.
The FG may have to borrow more to find its budget as it missed its revenue targets for the month of October this year. The October 2019 Economic Report of the CBN showed that the country’s estimated revenue collection of ₦894.09 billion fell short of the monthly budget estimate of ₦1.2 trillion. The shortage of ₦351.98 billion represents a 28.2 percent shortfall. The fund recorded in October is the third consecutive drop in federally collected revenue, with September and August figures standing at ₦902.1 billion and ₦925.7 billion respectively. This, according to the CBN is as a result of the failure to meet the federally collected revenue target to a shortfall in both oil and non-oil revenue. This shows that the country’s revenue challenges are still obvious. The break down of the revenue showed that oil receipts, at ₦577.30 billion or 64.6 percent of total revenue, were below the monthly budget estimate of ₦798.83 billion by 27.7 percent. This, however, exceeded the receipt of ₦467.58 billion in the preceding month by 23.5 percent. The ₦577.30 billion recorded in October is the highest the country has recorded in 2019. The decrease in the oil revenue is not unconnected with shut-ins and shut-downs at some terminals of the NNPC due to pipeline leakages and maintenance activities. The non-oil receipts for October stood at ₦316.79 billion or 35.4 percent of total revenue. This was below the monthly budget estimate of ₦447.24 billion and the preceding month’s earning of ₦434.52 billion by 29.2 percent and 27.1 percent, respectively as the receipt in October is the lowest the country has recorded in 2019. Corporate tax, independent revenue of FG and other revenue sources experienced significant drops in October. This was, relative to the monthly budget estimate, due to the decline in revenue from Corporate Tax, VAT, Education Tax and Federal Government Independent Revenue. Disbursing the generated revenue, out of the ₦697.50 billion retained in the Federation Account, the sums of N89.16 billion, ₦23.11 billion, and ₦2.33 billion were transferred to the VAT Pool Account, FG Independent Revenue, and “Others”, leaving a net balance of ₦582.90 billion. The FG received ₦279.98 billion out of the net balance while the state and local governments received ₦142.01 billion and N109.49 billion, respectively. The balance of ₦51.42 billion was shared among the oil-producing states as 13 percent Derivation Fund. The FG received ₦13.37 billion from the ₦89.16 billion transferred to the VAT Pool Account, while the state and local governments received ₦44.58 billion and ₦31.21 billion respectively. ₦950 million was distributed in the month as Exchange Gain, with the Federal, State and Local governments receiving ₦440 million, ₦220 million and ₦170 million. Overall, the total allocation to the three tiers of government in October 2019 amounted to ₦673.01 billion, which was below the preceding month’s budget estimate of ₦1.091 trillion and monthly allocation of ₦676.9 billion. The FG spent ₦695.89 billion in October, with the fiscal transactions showing that recurrent and capital expenditure constituted 57 percent and 37.3 percent of the total expenditure, respectively; transfers gulped 5.7 percent of the recurrent expenditure; non-debt obligation was 76.8 percent while debt service payments accounted for 23.2 percent of the total.
The US Department of Justice, on Friday, charged the CEO Air Peace, Allen Onyema, with bank fraud and money laundering for moving more than $20 million from Nigeria through US bank accounts in a scheme involving false documents based on the purchase of airplanes. In a statement, the American government said the airline’s CFO, Ejiroghene Eghagha, had also been charged with bank fraud and “aggravated identity theft” in connection with the scheme. According to US Attorney Byung Pak, the indictment, and other information presented in court, beginning in 2010, Onyema began travelling frequently to Atlanta, where he opened several personal and business bank accounts. Between 2010 and 2018, over $44.9 million was allegedly transferred into his Atlanta-based accounts from foreign sources. The letters of credit were purportedly to fund the purchase of five separate Boeing 737 passenger planes by Air Peace. The letters were supported by documents such as purchase agreements, bills of sale, and appraisals proving that Air Peace was purchasing the aircraft from Springfield Aviation Company LLC, a business registered in Georgia, however, the supporting documents were fake as Springfield Aviation Company LLC, which is owned by Onyema and managed by a person with no connection to the aviation business, never owned the aircraft, and the company that allegedly drafted the appraisals did not exist. Onyema has denied the allegations, and said his lawyers had taken over the case.
Data from the NBS has shown that Nigeria’s economy expanded by 2.28 percent year-on-year in Q3 of 2019 from 1.94 percent y/y in Q2’19. The GDP growth in Q3 represents a 47bps increase when compared with the 1.81 percent y/y achieved in the same period of 2018. The Q3 GDP growth is also 17bps higher compared to the Q2-2019 revised growth of 2.12 percent y/, previously; 1.94 percent y/y. The uptick in the country’s growth momentum, the NBS said, was supported by a 1.85 percent y/y growth in the non-oil sector, the largest part of the country’s economy. However, its contribution to the total GDP moderated to 90.23 percent from 91.02 percent in Q2’19. Growth in the oil-sector moderated slightly by 68bps to 6.49 percent y/y from 7.17 percent y/y in Q2’19 while the sector’s contribution to the total GDP rose to 9.77 percent from 8.98 percent in Q2. The slight improvement in output from the real sectors; Agriculture, Mining & Quarrying, Manufacturing and Construction, was responsible for the uptick in the non-oil sector growth as overall, the real sectors grew by 2.8 percent y/y in the review period compared to a growth rate of 2.3 percent y/y recorded in Q2’19. All the components of the real sector, save for Mining & Quarrying, recorded an improvement in the quarter as the agricultural sector grew by 2.28 percent y/y, the manufacturing sector grew by 1.10 percent y/y, while the construction sector grew by 2.37 percent y/y. In contrast, output growth from the mining and quarrying sub-sector softened in real terms to 6.19 percent y/y in the review period from 7.00 percent y/y in Q2’19. The real sectors, the transportation and storage sub-sector also a delivered stellar growth in the third quarter, up 18.24 percent y/y while the information and communication sub-sector expanded further by 9.88 percent y/y. Meanwhile, the contraction in the trade sector deepened to -1.45 percent y/y while the real estate sector also contracted by 2.31 percent y/y in Q3. The financial sector bucked its four consecutive quarters of negative growth and recorded a growth of 1.07 percent y/y, largely supported by the strong growth in the loan books of most deposit money banks in the period. According to analysts at Nairametrics, the recent policy by the CBN to improve lending and support growth in the real sector appears to be kicking in as the implementation of the loan-to deposit ratio guideline early enough in the quarter, compelled banks to lend to the real sectors and had a multiplier effect on output from both the real sector and the financial & insurance sector and by extension aggregate economic output. It is then expected that the country’s economy remains in a cycle of secular stagnation. Though, the CBN will continue to implement unconventional policies to improve economic growth in the long-term.