Economy

Global oil price surge put pressure on government to remove daily petrol subsidy of N8.28b

—-NNPC , PPPRA disagree on exact figures of petrol subsidy.

–as PMS landing cost hits N264.65/Litre

The rapid rise in global oil prices to record highs has pushed the subsidy cost being incurred by the Federal Government to N8.28bn daily.

This has therefore put pressure on the Nigeria National Petroleum Corporation(NNPC) to remove subsidy on the product which analysts said is consuming more than 50 per cent of its remittances to the Federation Account.

The data also revealed that without subsidy, petrol would be selling for about N300 per litre as the landing cost of the product rose to N276.94 per litre last Friday from N249.42 per litre in July 30.

The Economic Confidential had reported on September 28 that the NNPC spent a total of N905.27bn on petrol subsidy from January to August, citing data from the corporation.

The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in oil prices.

President Muhammadu Buhari has said the federal government’s expenses on petrol subsidy has eaten into the revenue that should have been available to fund the 2021 budget.

He spoke on Thursday when he presented the 2022 appropriation bill at the National Assembly.

He said the government was forced to suspend a further increase in the pump price of petrol due to opposition from the labour unions and other stakeholders.

“The National Assembly will recall that in March 2020, the Petroleum Products Pricing Regulatory Agency(PPPRA) announced that the price of petrol would henceforth be determined by market forces.

“However, as the combination of rising crude oil prices and exchange rate combined to push the price above the hitherto regulated price of 145 Naira per litre, opposition against the policy of price deregulation hardened on the part of labour unions in particular.

“Government had to suspend further upward price adjustments while engaging labour on the subject. This petrol subsidy significantly eroded revenues that should have been available to fund the budget”, observed President Buhari.

Responding to an enquiry on whether NNPC would continue to shoulder the financial burden of petrol subsidy, the corporation’s Group General Manager, Group Public Affairs, Garba-Deen Muhammad, replied, “NNPC has made no secret about the burden it is shouldering.”

The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the crash in oil prices.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

The price of crude oil, which accounts for a large chunk of the final cost of petrol, has continued to rise in recent months, with Brent, the international oil benchmark, closing at $82.39 on October 8, up from $77.72 on July 30. It increased further to $83.94 per barrel as of 5:05 pm Nigerian time on Monday.

The Petroleum Products Pricing Regulatory Agency(PPPRA) had in March this year released a pricing template that indicated the guiding prices for the month.

The template, which showed that the petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry and was later deleted by the agency from its website.

It was based on an average oil price of $62.22 per barrel, and the landing cost of petrol was put at N189.61 per litre.

Based on the PPPRA template and Platts data, the expected pump price of petrol rose to N299.94 per litre on October 8 from N272.34 per litre on July 30.

The expected retail price of N299.94 per litre and the current pump price of N162 per litre indicate a subsidy of N137.94 per litre as of October 8, compared to N110.34 per litre on July 30.

With daily petrol consumption put at about 60 million litres by the NNPC and a subsidy of N N137.94 per litre, daily subsidy increased to N8.28bn last Friday from N6.62bn on July 30.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $822.75 per metric tonne (N254.25 per litre, using the I&E rate of N414.40/$1) on October 8 from $748.50 per MT (N228.91 per litre) on July 30.

The freight cost increased to $26.77 per MT (N8.27 per litre) last Friday from an average of $21.63 per MT (N6.62 per litre) used by the PPPRA in its March template.

Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).

The pump price is the sum of the landing cost, wholesale margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).

While marketers have continued to stress the need to allow market forces to determine the pump price of petrol and do away with subsidy, it remains uncertain whether the discussions between the Federal Government and labour unions will lead to the deregulation of petrol prices.

Meanwhile, both the NNPC and PPPRA have disagreed on the actual amount which the government is pending as a petroleum subsidy.

According to a source in the Petroleum Products Pricing Regulatory Agency (PPPRA), there exists a difference between the agency’s cost and that of the Nigerian National Petroleum Corporation (NNPC).

A subsidiary of the NNPC, the Pipelines and Products Marketing Company(PPMC) is the sole importer of the product.

The NNPC said the source has a higher landing cost than that of the PPPRA. Although the agency had last year announced the deregulation of the product, the Federal Government had recourse to subsidising it when the landing cost became unbearable for the end-users.

The NNPC that termed it under recovery regime has left the pump price at a band between N162 and N165 per litre.

From the PPPRA landing cost of N264.65 per litre, there exists a subsidy or an under-recovery of N102.65 per litre.

In the last few years, many stakeholders within and outside the federal government have called for the scrapping of the subsidy regime for premium motor spirit (PMS), better known as petrol.

