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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”.

 

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Economy

CBN succumbs  to pressure, extends use of old naira notes to February 10

The Eyewitness reporter
The Central Bank of Nigeria (CBN) has finally caved in to Public outcry over the February 1st deadline for the use of old naira notes when on Sunday, the apex bank announced February 10 as the new date.
Announcing the new deadline in a statement, Governor Central Bank Of Nigeria(CBN), Godwin Emefiele, said the decision to add extra 10 days was “to allow for the collection of more old notes”

Up till Saturday, CBN had insisted on the 31st January deadline for the validity of the old N200, N500 and N1,000 despite overwhelming complaints that the notes are either not available or in short supply in the banks or their Automated Teller Machines.

Last October, Emefiele announced the Naira redesign policy which entails the issuance of new notes to replace the existing N200, N500 and N1,000 series.

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Economy

CBN reverses itself on cash withdrawal limits as Emefiele succumbs to pressure

Governor of Central Bank of Nigeria, Godwin Emefiele

 

—now pegs weekly withdrawal for individual to N500,000, Corporate N5million

The Eyewitness Reporter

The Central Bank of Nigeria(CBN) may have succumbed to pressure from the National Assembly and other rich Nigerians as it has reversed itself on its earlier cash withdrawal limits for individuals and corporate organisations.

In a circular number BSD/DIR/PUB/LAB/015/073 dated December 21st, 2022 and addressed to all Deposit Money Banks(DMBS) and other financial institutions, the apex bank disclosed that the new weekly cash withdrawal limits for both the individuals and corporate organisations have now been reviewed to N500,000 and N5million respectively.

The new weekly cash withdrawal limits now superseded the earlier one released on December 6th, 2022 which were put at N100,000 for individuals and N500,000 for corporate organisations.

In the new revised cash withdrawal limits, the CBN claimed the revision of the policy was in response to feedback from the stakeholders.

The new revised policy also slashed the processing fees for amounts above the approved threshold from an initial 5 percent for individuals to 3 percent and for corporate organisations from 10 percent to 5 percent.

The circular, which was signed by Haruna Mustafa, the Director of Banking supervision, the CBN said the new revised cash withdrawal policy takes effect from January, 9th,2022.

”Following our circular BSD/DIR/PUB/LAB/015/069 dated December 6, 2022, on the above subject and based on feedback received from stakeholders, the Central Bank Of Nigeria(CBN) hereby makes the following reviews;

–the maximum weekly limit for cash withdrawal across all channels by individuals and corporate organisations shall be N500,000 and N5 million respectively.

–In compelling circumstances where cash withdrawal above the limits in (1) above is required for legitimate purposes, such requests shall be subject to a processing fee of 3 percent and 5 percent for individuals and corporate organisations respectively.

–Futrher to (2) above, the financial institution shall obtain the following information from the Customer, at the minimum,and upload same on the CBN portal created for the purpose

a. Valid means of identification of the payee(National ID, International passport, or driver’s license)

b.Bank Verification Number(BVN) of the payee.

c.Tax Identification Number(TIN) of both the payee and the payer.

d. Approval in writing by the MD/CEO of the financial institution authorising the withdrawal.

–Third-party cheques above N100,000 shall not be eligible for payment over the counter, while the extant limit of N10 million on clearing cheques still subsists.

—Monthly returns on cash withdrawal transactions above the specified limits should be rendered to the banking supervision, Other financial institution supervision and Payment System Management  Departments as applicable

—Compliance with extant AML/CFT regulations relating to KYC, ongoing customer due diligence, currency and suspicious transaction reporting, etc is mandatory in all circumstances.

—Customers should be encouraged to use alternative channels(internet banking, mobile banking apps, USSD, cards/POS, eNaira,gets) to conduct their banking transactions”, the circular reads.

The CBN however warned all the banks and OFIS that aiding and abetting the circumvention of this policy will attract severe sanctions.

It could be recalled that the policy, which was first announced on December 6th, 2022, generated mixed reactions, especially from the members of the National Assembly who invited the CBN Governor. Godwin Emefiele to come and explain the rationale behind the cash withdrawal limits.

Twice, the National Assembly invited Mr. Emefiele, but twice, he did not appear, citing national assignment engagement as the reason for his non-appearance.

The review may, however, be as a result of the intense pressure that the CBN governor has lately been subjected to as a result of this policy which analysts believed does not favour the elites, the politicians and the rich Nigerians, especially giving the forthcoming elections.

 

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Economy

ICT media chiefs launch foundation to drive advocacy, development

Bimbo Tooki
Abiodun Bayo
Top ICT media practitioners and pioneers in Nigeria have launched a Foundation known as Cloud Network Foundation, (CNF), to drive advocacy for skills acquisition and capacity building among youths and push for policy that encourages local content in ICT development in Nigeria.
The Foundation, made of the first eleven in ICT journalism in Nigeria, is worried that, among others, policy direction and implementation in the country has primarily neglected local content development and the creation of the requisite skills and enablement for Nigeria’s teeming youth to excel in the ICT ecosystem.
Chairman of the Foundation, Mr. Abimbola Tooki, who remarked at the body’s inaugural meeting, said Nigeria has so much untapped potential that, when harnessed by the provision of the right policies and strategies, could replicate another Silicon Valley in California, the United States to Bangalore in India.
“We can move from a consuming nation to a producing one in a few years in the ICT ecosystem, and over 20 million of our youths can be lifted out of poverty every year if they have the right information, guidance, enabling environment and skills at their disposal if we take the right steps”, Tooki said.
 He said if the government prioritised integrating technology (ICT) infrastructure into public service delivery to promote growth-oriented policies, it would be easier for all tiers and arms of government to collaborate to pull Nigerians out of poverty.
The Cloud Network Foundation promises to provide an influential voice for stakeholders in the media, business community and government on the benefits of ICT in economic growth and national development.
It will also promote multidisciplinary collaboration and interdisciplinary initiatives on ICT to foster the creation, usage and sharing of knowledge in the fields of ICT for national development.
Also speaking at the body’s inauguration, Vice Chairman of the Foundation, Mr. Don Pedro Aganbi further said industry stakeholders should look forward to the Foundation’s resolve to ensure a more active ICT industry in Nigeria.
Meanwhile, the CNF announced in the statement that as the election produced the Chairman and Vice Chairman, the group also elected the following officials: Olubayo Abiodun (Secretary); Ufuoma Emuophedaro, (Treasurer) and Ayo Makinde, as  Publicity Secretary.
Aganbi said CNF would ensure that all operators wake up to their responsibilities of delivering quality services to Nigerians while fostering a friendly environment for all.
Other members of the fully registered non-political, non-religious and non-profit organisation include award-winning and pioneering ICT journalists such as Mr. Aaron Ukodie, Mkpe Abang, Bayero Agabi, Bunmi Idowu, Enyi Moses, Ken Nwogbo, Shina Badaru, Biyi Fasoyin, Tayo Adewusi, and Otunba Biodun Ajiboye, among others.
The CNF stated that it will also work with educational institutions at all levels in advancing the usage and adoption of ICT in learning and educational endeavours, and providing an effective voice for stakeholders in the media, business community and government on the benefits of ICT in economic growth and national development.
It will also promote research in diverse segments of ICT, develop professionals in ICT Journalism, and promote multidisciplinary collaboration and interdisciplinary initiatives on ICT to foster the creation, usage and sharing of knowledge in the fields of ICT for national development.
Cloud Network Foundation has an active online presence, with a dedicated website (cloudnetwork.ng), twitter, Facebook and Instagram.
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