Economy

N4.74tn Spent on Fuel Imports in 2016 – Kachikwu

Published

7 years ago

June 9, 2017

Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu

N4.74tn Spent on Fuel Imports in 2016 – Kachikwu

In the last one year, the country has spent about N4.74tn on the importation of petroleum products, an amount that is made up of N3.4tn for the actual products and N1.34tn on logistics.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who stated this at a press conference in Abuja on Thursday, said, “The importation of petroleum products between January and December of last year amounted to about 20 million metric tonnes. A total amount of N3.4tn was spent.

“The consumption of foreign exchange from the Central Bank of Nigeria was approximately 30 per cent of the CBN’s total foreign exchange outlay, and the logistic cost of that importation was about N1.34tn within the same one year period.”

Explaining why the country must end the importation of refined petroleum products, he added, “The domestic refining capacity as of today is six million litres out of a total consumption of about 35 million litres, averaging less than 25 per cent.

“In the midst of this sort of statistics, it is absolutely critical that we move in to try to end importation of products, improve our refineries and get them up to 100 per cent nameplate.”

The minister also said the government had neither given out any of the refineries to private investors as concessions nor had disposed them.

According to him, no financier has been selected to revamp the refineries as the government is still searching.

He also stated that the Federal Government would require about $1.2bn to repair and bring the four refineries in Port Harcourt, Warri and Kaduna up to 100 per cent production level.

Kachikwu said, “Internally, we have been able to determine the sort of amount that will be required to do this work in terms of what work is really required to be done. The total cumulative amount is in the $1.1bn and $1.2bn category between all the refineries.

“And that, of course, does not include the pipelines. You have got to address the pipelines and that is something else that is being done.”

He stated that so far, no financier had been selected for the refineries as planned, adding that what had happened was that advertisements were placed in some national and international newspapers in April last year seeking financiers to fund, rehabilitate and jointly operate the refineries.

This, the minister said, was in order to increase the capacity utilisation of the facilities and that nowhere in those adverts was it stated that there would be a transfer of the assets to any eventual successful financier.

Kachikwu, however, stated that the tender process for financiers was truncated in May last year following concerns raised by the National Assembly and the Bureau of Public Enterprises.

The concerns, according to him, were thrashed out and an understanding was reached that the rehabilitation process would not adversely impact any future Federal Government’s privatisation initiative.

He noted that following the understanding that was reached by the parties, a presidential approval was granted the Nigerian National Petroleum Corporation in October to engage credible financiers to rehabilitate and improve the performance of the refineries.

He stated that three possible partners, Agip, Saudis and Qataris were initially identified for engagement.

The minister said the government also indicated that it would invite the original builders for the refineries to undertake the repairs.

With regard to the co-location of refineries, Kachikwu stated that a public tender was announced in April last year and bids were received and analysed, adding that winners for the Port Harcourt and Warri refineries had been identified.

He stated that discussions on the issue were still ongoing to finalise the process, with approval to be given by both the NNPC Board and the Federal Executive Council.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Ubeta Project to Produce 350 Million Standard Cubic Feet of Gas Per Day Once Operational – FG

Published

2 hours ago

September 18, 2024

Ugwoke Ogbodo

The Federal Government of Nigeria has said that once the Ubeta gas field is fully operational, it will produce 350 million standard cubic feet of gas per day.

With this dream realised, the Federal Government said the anticipated achievement would enhance energy security, attract investments, and strengthen collaboration with key partners.

This was made known by the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, at the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.

Recall that the Nigerian National Petroleum Corporation (NNPC) Limited, in partnership with French energy giant TotalEnergies, had in July planned to invest a significant $550 million to develop gas facilities in oil-rich Rivers State.

Verheijen had announced the kickoff of a $550 million upstream gas project between Nigerian National Petroleum Corporation Ltd. (NNPCL) and TotalEnergies for the development of the Ubeta field.

At a luncheon during the dialogue, Verheijen mentioned that the upstream gas project would produce 350 million standard cubic feet of gas per day once operational.

A statement from Morenike Adewunmi, Stakeholder Manager, Office of the Special Adviser to the President on Energy, quoted Ms. Verheijen as informing the gathering that President Bola Tinubu’s major energy reforms since June 2023 have been aimed at enhancing energy security, attracting investments, and strengthening collaboration with key partners, including the US government.

According to her, the reforms have significantly improved the viability of Nigeria’s gas-to-power value chain.

She explained that in support of the reform efforts, the President issued five new executive orders designed to offer fiscal incentives for investment and reduce the cost and time required to finalize and implement contracts for developing and expanding gas infrastructure.

Verheijen said that the directives aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.

She acknowledged the valuable support of financing and technical partners, including the US government, the World Bank, and the African Development Bank, in efforts to expand electricity access and reliability through both grid and off-grid solutions.

