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Nigeria to Stop Fuel Importation by 2019 – Kachikwu

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  • Nigeria to Stop Fuel Importation by 2019

Nigeria will stop importing refined petroleum products by 2019.

The Minister of State for Petroleum Resources, Mr Ibe Kachikwu, said on Tuesday in Abuja at a public hearing on the review of petroleum pricing template for Premium Motor Spirit organised by the House of Representatives.

He said that within two years, the Federal Government revived refineries that were non-functional to contribute about eight million out of over 20 million litres of petrol consumed in the country daily.

He explained that the Federal Government initiated a model which attracted foreign investors to partner with the Nigeria National Petroleum Corporation to repair the country’s refineries within the two years period.

He said, “This has consistently served as a target for this government so that by December 2018, NNPC must be able to deliver on some of the terms given them, one of which is to reduce petroleum importation by 60 per cent.

“By 2019, we should be able to exist completely on the importation of petroleum products in this country.

“Cognisant of the fact that Dangote is building one refinery, we expect to have an excess situation.”

The minister said that Nigeria must also have the capacity to stop exporting crude oil.

According to him, selling crude oil is not different from selling agricultural produce in an unprocessed manner.

He said, “The world is leaving that, every member of OPEC is leaving that because of the prizing, volume and market challenges is now shifting from selling crude to selling refined petroleum products.

“That is what this country must do and there is a template we are working on.”

He further said that the ministry intended to create an enabling environment that would promote local refining of crude oil.

He said, “The issue is not giving licences to illegality, the issue is how do we ensure that we create an investment environment that pulls individuals from illegal creek activities to legal business activities.

“We are looking at modular refineries, about 60 licences were given out just before this government came in and none of that was utilised because it requires a lot of money, land and crude security.

“But now we are going out to identify refineries, get individuals who can build refineries on the same platforms where our refineries are and identify some key specific modular refineries backed up by foreign investments working with state governments.

“Hopefully this will address the restiveness you see in the Niger Delta.”

On the possibility of reducing the fuel pump price, Kachikwu said there was no padding in the petroleum pricing template for PMS currently sold at N145 per litre.

According to him, 71 per cent of the cost is for the production and freight, 18 per cent balance is covered by depot charges and retailers margin.

He said, “In other words, the storage tanks, the amount you get by verge of operating a filling station takes another 18 per cent, the output of those is already taking you to roughly about 90 per cent.

“The transportation is less than 10 per cent; we probably can do better; the templating is an insignificant 1 per cent or 2 per cent but that’s not where the problem is.

“The problem is with foreign exchange rate.

“There are two key elements in the template, how much you buy it is internationally fixed, it is not a Nigerian issue the cost of foreign exchange is a monetary policy issue.

“So, at the time we did the template the Central Bank of Nigeria monetary policy was N245, that was the basis upon which we calculated the pricing, today N305 is the exchange rate.

“And what we have tried to do is to ensure that anybody who sells us foreign exchange follows basically the instructions of the CBN in terms of the amount.”

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

Japan Donates US$6.5 Million to WFP to Stem Food Insecurity in South Sudan

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The United Nations World Food Programme (WFP) welcomes a contribution of US$6.5 million from the Government of Japan. This contribution is timely at the start of the lean season when more than 7.2 million people in South Sudan are expected to face acute food shortages.

This latest contribution consists of US$4.5 million for life-saving food assistance to people who are severely food insecure and US$ 2 million to restore livelihoods and enhance resilience.

WFP will use this contribution to support 115,000 people in Jonglei, Warrap, Northern Bahr el Ghazal and Lakes States, where food insecurity has reached catastrophic levels due to continuing violence, two years of excessive flooding, displacement and the loss of livelihoods, livestock, infrastructure and homes that have left millions of people highly vulnerable and unable to provide for themselves.

“It is our sincere wish that Japan’s grant helps save the people from food insecurity accelerated by natural disaster, communal violence and displacement and bring those suffering people back to a normal living environment which is the precondition to pave the way to nation building and economic development in South Sudan,” said H.E. Tsutsumi Naohiro, Ambassador of Japan to the Republic of South Sudan.

The contribution will also support WFP’s livelihoods and resilience-building programmes, which include creation of community assets such as access roads and multi-purpose water points. These communal assets are geared towards improving families’ access to local markets to sell their produce and purchase food and other essentials, as well as their access to clean water.

