- $1bn Spent on Kerosene Subsidy in 2015
Nigeria spent the sum of $1bn as subsidy on kerosene last year, Vice-President Yemi Osinbajo said on Tuesday.
According to him, the massive dependence on kerosene and firewood by millions of households across the country made the Federal Government to spend such an amount subsidising the commodity.
Osinbajo, who spoke at the Domestic Liquefied Petroleum Gas Stakeholders’ Forum organised by his office in collaboration with the Federal Ministry of Petroleum Resources in Abuja, explained that the low level consumption of the LPG by Nigerians was a major reason for the high demand for kerosene and firewood.
“The low LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuel. The government has undertaken huge subsidy of over $1bn in 2015 on kerosene subsidy,” he stated.
This, he said, was not beneficial for the country economically and health wise, as data at the disposal of the government showed that thousands of women and children had died as a result of diseases caused by firewood and kerosene polluted air.
The vice-president emphasised the need to unlock the domestic LPG value chain, stressing that this was one policy that the current government was passionate about since Nigeria had one of the largest gas reserves in the world.
He stated that the gas sector had the potential to revolutionise Nigeria’s fuel consumption, adding that a gas policy was being developed to address the gas development issues.
Osinbajo also noted that in 2015, operators imported 40 per cent of the total volume of domestic LPG consumed in Nigeria, a development that impacted the country’s foreign exchange reserves adversely.
He stated that the country’s LPG consumption recorded a steady decline until 2007 when the Nigeria Liquefied and Natural Gas Company intervened, adding that since then, the demand for domestic gas had been on the increase.
He said, “In the gas policy, liquefied petroleum gas has been identified as a viable source of stimulation of the socio-economic health of our nation. Nigeria’s LPG consumption had been declining until the NLNG intervened and since then, our LPG consumption has grown from 50 metric tonnes per annum to 400MTPA.
“Though this signifies some improvement in domestic LPG consumption, it translates to a per capita consumption of less than 2.5kg when compared to higher per capita consumption of some African countries. Also, about 40 per cent of our domestic LPG consumption in 2015 was imported, this impacts on our foreign exchange.”
The Managing Director, NLNG, Mr. Tony Attah, stated that despite the progress recorded in the domestic LPG sub-sector, there were still bottlenecks frustrating the full-fledged development of the market.
Also on Tuesday, Osinbajo said the government hoped to conclude the sale of a $1bn Eurobond by the end of the first quarter of 2017 and would seek to make its foreign exchange market more flexible.
The country is in its deepest recession in 25 years and needs to find money to make up for shortfall in its budget. Its revenues from oil have plunged due to low international prices and militant attacks on the crude-producing heartland, the Niger Delta, cutting output.
To help cover its budget shortfalls, the government was keen to ensure it was collecting taxes efficiently, Osinbajo told Reuters in an interview.
“We will continue to consider the issue of raising tax and raising VAT. But at the moment, we are more concerned with ensuring that we really improve our coverage,” he said, referring to tax collection.
The government began the process of appointing banks for the sale of the Eurobond in September and had said it wanted to issue the bond by the end of the year. It has yet to announce a lender to lead the sale.
“At the very latest, between the end of the year and the first quarter of next year, we will begin to see all that process concluded,” Osinbajo said.
The vice-president said the severe loss of petro-dollars had caused serious foreign exchange shortages and had been worsened by attacks on oil pipelines and export terminals.
The government had wanted to issue the Eurobond to help plug a gap in its record N6.06tn budget this year, in addition to tapping concessionary loans from the World Bank and China as its oil revenues fell.
So far, only the African Development Bank has come to its aid, approving a $600m loan, the first tranche of a total $1bn package.
Osinbajo also said his office was working with the central bank to make the foreign exchange market more flexible and more reflective of actual demand and supply.
The regulator in June officially ended its policy of pegging, or fixing, the naira’s exchange rate at 197 per dollar to let the currency float freely. But the exchange rate has since been stuck at N305 to N315 on the official market due to dollar shortages, while on the black market, the naira is changing hands at 470 per dollar.
Nigeria’s crude production, which was 2.1 million bpd at the start of 2016, fell by around a third in the summer following a series of attacks by Niger Delta militants who want a greater share of the country’s energy wealth to go to the impoverished southern oil-producing region.
“At one point, we were losing almost one million barrels per day, which translated to 60 per cent of oil revenues…and that affects the availability of dollars,” Osinbajo said.
He also said the government was prepared to talk with the militants but that maintaining security was essential for law enforcement.
Akinwumi Adesina Says It Is Impossible for Businesses to Survive Without Generator in Nigeria
The President of the African Development Bank (AFDB), Akinwumi Adesina faulted the lack of reliable power supply in Nigeria as a hindrance to industrial growth in the nation.
Speaking at the 49th Annual General Meeting of the Manufacturers Association of Nigeria in Abuja, Adesina stated that Nigerians spend $14 billion yearly on generators and fuel. He further went on to quote a report by the International Monetary Fund (IMF) which stated that Nigeria loses $29 billion annually, about 5.8 percent of its Gross Domestic Product due to a lack of reliable power supply.
