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Fuel import: FG saves N173bn in Five Months

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  • Fuel import: FG saves N173bn in Five Months

The Federal Government says it has been saving a total of $4m (N1.22bn) daily in fuel import bill since May 12, this year when it stopped paying subsidy claims to importers.

The Minister of Budget and National Planning, Senator Udo Udoma, who confirmed the figure, said the liberalisation policy in the oil sector had also led to a 30 per cent reduction in fuel consumption in the country.

He said these in a presentation made to economists at the annual conference of the Nigerian Economic Society.

Between May 12 and October 2, there are 142 days. And when the figure is multiplied by the daily savings of N1.22bn, it amounts to N173.24bn.

In the presentation, a copy of which was obtained by our correspondent in Abuja on Sunday, the minister said the partial deregulation of the downstream sector had enabled the Federal Government to ascertain the real demand for petrol in the country.

He noted that what the country had before May 12 was an artificial demand for petrol created by abuses of the subsidy regime.

He said, “We have introduced a market-related exchange rate regime and liberalised the downstream petroleum sector by freeing up the price of the PMS (petrol).

“The liberalisation of the PMS helped us to ascertain the real demand for the PMS in the country, as opposed to the artificial demand created by abuses of the subsidy regime.

“The PMS was liberalised on the 12th of May. Immediately this was announced, consumption dropped by 30 per cent. This reduction has resulted in a saving of $4m a day in the PMS import bill.”

The minister lamented that if there had not been disruptions in crude oil production, the economy would have recovered faster than it was currently doing.

Udoma stated, “Indeed, but for the major crude oil production disruptions we have been experiencing this year, we might have already started seeing the economy beginning to pick up a little as our reflationary capital spending would have started to kick in.

“Instead, we are in a recession with insufficient revenue to fully fund the 2016 capital budget.”

He explained that the Federal Government was currently taking measures to raise revenue by addressing the disruptions in the Niger Delta so as to restore oil production.

In a related development, the minister has appealed to international agencies to assist Nigeria’s drive for self-sufficiency by encouraging the local production of items required for the execution of their mandate in the country.

A statement from the ministry quoted him as saying this during a meeting with the Executive Director of the United Nations Population Fund, Prof. Babatunde Osotimehin, and members of a delegation from the agency.

He said Nigeria had the human capacity to realise the objective but needed support and patronage to drive the process.

As part of plans to achieve self-sufficiency, the minister said the government was focused on encouraging small and medium-scale industries and promoting made-in-Nigeria goods.

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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Gold

Gold Steadies After Initial Gains on Reports of Israel’s Strikes in Iran

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Gold, often viewed as a haven during times of geopolitical uncertainty, exhibited a characteristic surge in response to reports of Israel’s alleged strikes in Iran, only to stabilize later as tensions simmered.

The yellow metal’s initial rally came on the heels of escalating tensions in the Middle East, with concerns mounting over a potential wider conflict.

Spot gold soared as much as 1.6% in early trading as news circulated regarding Israel’s purported strikes on targets in Iran.

This surge, reaching a high of $2,400 a ton, reflected the nervousness pervading global markets amidst the saber-rattling between the two nations.

However, as the day progressed, media reports from both countries appeared to downplay the impact and severity of the alleged strikes, contributing to a moderation in gold’s gains.

Analysts noted that while the initial spike was fueled by fears of heightened conflict, subsequent assessments suggesting a less severe outcome helped calm investor nerves, leading to a stabilization in gold prices.

Traders had been bracing for a potential Israeli response following Iran’s missile and drone attack over the weekend, raising concerns about a retaliatory spiral between the two adversaries.

Reports of an explosion in Iran’s central city of Isfahan further added to the atmosphere of uncertainty, prompting flight suspensions and exacerbating market jitters.

In addition to geopolitical tensions, gold’s rally in recent months has been underpinned by other factors, including expectations of US interest rate cuts, sustained central bank buying, and robust consumer demand, particularly in China.

