Economy

Nigerians may pay more for cooking gas —-as DPR advocates for market forces as determinant of prices

Eyewitness reporter

If the Federal government heeds the call of the Department of Petroleum Resources (DPR) to subject the prices of Liquefied Petroleum Gas(LPG), otherwise known as cooking gas, to the vagaries of market forces, then Nigerians may pay more for the product.

Mr Sarki Auwalu, the Chief Executive Officer, (DPR), believed that to achieve uninterrupted supply of gas, government should allow the factor of demand and supply to guide the prices of the product.

The position of DPR, one of the regulatory government agencies in the oil and gas industry, aligned with the similar call by the Nigeria National Petroleum Corporation (NNPC) when its Group Managing Director, Dr Mele Kyari also said the corporation could no longer bear the burden of sustaining the expensive subsidy regime on Premium Motor Spirit (PMS) and that its prices should be market- driven .

The positions of these two regulatory bodies in the Oil and Gas industry have further put pressure on Nigerians who should brace up to likely hike in the prices of these essential products.

While making this call in his keynote address at the pre-summit conference on “Decade of Gas’, in Abuja, on Monday, Auwalu said that the right and market-based pricing of gas was critical, as it would assure producers of returns on their investments.

He also outlined five critical levers for gas development, especially as Nigeria moves to leverage its abundant gas resources for national growth, diversification of the economy and to use gas as the fuel for economic transformation.

According to him, the levers include availability, accessibility, affordability, and acceptability, as well as deliverability.

He noted that these were critical to utilising Nigeria’s proven gas reserves of 203 trillion cubic feet, TCF, for national development.

“Whereas references have been made to the other elements in this discussion, right pricing of gas is requiring particular attention to ensure security of gas supply and security of credible gas demand.

“This is because upstream gas producers must be assured that they will receive fair and equitable returns for their investments whereas, the price must be such that the end-users are able to pay for gas offtake in a reliable and consistent manner.

“Accordingly, the most robust and sustainable pricing mechanism is that which ‘let the market speak’ in a way that all costs are reflective of prevailing market conditions and for which the economic dynamics of demand and supply are allowed to interplay in an open, transparent, and free market environment.

“Thus, our drive as a nation should be early attainment to the ‘willing buyer; willing seller’ market status.

“Any transitional pricing arrangements, today, must be structured to quickly give way for market-led pricing regime and conditions,” he said.

Auwalu commended President Muhammadu Buhari and the Minister of State for Petroleum Resources, Chief Timipre Sylva, for their outstanding leadership in deepening gas utilisation in Nigeria.

He noted that these efforts had culminated in the establishment of the National Gas Expansion Programme, National Gas Transportation Network Code and the National Gas Flare Commercialisation Programme.

Others, he noted, include the ongoing construction of the ELPS-II, OB3 and AKK pipelines as critical backbone gas infrastructure required to improve gas deliverability and availability.

He added that government was also working toward the expeditious passage of the Petroleum Industry Bill (PIB) which would enhance clarity in legislative, regulatory, fiscal, and administrative frameworks in the industry.

“This bill, when passed into law, will eliminate the uncertainties and bottlenecks associated with gas development in Nigeria and accelerate the growth of the Nigerian gas market to a fully developed and matured status.

“Specifically, on gas matters, the PIB provides for the following: promotion of dedicated gas exploration and development, gas terms, fiscal separation of gas as a commodity.

“It will also enhance the domestic gas delivery obligation, tariffing structure & methodology, open access regimes and revised gas pricing framework, to mention but a few,” Auwalu said.

He added that the DPR would continue to be an enabler and an opportunity provider in the oil and gas industry.

“Our focus remains the effective implementation of all policies and strategic programmes of government in an efficient manner that optimises the value of our petroleum resources for all stakeholders, all in overriding national interest,” he said.

Economy

Auditor General indicts MTN over evasion of Customs duty since 2021

—–as House of Reps knocks FIRS over operational infractions

The Office of the Auditor General of Federation has indicted the telecom giant, MTN, over evasion of payment of Customs duties since 2021.

This was contained in the 2019 queries issued by the office of the Auditor General of the Federation which was made available to the House of Representatives Committee on Public Accounts.

The committee also heard that the Federal Inland Revenue Service, (FIRS) received capital allowances claims by taxpayers without the certificate of acceptance from the ministry of trade and industries in 2019.

Speaking at the resumed hearing of the investigations on queries issued by the office of the Auditor General of the Federation against the Ministries, Departments and Agencies, (MDAs) of the Federal Government, the Chairman of the committee Hon Oluwole Oluwole Oke, lamented the level of external borrowings by the federal government, saying that the committee’s probe of public funds was aimed at curtailing revenue leakages to boost government treasury.

His statement was coming against the backdrop of tax evasion by the telecom service provider, MTN whose current assets stand at N2.68 trillion in the country, yet does not have proof of customs duty over the years.

The lawmakers also decried the issuance of an assets certificate by the Ministry of Trade and investment to the telecommunication firm without first evaluating their assets.

Following the failure of the MTN representative to tender the relevant documents to buttress his position that the company was up to date, the committee resolved to write the Nigeria Customs Service, (NCS) to furnish it with relevant documents, including MTN duty permit so as to ascertain the total amount it owes government since 2001.

Hon Oke, therefore, directed the Clerk of the Committee to write to the Management of the Nigeria Customs Service on the financial indebtedness of the firm to the federal government.

Economy

AFCFTA, WCO sign MoU to enhance trade in Africa

The African Continental Free Trade Area (AfCFTA) Secretariat and the World Customs Organisation (WCO) have signed a Memorandum of Understanding (MoU) aimed at operationalising the tariff schedules and ensuring additional free and efficient movement of goods in Africa.

