Friday, 21 March 2014

Kazakhstan increases crude oil export duty

The Kazakhstan government has increased the so-called ‘export customs duty’ (ECD) on crude oil from $60 to $80/ton. This change will take effect on 1 April, according to economy and budget planning minister Yerbolat Dosaev, who unveiled the new export tariff at a ministerial meeting.

The ECD increase should boost this year’s projected government revenue by $2.7 billion. The economy ministry has added $1.6 billion to this total in the form of extra tax income to be derived from the exporting industries’ future profits, which are widely expected to ameliorate after the 20% devaluation of the tenge in February 2014.

The ECD was introduced in May 2008 at the rate of $110/ton at a time when international oil prices were as high as $125/barrel. It was argued that the new duty would enable Kazakhstan to benefit fully from increasingly favourable conditions on global markets as well as its expected stabilising domestic effect.

In January 2009, however, the government scrapped the ECD after oil prices had fallen from their historic highs. As the global market stabilised the ECD was re-introduced in August 2010 at the rate of $20/ton. This was applied to all Kazakhstan-based oil exporters except those whose production-sharing agreements guaranteed stability of the customs regime. In January 2011 the ECD was increased to $40/ton and then again to $60 in April 2013.

The government plans for at least 6% GDP growth by the end of 2014, while also containing annual inflation below a 6–8% cap. The benchmark oil price that serves as the basis for all income and expenditure forecasts has also been increased, from $90 a barrel to $95. Some local analysts have already expressed their scepticism about the latter benchmark, given the possible impact of the crisis in Ukraine on future global oil market stability.

Earlier this month the US administration announced its intention to release around 5 million barrels of crude to the market and cited the need to test the sustainability of the US oil infrastructure after a recent surge of domestic production. Some have seen this, however, as a calculated move as part of Washington’s efforts to punish Moscow for its combative stance on
Ukraine’s Crimea peninsula.

While this quantity is clearly too small to have any significant impact on oil prices, expanding US domestic production may upset both Russia’s and Kazakhstan’s medium- to long-term price expectations.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2014 Menas Associates

Thursday, 20 March 2014

Iran unveils contract model

The Ministry of Petroleum unveiled the draft model of its new oil and gas contracts, which is aimed at drawing more foreign companies to the Iranian hydrocarbon sector. The Iran Petroleum Contract (IPC) was announced in Tehran by Mehdi Hosseini, who heads a ministry-appointed committee to revise oil contracts.

‘In the new contracts, different stages of the petroleum industry (exploration, development, and production) are commissioned in an integrated manner,’ Hosseini told a forum organised to introduce the contracts.

The IPC is replacing buy-back contracts, which are no longer attractive to foreign companies. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

Under the IPC, the National Iranian Oil Company will form joint ventures in crude and gas production with international companies to manage projects, provide financing, and maximise hydrocarbon recovery, Hosseini said.

The official emphasised that the new contracts will offer higher fees for riskier exploration and production projects but that ‘ownership of reservoirs is not transferrable. Under new contracts, Iranian experts will work shoulder to shoulder with foreign investment companies in order to become familiar with the latest technologies of the world.’

The new contracts are also intended to raise the recovery factor of Iranian oil fields, half of which are in their maturity period. Iran needs US$150 billion of investments in its upstream oil and gas industry in the next five years, and the share of foreign investment in the contracts therefore had to increase.

Iran expects to attract US$100 billion in investment in its energy sector over the next four years after the new model takes effect.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2014 Menas Associates

Wednesday, 19 March 2014

Nigeria: Sanusi suspension becomes test of will for Jonathan

Central Bank of Nigeria (CBN) governor Sanusi Lamido Sanusi is challenging his suspension by President Goodluck Jonathan in the courts, and the case is becoming an overwhelmingly political clash as accusations are traded publicly.

Sanusi submitted a 36-point memorandum to Jonathan on 17 March which containing detailed rebuttals of the allegations against him contained in a Financial Reporting Council of Nigeria briefing note.

Jonathan’s February suspension of Sanusi was preceded by earlier attempts to get the governor to resign before the June 2014 end of his term. Initially, Sanusi said that he would not seek reinstatement to his post but would test the constitutional legitimacy of the suspension in court to establish a legal principle.

Having been sent a list of infractions at the bank under his management, Sanusi has analysed them and seems to have changed his strategy. He is now publicly asking Jonathan to reinstate him for the remaining three months of his tenure.

