- Solid Minerals Sector Yields Only N2bn in 2016
Agriculture, mines and steel present the quickest means of diversifying Nigeria’s mono-economy, according to experts. Running with this idea, the Federal Government has emphasised mines and steel at every possible juncture. Despite this emphasis, the sector has only boosted the Federation Account by N2bn in 2016.
The minerals and mines sector has contributed N2bn to the Federation Account in 2016, according to information obtained from the Ministry of Mines and Steel Development.
Compared to the role expected of the sector in a diversified economy, the revenue made from the sector for sharing by the three tiers of government is negligible.
The Federal Government had never hidden the fact that it looks up to the solid minerals sector and agriculture for the much needed diversification of the economy, given the significant reduction in the earnings from the main base of the nation’s economy, oil.
In realisation of the nation’s need for diversification, the Muhammadu Buhari-led government has continued to emphasis the reed to exploit the solid minerals sector in order to increase the earning capacity of the country.
The government signified its interest in the solid minerals sector in the articulation of the 2016 budget. It increased the capital budget of the sector seven times, from N1bn in 2015 to N7bn in 2017.
While other ministries, departments and agencies may be writhing in unreleased capital budget for the year; that of the Ministry of Mines and Steel Development has been fully released; even with five months left to the end of the 2016 budget implementing year.
Experts therefore say it is disappointing that despite the emphasis, the mines and steel sector has contributed only N2bn to the Federation Account within the year.
However, given what had been the lot and performance of the sector in the previous year, some stakeholders believe the N2bn contributed by the sector to the federation account indicates a bright future for the industry.
Given that the sector contribuýted N700m to the federation account in 2015, N2bn represents almost 200 per cent improvement on the contribution of the solid minerals sector to the coffers of the nation.
President of the Miners Association of Nigeria, Alhaji Sani Shehu, said although the government did not do much to increase revenue drive in the sector, the N2bn contributed to the coffers of the government represented a significant increase.
He expressed confidence that the sector would do much better in the years ahead, beginning from 2017.
Shehu said, “When you compare N2bn to the N700m contributed by the sector in 2015, it is a significant improvement. There is high possibility that the sector would surpass the N3.5bn revenue which the government has projected for 2017.
“Do not forget that the revenues we get now are mainly from quarries and cement. The core mining activities have not started yielding revenues. So, there is the likelihood that the sector would now be yielding much more to the government beginning from 2017.”
For the Minister of Mines and Steel Development, Dr. Kayode Fayemi, the most significant thing is that the right foundation is being laid to ensure increased productivity of the sector in the years ahead.
This, he said, included the articulation of the road map for the reform of the mining sector; the inauguration of the Mining Strategic Team; and the resolution of the legal tussle between the Federal Government and an Indian firm over the contentious concession of Ajaokuta Steel Mill.
To increase the participation of the state governments, even with the stipulation of the 1999 Constitution that mining is on the exclusive list, the Federal Government has sought innovative means to avoid constitutional breach.
Fayemi said, “In order to encourage beneficial participation of state governments in the mining sector, we have got approval for the implementation of the constitutionally guaranteed 13 per cent derivation for mineral revenue for states, similar to the derivation that oil-producing states currently enjoy from the federation accounts.
“While in principle, we cannot give states licences as separate legal entities, companies in which the states have an ownership interest can bid for and receive licences. We are also working closely to build the capacity of state governments in structuring Special Purpose Vehicles to participate in mining in their jurisdictions, without undermining private sector.”
On securing the finance required to lift up the sector, Fayemi had said, “We sought for N30bn intervention fund from the Federal Government, partly to focus on exploration, formalisation of artisanal miners, and providing access to funding for genuine miners. For the first time since 2004, we got approval for this amount by securing access to the revolving mining sector component of the Natural Resources Development Fund.
“We are working with the Nigerian Sovereign Investment Authority, the Nigerian Stock Exchange and others to assemble a $600m investment fund for the sector which we hope to conclude and operationalise by the second quarter of 2017.
“We have secured support from the World Bank for $150m for the Mineral Sector Support for Economic Diversification programme, a critical component of which is to provide technical assistance for the restructuring and operation of the Mining Investment Fund, which will make finance available to the ASM operators through development finance, micro-finance and leasing institutions.”
He added that the fund would help to bring back on stream previously abandoned proven mining projects such as tin ore, iron ore, coal, gold and lead-zinc.
So, will the mining sector begin to make significant contribution to the coffers of the nation? Will the nation make the much sought transition from a mineral-rich state to a mining destination?
Stakeholders believe that incremental revenues are possible but they add that the best this administration can do is to lay the necessary foundation blocks for eventual growth because the transition will take a little more time than anxious citizens are willing to allow.
Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start
A year after shutting down all of its dilapidated refineries to figure out how to fix them, Nigeria still can’t say how much it will cost to do the work or where the money will come from.
Nigerian National Petroleum Corp. said it has finished the appraisal of its largest facility, but hasn’t completed the process at two others. Refining experts said the extended halt means the plants are at risk of rotting away and unlikely to restart on time.
“Things haven’t been looking good lately,” with Nigeria’s plants probably “completely out of action for some 18 months,” said Elitsa Georgieva, Executive Director at Citac, a consultant that specializes in African refining.
