Nigeria is seeing asymmetric attacks from all angles. Naira is struggling. Inflation is eating savings. Insecurity is there. NNPC has not found a chequebook to send money to the federation account for months. Now, Nigeria Liquefied Natural Gas (NLNG), the sparkling goldfish, has declared force majeure:
“Nigeria’s flood disaster that is rapidly escalating across its states has created further economic challenges for the country. In addition to over 600 deaths, more than 1.4 million displaced persons, and submerging farmlands across Nigeria, the flood is set to exacerbate the country’s insufficient revenue generation. Bloomberg reports that Nigeria Liquefied Natural Gas (NLNG) Ltd. has declared force majeure on shipments from its Bonny Island liquefied natural gas facility after supplies were cut off by flooding.”
If you are a government staff, this may be a time to think of a backup plan. There is a high chance that the government will close ministries and departments since I expect tough decisions ahead, irrespective of who wins next year. Nigeria will require a fundamental redesign in its economic architecture to remain financially viable as a nation.
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“The notice by the gas suppliers was a result of high flood water levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG,” Bloomberg quoted the company spokesman Andy Odeh as saying by email on Monday.
This comes at the heels of growing shortfalls in Nigeria’s crude oil production, which has seen the country’s revenue significantly drop in the past few years, forcing Africa’s largest economy to depend on borrowing to fund its budgets.
Bloomberg noted that NLNG, which can produce 22 million tons of LNG a year, was already falling short of its production capacity due to difficulties securing adequate feedstock.
The force majeure means that the operation of NLNG, which is a joint venture between the state-owned Nigerian National Petroleum Co., Shell Plc, TotalEnergies SE and Eni SpA, will reel on the mercy of the flood until further notice.
Nigeria’s Budget Deficit to Worsen As NLNG Declares Force Majeure
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