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Shrinking Profit Worries Marketers as Crude Prices Rise

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petrol

The rise in crude oil prices coupled with the challenge of difficult access to foreign exchange is bound to reduce petrol imports into Nigeria by marketers.

The gradual rise in crude oil prices and the challenge in the foreign exchange markets do not go down well with marketers of Premium Motor Spirit, popularly known as petrol. They are worried that the development may erode the gains from the partial deregulation of the downstream oil sector.

According to them, the increase in crude prices and the high exchange rate of the United States dollar at the parallel market have almost wiped out the incentive to be enjoyed whenever they import petrol.

This, they say, is despite the recent 67.6 per cent increase in the pump price of the PMS by the Federal Government, as they argued that it would have been better to effect a full deregulation of the downstream sector and allow market forces to determine petroleum products’ prices.

On May 11, 2016 when the Federal Government partially deregulated the downstream oil sector by increasing petrol prices from N86 and N86.5 per litre to between N135 and N145 per litre, the cost of crude oil in the international market was about $44 per barrel.

Around that period, the total cost of petrol, according to the May 11, 2016 official pricing template of the Petroleum Products Pricing Regulatory Agency, was N138.11 per litre, leaving a profit margin of N6.89 per litre for marketers.

But on Saturday, May 21, 2016, the price of crude oil rose to $47.17 per barrel, and had risen to over $48 per barrel a few days earlier.

In its updated template that was posted on Friday, the PPPRA stated that the total cost for PMS had risen to N140.01 per litre, hence, leaving a profit margin of N4.99 per litre for the marketers.

The PPPRA, which is the agency of the Federal Government in charge of fixing petroleum products’ prices, updates its PMS pricing template in accordance with the fluctuations in the global prices of crude oil.

“If you say the upper limit is N145 and I know that my total cost will be around N140, will there be any need for me to bother myself importing the PMS? Definitely there is no way I’ll do that because I won’t be able to recover my cost, and if a businessman cannot recover his cost, then there is no point going into that business,” an executive member of the Reconciliation Committee of the Independent Petroleum Marketers Association of Nigeria, Mr. Dibu Aderibigbe, stated.

He noted that marketers were faced with other operational costs, stressing that it would make no business sense to import petrol if the constraints of accessing forex were not cleared, considering the fact that crude prices were beginning to rise.

Aderibigbe said, “The funniest thing is that when the PPPRA was putting together the template, it seemed to have based the cost of dollar on N285 when sourced at the parallel market, as was stated by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, when he appeared on the TV to explain how they arrived at the N145 per litre price.

“However, I don’t know if anyone can get the US dollar at that rate at the parallel market. The black market rate that we know is over N320 to a dollar. So, if they now base their calculation on N285, it therefore means that there is a problem already from the beginning.”

On the increase in crude prices, the IPMAN official advised the PPPRA to review its template and petrol price every fortnight.

“From $44 to around $46 or $47 is no mean change. The $2 or $3 increase cannot be overlooked. So, if you say you will be reviewing the price every month, then you might be making a mistake. To make the regime work very well, you must be ready to review the price of the PMS within an interval of two weeks, at most,” Aderibigbe added.

Also speaking on the recent petrol price policy, the Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, said marketers had always canvassed a fully deregulated downstream oil sector as a result of the challenges they faced with accessing forex and other operational matters.

According to him, market forces like issues of accessing forex, fluctuation in crude oil prices and rising importation cost  should be allowed to determine the cost of petrol as obtained in a truly deregulated sector, adding that this would engender competition among marketers.

Although Olawore commended the Federal Government for partially deregulating the downstream segment of the oil industry, he maintained that marketers would prefer a fully deregulated sector.

The MOMAN secretary, however, noted that the current petrol price regime was a sign that the sector might be fully deregulated in the near future.

“What we have now is a step towards deregulation. Deregulation is actually the end point; we are in the process and we will get there. When we get to deregulation, you will have the refining process included. As it is now, we are looking at only the petrol import side,” he  said.

A senior official of an oil marketing firm, who spoke on condition of anonymity, told our correspondent that the marketers had met with the Minister of Finance, Mrs. Kemi Adeosun, to seek the Federal Government’s assistance in accessing forex, particularly as the cost of crude oil appreciates.

The official said, “Crude oil prices are beginning to rise, although marginally. This is also due to several production shut-ins in Nigeria, which were caused by attacks on oil installations in the Niger Delta by militants. This rise in crude prices does not favour the PMS importers at the moment because the sector has been liberalised and we don’t get subsidy anymore.

“Accessing forex has been a challenge for long, but the recent gain in crude prices is compounding the challenge for marketers because it is eroding our profit margins, particularly if you source your forex from the parallel market. This was actually one of the many reasons why marketers met the Finance minister recently in Abuja. You know we don’t get subsidy anymore; so, facing stiff challenges like the ones we face now may slow the importation of the  PMS by the marketers.”

Olawore stated that the last time oil marketers were paid petrol subsidy was in 2015, adding that all subsidies incurred in 2016 were meant for the Nigerian National Petroleum Corporation.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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NIMC Announces Launch of Three National ID Cards to Boost Identity Management

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The National Identity Management Commission (NIMC) has unveiled plans to launch three new national identity cards.

These cards are aimed at providing improved access to government services and bolstering identification systems across Nigeria.

The three new national identity cards, as disclosed by Ayodele Babalola, the Technical Adviser, Media, and Communications to the Director-General of NIMC, will include a bank-enabled National ID card, a social intervention card, and an optional ECOWAS National Biometric Identity Card.

Babalola explained that these cards are tailored to meet the diverse needs of Nigerian citizens while fostering greater participation in nation-building initiatives.

