By Felix Onuah

ABUJA (Reuters) – Nigeria hopes to conclude the sale of a $1 billion Eurobond by the end of the first quarter of 2017 and will seek to make its foreign exchange market more flexible, vice president Yemi Osinbajo said on Tuesday.

Nigeria is in its deepest recession in 25 years and needs to find money to make up for shortfall in its budget. Its revenues from oil have plunged due to low international prices and militant attacks in its crude-producing heartland, the Niger Delta, that have cut its output.

The government began the process of appointing banks for the sale of the Eurobond in September and had said it wanted to issue the bond by the end of the year. It has yet to announce a lender to lead the sale, however.

“At the very latest, between the end of the year and the first quarter of next year we will begin to see all that process concluded,” Osinbajo told Reuters in an interview.

The vice president said the severe loss of petro-dollars had caused “serious” foreign exchange shortages and had been worsened by attacks on its oil pipelines and export terminals.

The government had wanted to issue the Eurobond to help plug a gap in its record 6.06 trillion naira ($19.9 billion) budget this year, in addition to tapping concessionary loans from the World Bank and China as its oil revenues fell.

So far only the African Development Bank has come to its aid, approving a $600 million loan, the first tranche of a total $1 billion package.

Osinbajo also said his office was working with the central bank to make the foreign exchange market more flexible and more reflective of actual demand and supply.

The regulator in June officially ended its policy of pegging, or fixing, the naira’s exchange rate at 197 per dollar to let the currency float freely. But the exchange rate has since been stuck at 305 to 315 on the official market due to dollar shortages, while on the black market the naira is changing hands at 470 per dollar.

LOSING REVENUES

Nigeria’s crude production, which was 2.1 million bpd at the start of 2016, fell by around a third in the summer following a series of attacks by Delta militants who want a greater share of the country’s energy wealth to go to the impoverished southern oil-producing region.

“At one point we were losing almost 1 million barrels per day (bpd) which translated to 60 percent of oil revenues … and that affects the availability of dollars,” Osinbajo said.

The militants, after saying in August they would halt hostilities to pursue talks with the government, said this month they had resumed attacks because of the continued presence of the army in the region.

Osinbajo said that the government was prepared to talk with the militants but that maintaining security was essential for law enforcement.

Ratings agency Moody’s forecast that Nigeria’s economy could expand by 2.5 percent next year if it could produce 2.2 million barrels of oil per day – the level at which the government made its budget calculations.

To help cover its budget shortfalls, the government is keen to ensure it is collecting taxes efficiently, Osinbajo said.

“We will continue to consider the issue of raising tax and raising VAT. But at the moment we are more concerned with ensuring that we really improve our coverage,” he said, referring to tax collection.

On the missing Chibok schoolgirls, the vice president said the release of 21 of the girls in October was a result of government engagement with Boko Haram.

He did not provide any update on the remaining missing girls, but he said the government was continuing to engage with Boko Haram.

($1 = 304.20 naira)

(Writing by Chijioke Ohuocha; Editing by Hugh Lawson)

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ABIDJAN (Reuters) – Heineken is planning to take on Castel for the top spot in Ivory Coast’s growing beer market by competing with the French company on price, the general manager of the Dutch firm’s new brewery said on Monday.

Following a decade-long crisis that ended in 2011, Ivory Coast has emerged as Africa’s fastest growing economy, according to the International Monetary Fund, and beer consumption is rising in the cocoa producing country of 23 million people.

Heineken, the world’s second largest beer maker, and Africa-focused trading firm CFAO invested 100 billion CFA francs ($162 million) to build a brewery that opened this month near the commercial capital Abidjan.

Groupe Castel, a private firm founded by the Castel family, produces the majority of the 270 million litres of beer consumed annually in Ivory Coast at its Solibra brewery in Abidjan and has maintained an iron grip on the market for years.

Besides its ever-popular Castel, Flag and Solibra Bock brands it also brews other well-known beers under licence such as Diageo’s Guinness and Carlsberg’s Tuborg.

“We want to be the leading beer seller in Ivory Coast,” Alexander Koch, general manager of Heineken’s new Brassivoire brewery, told Reuters.

“The market has been served by a single actor, Castel, for years … We judged it promising enough to move in with this investment.”

For now, the Dutch company is focusing on producing its local Ivoire brand at the new plant, which has a capacity of 160 million litres a year, said Koch.

