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.
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.
Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy
Mr Cui Jianchun, the Chinese Ambassador to Nigeria, says he is in talks with Chinese owned Banks to establish operations in Nigeria.
This, the envoy said, is to boost Nigeria’s economy and expand trade relations between the two nations.
Cui made this known on Tuesday in Abuja while addressing Journalists during the commemoration of the 2021 Chinese Moon Festival and China-Nigeria Cultural week.
According to Cui, the establishment of Chinese Banks in Nigeria will also be one of the key areas of discussion during the China-Nigeria Binational Committee meeting, which he is also pushing for the establishment.
He said that an efficient financial institution was a key driver to achieving a strong economy, one Nigeria can learn from China’s experience.
“Before my departure from Beijing to Abuja, I talked to several banks in China. When you list the World’s 10 big banks, six are in China.
“The Banking sector is very important, because, without money, we cannot build our industries.
“What I am thinking here is best to talk to the governor of Central Bank and how we can allow the Chinese Banks to run office here and now, they are doing the feasibility studies on that.
“I am working hard that in the Bi-national meeting, I hope we can make a big decision and give a big push to let the banking industry and insurance industry because financial integration and institutions are key.
“If you go to China, you will find our banking industry is very powerful, not only for business but the change in the way of life.
“Because of the COVID-19, the Banking Industry is a little hesitant, but I told them Nigeria has a lot of human resources and as long as we work together, we can do big things.
“And that is why it is important to invest in the banking industry, to solve this problem,” Cui said.
Extolling the extant China-Nigeria trade relations, Cui noted that the volume of trade between China and Nigeria is nearly 20 billion US Dollars, with an increase from 2020’s 19.2 billion dollars.
Cui said the Chinese economy is restoring to the normal post-COVID-19 pandemic and both governments are working hard on how to expand imports and exports.
Speaking on the event, Cui said the China’s moon festival is a very important and significant one for China as it symbolises family reunion, national peace and social harmony.
The envoy said the 2021 celebration is also a special one as it coincides with the 50th Anniversary of China-Nigeria’s bilateral relations.
He said that both countries also share Oct. 1 as their National Days.
He said it is also on that note that the Chinese Embassy is honouring 50 Nigerian employees of Chinese Companies in Nigeria for their outstanding performance and contribution to strengthening diplomatic ties.
Dr Ifeoma Anyanwutaku, the Permanent Secretary, Federal Ministry of Information and Culture, also lauded the Nigeria-China relations.
She said the relations had recorded great successes over the past five decades.
“The five decades of co-operation had since witnessed several cultural activities and exchanges in the spheres of arts, music, dance, exhibition, cultural administration, training and capacity building of cultural officers.
“And recently, the development of Cultural Industries centres in Nigeria, among others.
“I must add that China, through the youth-oriented programmes such as the photos competition and similar activities in the past is surely a dependable ally.
“In redirecting the energy and mind of our youth to creative ventures, thereby furthering the Nigerian government’s policy of lifting a hundred million Nigerians out of poverty in the next 10 years”, Anyanwukatu said. (NAN)
Lagos Prohibits Open Cattle Grazing, Sanwo-Olu Signs Bill Into Law
Lagos State Governor Babajide Sanwo-Olu, on Monday, assented to the bill prohibiting Open Cattle Grazing and Trespass of Cattle on Land, signing the legislation into law 11 days after it was unanimously passed by the State House of Assembly and transmitted to the Executive arm for authorisation.
By implication, it is now criminal in Lagos for cattle rearers to occupy unapproved public areas and private land with their livestock for grazing. The law also prohibits the act of moving cattle round public places by herders.
The signing of the anti-open grazing law by the Governor followed the decision of Southern Governors’ Forum last August, setting the September deadline to pass the law across member States.
There have been crises witnessed in some States, resulting from alleged open grazing.
Although farmer-herder crisis is not pronounced in Lagos, the anti-open grazing law is expected to prevent the spillover of the menace into the State.
Sanwo-Olu, who assented to the bill during the State’s Executive Council meeting in Alausa, directed the security agencies to swing immediately into action and enforce provisions of the law.
He said: “By the powers vested in me as the Governor of Lagos State, I am signing the bill on Open Cattle Grazing and Trespass of Cattle on Land into law to prohibit issues associated with open grazing of livestock.”
