12 October 2012

Nigeria's External Reserves Hit Two-Year High

The Nigeria's external reserves have increased to a two-year high of $41.662 billion as at Tuesday, October 9, this year, the Central Bank of Nigeria (CBN) has revealed.

The CBN Governor, Mallam Sanusi Lamido Sanusi, said Thursday at the Nigeria Investment Forum (NIF) in Tokyo, Japan, that the reserves had accreted from $41.510 billion, which it closed on Friday, October 5, representing an increase of $152million within two working days.

The last time the external reserves rose to $41.51 billion was in April 2010.

The NIF was one of the supporting events of the 2012 Annual Meetings of the IMF and the World Bank Group. It offers an opportunity for Nigeria to engage her major development partners and prospective foreign investors, who are desirous of, either initiating or continuing discussions with the country's senior government officials and business leaders.

Sanusi, who enthused that external reserves were now staying above $40 billion mark for the first time in two years, attributed the build-up to the swelling of excess crude proceed account (ECA) as a result of high oil prices as well as closure of fiscal leakages and stable exchange rate.

He noted that the amount in the ECA was $8 billion as at October 3 and had been projected to grow to $10 billion by the end of this year.

Sanusi, who also represented the Coordinating Minister for the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, said was that eventually, subsidy on petroleum products would be removed, even though he acknowledged that it was difficult removing 50 per cent of it at the beginning of the year.

According to him, "there have been concerns about the unsustainable subsidy regime and we now have a taskforce and a number of importers are now being investigated for subsidy payments that do not relate to importation of petroleum products.

"In 2011, over N2 trillion was paid as subsidy for importation of petroleum products .This has come to about N888 billion in 2012. Ultimately, this subsidy will have to go. It is difficult to remove, but the government was able to remove 50 per cent this year- it is a major, major achievement, especially for the fact that for a long time no one could remove the subsidy."

Sanusi spoke alongside the Minister of Trade and Investment, Mr. Olusegun Aganga; President, Manufacturers' Association of Nigeria (MAN), Mr. Sam Ohuabunwa; Group Executive Director, Gas and Power, Nigeria National Petroleum Corporation (NNPC), Dr. David Ige; Minister of State for Power, Mr. Darius Ishaku; Managing Director, Bank of Industry (BOI), Ms Evelyn Oputu; and Director-General, Bureau of Public Enterprises (BPE), Ms Bola Onagoruwa, amongst others.

Aganga told the Japanese investors and others from other countries present at the forum that it was better for them to invest in the Nigerian economy now because doing so another time might be too late.

He said with all the growth indices and benefits inherent in the economy, especially in terms of high returns on investment, there was no better time to invest in the economy than now.

According to him, the days of talking about potentials were gone, Nigeria is an investment destination.

Aganga alluded to the 2012 World Economic Outlook (WEO) launched last Tuesday, which reported that seven of the fastest-growing economies were in sub-Saharan Africa, including Nigeria and the downgrading of the developed countries.

Similarly, he pointed out that investments were currently finding their ways into the economy as a result of the crisis in the Eurozone which has also been predicted by the WEO report to grow at zero per cent in 2013.

Speaking on behalf of the organised private sector (OPS), Ohuabunwa testified that Nigerian manufacturers had never had it so good in a long time.

"I think for the first time, we are seeing the impact of reforms. Some critical areas have been affected. There has been reduction in infrastructure deficit. We are not spending as much money as we used to spend on diesel and if the current situation continues for some time, there will be reduction in the cost of goods produced in the country. "Another area that the organised private sector has suffered is funding and the BOI has been able to provide the needed funding."

In his contribution, Ige, who represented the Minister of Petroleum, Mrs. Diezani Alison-Madueke, spoke about the opportunities for discerning investors in the gas industry.

He said enormous gas reserves of 187 trillion cubit feet abounded in the country with gas current gas wells production of 7.8 billion cubic feet per day (bcf/d).

According to him, 3.2 bcf/d (41 per cent) of production for export as liquefied natural gas (LNG); 2.5bcf/d (32 per cent) for re-injection and other operational usage; 1.2 bcf/d (15 per cent) for gas flaring; and 0.9 bcf/d (12 per cent) for domestic consumption by power and industries.He noted that the gas growth agenda of the government translated to 1.8mm barrel of oil equivalent per day (boe/d) industry, which is potentially within top three in Africa. This, he said, was an unprecedented platform for investment opportunities.

Besides, Ige, while talking about the gas to power initiative, said the Federal Government's efforts in power were targeted at meeting a projected 3 bcf/d of gas demand by about 37 existing and proposed power plants which have a collective potential to generate about 12 Gigawatts (GW) of electricity by 2015

He disclosed that by the end of this year, government would have added enough gas to support a 30 per cent expansion in power generation capacity compared to the level it was at the beginning of the year.

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