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FG Resumes Payment into Excess Crude Account with $87m

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  • FG Resumes Payment into Excess Crude Account with $87m

The Minister of Finance, Mrs. Kemi Adeosun, said on Monday that the federal government has commenced payment into the Excess Crude Account (ECA), in line with efforts to rebuild fiscal buffers.

Adeosun said for the first time since the administration took over, the federal government last month paid $87 million into the ECA.

“Even though things are difficult, we are saving. As you know, when we came in, we gave the Sovereign Wealth Fund (SWF) an extra $500 million and we are still going to do more. We cannot afford to waste because we don’t have money to waste,” Adeosun said while speaking at The Platform, a programme organised by Covenant Christian Centre in Lagos on Monday.

She said a lot of foreign investors were interested in investing in the country.

Adeosun told her audience: “When I leave here (The Platform), I am going to meet a group of investors that came in from America. Long-term investors are now looking at Nigeria and saying it is time to come in. On Thursday, we had a group of Japanese.

“We are not talking about people that are bringing in sachets of things to come and sell here, we are talking about people that want to set up factories to manufacture transformers. We are talking about industrialists. They are coming back into Nigeria because Nigeria is showing that it is serious.

“We have taken the pains. Often, the medicine that does it the best is the bitterest medicine and we have had very bitter medicine in the last one year. But now, we would have the long-term benefits in terms of growth and jobs.”

According to Adeosun, in terms of entrepreneurship, the federal government recently revived the Development Bank of Nigeria, saying it was a development finance institution project that started under the previous government, adding that the bank would have $1.3 billion of capital that would be lent to microfinance and banks, specifically for on-lending to SMEs.

“Actually, our economy is 50 per cent driven by SMEs and only 10 per cent of them have access to loans. So, if you begin to improve their access to capital, you can rapidly grow jobs and businesses,” she said.

Furthermore, the minister said the policy direction of the federal government would help lay the foundation for a sustainable economy.

She said: “We are going to build an economy that really doesn’t care about what the price of crude oil is. There are 180 million of us in the country and we have two million barrels of oil per day.

“Kuwait has 3.9 million people and three million barrels of oil per day. So, we can’t afford to continue to behave like an oil economy. An oil economy simply pumps the oil out, then use the dollars to buy everything they need.

“That is the economic model that Nigeria has largely been following. We export crude oil and then we buy everything. We don’t add value, we don’t get any of the by-products and that means that Nigeria has become a very unproductive economy. That is not the intention of the Nigerian dream.”

The minister reiterated that a recent study showed that only 214 individuals pay tax in excess of N20 million, saying that the government would take measures to broaden the tax base.

“Oil has made us extremely lazy. The truth is that what we spent monies on in the past were all on wrong things. We are now suffering the effects of the things that were done three years ago.

“When we started the whistle-blowing policy, people were saying why should we pay somebody five per cent? But our argument was that, what about the person who stole 100 per cent? Why fixated on the person that is getting five per cent to bring the money back.”

Adeosun justified the federal government’s increased borrowing, citing the case of the renovation of the runway of the Abuja airport.

“If you spend money on the right thing, you get the right results. We do have to borrow because if we have to wait for oil price to recover, we would be in recession for a very long-term and use the money to develop capital projects.

“One of the things we have been trying to do is to improve our revenue so that we can’t continue to depend heavily on crude oil sales,” she added.

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

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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.

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

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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.

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

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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.

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