Connect with us

Economy

Pace of Inflation Increase to Reduce in September

Published

on

U
  • Pace of Inflation Increase to Reduce in September

Following yesterday’s release of the data for Consumer Price Index (CPI) by the National Bureau of Statistics, which put the figures at 17.9 per cent (year-on-year), representing 0.24 percentage points higher than 17.6 per cent in August 2016, the pace of increase in inflation has further reduced.

This has confirmed the projections of analysts, who forecast the further narrowing of the gap of increase in CPI, which measures inflation, in the review month.

Earlier, analysts, in their estimations, had projected a slower pace of increase in the CPI in September. The projections were contained in the analyses done by Dunn Loren Merrifield Asset Management and Research Company Ltd (DLM) and Financial Derivatives Company Ltd (FDC).

For Dunn Loren Merrifield, CPI would increase to 17.93 per cent (year-on-year) in September 2016, representing an increase by 32 basis points from 17.61 per cent in the previous months, while FDC put the headline inflation for the review month at 18 per cent, an increase of 40 basis points. In fact, FDC has regarded the 18 per cent inflation rate as the highest in 11 years.

At 17.61 per cent, inflation for August had risen by 48 basis points from 17.13 per cent in July. When compared with the expected pace of increase in September, it is projected that the gap of increase would reduce.

According to DLM, “We estimate an increase in headline inflation to 17.93 percent year-on-year in September 2016; up by 32bps from 17.61 percent recorded in the preceding month.”

This in our view, DLM analysts explained, will be primarily driven by a faster rise in the food index. “Our model shows a movement in the food sub-index captured by “farm produce and processed foods” to 212.2 points in September 2016 up from 181.8 points in the corresponding period of the previous year. In addition, we expect a movement in the core sub-index to 204.0points up from 173.7points in September 2015. Hence, this translates into a food and core inflation of approximately 16.73 percent and 17.47 percent respectively in September 2016.”

They recalled that the increase in inflation in August was “supported by the rise in prices recorded in all classes of the Classification of Individual Consumption According to Purpose (COICOP) which contribute to the index.”

“In particular, the divisions which recorded higher inflationary pressures during the month include: housing, water, electricity, gas and other fuel, education and transportation services.

However, on a month-on-month basis, the pace of price increases slowed marginally to 1.00 percent from 1.30 percent in July 2016,” they added.

The analysts also noted that food inflation up by 63bps even as core inflation increased for the seventh consecutive month. “The food index was higher by 16.43 percent up from 15.80 percent recorded in the previous month. This was despite the slower rise in prices recorded in the fruits, potatoes, yam and other tubers as well as oils and fats classes which weighed considerably on the overall sub-index.

“On a month-on-month basis, the food sub-index remained relatively flat at 1.20 percent during the month.

Similarly, the core inflation index rose by 17.21 percent from 16.93 percent in July 2016 with the highest increases seen in solid fuels, vehicles parts, books & stationeries, clothing and other articles of clothing. On a month-on-month basis, the core sub-index rose marginally to 0.90 percent from 1.20 per cent in the previous month.”

Nevertheless, FDC analysts, in giving their own position, noted that, “If the estimates of our model are accurate, it will be the highest level in 11 years,” but added that, “a change of 0.4 per cent indicates that the rate of increase is slowing.” As such, they submitted that, “If this trend continues, the direction of inflation is likely to reverse.”

On factors that are responsible for pressure on inflation, FDC said: “Diesel prices eased in September to an average of N190/ltr from August’s average of N193.53/ltr partly due to heavy rains and reduced attacks in the Niger Delta due to a ceasefire agreement. However, on the 24th of September the NDA defied the cease-fire agreement with an attack on the Bonny crude export line. PMS prices maintained an average of N143/ltr with some filling stations selling as low as N140/ltr.”

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.

Economy

Electricity Consumers Get 611,231 Meters Under MAP Scheme

Published

on

power project

Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

Continue Reading

Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Published

on

Banana Island

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

Continue Reading

Economy

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Published

on

petrol Oil

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

Continue Reading

Trending