Economy

Nigeria’s Trade Surplus Hits N6.95 Trillion in Q2 2024, Marking a 33.63% Increase

Published

5 days ago

September 13, 2024

Investors King

Nigeria’s trade surplus, the difference between exports and imports, rose to N6.95 trillion in the second quarter of 2024, according to the latest foreign trade statistics report released by the National Bureau of Statistics (NBS) on Wednesday.

This marks a 33.63 percent increase from the N5.19 trillion recorded between January to March 2024, bringing the total value at N12.14 trillion in the first half of 2024.

This is however higher than N154.12 billion recorded in the first six months of 2023, the NBS data revealed.

The report showed that the country recorded a positive trade balance for the sixth straight quarter in Q2, signifying key economic development.

A trade surplus occurs when a country’s exports exceed its imports.

Total merchandise trade in Africa’s most populous nation stood at N31.8 trillion in Q2, a decline of 3.76 percent compared to the preceding quarter and a 150.39 percent jump compared to a year ago.

“Exports accounted for 60.89% of total trade with a value of N19,418.93 trillion, showing a marginal increase of 1.31% compared to the value recorded in Q1 2024 (N19,167.36) and a 201.76% rise over the value recorded in the second quarter of 2023 (N6,435.13),” NBS said.

Analysts attributed the surge in exports to the exchange rate depreciation caused by the foreign exchange reform implemented last June.

Tobi Ehinmosan, a fixed income and macroeconomic analyst at Lagos-based FBNQuest Capital, said the major factor for this significant trade surplus numbers is the decline in import trade.

“No doubt, our export performance has been on the rise but then the main driver is the drop in import trade, especially from June 2023 when the exchange rate was floated,” he said.

“A reasonable explanation for the lower import figure is the challenges traders face in sourcing for FX,” Ehinmosan noted, adding that the scarcity of FX has led to lower import of commodities into the country.

Echoing the same sentiment, Michael Adeyemi, an economics lecturer said the surplus suggests a reduction in imports, caused by such factors like currency devaluation or high import costs.

“A trade surplus strengthens the balance of payments, which can help stabilize Nigeria’s currency, the naira,” Adeyemi said.

“It also allows the country to build foreign reserves and pay off international debt obligations more comfortably,” the university lecturer explained.

The naira has tumbled by over 70 percent this year following a two-time devaluation last year. The official exchange rate increased from N463.38/$ on June 9, 2023, to N1.558.7/$ as of September 12, 2024.

At the parallel market, the naira depreciated to over N1,600/$ from 762/$.

Recent data from the International Monetary Fund highlighted that Nigeria’s current account balance, a measure of its net trade in goods, services, and transfers with the rest of the world, rose to $1.43 billion this year from $1.21 billion surplus in 2023.

“A growing current account surplus can be a sign of economic strength, indicating that the country’s industries are competitive internationally and that its exports are in demand,” Ibrahim Bakare, a professor of Economics said.

“It may also lead to an appreciation of the country’s currency, as increased demand for its goods and services boosts the value of its currency relative to others,” he added.

Economy

FIRS VAT Revenue Surges to N1.56 Trillion in Q2 2024 Amid Economic Struggles

Published

1 week ago

September 10, 2024

Samed Olukoya

The Federal Inland Revenue Service (FIRS) generated N1.56 trillion in Value Added Tax (VAT) in the second quarter (Q2) of 2024, according to the latest report from the National Bureau of Statistics (NBS).

This represents an increase of 9.11% compared to the N1.43 trillion reported in the first quarter of 2024.

A breakdown of the report showed that local VAT payments accounted for N792.58 billion of the total amount generated, while foreign VAT payments stood at N395.74 billion, and import VAT contributed N372.95 billion.

A quarterly analysis of the report revealed that human health and social work activities recorded the highest growth rate with 98.44%. This was followed by agriculture, forestry, and fishing with 70.26%, and water supply, sewerage, waste management, and remediation activities with 59.75%.

On the other hand, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use had the lowest growth rate with –46.84%, followed by real estate activities with –42.59%.

Sectoral analysis showed that the manufacturing sector contributed the most at 11.78%. Information and communication and mining and quarrying contributed 9.02% and 8.79%, respectively.

Nevertheless, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.00%, followed by activities of extraterritorial organizations and bodies with 0.01%, and water supply, sewerage, waste management, and remediation activities and real estate services with 0.04% each.

On a year-on-year basis, VAT collections grew by 99.82% from Q2 2023 despite ongoing economic challenges.

Nigeria’s inflation rate remains well above 30 percent, while new job creation is almost nonexistent.

Other key economic factors, such as investor sentiment, the purchasing managers’ index, and consumer spending, remain weak amid intermittent protests by citizens demanding improvements in quality of life.