Daily Watch – FG to fine flarers billions, Kenya fends off debt default chatter

Nigeria is losing at least $10 billion annually due to a lack of transparency and accountability in public contracts procurement, a new report by Agora Policy, an Abuja-based think tank has said. According to the report, Nigeria’s current public procurement practices established a significant correlation between weak public procurement procedures and corruption and its associated consequences such as poverty, infrastructural deficits and underdevelopment. “The assessment put the government’s revenue loss to underhanded transactions at 60 percent, averaging US$10 billion annually,” the report said. Agora Policy identified inflation of contract costs, absence of procurement plans, poor project prioritisation, poor budgeting processes, lack of competition and manipulations of procurements in Nigeria’s contract award processes.

The Federal Government will impose a $49 million (₦22 billion) fine on oil and gas firms operating onshore for flaring 24 billion Standard Cubic Feet (SCF) of gas valued at about ₦40 billion ($86 million) between January and February 2023. According to the latest gas flare data by the National Oil Spill Detection and Response Agency (NOSDRA), the companies operating onshore will pay the penalties for violating the gas flaring rule. The report said companies flared 19.14 billion SCF of gas in January and 14.04 billion SCF of gas in February 2023, contributing 1.3 million tonnes of carbon dioxide emission, with a power generation potential of 2,500 gigawatts hours. On the other hand, companies operating offshore flared 25.8 billion SCF of gas valued at $90 million; the equivalent of 1.4 million tonnes of carbon dioxide emission and capable of generating 2,600 gigawatts hours of electricity.

Ghana is the Sub-Saharan African country with the highest electricity access rate. According to the World Bank’s April 2023 Africa Pulse Report, the country had an 81 percent access to electricity rate in 2021, beating such African powerhouses as South Africa, Kenya and Nigeria. In 2015, the country’s access to electricity in Africa stood at about 75 percent, which still placed it number one on the continent. The World Bank’s Africa Pulse Report pointed out that the COVID-19 pandemic has had a sharp, adverse effect on access to electricity, adding, the pandemic eroded gains made in the preceding five years. Meanwhile, Côte d’Ivoire and Kenya were ranked second and third respectively in Sub-Saharan Africa with the biggest electricity access rate. Nigeria ranks fifth. 

Kenya will not default on its debt repayment obligations, the president’s chief economic adviser said, as the government delayed payment of civil service salaries due to a cash squeeze caused by massive interest payments. Nairobi has no plans to go down that route, said David Ndii, the president’s adviser. “We are not insolvent. We can finance repayments. It is a significant sacrifice but we are actually able to pay,” Ndii told Citizen TV. He said default was a “very bad idea” since it would force the government to “spend the next three to four years in very protracted debt restructuring negotiations.” Annual interest payments on domestic debt alone have surged to 680 billion shillings ($5.09 billion) this year from 180 billion shillings nearly a decade ago when the debt binge started.