Business

France threatens to cut UK and Jersey energy supply in fishing row

Published

9 months ago

October 6, 2021

THN

France threatens to cut UK and Jersey energy supply in fishing row

The EU could hit Britain and Jersey’s energy supply over the UK’s failure to provide sufficient fishing licences to French fishers, France’s EU affairs minister has said.

Clément Beaune, who is a close ally of the French president, Emmanuel Macron, said action would be decided on within days and discussions were already in motion.

France’s prime minister, Jean Castex, echoed the sentiment, telling the national assembly that the EU had to be firmer with the UK. “The [European] Commission is moving, it must do more”, he said.

France has been consistently pushing the EU to take a stronger stance against the UK over its concerns that Boris Johnson’s government is acting in breach of its obligations over fishing access to Channel waters.

Last week a third of French boats applying to fish in Jersey’s waters were turned down by the island’s government. The previous week the UK government provided only 12 of 47 French vessels with permits for its coastal waters. The UK and Jersey authorities have said the vessels that had been turned down had failed to provide evidence of operating in the relevant waters.

Beaune said France “would not stand for it”. He said: “Enough already, we have an agreement negotiated by France, by Michel Barnier, and it should be applied 100%. It isn’t being. In the next few days – and I talked to my European counterparts on this subject yesterday – we will take measures at the European level or nationally to apply pressure on the United Kingdom.”

He added: “We defend our interests. We do it nicely, and diplomatically, but when that doesn’t work we take measures. The Channel Islands, the UK, are dependent on us for their energy supply. They think they can live on their own and badmouth Europe as well. And because it doesn’t work, they indulge in one-upmanship, and in an aggressive way.”

The UK is a net importer of energy from French nuclear power stations. Paris has previously suggested it could cut the supply to Jersey, whose energy it provides through undersea cables under a commercial contract between the French company EDF and the Jersey Electricity Company.

Under the post-Brexit trade and cooperation agreement struck on Christmas Eve, in case of a dispute with Jersey the EU can take unilateral measures “proportionate to the alleged failure by the respondent party and the economic and societal impact thereof”.

Unilateral measures affecting the energy supply to the rest of the UK would also theoretically be possible. But France would need to gain the consent of other member states in both cases and the action would need to be proportionate, as the UK would have the right to take the EU to arbitration after any such move.

Castex, talking to the French parliament, suggested that his government would be likely to instead take the option of appealing to an arbitration tribunal in the first instance, an easier sell to the fellow EU member states, or go it alone in suspending bilateral agreements with the UK.

He said: “We will use the arbitration panel of the agreement to force the British to respect their word. We will question all the conditions for the more comprehensive implementation of the agreements concluded under the aegis of the European Union, but also, if necessary, the bilateral cooperation that we have with the United Kingdom in many areas.”

The trade and cooperation agreement also creates a link between continued EU access to British waters until 30 June 2026 and the UK’s access to the bloc’s electrical grid and gas network.

The energy part of the agreement allows the UK virtually unchanged access but that expires on the same date as the deal on access, raising the spectre that this could be used as leverage. The level of fishing quota will be decided by annual negotiations after 2026.

A commission spokesperson sought to play down the row, adding that officials in Brussels were in “constant contact with the UK authorities to ensure that all licence applications are dealt with as soon as possible”.

The spokesperson said: “We took note of last week’s announcements, but regret that with the number of licences granted it still has not been possible to bring this issue to an end now.

“The UK has published their methodology and we are now discussing the differences with the British and Jersey authorities regarding the rights of the boats involved. On our side we will continue to engage in the interest of our fishermen and women so that further licences will be provided.”

Business

Nigerian govt to auction N225bn bond as search for funds continues

Published

5 days ago

June 20, 2022

Harmattan News

Nigerian govt to auction N225bn bond as search for funds continues

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

The debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

In a circular published on its website and obtained by The Harmattan News, all three maturities are re-opening, meaning they are from the previously sold bonds.

The circular noted that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction. Another N75 billion worth of a 10-year note maturing in 2032 is up for grabs and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment will be done on the maturity date.

Business

Debt servicing doubles, hits N896bn in three months – DMO report

Published

5 days ago

June 20, 2022

Harmattan News

Debt servicing doubles, hits N896bn in three months – DMO report

Nigeria’s debt servicing bill has increased by 109 per cent to N896.56bn, findings by The harmattan News have shown.

As a result, the country has also spent N3.83tn on debt servicing payments in 15 months, according to data obtained from the Debt Management Office.

