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Petrol Price: FG Rules Out Total Deregulation

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  • Petrol Price: FG Rules Out Total Deregulation

The Federal Government on Thursday announced that it had ruled out the total deregulation of the downstream oil and gas sector so as not to raise the pump price of Premium Motor Spirit, popularly known as petrol.

It noted that any attempt to enforce a total deregulation of the sector would lead to an increase in the prices of petroleum products, adding that it was aware of the severe consequence that this would have on Nigerians.

Speaking at the 2017 African Modular Refinery Discussion organised in Abuja by the Modular Refineries Association of Nigeria, Acting President Yemi Osinbajo, noted that despite calls for the complete deregulation of the downstream oil sector, the government would not do so but would continue to moderate activities in the industry.

He said, “There are those who are saying we need to deregulate fully. Why are they saying that? It is because if we do not deregulate, it is not cost-effective for those who are producing PMS to sell. At the same time, if you deregulate completely, prices of everything will go up.

“So there are those complications, meaning we got to moderate all those things. Government has to come in to a certain extent and this is what is currently going on to try and balance things up. Because we cannot have just overnight another massive deregulation. If you do that, the consequences will be very dire for the economy.”

Osinbajo also blamed the government’s involvement in the refineries for the failure and near collapse of the facilities in Kaduna, Warri and Port Harcourt.

According to him, in the new modular refineries’ initiative, oil producing communities will be made to acquire stakes in refineries that are set up in their localities, while the federal and state governments will have some stake, as well as private investors.

He said the government was committed to creating an enabling environment for private sector participation and investments in modular refineries, adding that it was aware of the challenges and complications posed by the non-deregulation of the sector.

Speaking further on the poor performance Nigeria’s three refineries, Osinbajo said the Federal Government had also ruled out building and managing refineries, adding that it would only create the atmosphere for private players.

He stated, “Government cannot just go and be setting up refineries. If government sets up refineries and uses its people to run it, it won’t work. We have good examples in all the refineries that we have seen. If you look at the refineries we have today, Warri, Port Harcourt and Kaduna, the primary reason they are not working today is that they are government-run.

“Government cannot do business. Government business is to create the enabling environment for business. And then, government will put some investment into it. Government should not be in the business of setting up refineries all over the place. That is just a waste of time and resources.”

The acting President added that the nation must exploit the massive petroleum resources that it had and explained that this prompted the Federal Government’s decision to establish modular refineries across the Niger Delta in particular.

He stated that in ensuring increased community participation, citizens from the Niger Delta must ensure that they participated adequately in the process.

Osinbajo added, “They are entitled not because they live in the Niger Delta, but they are entitled to it because they also have the brains, the resources to be able to make it happen and this is what I have seen from my engagement with people in the Niger Delta.

“They themselves are bringing in the investors; they themselves are talking to private investors locally and internationally, and they are bringing them here.”

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

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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Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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