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$35bn Spent on Fuel Subsidy in Five Years – Ex-NNPC Director

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Oil Prices - Investors King

Nigeria spent an estimated $35bn as subsidy on petroleum products out of the $300bn earned from crude oil from 2010 and 2014, a former Acting Group Executive Director of the Nigerian National Petroleum Corporation, Dr. Tim Okon, has said.

This is coming as experts have urged the Federal Government to discontinue its overdependence on oil revenue, noting that it should seriously work towards diversifying the economy away from oil.

Okon and some professors, as well as other stakeholders in the oil and gas sector, spoke during the 6th Emmanuel Egbogah Legacy Lecture Series with the theme, ‘Managing Petroleum Revenue under Volatile Price Dynamics’, organised by the Emerald Energy Institute, University of Port Harcourt, Rivers State, on Wednesday.

While delivering the keynote address, Okon, who is the chief executive officer, International Institute of Petroleum, Energy Law and Policy, and a special adviser on fiscal strategy at the Federal Ministry of Petroleum Resources, stated that the subsidy programme was actually designed for the poor but it benefitted a few rich persons massively.

He said, “In the period when Nigeria earned close to $300bn as revenue from oil, from 2010 to 2014, we were spending approximately $7bn annually on subsidy. Worse than this was that in spite of the huge revenue inflows, we were also borrowing.”

He also decried the magnitude of borrowing by the Federal Government and stressed that Nigeria might be heading towards a situation in which it would sustain its operations mostly on public debts if care is not taken.

“If we continue to borrow, we will be returning to the point where we may seek debt forgiveness. This is why we are concerned about this development,” Okon said.

The ex-NNPC director lauded the halt in the subsidy regime and stated that the billions of dollars spent on subsidising petrol across the country would have been used to fix all the country’s refineries as well as build the Mambilla Power Plant, which has the capacity of generating about 3,000 megawatts of electricity.

He said, “Of course, spending money on consumables versus having productive capacity is another issue. At one point in time, the subsidy programme was worth $7bn a year. This, however, was despite the fact that the total cost of getting our refineries fixed was about $3bn. But the $7bn was spent through the exhaust fumes of our vehicles.”

Okon explained that Nigeria had been in the oil business for several decades and had seen how crude prices fluctuated over the years, adding that it was worrisome that the current fall in crude prices had taken a huge toll on the Nigerian economy.

He said, “Volatility is not new; commodity price changes are not new and, therefore, Nigeria ought to, having being an oil producer for quite some time, have an understanding of this cycle. But the question is, why is it now difficult?”

He frowned on the way and manner in which government’s revenue was managed, noting that efficient planning tools abound that could help in the management of proceeds from oil, particularly in a volatile market.

The ex-NNPC official stated that there was the need to deal with the revenue governance framework, adding that one way was the ability to create adequate buffers.

He said, “Our failure to create enough buffers has resulted in the situation that we have found ourselves. The second approach for most countries who are oil producers is that when the prices are high, you have to save and that is the purpose of the Sovereign Wealth Fund. Nigeria’s SWF, the last time I checked, was about $1.2bn, while that of Saudi Arabia, when I last checked it up, had come down from $783bn to about $600bn.”

He said Nigeria’s SWF had been eroded due to political interferences over the years, as against what was obtainable in 2007/2008 when the fund was used to support the economy during the fall in global crude oil prices at that period.

Proffering solutions to the myriad of challenges confronting the country, particularly in its oil and gas sector, Okon said it was high time Nigeria diversified its revenue-generating sources.

According to him, the country should also undertake resource diversification and the burden on the oil and gas industry should be reduced since it contributes only about 15 per cent to the Gross Domestic Product.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy

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Chinese Ambassador to Nigeria- Investors king

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)

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Lagos Prohibits Open Cattle Grazing, Sanwo-Olu Signs Bill Into Law

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herdsmen

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.

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ECOWAS Imposes Sanctions on Guinea Junta Over Coups

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ECOWAS Bans Junta-Investors King

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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