A long political and legal battle looms but it is certain that Jonathan will use every tactic to ensure that Sanusi does not get access to the governor’s office before his tenure formally ends. 

The trend of claims and counter-claims in the dispute suggests that there will not be an independent and credible effort to investigate the basis of Sanusi’s concerns about the Nigerian National Petroleum Corporation, which has been unable to account for failing to transfer some US$49.8 billion in revenues from January 2012 to July 2013 to the CBN accounts.

Acknowledging that he lacks the constitutional power to remove Sanusi from office, Jonathan says the governor is free to return to office once he disproves the ‘acts of financial recklessness’ allegations against him. These supposedly arose from recently received audits of CBN accounts.

Sanusi’s quick response to Jonathan’s allegations was to allege that there was a conspiracy supported by bank chiefs who are unhappy that they would have to open their books to independent auditors so that the missing billions can be tracked.

This view, relating to the role of Nigeria’s banks as likely intermediaries in corrupt flows of funds, has been voiced by Sanusi and other financial experts. Prior to his appointment as CBN governor, Sanusi was chief executive of First Bank Nigeria, through which billions of state oil earnings are transferred between state agencies and other institutions.

Sanusi will meet Justice Gabriel Kolawole later this week when he attends a rescheduled hearing on the case. 

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2014 Menas Associates

Monday, 17 March 2014

Mali: peace process loses momentum

It is clear from the array of reports and commentaries over the last month that the Mali peace process has lost momentum, if it ever had any.

The Ouagadougou Agreement of 18 June 2013 stipulated that an ‘inclusive dialogue’ should begin 60 days after the naming of a new government. That has not happened. Since then, the Mouvement National pour la LibĂ©ration de l’Azawad (MNLA) and the government have accused each other of reneging on agreements on security arrangements in Kidal.

There are two fundamental reasons.

First, the Bamako government has rarely shown much interest in its extreme northeast (Kidal), let alone most of its north (Azawad). It has never had more than a fleeting political or economic inclination to get to grips with the extremely taxing and deep-rooted problems of the region, and looks even less likely to do so today than it did this time last year.

Second, much blame must be placed on that vast, enigmatic entity, the ‘international community.’ It embraces the United Nations (and all its many agencies), the African Union (AU), the Economic Community of West African States, the European Union, a host of NGOs, the World Bank, the International Monetary Fund, and many other largely unaccountable entities, including NATO – not to mention the plethora of so-called experts, many of whom have little more than a passing acquaintance with the region or its people.

A month or so ago, most analysts recognised that the northern region of Kidal remained an MNLA stronghold. Also in the area are the French army, the UN Multidimensional Integrated Stabilization Mission in Mali, and troops of the Mali army. But they are not enough to secure the vast area. 

Many politicians and commentators in Bamako have been arguing that the French army should step aside and let a strengthened Mali army step in. But in 2013, the MNLA warned one reporter that ‘to plant a Malian flag in Kidal is an act of war.’

That remains pretty much the case today, except for one thing. The MNLA itself is now fragmenting into what appear to be at least three parties. While this may be a temporary state of affairs, it makes any sort of overall deal almost impossible in the near future.

For more news and expert analysis about the Sahara region, please see Sahara Focus.

© 2014 Menas Associates

Friday, 14 March 2014

Nigeria: Finance Minister seeks to reassure international community

Minister of Finance Ngozi Okonjo-Iweala has assured the international community of the government's seriousness over the issue of financial accountability.

The political and international nature of the NNPC dispute has become increasingly clear to Ngozi Okonjo-Iweala who is not only Minister of Finance but also a former senior World Bank official and former candidate for Bank leadership. According to some analysts, her position and reputation have been damaged by the affair despite her calls, which preceded Jonathan’s authorisation, for a forensic audit of NNPC financial affairs.  

She has even been accused of instituting a public relations “campaign” to protect her international and domestic reputation. This observation has been bolstered by her alleged use of the expensive US-based Mercury LLC public relations firm which has reportedly been used by President Jonathan’s administration since August 2013. 

This perception was perhaps bolstered by an Okonjo-Iweala piece that appeared in London’s Financial Times newspaper earlier this week. It opened with an assurance that despite “consternation in the markets” following Sanusi’s suspension and foreign exchange reserves below US$40 billion, the Naira has recovered and that the fundamentals are strong.  