He went on to note the various challenges affecting manufacturing in the country stating that lack of reliable power supply in the country is a major challenge to manufacturers. His words were “To be a manufacturer in Nigeria is not an easy task. You succeed not because of the ease of doing business in the country, but by surmounting multiple constraints that limit industrial manufacturing. Today, the major challenge facing Nigeria’s manufacturing is the very high cost and unreliability of electricity supply. Load shedding and the inconsistent availability of electrical power have resulted in high and uncompetitive manufacturing costs.”
He went on saying “Today, no business can survive in Nigeria without generators. Consequently, the abnormal has become normal. Traveling on a road one day in Lagos, I saw an advertisement on a billboard that caught my attention. It was advertising generators with the bold statement, we are the Nation’s number one reliable power supplier!!”
He then went on to proffer potential solutions to the problem, saying that Nigeria should invest in different means of energy generation to ensure the efficiency of the local industries. He suggested there should be massive investment in variable energy mixes, including gas, hydropower resources, and large-scale solar systems to ensure stable baseload power for industries to direct power preferentially to industries and to support industrial mini-grids and concentrate power in industrial zones. In addition, he suggested the development of more efficient utilities which would reduce the technical and non-technical losses in power generation, transmission and distribution systems.
World Bank Says Nigeria’s Economy is Static, Per Capita Income Unchanged in 40 Years
The World Bank claims Nigeria’s per capita income has been static since 1981, which is a total of 40 years.
The Country Director of the World Bank, Shubham Chaudhuri said this at the breakout panel session of the 27th Nigerian Economic Summit on Lightning Nigeria: Solution framework for power recovery held in Abuja.
He further went on to advise Nigeria’s economic managers to quickly assemble potent strategies to harness the robust potential of the country.
He went on to say that the medium-term development plan for 2021-2025 is set on the development agenda for sustainable growth driven by new and emerging sectors. He claimed about three million Nigerians come of working age yearly, but surveys have shown that they aspire to go abroad to earn a better standard of living.
Per Capita Income is an Economic indicator that indicates the average income earned per person in a country in a specified year. It is calculated by dividing the country’s total income by its total population. In 1981, according to World Bank data, Nigeria’s per capita income was $2,180.2 and per capita income was $2,097 in 2020, meaning there has been no significant change in four decades.
Earlier in the session, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed called for a paradigm shift in running the country’s economy through comprehensive and targeted reforms, a reorientation of national values, and a radical shift in attitudes to taxation and public financial management.
She said, “This is consistent with the focus of this administration on targeted investment in critical infrastructure and social development.”
The Nigerian Economic Summit is the flagship event of the Nigerian Economic Summit Group (NESG) and it is organized in collaboration with the National Planning Commission (NPC). The Nigerian economic summit has consistently focused on job creation, small and medium-sized enterprises (SME) growth, competitiveness, dismantling the pillars of corruption, encouraging sustainable growth and development, and aligning home-grown long-term agenda with the UN sustainable development goals. The 27th Nigerian Economic Summit has the theme Securing our Future: The Fierce Urgency of Now.
East African Countries to Discuss Economic Recovery and Investments Promotion this Week in Kigali
More than 100 decision-makers and economic stakeholders will gather in Kigali this week to discuss the road to social and economic recovery and how to attract investments in East Africa. The meeting known as the 25th session of the Intergovernmental Committee of Senior Officials and Experts (ICSOE), will take place from 27 to 29 October 2021.
The ICSOE is the annual gathering of the office for Eastern Africa of the UN Economic Commission in Africa (UNECA) organised in collaboration with the Rwanda Ministry of Finance and Economic Planning. The theme of this year’s meeting is: “Strengthening resilience for a strong recovery and attracting investments to foster economic diversification and long-term growth in Eastern Africa”.
Dr Mama Keita, Director of UNECA in Eastern Africa said that the Covid-19 pandemic has weakened the economic conditions of all countries in the region. She stressed that the ICSOE meeting will provide a platform for various stakeholders from governments to have a conversation with experts and private sectors on the needed economic recovery and on how to re-ignite the engines of trade and investment.
Dr Uzziel Ndagijimana, Minister of Finance and Economic Planning said that this meeting is timely and significant. “This is the time for Rwanda to discuss with other countries of the region the potentials and the ability to rise and be responsive to the socio-economic challenges, exacerbated by the Covid-19 crisis.
According to Ms Keita, the African Continental Free Trade Area (AfCFTA) is undoubtedly critical to support the recovery from the severe adverse impacts of the Covid-19 pandemic, increase the economic multiplier in the region and will help countries to build back better, grow their economies and create jobs that foster inclusive growth.
The participants at the meeting will discuss thematic issues such as deepening Regional Value Chains, environment for investment Opportunities and Interlinkages between peace, security and development.
The subregional office for East Africa of UNECA serves 14 countries: Burundi, Comores, RD Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda.
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