President Bola Tinubu in a broadcast at 7pm  WAT yesterday announced a state of emergency in Rivers State following a political impasse that had dragged on for months. 

Vice Admiral Ibok-Ete Ekwe Ibas(RTD) has been appointed sole administrator for a tenure of 6 months. The Governor Sim Fubara and the state house of assembly are thus in limbo for now. 

There are arguments for and against the action. I won’t be going into that. Let’s look at the economic consequences of the events of the last few days. 

Investor confidence 

The biggest victim in all this is investor confidence. Foreign investors had taken baby steps into the economy (mostly in treasury bills and OMO). Prior to this, there had been some interest by them in more long term investing (as well as bigger position sizes). 

The incidents with crude oil facilities will put them on edge. 

I expect further weakness in the stock market in today’s trading session. 

Oil and gas may face pressure 

There were two major facility disruptions. I use the term disruption, because it is as at this time unknown if this was a result of militant attacks or technical issues. 

A section of the Trans Niger pipeline was damaged. That knocks off crude oil supplied to the Forcados terminal. Exactly how many barrels knocked off is unknown yet. 

There was another pipeline explosion in Ogba/Egbema/Ndoni Local Government Area (ONELGA) of Rivers State

Q2 2025 GDP numbers as well as data from the NUPRC should provide colour in the coming weeks and months

The implications of this are lower crude oil revenue for the country, and higher operating costs for oil companies. Some of them may have to barge their crude to export terminals.

We could get more colour on this from Aradel in their FY 2024 call and Seplat sometime next month during their Q1 2025 call (which will be sometime in April).

Exchange rate 

There may be some pressure on the exchange rate. Pressure from potentially lower crude oil revenue (which means lower dollar revenue). Pressure from panic from some investors/speculators who may decide to up their dollar position.