Zainab Ahmed, Minister of Finance, Budget and National Planning, in July 2021, advocated the end of fuel subsidy, saying it “costs as much as N150 billion” monthly.

Her comment came four months after Mele Kyari, Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), had said the company “may no longer be in a position” to bear the “subsidy burden”.

Economy

EFCC under fire over failure to disclose identity of ex- government official owner of forfeited Abuja estate

Funso OLOJO

Enraged Nigerians have taken a swipe at the Economic and Financial Crimes Commission (EFCC) for keeping silent on the identity of a “former government official” who owns 753 units of duplexes on a 150, 500 square metres in Abuja which the commission said was from proceeds of corruption and forfeited to the Federal Government.

However, in a statement on Monday December 2nd, 2024, the anti- graft agency announced with glee the final forfeiture of the estate to the federal government.

According to the EFCC, the forfeiture order was made by Justice Jude Onwuegbuzie, on Monday, December 2, 2024 when he gave a ruling on the EFCC application that the gigantic estate be forfeited to government.

The estate is in Abuja measuring 150,500 square metres and containing 753 Units of duplexes and other apartments.

“This is the single largest asset recovery by the EFCC, since its inception in 2003.

” The Estate rests on Plot 109 Cadastral Zone C09, Lokogoma District, Abuja” the statement declared.

The commission said the forfeiture of the property to the federal government by the owner who was simply described as “a former top brass of the government” was pursuant to EFCC’s mandate and policy directive of ensuring that the corrupt and fraudulent do not enjoy the proceeds of their unlawful activities.

In this instance, the Commission relied on Section 17 of the Advance Fee Fraud And Other Fraud Related Offences Act No 14, 2006 and Section 44 (2) B of the Constitution of the 199 Constitution of the Federal Republic of Nigeria to push its case.

Ruling on the Commission’s application for the final forfeiture of the property, Justice Onwuegbuzie held that the respondent have not shown cause as to why he should not lose the property, “which has been reasonably suspected to have been acquired with proceeds of unlawful activities, the property is hereby finally forfeited to the federal government.”

The road to the final forfeiture of the property was paved by an interim forfeiture order, secured before the same Judge on November 1, 2024.

The government official which fraudulently built the estate is being investigated by the EFCC.

The forfeiture of the asset is an important modality of depriving the suspect of the proceeds of the crime.

The justification for the forfeiture is derived from Part 2, Section 7 of the EFCC Establishment Act, which stipulates that the EFCC “has power to cause investigations to be conducted as to whether any person, corporate body or organization has committed any offence under this Act or other law relating to economic and financial crimes and cause investigations to be conducted into the properties of any person if it appears to the Commission that the person’s lifestyle and extent of the properties are not justified by his source of income.”

However, the action of the anti graft agency has attracted scathing remarks from members of the public who were enraged by the failure of the commission to name and shame the owner of the forfeited property.

Nigerians, who took to their X handle, lambasted the EFCC, describing the non disclosure of the owner of the estate as inimical to the fight against corruption.

They disclosed that naming and shaming the owner would have sent a strong signal to all corrupt individuals, both in government and out of government of the genuine intentions of the EFCC to fight corruption.

The enraged respondents inquired that if the EFCC could quickly name and display the pictures of Internet fraudsters otherwise known as “Yahoo boys” publicly, they saw no justification for covering the identity of this ” ex government official”

Nevertheless,the Commission’s Executive Chairman, Mr. Ola Olukoyede, has repeatedly described asset recovery as pivotal in the fight against corruption, economic and financial crimes and a major disincentive against the corrupt and the fraudulent.

Addressing members of the House of Representatives Committee on Anti-corruption recently, he said, “If you understand the intricacies involved in financial crimes investigation and prosecution you will discover that to recover one billion naira is war.

“So, I told my people that the moment we start investigation we must also start asset tracing because asset recovery is pivotal in the anti-corruption fight; and one of the potent instruments that you can deploy as an anti-corruption agency for an effective fight is asset tracing and recovery.

“If you allow the corrupt or those that you are investigating to have access to the proceeds of their crime, they will fight you with it.

” So one of the ways to weaken them is to deprive them of the proceeds of their crime. So, our modus operandi has changed simultaneously.

“The moment we begin investigation, we begin asset tracing. That was what helped us to make our recoveries.”

Economy

NNPCL signs 10- year deal to supply gas to Dangote Refinery

Funso OLOJO

The NNPC Gas Marketing Limited (NGML), a subsidiary of the Nigerian National Petroleum Company (NNPC) Limited, has successfully executed a Gas Sale and Purchase Agreement (GSPA) with Dangote Petroleum Refinery and Petrochemicals FZE.