The recommended unit price for a 60 cl bottle of Ivoire will be 500 CFA francs a bottle, said Koch, which is lower than the rival brands produced by Castel, Africa’s second largest producer of beer and soft drinks.

Heineken has operations in 10 other African countries including Nigeria, South Africa, Democratic Republic of Congo and Ethiopia.

($1 = 617.7200 CFA francs)

(Reporting by Loucoumane Coulibaly; editing by Nellie Peyton and David Clarke)

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TUNIS (Reuters) – The European Investment Bank (EIB) has agreed to grant loans to Tunisia worth 400 million euros for youth and infrastructure projects, the Tunis government said on Monday.

The deal will be signed during an international investment conference in Tunis on Tuesday, the prime minister’s office said in a statement.

It quoted EIB President Werner Hoyer as saying the money would be provided for projects targeting youth, children, and schools, as well as a bridge project in the northern city of Bizerte. The projects will have an “immediate impact”, it said.

The statement added that the EIB had made a commitment to provide a total of 2.5 billion euros worth of funding to the North African country, without giving details.

Tunisia’s economy has been hit by social unrest and militant attacks following a 2011 uprising that toppled former leader Zine El-Abidine Ben Ali, leaving many young people frustrated at a lack of economic opportunities.

Earlier on Monday, Tunisia’s government said it was planning to issue a Eurobond worth 1 billion euros in January as it seeks funding to cover its deficit.

(Reporting by Tarek Amara; Writing by Aidan Lewis; Editing by Catherine Evans)

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By Henning Gloystein

SINGAPORE (Reuters) – Oil prices fell on Monday, adding to Friday’s steep losses as doubts re-emerged over the ability of major producers to agree output cuts at a planned meeting on Wednesday aimed at reining in global oversupply.

Brent crude futures fell 2 percent at one point but regained ground to be trading down 24 cents, or half a percentage point, at $47 per barrel at 0439 GMT.

U.S. West Texas Intermediate (WTI) crude futures also retraced early loses to be down 26 cents, or 0.6 percent, at $45.80 a barrel.

Monday’s falls came after prices tumbled more than 3 percent on Friday on disagreement between OPEC and non-OPEC crude exporters like Russia over who should cut production by how much in order to curb a global supply overhang that has more than halved prices since 2014. [nL4N1DQ1SV]

Despite the wrangling, traders said they still expected some form of an output restriction to be agreed this week.

“I hold a very strong view, that the fiscal imperative of the budget and income/expenditure situation of the Saudis together with many other OPEC and non-OPEC nations means a deal will get done,” said Greg McKenna, chief market strategist at Australian brokerage AxiTrader.

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna on Wednesday to decide on the details of a cut, potentially including non-OPEC members like Russia. A meeting between OPEC and non-OPEC producers that was to be held on Monday was called off after Saudi Arabia declined to attend.

Saudi Arabia’s energy minister Khalid al-Falih said on Sunday that Saudi representatives would not attend the talks originally scheduled for Monday because no agreement within OPEC had been reached so far.

Falih said that the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified. [nL8N1DS0IC]

Despite the disagreements among producers, Morgan Stanley said it still expected “at least a paper deal agreement”.

Even if a cut is agreed, oversupply may not end soon.

In the United States, the oil rig count exploring for new production rose by three last week, and Goldman Sachs said that “since its trough on May 27, 2016, producers have added 158 oil rigs (+50 percent) in the U.S.”

Eiichiro Kitahara, Executive Officer of Japanese refiner TonenGeneral Sekiyu K.K said that “once oil prices reach above $60/barrel, (U.S.) shale oil producers are likely to resume operations, which will weigh on the market.”

(Reporting by Henning Gloystein in SINGAPORE; Additional reporting by Yuka Obayashi in TOKYO; Editing by Kenneth Maxwell and Richard Pullin)

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By Loucoumane Coulibaly

ABIDJAN (Reuters) – French oil major Total , the Ivorian state oil company and four other partners have formally established a consortium to build a liquid natural gas (LNG) import terminal meant to feed the country’s growing electricity consumption.

Demand for electricity is rising in Ivory Coast – which is Francophone West Africa’s largest economy – by some 10 percent a year, and the energy minister said last year that $20 billion of investment is needed in the industry over the next 15 years.

According to the agreement – first announced on Nov. 24 – the new Cote d’Ivoire-GNL company is 34 percent owned by Total while the State Oil Company of Azerbaijan Republic (SOCAR) controls 26 percent and Ivorian state oil company Petroci has 11 percent.