Okonjo-Iweala - notably echoing Jonathan and Abati’s references to Sanusi’s three different estimates of the missing oil revenues - criticised him. She observed that Sanusi had first claimed that the figure was US$49.8 billion before he “accepted“ a finance ministry estimate of an unaccounted US$10.8 billion, before he “alleged” a “new figure” of US$20 billion. Besides the details, the minister also called for passage of the much-delayed PIB. It is clear that she was staying on message – even highlighting and supporting Jonathan’s announcement of a forensic enquiry – while also appealing to the international community.

Okonjo-Iweala was not the only senior high profile Nigerian appealing to foreign interests in London earlier this week. A large Nigerian delegation - including governors Isa Yuguda (Bauchi State), Emmanuel Uduaghan (Delta State) and Adams Oshiomhole (Edo State), former president Yakubu Gowon (1966-75) and Minister of Power Chinedu Nebo held court at the Institute of Directors. There they emphasised the attractiveness and openness of Nigeria to foreign investment and the length, admittedly including colonial rule, of the relationship between Nigeria and the UK.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2014 Menas Associates

Thursday, 13 March 2014

Yemen: Saudis put al-Huthi on list of terrorist organisations

Saudi Arabia issued a list of terrorist organisations on 6 March which includes the obvious suspects such as Al-Qa’ida in the Arabian Peninsula but also al-Huthi and the Muslim Brotherhood (MB). The Saudis have made clear that the banning of the MB is not directed at Islah, even though it is well known that the MB is part of that party. The naming of al-Huthi follows the approval of a new law on terrorism under which a special committee was set up to designate terrorist groups.

Riyadh has long regarded al-Huthi as hostile and fought al-Huthi fighters in 2009 and 2010. However, in the past three years the border has been quiet and both sides have avoided provocations. The Saudis have little doubt that al-Huthi is supported by Iran and the Lebanese Hizbollah and thus regarded as hostile. Riyadh will have been disturbed by the rapid rise in al- Huthi power in Yemen and the challenge this poses to some of Saudi Arabia’s traditional friends in the non-MB part of Islah. It is not clear if the al-Huthi political party, Ansar Allah, is affected.

Abd al-Malik al-Huthi blames the US, as usual, for the Saudi action, which he presented as taken precipitately and suggested that the Saudis might want to reconsider the situation. 

Saudi Arabia suspended its economic support to Yemen in late 2013, claiming that it wanted to encourage the politicians to agree on a way forward. The Saudi expulsion of Yemeni illegal migrants (within a general crackdown on illegals) has inflamed anti-Saudi opinion in Yemen.

Whether the Saudis have the will and capacity to turn the banning of al-Huthi into action against the movement in Yemen is moot.

Some Yemeni politicians are concerned about the rift within the GCC between Saudi Arabia and the UAE on one hand and Qatar on the other, mostly over Qatar’s backing for the MB. Qatar played a leading role in attempts in the late 2000s to mediate between the government and al-Huthi leaders and is the main financier, so far, of the fund to address southern grievances.

For more news and expert analysis about Yemen, please see Yemen Focus.

© 2014 Menas Associates

Wednesday, 12 March 2014

Ghana: Ecobank CEO sacked

Ghana's Albert Essien has been appointed as the new CEO of Ecobank Transnational Incorporated, after a special 11 March meeting of the executive board in Cameroon sacked Thierry Tanoh. This follows nine months of turmoil, with mounting criticism of the governance standards under Tanoh's management.

The board also reinstated the Finance Director Laurence do Rego, who had alerted regional regulators about the abuses at the bank. Tanoh sacked Do Rego in January but was ordered to reinstate her immediately by Nigeria's Security and Exchange Commission; he chose to ignore the directive.

Tanoh survived Ecobank shareholders’ extraordinary general meeting in Lome on 3 March. But opposition to his continuing leadership of the bank was growing, with calls from both senior Ecobank officials and major shareholders, including South Africa’s state-owned Public Investment Corporation, for Tanoh to step down. South Africa’s Nedbank said that Tanoh’s tenure has made it question whether to convert Ecobank indebtedness into Ecobank stock later this year.

Details of the high-tension board meeting aside - other than noting that Ecobank will keep a 12-member board rather than institute a seven-member interim board, and amend its articles of association to limit certain transactions exceeding a specified portion of the bank’s “book” value - the Ecobank saga is also notable because of the significant pan-African or South African influence in affairs.

The Ecobank matter illustrates how African investors can pressure major operators such as the pan-African Ecobank. As well as South African pressure, Nigeria's SEC investigated governance matters in the bank with the help of KPMG auditors and played a key role in easing out both Tanoh and his ally, the former chairman Kolapo Lawson, who resigned late last year. 