The agreement, signed by the Managing Director, NGML, Barr. Justin Ezeala and the President/CEO of the Dangote Group, Aliko Dangote on Tuesday at the Corporate Head Office of Dangote in Falomo, Lagos State, outlines the supply of natural gas for power generation and feedstock at the Dangote Refinery, in Ibeju-Lekki, Lagos State.

This major milestone is in line with President Bola Ahmed Tinubu’s policy of utilizing Nigeria’s abundant gas resources towards revamping the nation’s industrial growth and kickstarting its economic prosperity.

This development, which sees a huge investment of this nature penned with zero capital expenditure (CAPEX) outlay, has been described by many as unprecedented in the history of NGML or any gas Local Distribution Company (LDC) in the country.

Under the terms of the agreement, NGML will supply 100 million standard cubic feet per day (MMSCF/D), 50MMSCF/D being firm supply and the rest 50MMSCF/D, interruptible natural gas supply to the refinery for an initial period of 10 years, with options for renewal and growth.

This collaboration is a significant step toward ensuring the operational success of the Dangote Refinery and enhancing Nigeria’s domestic gas utilization.

NNPC Ltd., through NGML, its gas marketing subsidiary, continues to lead efforts in promoting the use of domestic gas to support industries and businesses nationwide.

The agreement represents a milestone for both NNPC Ltd. and Dangote Refinery, aligning with their shared commitment to boosting local production and providing vital products for the benefit of all Nigerians.

It is also a further proof of NGML’s unwavering commitment to business excellence and fulfilling NNPC Ltd.’s core mandate of ensuring Nigeria’s energy security through the execution of strategic gas projects across the country.

Economy

NNPC to unveil 12 CNG stations nationwide

Funso OLOJO

The Group Managing Director of Nigeria National Petroleum Corporation Limited (NNPCL) , Mele Kyari, has reiterated the company’s commitment to resolving Nigeria’s energy trilemma, by ensuring energy security, sustainable growth and energy affordability.

Kyari disclosed this at the opening ceremony of the 42nd Nigeria Association of Petroleum Explorationists (NAPE) Annual International Conference and Exhibition themed: “Resolving the Nigeria Energy Trilemma: Energy Security, Sustainable Growth and Affordability” in Lagos, on Monday.

The GCEO, who was the Special Guest of Honour at the occasion, also said the company has perfected plans to deliver 12 Compressed Natural Gas (CNG) Mother Stations and Mini LNG Plants soon, as part of efforts to boost the existing 1.6 billion standard cubic feet (bscf) of gas supply for the domestic market.

“The energy trilemma is a profound responsibility we shoulder as stewards of Nigeria’s energy future.

” NNPC Ltd. is working tirelessly to improve our supply chain, develop new refining capacities and expand our retail network,” Kyari stated.

According to him, NNPC Ltd. is set to collaborate with private refineries to ensure affordable and sustainable petroleum products supply; Naira-for-crude transactions in order to stabilise the local currency and regulate forex markets.

This, he added, will bring about expansion of gas infrastructure such as the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline and the Obiafu-Obrikom-Oben (OB3) Gas Pipelines projects and the development of cleaner energy options, such as Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG).

“Currently, NNPC Ltd. supplies over 1.6 bscf of gas per day to the domestic market through infrastructure we either own outrightly or operate with partners.

” This distribution network is entirely managed on NNPC Ltd.’s balance sheet,” Kyari added.

Explaining that the Company is expanding its efforts to enhance domestic energy access, the NNPC Ltd. helmsman said the next 3-6 months will see significant project launches, including CNG mother stations, mini-LNG plants, and additional CNG daughter stations.

Kyari, who commended President Tinubu’s efforts to relieve forex pressures by reducing fuel imports and strengthening Nigeria’s local refining capacity, emphasised the need for collaboration, innovation, and technology in achieving Nigeria’s energy goals.

“Resolving the energy trilemma requires bold ideas, shared knowledge, and collective determination.

“Together, let us build a Nigeria where energy is secure, sustainable, and affordable for all.”

On NNPC Ltd.’s mandate to guarantee energy security as stipulated by the Petroleum Industry Act, 2021, Kyari said the Company has fostered partnerships and investments aimed at enhancing local production and generating revenue for economic diversification.

Reacting to claims that NNPC Ltd. is sabotaging the efforts of domestic refineries, Kyari said the NNPC Ltd. is part-owners of the Dangote Refinery, stressed further that such an investment is a strategic move aimed at strengthening domestic fuel supply.