The Governor also signed legislation transforming the Lagos State Domestic and Sexual Violence Response Team (DSVRT) into a full-blown agency.
The development coincided with the commemorative month dedicated to raising awareness on gender-based violence in the State. The Governor and members of the State’s cabinet wore attire with purple shades to support the campaign against sexual violence.
The DSVRT legislation provides for the establishment of Sexual Offenders’ Register that would help the State efficiently tackle violations in the communities.
After signing the law, Sanwo-Olu said: “Raising awareness about domestic and sexual violence is an important piece of working to end the cycle of violence. It is important to reiterate the State Government’s zero tolerance to all forms of sexual and gender-based violence. We will not rest on our oars until the menace is reduced to the barest minimum in Lagos.”
The Governor appointed Mrs. Titilola Vivour-Adeniyi as the Executive Secretary of the new agency.
Vivour-Adeniyi was the coordinator of the response team before the legislation was signed into law.
ECOWAS Imposes Sanctions on Guinea Junta Over Coups
West African leaders have decided to impose travel bans and freeze the financial assets of members of Guinea’s ruling junta and their families after a coup more than a week ago.
The decisions were announced Thursday after an Extraordinary Summit on Guinea in Ghana’s capital, Accra. Mediators with the regional group had traveled to Guinea to meet with junta leaders and check on the condition of deposed President Alpha Conde.
ECOWAS president Jean Claude Brou said the West African leaders have also insisted that there should be no “need for very long transition for the country to return to democratic order.”
The targeted sanctions come after Guinea’s coup leaders set a number of conditions for releasing Conde, according to the foreign minister of Ghana.
ECOWAS had already warned it will impose penalties on the junta in Guinea unless it immediately releases Conde, who has been held at an undisclosed location since being detained during the Sept. 5 coup in Conakry.
“We are coming to address a burning issue in the region,” said Ghana’s President Nana Addo Dankwa Akufo-Addo, the current chair of the regional bloc, ahead of the summit. He was joined by presidents or high-ranking officials from eight of the other 15 ECOWAS countries.
Members of the ECOWAS delegation that visited Conakry after the coup presented their reports at Thursday’s meeting, said Ghanaian Foreign Minister Shirley Ayorkor Botchway. The junta has set a number of conditions for complying with the demands of regional mediators, she said but declined to disclose what they are.
The delegation has spoken with Conde’s doctor “who ascertained that indeed physically, he’s very well,” she said. However, she said, the ex-president is still coming to terms with the fact that his government has been toppled after more than a decade in power.
“For anybody who has gone through such a traumatic experience like he did, mentally, it’s not the best, not to say that mentally we found anything wrong, but he was quite shocked; he’s still in a state of shock,” she added.
Meanwhile, in Conakry, junta leaders were also set to meet with mining company representatives on the third day of a special summit to chart Guinea’s political future. Junta leader Col. Mamady Doumbouya has sought to reassure the country’s most vital economic sector that the political changes will not impact existing mining projects in the country, which has the world’s largest reserves of bauxite.
Guinea’s coup leaders have yet to make public their proposed timeframe for handing over power to a civilian transitional government, nor have they outlined how quickly new elections can be organized.
Conde had sparked violent street demonstrations last year after he pushed for a constitutional referendum that he used to justify running for a third term, saying term limits no longer applied to him. He ultimately won another five years in office last October, only to be toppled by the coup 10 months later.
At the time he came to power in 2010, he was Guinea’s first democratically elected leader since independence from France in 1958.
The regional bloc also planned to tackle concerns over whether a second member state, Mali, is making enough progress toward a return to democracy more than a year after a military takeover there.
In Mali, the ruling junta led by Col. Assimi Goita has committed to holding new elections by February 2022, though mediators who recently visited have expressed concern about whether that deadline now can be met.
Goita overthrew Mali’s president in August 2020 and then agreed to a civilian transitional government and an 18-month timeframe for holding a vote. However, only nine months after the first coup he effectively staged a second one, firing the civilian interim leaders and ultimately naming himself as president of the transition.
ECOWAS has not reinstated Mali’s membership in the bloc, marking the first time since 2012 that two of the 15 member states are suspended concurrently.
ECOWAS President Brou said there was the need to revisit the organization’s 2001 protocol on good governance “because a lot of things have changed or improved.”
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