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2014 Menas Associates

Monday, 10 March 2014

US human rights report criticises both Boko Haram and Nigerian military

Neither the Boko Haram insurgency nor the government itself escaped lightly in the new Country Report on Human Rights practices for 2013 just published by the United States State Department's Bureau of Democracy, Human Rights and Labour. 

Boko Haram - "which conducted killings, bombings, abduction and rape of women, and other attacks throughout the country, resulting in numerous deaths, injuries, and widespread destruction of property" - came in for first criticism. But the report gave over plenty of column inches for the security services, "which perpetrated extrajudicial killings, torture, rape, beatings, arbitrary detention, mistreatment of detainees, and destruction of property." 

President Goodluck Jonathan's pardon of former Bayelsa State governor, Diepreye Alamieyeseigha, who was convicted of money laundering in 2007, did not escape the attention of the report's authors. Indeed, the report was harshly critical of the small number of prosecutions against police abuse and official corruption. "Impunity remained widespread at all levels of government." The report also condemned the practice of "parading" arrestees: "Bystanders often hurled taunts, food, and other objects. Police defended this practice with the argument that public humiliation helped deter crime." 

It is a common practice. In the past week, reports appeared in the media of the parading of 13 suspected members of the "Supreme Eiye Confraternity", arrested in Lagos. In Cross Rivers State the commander of the NNS Victory arrested and paraded a dozen people who were allegedly transporting contraband worth millions of naira. While the arrests might win plaudits for the authorities, it looks like a clear violation of due process for the arrested persons whose names and photos appear in the media before they have come to trial. 

On a more positive note, the State Department researchers found that there were few reports of the Economic and Financial Crimes Commission (EFCC) being used to harass political opponents of the ruling party. "Existing allegations tended to rise and fall with election cycles," the report dryly noted, leaving open the possibility that new accusations will appear as the 2015 elections approach. 

Other events were too recent to appear in the report. It said that "on 17 December a harmonized version of the 'Same Sex Marriage (Prohibition) Bill' passed the Senate." That bill, signed into law by President Jonathan in January 2014, triggered fresh round-ups of gays and lesbians and provoked international condemnation. It will be sure to feature more prominently in the 2014 report.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2014 Menas Associates

Thursday, 6 March 2014

Egypt: New government meets for first time to deal with strikes

Prime Minister Ibrahim Mehleb appealed to Egyptians’ sense of patriotism to go back to work and to call off their strikes which are crippling the national economy.

The labour unrest, however, is largely the making of government measures introduced over the past three years allied to the sense of people-power acquired since the protests started three years ago. Successive governments have sought to mollify public opinion by granting wage increases to public sector workers which are not sustainable, given the dire state of government finances. Furthermore, the increases have not been universally applied, with the police and army getting a higher increase and some workers, particularly in the transport sector, deemed ineligible for the minimum wage.

The prime minister promised to look into the demands of protesters, but it is unclear what he can propose to meet their grievances.

Those who have been on strike include bus drivers, postal workers, doctors, pharmacists and workers in the steel and textile industries. According to media reports, negotiations between the minister of communications and postal workers broke down when the minister said that there was not enough money to pay the workers what they were asking for.

The difficult economic conditions have been exacerbated by power cuts caused by a shortfall in the production and supply of natural gas to meet demand, rising at 8-10% a year.

Security challenges are also dampening economic activity. The tourism minister flew to Berlin for the major travel trade show and also to try to persuade the German authorities to reverse their advisory on citizens to avoid all of the Sinai Peninsula. The Egyptian authorities have sought to isolate Sharm el Sheikh and other resorts from the violence that has afflicted other parts of the peninsula, but the German government was unwilling to see the distinction.

For more news and expert analysis about Egypt, please see Egypt Politics & Security.

© 2014 Menas Associates

Saadi Qadhafi extradited to Libya

Saadi Qadhafi, the third son of Libya’s deposed dictator Muammar Qadhafi, was extradited early today from neighbouring Niger back to Libya. According to a statement posted on the government’s official Facebook page, Saadi is currently being held in the high-security Hadaba Prison in Tripoli.

"The Libyan Government thanks the President of the Republic of Niger, Mahamadou Issoufou, we also thank the Niger Government and the people of Niger for their cooperation with the Libyan Government in pledging its commitment to the treatment of the accused on the principles of justice and international norms in dealing with prisoners. God save Libya.”

