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

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Falling Oil Prices Illustration

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.

Government

Boko Haram Kills Rice Farmers in Borno State, Northeast Nigeria

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Rice farmers were killed on Saturday morning in the Northeast Nigeria by suspected Islamist militants, Boko Haram, according to a Reuters Report.

The report also noted that 30 of the people killed were beheaded while over a dozen others were still missing.

However, resident of the Zambarmari Village where the attacks took place said a total of 70 people were feared dead.

Another resident and Amnesty International were quoted as saying at least 10 women were among those missing.

In another statement by Edward Kallon, the United Nations’ humanitarian coordinator in Nigeria, it was armed men on motorcycles that led the brutal attack on civilians harvesting their fields.

Armed men on motorcycles led a brutal attack on civilian men and women who were harvesting their fields,” Edward Kallon stated.

“At least 110 civilians were ruthlessly killed and many others were wounded in this attack,” he added, noting that several women are believed to have been kidnapped.

“The incident is the most violent direct attack against innocent civilians this year. I call for the perpetrators of this heinous and senseless act to be brought to justice,” Kallon said.

On Sunday, Governor Babaganan Umara Zulum of Borno State, who was at the burial told journalists that at least 70 farmers were killed on Saturday.

The Governor, therefore, called on the Federal Government to recruit more Civilian Joint Task Force members, Soldiers and civil defence fighters to protect farmers in the region.

He added that people are facing desperate choices.

In one side, they stay at home they may be killed by hunger and starvation, on the other, they go out to their farmlands and risk getting killed by the insurgents,” he said.

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In The Fight Against Corruption, No Individual is Bigger Than The State – Buhari

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Muhammadu Buhari

In response to the suspended acting EFCC Chairman, Ibrahim Magu, President Muhammed Buhari, lamented that the anti-corruption war becomes endangered “when persons entrusted with the responsibility of that magnitude become suspects themselves.”

Buhari, whose vision is to put an end to corruption in Nigeria, believed that every aspect of the nation’s life is enshrined in corruption and it’s of major concern when leaders of institutions saddled with the mandate to fight the menace are found in the waves of the corruption they claimed to be fighting.

This act is a great abomination not only because it strikes at the root but it also trivialises and undermines the anti-corruption crusade itself, the President explained.

He further said that in a bid to put an end to this great abomination, he had set up Ayo Salami Panel to unravel the mystery behind the mystique of Magu’s alleged involvement in corruption that his administration is fighting.

Buhari said that his administration is ready and willing to go all out in the fight against corruption, and no one is too big nor above the law to become a victim of anti-graft’s sledgehammer.

The president said, “However, the stark reality of widespread corruption becomes poignant when allegations of corruption touch on the leadership of an institution set up by law to coordinate and enforce all economic and financial crimes.

“It is an abomination that strikes at the root and undermines the government’s anti-corruption programme.

“It was in response to the serious allegations against the Economic and Financial Crimes Commission that I set up a panel headed by the Honourable Justice Isa Ayo Salami, retired President of the Court of Appeal, via an Instrument dated 3rd July 2020 pursuant to the Tribunals of Inquiry Act (Cap T21, LFN, 2004).

“We recognise that there are more grounds to cover in the war against corruption, and we are prepared to go out to possess those lands by cutting off any stream that nourishes the seed of corruption and supports its growth.

“Let it be known that in the fight against corruption, no one is too big to tackle, as no individual is bigger than the Nigerian State!”

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In Search For The New EFCC Chairman, Justice Ayo Salami Panel Advises Buhari to Look Outside The Police Force

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EFCC

Justice Ayo Salami’s panel advised President Muhammadu Buhari to look outside the Nigerian Police Force for the new Chairman of the Economic and Financial Crimes Commission (EFCC).

A credible source confirmed that President Muhammadu Buhari may have decided to follow the panel recommendation to avoid a similar fate to that of Magu, the former chairman.

The source also confirmed that the panel recommendation was a result of sleaze allegations against suspended acting Chairman, Ibrahim Magu. Also, that search team would be constituted in the next few days to slim down the possibilities of finding the right candidate to bring into reality the President’s vision of a corrupt-free anti-graft agency.

The source further confirmed that “the sleaze and abuse of office allegations against Magu, a commissioner of police, were overwhelming,” and that he may be put on trial.

As advised by the panel, the new EFCC chairman should be in interim position for two years.

It was suggested that the recommendation from the Justice Ayo Salami panel might have pinned Magu, according to Femi Adesina, the presidential spokesman, he advised president Buhari to consider looking into other law enforcement or security agencies, as well as considering important and diligent staff of EFCC in his plans to appoint the next EFCC chairman, as s provided in the EFCC Establishment Act of 2004.

Following the Justice Ayo Salami panel recommendation, Salami said “Your Excellency, permit me to say that four successive chairmen of the EFCC from inception have been drawn from the police. Therefore, in appointing a new chairman of EFCC, consideration should be given to candidates from other law enforcement or security agencies and qualified core staff of EFCC as provided in the Economic and Financial Crimes Commission (Establishment Act 2004).

“It is also important to point out that at the moment, 970 policemen (114 drivers, 641 mobile policemen and 215 operations), are on secondment in the EFCC.

“Therefore, an exit plan for the disengagement of the police and other personnel within two years from now should be considered. This will address the issue of non-promotion of core staff for over nine years.

“Your Excellency, our thinking here is that whoever you are appointing other than a core EFCC staff, should be in transitional capacity of two years during which period, the arrangement would be made for the appointment of any of the core staff who has been commended by National Crime Agency, UK and other international law enforcement for their professionalism”.

Justice Ayo Salami appreciated the president for giving members of the panel an avenue to serve the country.

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