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Economy

US tackles OPEC over rising Oil prices

Joe Biden, US President

—-rallies allies to saturate global market with excess supply

 

Eyewitness reporter with agency report

Amidst controlled supplies of oil in the international market by the Organisation of Petroleum Exporting Countries(OPEC) and its allies( OPEC +), which has raised global oil prices, the United States of America (USA) has perfected a plan to crash the soaring oil prices.
To achieve this, the US has beckoned on its allies to join it in releasing their strategic oil reserves that will saturate the global oil market with excess supply and crash the galloping prices of crude.

The Joe Biden administration came to this conclusion as the last resort after its appeal to OPEC and its allies, OPEC+, to raise production quota to boost oil supplies failed.

Consequently, governments from some of the world’s biggest economies may have agreed with the US in principle when they said they were looking into releasing oil from their strategic reserves, after a rare US request for a coordinated move to cool global energy prices ahead of a meeting of major oil-producing nations.

The Biden administration has asked a wide range of countries, including China for the first time, to consider releasing stocks of crude.

Other major consumers India, Japan and South Korea were also involved in discussions.

As the world economy rebounds from the pandemic, Washington and other nations have been frustrated that producers in OPEC+, the Organization of the Petroleum Exporting Countries and allies such as Russia, have rebuffed US requests to speed up additional oil supplies.

OPEC nations, for their part, have said that world economies remain too fragile to warrant increasing supplies quickly.

To that end, the market slumped on Friday after Austria announced that it would reimpose a full nationwide lockdown due to soaring coronavirus cases, and Germany, Europe’s largest economy, may soon follow suit.

International benchmark Brent was down 2.7 percent to US$79.11 (RM330) a barrel, the lowest since early October.

 The market has been weakening for several weeks as investors have started to anticipate an increase in supply worldwide.

With gasoline prices and other costs rising, Democratic US President Joe Biden also faces political pressure ahead of midterm congressional elections next year.

 A Reuters poll in October showed 67 percent of US adults agreed that inflation is a very big concern.

Members of Biden’s national security team had discussed the need to meet fuel demand, White House spokesperson Jen Psaki said.

 “That is an ongoing conversation and one we are having with a number of partners,” she added.

OPEC+ plans to meet on December 2nd, 2021.

 The group has been raising output by 400,000 barrels per day (bpd) per month, gradually unwinding record production cuts made in 2020 when the pandemic dissipated fuel demand.

This week, Secretary-General Mohammad Barkindo said OPEC expects an oil supply surplus to begin building next month.

Other countries have been pressing OPEC for some time, including China and India.

“This is not a case of supplies not being available,” Hardeep Singh Puri, India’s Oil Minister, told a conference in Dubai on Wednesday.

 “There are five million barrels a day of supplies available which have not been released for whatever reason.”

While OPEC+ has been raising oil output by 400,000 bpd per month since July, the producer group still has about 3.8 million bpd in supply cuts that it has not yet returned to the market.

Several of the group’s members have been unable to meet production targets due to years of under-investment.

“Half of (OPEC+’s) members can’t meet their quotas given their own under-investment,” Goldman Sachs analysts said.

OPEC+ in April 2020 cut output by more than 10 million barrels a day in response to the swift spread of the coronavirus pandemic.

China’s state reserve bureau told Reuters it was working on a release of crude oil reserves, but declined to comment on the US request.

It would also mark the first time that China, the world’s No. 2 oil consumer and largest importer, would be involved in a coordinated release with the United States.

China held its first-ever public auction of oil reserves in September.

Consultancy Energy Aspects said in a note to clients that Beijing is expected to release another 10 million to 15 million barrels of crude from its reserves in eastern Zhoushan in its next auction round.

“Any oil released from the Chinese SPR needs to be refilled within 90 days,” Energy Aspects said.

“The market should focus on where these countries will find crude to refill these tanks given just how low stocks are.”

The United States has the largest strategic reserve at more than 600 million barrels.

The US SPR was set up in the 1970s after the Arab Oil Embargo to ensure the nation had adequate supply to weather an emergency.

In the last several years, the shale boom has pushed US output to rival that of Saudi Arabia and Russia.

That has enabled the United States to become less dependent on energy imports from other nations, particularly members of OPEC.

The United States and its allies have coordinated strategic petroleum reserve releases before, such as in 2011 when supplies were hit by war in OPEC member Libya.

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Economy

 Discos gross N2.4trn revenue in 5 years amidst power outage

The Electricity Distribution Companies (Discos) raked in a total of N2.4 trillion as revenue between 2015 and 2020, the National Bureau of Statistics (NBS) has revealed.

According to the NBS, revenue generated by the DisCos in 2015 stood at N278.89 billion and rose to N303.03 billion in 2016, showing an 8.65 percent growth rate.

Also, in 2017, revenue generated by the Discos increased by 22.25 percent to N370.46 billion and further rose by 19.48 percent in 2018 to N442.63 billion.

It further increased by 9.03 percent in 2019, to N482.61 billion as well as a sustained positive growth of 9.15 percent when N526.77 billion was collected in 2020.

The statistical agency disclosed this in its June Electricity Report which presents statistics on electricity from 2015 to 2020.

The report focuses on customer numbers, metered customers, estimated billing customers, and most importantly, electricity supply and revenue collected under the reviewed period.

In the 2020 revenue receipt, the highest collection was by Ibadan Electricity Distribution Company (IEDC) with N102.10 billion. It was closely followed by EKEDC with N81.39 billion while the least collection was recorded in YEDC with N10.64 billion.