“We are grateful to Japan for this timely contribution at a time when food needs are the greatest but funding for humanitarian assistance is dwindling because of the economic impact of COVID-19. This noble gesture demonstrates the government of Japan’s commitment towards alleviating suffering and contributing to peace in South Sudan,” said Matthew Hollingworth, WFP’s Country Director in South Sudan. “It is a great boost towards our saving lives and changing lives efforts.”

The Government of Japan has funded food assistance to developing countries since 1968. Japan has supported WFP’s work in South Sudan since 2013, contributing more than US$35 million.

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Oil Firms Borrowed N130B From Banks in February – CBN

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Operators in the downstream, natural gas and crude oil refining sectors of the Nigerian oil and gas industry borrowed N130b from Nigerian banks in February amid the significant rise in global crude oil prices.

The debt owed by the oil and gas companies rose to N4.05tn in February from N3.92bn in January, according to the latest data obtained from the Central Bank of Nigeria on Monday.

Operators in the upstream and services subsectors owed banks N1.26tn in February, down from N1.27tn a month earlier.

The combined debt of N5.31tn owed by oil and gas operators as of February 2021 represents 25.29 percent of the N21tn loans advanced to the private sector by the banks, according to the sectoral analysis by the CBN of deposit money banks’ credit.

Oil and gas firms received the biggest share of the credit from the deposit money banks to the private sector.

The slump in oil prices in 2020 as a result of the coronavirus pandemic hit many oil and gas companies hard, forcing them to slash their capital budgets and suspend some projects.

A global credit rating agency, Moody’s Investors Service, said last month that the outlook for Nigeria’s banking system remains negative, reflecting expectations of rising asset risk and weakening government support capacity over the next 12 to 18 months.

“Nigerian banks’ loan quality will weaken in 2021 as coronavirus support measures implemented by the government and central bank last year, including the loan repayment holiday, are unwound,” said Peter Mushangwe, an analyst at Moody’s.

The rating agency estimated that between 40 percent and 45 percent of banking loans were restructured in 2020, easing pressure on borrowers following the outbreak of the pandemic.

Another global credit rating agency, Fitch Ratings, had noted in a December 8 report that Nigerian bank asset quality had historically fallen with oil prices, with the oil sector representing 28 percent of loans at the end of the first half of 2020.

It said the upstream and midstream segments (nearly seven percent of gross loans) had been particularly affected by low oil prices and production cuts.

“However, the sector has performed better than expected since the start of the crisis, limiting the rise in credit losses this year due to a combination of debt relief afforded to customers, a stabilisation in oil prices, the hedging of financial exposures and the widespread restructuring of loans to the sector following the 2015 crisis,” it said.

The rating agency predicted that Nigerian bank asset quality would weaken over the next 12 to 18 months.

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Economy

Fall in Economic Activities in Nigeria Created N485.51 Billion Fiscal Deficit in January -CBN

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The drop in economic activities in Africa’s largest economy Nigeria led to a N485.51 billion fiscal deficit in January, according to the latest data from the Central Bank of Nigeria (CBN).

In the monthly economic report released on Friday by the apex bank, the weak revenue performance in January 2021 was due to the decline in non-oil receipts following the lingering negative effects of COVID-19 pandemic on business activities and the resultant shortfall in tax revenues.

In part, the report read, “Federally collected revenue in January 2021 was N807.54bn.

“This was 4.6 per cent below the provisional budget benchmark and 12.8 per cent lower than the collection in the corresponding period of 2020.

“Oil and non-oil revenue constituted 45.4 per cent and 54.6 per cent of the total collection respectively. The modest rebound in crude oil prices in the preceding three months enhanced the contribution of oil revenue to total revenue, relative to the budget benchmark.

“Non-oil revenue sources underperformed, owing to the shortfalls in collections from VAT, corporate tax, and FGN independent revenue sources.

“Retained revenue of the Federal Government of Nigeria was lower-than-trend due to the lingering effects of the COVID-19 pandemic.”

“At N285.26bn, FGN’s retained revenue fell short of its programmed benchmark and collections in January 2020, by 41.3 per cent and 7.5 per cent respectively.

“In contrast, the provisional aggregate expenditure of the FGN rose from N717.6bn in December 2020 to N770.77bn in the reporting period, but remained 14.4 per cent below the monthly target of N900.88bn.

“Fiscal operations of the FGN in January 2021 resulted in a tentative overall deficit of N485.51bn.”

The report noted that Nigeria’s total public debt stood at N28.03 trillion as of the end-September 2020, with domestic and external debts accounting for 56.5 percent and 43.5 percent, respectively.

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