The MoU, which was signed in Brussels, Belgium, on February 15, 2022, by the Secretary-General of the AfCFTA Secretariat, Wamkele Mene and the Secretary-General of the WCO, Kunio Mikuriya, is expected to strengthen the organisational capacity, transparency and effectiveness of African Customs administrations sustainably, through cooperation between both organisations.

The shared goal of both organisations remains to enhance continental trade by eradicating trade barriers through connecting Customs systems, populating the AfCFTA Tariff Book and providing capacity building for Customs officials and administration.

Mene said that “The MoU will improve the partnership between the WCO to and the AfCFTA in ensuring that Customs Administrations are fully equipped to implement the AfCFTA Agreement.”

He further said that good progress has been made since the establishment of the AfCFTA Secretariat, saying that one major milestone is the ratification of Rules of Origin for 87.7 percent of tariff headings agreed upon by 41 of its 54 Member States.

Mene noted that the expectations were high and that communities were eager to start trading under the new Agreement. He acknowledged the WCO’s expertise and role in delivering capacity building in highly-technical areas which were key for implementing the Agreement.

On his part, Dr. Mikuriya highlighted the areas where the WCO could contribute, including customs technical matters such as the Harmonised System, Valuation and Origin, as well as automation, risk management and trade facilitation which will yield economic benefits to the African continent.

He reaffirmed WCO’s commitment to contribute to the regional integration efforts in Africa through customs modernisation.

AfCFTA is the world’s largest free trade area since the formulation of the World Trade Organisation.

It aims to bring together all 55 member states of the African Union, covering a market of more than 1.2 billion people, including a growing middle class and a combined gross domestic product of $2.6 trillion.

It works towards several objectives, most importantly to create a single market for goods and services, having the potential to boost intra-African trade by 52.3 percent.

WCO is the only intergovernmental organisation focused uniquely on customs matters.

With 184 Members across the globe collectively processing 98 percent of world trade, the WCO is recognised as the voice of the customs community.

It is noted for its expertise in developing global standards, simplifying and harmonising customs procedures, trade security, trade facilitation, customs enforcement and compliance, the Harmonised System goods nomenclature, valuation, origin, and customs capacity building.

The MoU is expected to strengthen the organisational capacity, transparency and effectiveness of African Customs administrations sustainably, through cooperation between both organisations.

AfCFTA is the world’s largest free trade area since the formulation of the World Trade Organisation. It aims to bring together all 55 member states of the African Union, covering a market of more than 1.2 billion people, including a growing middle class and a combined gross domestic product of $2.6 trillion.

Economy

NNPC, MRS engage in blame game over importation of toxic fuel

The Nigerian National Petroleum Corporation(NNPC) and MRS, a Major oil marketer, have engaged in a blame game over the importation of adulterated fuel into the country.

The two organisations were locked in trading of accusations and counter-accusations over who was responsible for the importation of the toxic fuel.

Curiously, the NNPC, the sole importer of petroleum products into the country, in an attempt to absolve itself of the national embarrassment, fingered some major oil marketers in the sordid transaction.

The Group Managing Director of NNPC, Mallam Mele Kyari, at a press conference on Wednesday, revealed that MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium, Oando and Duke Oil are the importers of the adulterated fuel.

However,MRS countered the position of the NNPC, accusing the oil corporation of importing the toxic fuel.

In its rebuttal statement on Wednesday, MRS accused Panama-based Duke Oil, an NNPC agent, of being the direct importer of the adulterated fuel.

The Major Oil marketer denied importing the substandard PMS, stating that importation of fuel into Nigeria was solely the responsibility of Duke Oil on behalf of NNPC, and the contaminated fuel was distributed to various retailing companies.

How the toxic fuel was imported and distributed in Nigeria

Investigation revealed that Duke Oil is a subsidiary of Nigeria National Petroleum Corporation (NNPC), acting as the government agency’s trading arm, which makes the firm the only importer of PMS into Nigeria.

The company was established about 32 years ago during the administration of Gen Ibrahim Babangida, with a registered designation of Sociedad Anonima, which means Anonymous Society.

Sociedad Anonima implies that shareholders of Duke Oil are largely unknown or secret, and its registered base is in Panama, a Central American country known for providing safe haven to money launderers.

Stakeholders have however queried why a government agency such as NNPC should be running a sole trading arm that is operating out of a money laundering country with secret shareholders.

After the importation of the contaminated fuel, it was gathered that OVH, MRS, NIPCO, ARDOVA and TOTAL received the contaminated fuel from NNPC, after landing in Apapa between the 24th and 30th of January, 2022.

Sources claimed the adulterated fuel was bought by Duke Oil from the international trader, Litasco, and it has 20% methanol, an illegal substance in Nigeria after it was delivered with Motor Tanker (MT) Nord Gainer.

“Following delivery into the tank, it was observed that the product appeared hazy and dark,” MRS claimed.

adding “the product analysis revealed that the PMS discharged by MT Nord Ganier had 20% methanol, which is an illegal substance in Nigeria.

“As a Company, we are aware that alcohol/ethanol is not permitted to be mixed in PMS specification.” The oil and gas company wrote in the filing at the Exchange on Wednesday.

MRS said it has now halted further sales of fuel from its retailing stations and awaits NNPC’s decision on replacing the contaminated fuel.

However, Kyari said the efforts of the NNPC have been to hold back the affected fuel some of which came from Antwerp in Belgium.

He also explained that petrol imported into the country does not include tests to ascertain the level of methanol content.

The NNPC boss however said that the quality of the products as shown in the certificates issues at port of loading in Belgium showed the fuel was in compliance with Nigerian specifications.

Apart from this, he added that GMO, SGS, GeoChem and G&G working as NNPC quality inspectors had carried out tests before the products were discharged showing Nigeria’s standard.