Royal Dutch Shell will hold a 13 percent stake, while Houston-based Endeavor Energy and Golar LNG will have minority stakes.

“This project illustrates Total’s strategy to develop new gas markets by unlocking access to LNG for fast-growing economies,” said Philippe Sauquet, head of Total’s Gas, Renewables and Power division in a statement on Friday.

Total added that the terminal is expected to become operational by mid 2018, and that it will use the terminal to supply LNG volumes from its global portfolio.

The company hopes the Ivory Coast LNG hub will help unlock LNG demand in the West Africa region.

The project aims to build and operate a floating storage regasification unit (FSRU) with an initial capacity of 100 million cubic feet that would gradually be brought up to 400 million cubic feet.

“Many electricity-producing projects are awaiting a gas supply to really kick off,” Ibrahima Diaby, the director general of Petroci, said at the signing ceremony in Abidjan on Thursday.

The cost of the project, expected to take about 18 months to complete, has also been reduced to $100 million from an earlier estimate of $200 million, he added.

Total will make a final investment decision on the project in the first quarter of 2017, a spokeswoman added.

Ivory Coast has the region’s most reliable power production sector and exports electricity to its neighbours. Petroci said in July that it hopes to double oil and gas output by 2020 by developing offshore reserves in the oil-rich Gulf of Guinea.

(Additional reporting by Bate Felix in Paris; Writing By Aaron Ross; Editing by Sudip Kar-Gupta)

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By Melanie Burton

MELBOURNE (Reuters) – A plan by Zambia to put a duty on copper concentrates imports could put a kink in the global supply chain for the metal, industry sources said, by forcing neighbouring Democratic Republic of Congo (DRC) to send surplus mine output elsewhere.

The 7.5 percent duty announced earlier this month and due to come into force at the start of 2017, is likely to disrupt supply of refined metal in the early part of the year, just as the global market moves away from surplus, helping to support prices.

Zambia, Africa’s second-largest copper producer, will produce about 425,000 tonnes of copper metal this year, according to consultancy GFMS, accounting for about 2 percent of global output.

The country’s smelters, including those run by privately held Eurasian Resources Group (ERG) and India’s Vedanta Resources, currently source some 500,000 tonnes of concentrate from the DRC, according to consultants Wood Mackenzie.

This is made up of 400,000 tonnes from ERG’s Frontier mine and around 100,000 tonnes from La Sino-Congolaise Des Mines S.A. (Sicomines), a joint venture between DRC’s Gecamines, China Railway Construction Corp. and Sinohydro Corp.

“It will not be viable for smelters to buy concentrates from the DRC,” said an industry source working in Zambia. “This change will upset the supply chain for the first six months of 2017.”

Miners in the DRC would be forced to look for other ways to process their concentrate, such as sending it some 3,000 km (1,860 miles) overland to Durban in South Africa for shipping to China, a two-month trip, three industry sources said.

This would take the supplies out of circulation for several months and delay production of up to 150,000 tonnes of copper metal.

SMELTERS UNDER STRESS

Smelters in Zambia, where capacity far outstrips current mine supply, are already struggling with low feed stocks after miners including Glencore closed copper shafts as prices fell to six-year lows.

The duty could mean they have even less concentrate to process, at least in the short term, raising costs per unit.

“People are well aware that Zambian smelters are under considerable stress to which this will add significantly,” said a source familiar with the matter.

The sources said the most affected smelters would be ERG’s Chambishi Smelter and Vedanta’s Konkola Copper Mine which source a significant part of their concentrate needs from DRC.

Officials at ERG did not reply to an emailed request for comment. Konkola declined to comment.

The new duty was likely aimed at boosting Zambian refined metal production from local concentrate supplies, but the move could backfire and instead benefit smelters in other countries such as China and India, Wood Mackenzie said.

Companies with local mines including First Quantum Minerals and Barrick Gold could increase output, traders said. Officials from both companies did not respond to requests for comment.

The Zambian government was also coming under sustained lobbying from smelters to reverse its proposal, industry sources said.

“Some are already threatening to close down,” said a Swiss trader active in the region. “I believe that the duty is not a definitive decision”.

(Reporting by Melanie Burton. Additional reporting by Nicole Mordant in Vancouver and David Stanway in Shanghai; Editing by Richard Pullin)

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