Despite the initial surge followed by stabilization, gold remains sensitive to developments in the Middle East and broader geopolitical dynamics.

Investors continue to monitor the situation closely for any signs of escalation or de-escalation, recognizing gold’s role as a traditional safe haven in times of uncertainty.

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Commodities

Global Cocoa Prices Surge to Record Levels, Processing Remains Steady

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Cocoa futures in New York have reached a historic pinnacle with the most-active contract hitting an all-time high of $11,578 a metric ton in early trading on Friday.

This surge comes amidst a backdrop of challenges in the cocoa industry, including supply chain disruptions, adverse weather conditions, and rising production costs.

Despite these hurdles, the pace of processing in chocolate factories has remained constant, providing a glimmer of hope for chocolate lovers worldwide.

Data released after market close on Thursday revealed that cocoa processing, known as “grinds,” was up in North America during the first quarter, appreciating by 4% compared to the same period last year.

Meanwhile, processing in Europe only saw a modest decline of about 2%, and Asia experienced a slight decrease.

These processing figures are particularly noteworthy given the current landscape of cocoa prices. Since the beginning of 2024, cocoa futures have more than doubled, reflecting the immense pressure on the cocoa market.

Yet, despite these soaring prices, chocolate manufacturers have managed to maintain their production levels, indicating resilience in the face of adversity.

The surge in cocoa prices can be attributed to a variety of factors, including supply shortages caused by adverse weather conditions in key cocoa-producing regions such as West Africa.

Also, rising demand for chocolate products, particularly premium and artisanal varieties, has contributed to the upward pressure on prices.

While the spike in cocoa prices presents challenges for chocolate manufacturers and consumers alike, industry experts remain cautiously optimistic about the resilience of the cocoa market.

Despite the record-breaking prices, the steady pace of cocoa processing suggests that chocolate lovers can still expect to indulge in their favorite treats, albeit at a higher cost.

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Crude Oil

Dangote Refinery Leverages Cheaper US Oil Imports to Boost Production

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The Dangote Petroleum Refinery is capitalizing on the availability of cheaper oil imports from the United States.

Recent reports indicate that the refinery with a capacity of 650,000 barrels per day has begun leveraging US-grade oil to power its operations in Nigeria.

According to insights from industry analysts, the refinery has commenced shipping various products, including jet fuel, gasoil, and naphtha, as it gradually ramps up its production capacity.

The utilization of US oil imports, particularly the WTI Midland grade, has provided Dangote Refinery with a cost-effective solution for its feedstock requirements.

Experts anticipate that the refinery’s gasoline-focused units, expected to come online in the summer months will further bolster its influence in the Atlantic Basin gasoline markets.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, noted that Dangote’s entry into the gasoline market is poised to reshape the West African gasoline supply dynamics.

Despite operating at approximately half its nameplate capacity, Dangote Refinery’s impact on regional fuel markets is already being felt. The refinery’s recent announcement of a reduction in diesel prices from N1,200/litre to N1,000/litre has generated excitement within Nigeria’s downstream oil sector.

This move is expected to positively affect various sectors of the economy and contribute to reducing the country’s high inflation rate.

Furthermore, the refinery’s utilization of US oil imports shows its commitment to exploring cost-effective solutions while striving to meet Nigeria’s domestic fuel demand. As the refinery continues to optimize its production processes, it is poised to play a pivotal role in Nigeria’s energy landscape and contribute to the country’s quest for self-sufficiency in refined petroleum products.

Moreover, the Nigerian government’s recent directive to compel oil producers to prioritize domestic refineries for crude supply aligns with Dangote Refinery’s objectives of reducing reliance on imported refined products.

With the flexibility to purchase crude using either the local currency or the US dollar, the refinery is well-positioned to capitalize on these policy reforms and further enhance its operational efficiency.

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