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Power Sector Privatisation Faulty, Says Saraki

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  • Power Sector Privatisation Faulty, Says Saraki

President of the Senate, Bukola Saraki, has described the privatisation process in the power sector as faulty and hindering the achievement of positive results.

Saraki, in his message at the opening session of the Senate on Tuesday following its resumption from the Christmas and New Year recess, said, “Before we left for the break, myself, a select few of us and stakeholders in the power sector met to get an understanding of why no progress has been made thus far despite the best intention; and the revelations were mind-boggling.

“There had been errors in the privatisation process and the model by which the power sector is being operated, whether at generation or distribution levels, will never take us where we need to be. It has failed and nobody appears willing to tackle the issue head-on towards a permanent resolution.

“I have mandated the Senate Committee on Power to continue the consultation with the relevant parties to forge a path to solving our crippling power deficit. After all, if we are going to drive Nigerian industries, we need to resolve this and fast.”

The Senate President, who noted that the petroleum industry continued to be critical to the health of the nation’s economy, said the Senate was urging the executive to take positive steps to begin a “meaningful dialogue” with those aggrieved in the Niger Delta.

“The proposed engagement, we suggest, must be sincere, constructive, open and confidence-building. This Senate is willing to assist and play whatever role is necessary to facilitate a successful agreement that would help us see to the end of the lingering conflict,” he said.

He stated that it had become necessary that the lawmakers immediately began work on the 2017-2019 Medium Term Expenditure Framework and Fiscal Strategy Paper to ensure its passage by the end of the week.

He explained, “In this way, consideration and debate on the 2017 budget will immediately follow in the three sitting days of next week. It is our hope that we will, with this budget, begin the implementation of the report of the Committee on Budget Reforms, which has since been submitted.

“This will enable more Nigerians participate in the budget consideration process, deepen the review and create the necessary efficiencies we expect from our budget implementation.”

Saraki noted that as long as Nigeria’s economy remained in recession, “our work is not done because our people are still being laid off.”

He added, “So long as factories are closing shop, for as the hardship in the land continues to bite harder, investment continues to dwindle and the foreign exchange market remains fragmented, I will be demanding even much more from us to get all our economic reform bills passed.

“Ideally, we would like to see them pass together with the 2017 budget. Let me, therefore, urge all our committees involved with our priority bills to double efforts to ensure that by the end of the first quarter of this year, we will have these bills ready.”

While reiterating the importance of making the 2017 budget “the most successful budget we have ever passed,” Saraki said it was equally important to emphasise the need to have the budget back on the desk of the executive on time for implementation.

Meanwhile, the House of Representatives is to deviate from the practice of merely passing recommendations on budget proposals by considering every detail of the 2017 budget in its plenary.

The Speaker, Mr. Yakubu Dogara, announced this in Abuja on Tuesday as lawmakers reconvened in Abuja after a 26-day break.

The practice over the years was to refer the budget to the Committee on Appropriation to work on the details after the debate on the general principles had been concluded.

The committee will thereafter report its recommendations on the details to the House, where members will simply pass the figures on the various sub-heads.

The fallout in some cases was that lawmakers voted to pass certain sub-heads without really knowing how the money would be distributed down the chain.

Such developments led to the controversial N40bn budget padding allegation raised against four principal officers last year by a former Chairman of the House Committee on Appropriation, Mr. Abdulmumin Jibrin.

Addressing lawmakers as they resumed on Tuesday, Dogara said the old practice would be jettisoned in respect of the 2017 budget so that members would have the opportunity to consider every detail of the budget proposal in the plenary.

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

Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start

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refineries

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.

Failed Attempts

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.

Major Challenge

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.”

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Economy

Food Inflation Hits Record High of 19.56 Percent in December 2020

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Inflation

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).

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Economy

Nigeria’s Inflation Rate Rises to 15.75 Percent in December

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inflation

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.

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