Unofficial pictures were also released by the government-backed militia holding the businessman and former professional footballer, allegedly showing Saadi dressed in a blue prison uniform having his head shaved. There is a high likelihood that he will face the death penalty.

Libya has been seeking his extradition since he fled to Niger in the wake of the 2011 NATO-backed uprising that ousted his father. Niamey had previously refused to hand over Saadi around the time of the first anniversary of the February uprising because they feared he would be executed if he returned to Libya. A government spokesperson for the Nigerien authorities, Marou Amadou, said that it would only extradite Saadi “to a government which has an independent and impartial justice system”.

Following this request from Tripoli, Niger’s President Mahamadou Issoufou said any extradition requests would be viewed on strict legal merits alone, without referring specifically to the Saadi case. He had originally been granted asylum in November 2011 on humanitarian grounds, shortly after Interpol issued a warrant for his arrest in connection with allegations of forcefully misappropriated property and armed intimidation when he was head of the Libyan Football Federation. As a member of the ICC, Niger was obliged to extradite Qadhafi.

Saadi’s extradition is a real coup for the Libyan authorities. He was one of the most hated figures in the Qadhafi regime and arguably the most disliked of all Qadhafi’s sons. He had a reputation for being exceptionally brutal and is remembered in Benghazi particularly for his bulldozing of the Al-Ahli SC (Benghazi) stadium in an act of revenge after his football team, Al-Ahli SC (Tripoli), lost to the opposing side.

There is likely to be ongoing jubilation in Libya at the news. Congress is congratulating the families of the martyrs and the revolutionaries and is thanking Niger. This will serve as a reminder to a deeply troubled country of why they launched the uprising in the first place. 

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2014 Menas Associates

Wednesday, 5 March 2014

Ghana: NPP internal election chaos continues

The NPP’s election vetting committee has allowed businessman and founding member of the NPP, Paul Afoko, to continue campaigning to run for the party’s national chairmanship, but continues to suspend his vetting process.

The NPP internal election chaos is continuing because, according to party insiders, although the party’s national chairman Jake Obetsebi-Lamptey and General Secretary Kwadwo “Sir John” Owusu Afriyie continue to be the frontrunners for their respective party offices, both men are facing significant opposition at next month’s expensive party congress at the Northern Region city of Tamale. 

On the plus side, the party’s vetting committee has softened one major controversy by allowing one of Obetsebi-Lamptey’s opponents, the businessman Paul Afoko, to continue campaigning after, as we have reported in previous issues, it had earlier suspended investigations into his fitness to run following receipt of a non-attributable allegation over his alleged past wrongdoing.

Nevertheless, according to NPP elections director Martin Adjei Mensah, the vetting committee is still investigating Afoko’s suspension but has allowed him to continue campaigning for the present until a decision is taken. This has led Afoko to again voice his disappointment while campaigning in Upper West Region that the committee will not reveal the name of the party member who suggested that he had served a prison sentence in the UK for fraud.

Given that the other three other candidates for the post of national chairman have all been cleared by the vetting committee, Afoko may indeed be campaigning at a disadvantage.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2014 Menas Associates

Tuesday, 4 March 2014

Libya: Preliminary results of Constitution Committee elections

The preliminary results of the elections for the constitution committee, or Sixty Committee, which was established to draw up the country’s new constitution, were released this week. Although most of those elected are not well known, the initial results indicated that the liberal trend did well.

So far, only 47 out of the committee’s members have been declared because voting has yet to take place for the remaining 13 seats. Two of these seats remain empty because they were set aside for the country’s Amazigh (Berber) minority which boycotted the elections on the grounds that the Amazigh were under-represented in the committee and because they were given no guarantee that their rights would be protected in the new constitution. 

The other 11 seats remain unfilled because the elections to these posts could not go ahead on 20 February as a result of various security issues. Despite the fact that the Higher Election Commission announced that voting would take place for these seats six days later, similar disruptions and security violations occurred, meaning the re-runs did not go ahead.

In such circumstances it is difficult to see how this committee can start work. This means that the constitution writing process is likely to be delayed even further, suggesting that Congress’ Plan B for early elections will almost certainly have to be implemented, providing that the Congress itself lasts that long. 

Indeed, the head of the Higher Election Commission, Nouri Al-Abbar, who resigned this week (see below), informed the GNC that “in the best circumstances and even with the availability of logistical support, the earliest time that elections can be held is between 5 to 10 months”. Whether Libyans will agree to wait that long has yet to be seen.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2014 Menas Associates