Is Nigeria Becoming A Pariah State Again?

(Sundiata Post) – There is unease in the expatriate community after they received letters from their banks abroad that their accounts will be closed because they are based in Nigeria, sources have told “Heard on the Street.”

Their banks did not give them any specific reason for the decision to close their accounts, other than ask them to make alternative banking arrangements for themselves. This news comes a few weeks after Barclays Bank also asked Nigerians with a balance of less than 100,000 pounds in their accounts that their business is no longer needed by the bank.

In a letter dated June 12, 2017, to its Nigerian customers, Barclays informed their Nigerian customers that they would be affected by its decision to raise the minimum client balance requirement for international banking service. Many Nigerians have since had their accounts closed, forcing them to seek alternative banking services for their funds. Sources in the financial community are now concerned about if the current situation has anything to do with Nigeria’s fight against corruption or the threat by the Egmont Group to expel Nigeria from its membership, due to the country’s failure to make the Nigeria Financial Intelligence Unit (NFIU) autonomous.

The Egmont Group, which provides the platform for monitoring and secure exchange of expertise and financial intelligence on international money laundering and terrorist activities, threatened to expel Nigeria from the body if by January 2018, the country has not provided for the independence of the unit. R e c o m m e n d at i o n 29 of the international standards set by the Financial Action Task Force (FATF) was very clear that FIUs must be independent institutions free of interference from anybody or institution. The Senate has moved to make the unit independent but the repercussion may already be hitting the country. Is Nigeria really a high cost oil-operating environment? Nigeria is regarded as one of the most expensive places globally for oil exploration but sources in the government are beginning to question that perception. Average cost of producing crude oil in Nigeria is estimated at US$28 to US$30 per barrel but people in government are beginning to question this high cost profile, insisting that Nigeria’s oil could be produced at a lower rate.

Their argument is that the technology for producing crude oil is the same globally and therefore, technological cost should be the same and not more expensive in Nigeria. They have also punctured the argument that cost of security is the main issue. They are arguing that the cost of security is marginal, when compared to the total cost of crude oil production and should not be the basis for high cost of production in the country.

Besides, sources in the government are arguing that the oil majors are declaring huge profits globally with their Nigerian operations contributing significant portion of the profit yet turnaround to claim that the cost of operation is too high in the country. It is based on this that the government is pushing for lower cost of oil production in the country. With oil prices not expected to touch the US$100 level again, the Federal Government sees its only hope of ensuring that it can still get significant revenues from oil is to reduce cost.

Sources have told “Heard on the Street” that the government will now pay more attention to cost in the oil sector, to ensure that the oil majors are not making huge profits at the expense of the Nigerian state. (BusinessDay)

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