The dysfunction of its domestic refineries has long put Africa’s biggest oil producer in an ironic situation. It exports large volumes of crude to plants overseas, then pays a premium to import the fuels its customers produce.
Pledges to fix the facilities have been made and broken again and again over the years. For at least a decade, NNPC’s 445,000 barrels a day of refining capacity barely processed 20% of that amount.
The latest effort to fix the refineries was supposed to be different to the failed attempts that came before. The company had totally shut all three plants down by January 2020 to do a comprehensive appraisal, and set the ambitious target of having them all back up and running at 90% of capacity by 2023.
“The refineries have been deliberately shut down to allow for a thorough diagnosis,” said Kennie Obateru, an Abuja-based NNPC spokesman. “They can be fixed based on what the diagnosis reveals.”
The appraisal of the 210,000-barrel-a day Port Harcourt refinery has been completed and NNPC has called for bids for the necessary repairs, Obateru said. The company hasn’t determined how much the work will cost.
“It is when we close the bids, everything is analyzed and presented that we will know how much we need,” he said.
The diagnosis is underway at the 125,000-barrel-a-day Warri facility and should be complete before the end of the year, he said. After that, the study of the 110,000-barrel-a-day Kaduna plant will commence.
One year into the process, refining analysts are skeptical that all this work can be done by 2023.
“I don’t think anyone has a good understanding technically of what’s wrong with those refineries,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie Ltd. “They’re probably corroding, which makes it a very difficult proposition.”
NNPC reaffirmed its deadline and said there’s no reason the refineries, which are at least 40 years old, can’t be restored to full operation.
“There are refineries that are over a hundred years old still running, so age is not necessarily an impediment,” Obateru said.
There are parallel efforts backed by private companies to add to Nigeria’s capacity. Aliko Dangote, Africa’s richest person, is building a state-of-the-art 650,000 barrel-a-day refinery, which Citac estimates will start production in 2023.
Bringing NNPC’s Port Harcourt refinery to the same clean-fuel standards as Dangote’s modern plant would cost about $1.3 billion for the equipment, on top of whatever other repairs are required to get the facility running, Georgieva said.
NNPC is talking to oil-trading firms about $1 billion of prepayment deals that could finance the repairs at Port Harcourt, Reuters reported last week. Obateru declined to comment on the report, but said “I don’t envisage that we will have a problem getting people to invest.”
Food Inflation Hits Record High of 19.56 Percent in December 2020
Food Index, which measures prices of food items, grew by 19.56 percent in the month of December 2020 amid herdsmen attacks and flooding.
In the latest report from the National Bureau of Statistics (NBS), increases were recorded on Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On month on monthly basis, the food sub-index rose by 2.05 percent in December 2020, 0.01 percent from 2.04 percent recorded in November 2020.
“The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 percent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) percent” the report stated.
Headline inflation number increased by 15.75 percent in the month of December 2020, up from 14.89 percent.
The report noted that increases were recorded in all COICOP divisions that yielded the Headline index.
On a month-on-month basis, “the urban index rose by 1.65 percent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 percent in December 2020, up by 0.02 percent above the rate that was recorded in November 2020 (1.56 percent).”
Nigeria’s Inflation Rate Rises to 15.75 Percent in December
Inflation rate in Africa’s largest economy, Nigeria, rose at the fastest pace in several months in the last month of 2020, according to the latest report from the National Bureau of Statistics (NBS).
Consumer Price Index (CPI), which measures inflation rate, increased by 15.75 percent year-on-year in December 2020, representing a 0.86 percent increment from the 14.89 percent attained in November.
On a monthly basis, headline inflation rose by 1.61 percent in the month of December, representing 0.01 percent increase from the 1,60 percent posted in the month of November.
Food gauge that measures prices of items in Africa’s largest economy increased by 19.56 percent in December from 18.30 percent in November.
NBS attributed the increase to the surge in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.
On a monthly basis, the food sub-index grew by 2.05 percent in December 2020, an increase of 0.01 percent points from 2.04 percent recorded in November 2020.
The more stable annual rate showed Food sub-index over the last 12 months increased by 0.42 percent points from 15.75 percent in November to 16.17 percent in December.
Herdsmen attacks, the rising cost of fuel, flooding and the wide exchange rate are some of the key factors impacting the cost of food items in Nigeria, especially in December when demands were the highest.
Still lack of enough fiscal buffer to cushion the effect of COVID-19 and ease forex scarcity also drag on raw materials necessary for the production of some import-dependent items.
Finance4 weeks ago
Central Bank Closes 42 Microfinance Banks
Technology4 weeks ago
Here is how to Link Your National Identification Number(NIN) to Your SIM Card
Finance4 weeks ago
Zenith Bank Invests Over N12 Billion in Targeted Interventions, Posts N178 Billion PAT
Crude Oil4 weeks ago
Senate Pegs Oil at $40, Forex at N379/US$ as it Passed the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper
Finance4 weeks ago
CBN Closed All Naira Accounts of IMTOs
Cryptocurrency3 weeks ago
US Securities and Exchange Commission Goes After Ripple(XRP)
News2 weeks ago
Heartbroken American Mistress Displays Dangote’s Buttocks in a Viral Video
Crude Oil4 weeks ago
Brent Crude Oil Dropped 1.9 Percent Amid Fast-spreading New Coronavirus