In an interview, Babalola outlined the timeline for the rollout of these cards, indicating that Nigerians can expect to start receiving them within one or two months of the launch, pending approval from the Presidency.

The bank-enabled National ID card, designed to cater to the middle and upper segments of the population, will offer seamless access to banking services within the specified timeframe.

Also, the National Safety Net Card will serve as a crucial tool for authentication and secure platform provision for government services such as palliatives, with a focus on the 25 million vulnerable Nigerians supported by current government intervention programs.

This initiative aims to streamline the distribution process and ensure efficient delivery of social services to those in need.

Furthermore, the ECOWAS National Biometric Identity Card will provide an optional identity verification solution, facilitating cross-border interactions and promoting regional integration within the Economic Community of West African States (ECOWAS).

The announcement comes on the heels of NIMC’s collaboration with the Central Bank of Nigeria (CBN) and the Nigeria Inter-bank Settlement System (NIBSS) to develop a multipurpose national identity card equipped with payment capabilities for various social and financial services.

This collaborative effort underscores the commitment of key stakeholders to foster innovation, cost-effectiveness, and competitiveness in service delivery.

Babalola stated that the new identity cards aim to address the need for physical identification, empower citizens, and promote financial inclusion for marginalized populations. With a target of providing these cards to approximately 104 million eligible applicants on the national identification number database by the end of December 2023, NIMC is poised to revolutionize the identity management landscape in Nigeria.

The implementation of these programs aligns with broader efforts to drive digital transformation and improve access to essential services for all Nigerians.

Babalola highlighted the multifaceted benefits of the new identity cards, including their potential to uplift millions out of poverty by facilitating access to government social programs and financial services.

While the launch date is set tentatively for May pending presidential approval, NIMC remains committed to finalizing the necessary details to ensure a smooth rollout of the new identity cards.

The introduction of these cards represents a significant step forward in NIMC’s mission to provide secure and reliable identity solutions that empower individuals and contribute to the socio-economic development of Nigeria.

Efforts to reach Kayode Adegoke, the Head of Corporate Communications at NIMC, for further insights on the initiative were unsuccessful at the time of reporting.

As Nigeria gears up for the launch of these innovative identity cards, stakeholders express optimism about the potential positive impact on identity management, financial inclusion, and socio-economic development across the country.

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Nigeria Launches New National ID Card to Enhance Access to Social and Financial Services

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The Federal Government of Nigeria has announced the launch of a National Identity Card with integrated payment and social service functionalities.

This initiative, spearheaded by the National Identity Management Commission (NIMC) in collaboration with the Central Bank of Nigeria (CBN) and the Nigeria Inter-bank Settlement System (NIBSS), aims to provide Nigerians with a single, multifunctional card that combines identification, payment, and access to various government and private sector services.

The new National ID card backed by the NIMC Act No. 23 of 2007 is poised to become the country’s default identity card, serving as a tangible proof of identity for citizens and legal residents alike.

With features aligned with International Civil Aviation Organization (ICAO) standards, including a Machine-readable Zone (MRZ) and biometric authentication capabilities, the card offers robust security and verification mechanisms.

One of the most significant aspects of the new ID card is its payment functionality. Cardholders will have the ability to link their cards to bank accounts, enabling them to conduct debit and prepaid transactions seamlessly.

This feature is expected to enhance financial inclusion efforts, particularly for the unbanked and underbanked populations in Nigeria.

Also, the card will grant holders access to a wide range of government interventions programs, including travel, health insurance, microloans, agriculture initiatives, food subsidies, transport benefits, and energy subsidies.

By consolidating these services onto a single platform, the government aims to streamline administrative processes and improve service delivery efficiency.

To ensure widespread accessibility, the NIMC has outlined various channels for obtaining the new ID card, including online applications, commercial banks, participating agencies, and NIMC offices nationwide.

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New York City Hit by 4.8 Magnitude Earthquake

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christian dior

New York City, famously known as the “city that never sleeps” was hit by a 4.8 magnitude earthquake.

The tremors reverberated through the towering skyscrapers and bustling suburbs as it sent shockwaves across the densely populated metropolitan area and left residents feeling shaken.

The earthquake, with its epicenter approximately 45 miles west of New York City and 50 miles north of Philadelphia, caught many off guard.

Reports indicate that over 42 million people across the Northeast region may have felt the midmorning quake with reports coming in from as far as Baltimore to Boston and beyond.

The impact of the earthquake was not confined to mere tremors; it resulted in significant damage to several multifamily homes in Newark, New Jersey, displacing nearly 30 residents.

Officials immediately sprang into action, conducting checks on bridges and other major infrastructure to assess any potential structural damage.

Flights were diverted or delayed, Amtrak slowed trains throughout the busy Northeast Corridor, and a Philadelphia-area commuter rail line suspended service as a precautionary measure.

The experience was unsettling for many New Yorkers, with some likening it to the sensation of an explosion or construction accident.

Shawn Clark, an attorney working on the 26th floor of a midtown Manhattan office, described it as “pretty weird and scary,” echoing the sentiments of many who felt the earth move beneath them.

Aftershocks were reported hours later in a central New Jersey township, causing additional concern and producing reports of damage and items falling off shelves, according to Hunterdon County Public Safety Director Brayden Fahey.

The disruption caused by the earthquake extended beyond immediate safety concerns. Cellphone circuits were overloaded as people tried to reach loved ones, and phones blared with earthquake-related notifications during the New York Philharmonic’s morning performance, adding an unexpected twist to the day’s events.

Even as the seismic event rattled New York City, residents and officials alike drew comparisons to past earthquakes, particularly the memorable tremor of August 23, 2011. Registering a magnitude of 5.8, it was the strongest quake to hit the East Coast since World War II, leaving lasting impressions on those who experienced it.

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