While a total of N2.93tn was spent on debt servicing payments in 2021, a total of N896.56bn was spent in the first quarter of 2022.

Meanwhile, between October and December 2021, Nigeria spent N310.5bn on domestic debt servicing, while it spent $286.35m (N118.9bn) on external debt servicing, giving a total of N429.4bn.

However, between January and March 2022, Nigeria spent N668.69bn on domestic debt servicing, while it spent $548.79m (N227.87bn) on external debt servicing, giving a total of N896.56bn.

The official exchange rate of the Central Bank of Nigeria, which showed $1 =N415.22 as of June 15, 2022, was used for the external debt servicing.

This indicates the amount the country spent on debt servicing rose by 109 per cent from N429bn in December 2021 to N896bn in March 2022.

Nigeria’s debt position worsened in the first quarter of this year as the country’s debt stock rose by N2.04trn to hit N41.60tn from the N39.56tn recorded as of December 2021.

Between January and March 2021, Nigeria had spent N612.71bn on domestic debt servicing, while it spent $1bn (N415.22bn) on external debt servicing, giving a total of N1.03tn.

From July to September 2021, Nigeria spent N808.49bn on domestic debt servicing and $520.78m (N216.24bn) on external debt servicing, giving a total of N1.02tn.

Speaking at the launch of the World Bank’s Nigeria Development Update titled ‘The urgency for business unusual,’ held recently in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, had expressed concern that the fuel subsidy regime was hurting Nigeria’s ability to service its debts.

She said, “Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation.”

The International Monetary Fund had warned that debt servicing might gulp 100 per cent of the Federal Government’s revenue by 2026 if the government fails to implement adequate measures to improve revenue generation.

The IMF’s Resident Representative for Nigeria, Ari Aisen, disclosed this while presenting the Sub-Saharan Africa Regional Economic Outlook report in Abuja.

According to an IMF official, based on a macro-fiscal stress test that was conducted on Nigeria, interest payments on debts may wipe up the country’s entire earnings in the next four years.

Aisen said, “The biggest critical aspect for Nigeria is that we have done a macro-fiscal stress test, and what you observe is the interest payments as a share of revenue and as you see us in terms of the baseline from the federal government of Nigeria, the revenue almost 100 per cent is projected by 2026 to be taken by debt service.

“So, the fiscal space or the amount of revenues that will be needed and this without considering any shock is that most of the revenues of the federal government are now, in fact, 89 per cent and it will continue if nothing is done to be taken by debt service.”

Business

IMF: Nigeria’s economy gaining strength — but inflation will remain high

Published

1 week ago

June 17, 2022

Harmattan News

IMF: Nigeria’s economy gaining strength — but inflation will remain high

The International Monetary Fund (IMF) says inflation will remain high despite the ongoing economic recovery in Nigeria.

The Washington-based institution said this in a statement issued after completing a series of meetings between its team led by Jesmin Rahman, mission chief for Nigeria at IMF, and Nigerian authorities.

The meeting was held on June 6 and 10, 2022, and discussions centred on recent economic and financial developments and the economic outlook for the country.

The IMF described Nigeria’s economic outlook as “challenging” with high food prices raising food security concerns.

“Regarding the economic outlook, GDP growth is projected at 3.4 percent (y/y) in 2022 while inflation is expected to remain elevated,” the statement reads.

“The fiscal deficit of the consolidated government is expected to remain high at 6.1 percent of GDP due in great measure to costly petrol subsidies and limited tax revenue collections.”

Nigeria’s inflation reached 17.7 percent in May, led by a renewed surge in food prices exacerbated by the war in Ukraine.

Recently, the Central Bank of Nigeria (CBN) raised the benchmark interest rate to 13 percent to contain inflationary pressures.

“Economic recovery continues to gain strength on the back of services and agriculture with GDP growth reaching 3.6 percent (y/y) in Q1 2022,” the statement adds.

“Regarding the external sector, the current account deficit narrowed significantly in 2021, helped by import compression and higher net oil balance.

“However, the improving trade balance, which has continued so far in 2022, is having a limited impact on Foreign Exchange (FX) strains with the exchange rate premiums in the parallel market staying in the 35-40 percent range since October 2021.

It listed downside risks in the near term to include further deterioration of security conditions, elections, low vaccination against COVID-19 and higher global interest rates.

On the upside, the IMF said steady private sector recovery and further broadening of growth, the start of operations at the Dangote Refinery and decisive steps to mobilise revenues, in line with the strategic revenue growth initiative (SRGI), could spur inclusive growth and development.