Nonetheless, electricity supplied to customers during the period of the review showed an unstable trajectory.

The NBS stated that in 2015, 20,337.40 Gigawatt hours (GWh) were supplied across Nigeria. This fell by 6.36 percent in 2016, when 19,044.30 GWh were supplied. Also, it rose in 2017 by 2.04 percent with 19,432.39 GWh and further rose in 2018 by 10.55 percent with 21,483.25 GWh.

In total, electricity supplied in 2019 stood at 22,450.67 GWh but declined in 2020 by 1.82 percent when 22,042.28 GWh were supplied.

The NBS pointed out that customer numbers under the reviewed period increased successively on a year-on-year basis, with the highest numbers recorded in IBEDC.

Generally, customers numbers rose from 6.99 million in 2015 to 10.37 million in 2020.

Similarly, the number of metered customers increased consecutively on a year-on-year basis from 3.15 million in 2015 to 3.80 million in 2019 but declined to 3.51 million in 2020.

In 2015, Benin Electricity Distribution Company (BEDC) recorded the highest number, while IBEDC stood top between 2016 and 2019 while Abuja Electricity Distribution Company (AEDC) recorded the highest in 2020.

The NBS said the estimated billing customer records also showed a year-on-year positive growth rate consecutively from 3.85 million in 2015 to 6.86 million in 2020.

It added that in 2020, the customer numbers were highest in IBEDC with 1,282,136 and lowest in Eko Distribution Company (EKEDC) with 269,022.

The Statistician-General of the Federation, Mr. Adeyemi Adeniran, said: “Today, with the overwhelming global demand for energy and the emphasis positioned by the Sustainable Development Goal (7) on access to energy for all places the need for statistics on electricity as a form of energy.

“Thus, electricity statistics remain a very useful tool for socio-economic planning and development, particularly for a developing economy like Nigeria. These numbers will provide an insight and shape policymaking on improving energy, specifically the electricity supply in Nigeria.”

The report further stated that the trajectory of metered customers had shown annual positive growth rates consecutively except in 2020.

In 2015, metered customers were 3.15 million and rose slightly by 0.23 percent in 2016. This also increased in 2017 and 2018 with 3.57 million and 3.58 million customers respectively.

Metered customers in 2019 stood at 3.80 million, showing a 5.96 percent growth rate, yet lower in 2020 when 3.51 million customers were metered.

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Economy

AfCFTA Secretary-General allays fears of turning Nigeria into dumping ground

AfCFTA Sec.Gen, Wamkele Mene
Eyewitness reporter
The Secretary-General of the African Continental Free Trade Area(AfCFTA), Wamkele Mene, has allayed the fears of Nigeria over the possibility of being turned into a dumping ground for goods under the continental trade agreement.
Mr Mene, who stated this during the visit of the AfCFTA secretariat to Lagos ports Wednesday, said adequate measures have been built into the trade agreement to safeguard the country and other African nations from being turned into dumping grounds for foreign goods.
It could be recalled that it took Nigeria’s President, Mohammed Buhari to sign the trade agreement owing to fears being expressed by the government that Nigeria, as the biggest market in Africa, could easily be turned into a dumping ground under the continental trade agreement.
However, the AfCFTA scribe said though such fears are real, the agreement has taken care of its possibility.
He said the issue of dumping is a serious one but the agreement has given each country under the agreement powers to deal with the situation when it arises.
According to him, the agreement is intended to create jobs and not job losses, as dumping could lead to job losses.
“On the issue of dumping, it is a very very serious issue. This agreement is intended to create jobs, not job losses.

“So, we have to make sure that we are very vigilant against the transshipment of goods, against fraudulent invoicing.

” Any goods that are coming in that are not part of AFCTA, we should not hesitate to take action against such goods.
“That is why we are working closely with the customs authorities in Africa.

“In the agreement, there are rules: anti-dumping measures, all these rules are meant to protect domestic economies.

“If you see there is the importation of certain goods from certain countries, the agreement allows you to take action against those goods in that country.

“So we have built into the agreement safeguards to make sure that we minimize these.

“Fraudulent invoicing, and transshipment, like any other crimes, those things will always be there, the issue is to mitigate and make it difficult” Mr Mene declared.

He disclosed that in order to mitigate the issue of dumping, the AfCFTA secretariat is working closely with customs authorities in Africa to check against this menace.
“So we are working closely with the customs authorities, that is why we have hosted them in Accra, five times so that we can jointly together confront these challenges of the possibility of dumping of goods.

“What I always find interesting is that many times, we are willing to accept goods from a country whose name I would not mention that is not on this continent., substandard goods, goods that don’t meet our own requirements, these are the things we have to be vigilant against because it is not a Nigerian market, a Malian market, a Ghanian market, it is AFCTA market.

The AfCFTA chief said that dumping will not affect one county alone but the whole of Africa and that is why the secretariat viewed the issue with all seriousness.

“We are now creating one market, so if there is dumping in Nigeria, it impacts all of us. If it is dumped in another country, it imparts on all of us.

“So I really appreciate the sensitivity of this issue of dumping and I understand it.

“I mentioned in the previous session that in Southern Africa, there is a sugar that is being dumped from another part of the world that is being brought here, displacing the local market in Southern Africa, and creating job loss.

.”So we have to work together to make sure that we prevent this scourge of dumping” Mene stated.

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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.

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