Connect with us

Economy

FG, States Borrow N7.51tn Under Buhari

Published

on

minister-of-finance-kemi-adeosun
  • FG, States Borrow N7.51tn Under Buhari

The Federal Government under President Muhammadu Buhari and the 36 states of the federation as well as the Federal Capital Territory have borrowed N7.51tn in the last two years, statistics have revealed.

As of June 30, 2015, just a month after the present crop of leaders took over the leadership of the country, Nigeria’s total debt stood at N12.12tn.

However, as of June 2017, the nation’s total debt had climbed to N19.63tn, according to the latest debt statistics obtained from the Debt Management Office.

The debt stock data released by the DMO revealed that the total public debt stock (external and domestic debt stock of the Federal Government and sub-nationals) as of the end of June was N19.63tn (about $64.19bn at N305.9/$1), made up of external debt stock of N4.6tn (about $15.05bn) and domestic debt stock of N15.03tn (about $49.15bn).

The DMO said in a statement posted on its portal on Sunday, “The domestic debt stock of the Federal Government and sub-nationals accounted for 76.56 per cent of the total public debt stock, while their external debt stock accounted for 23.44 per cent.

“Furthermore, the total public debt stock increased by 2.5 per cent from N19.16tn (about $62.54bn) to N19.64tn (about $64.19bn), during the period under review.

“The total external public debt stock of the Federal Government and sub-nationals increased by 8.98 per cent from $13.81bn in March 2017 to $15.05bn in June 2017, while the domestic debt stock of the Federal Government and the sub-nationals increased by 0.67 per cent from N14.93tn in March 2017 to N15.03tn in June 2017.”

However, an analysis of the debt statistics from the May 29, 2015, when the current leaders took over the reins of power, to June 30, 2017, showed that the country’s total debt had risen from N12.12tn to N19.63tn.

This means that the country’s debt rose by N7.51tn or 61.96 per cent within a period of two years.

As of June 2015, the domestic debt of the Federal Government stood at N8.39tn. Detailed breakdown of the domestic component of the nation’s total debt as of June 30 was not available as of the time of going to press on Sunday.

However, the Federal Government’s domestic debt stood at N11.97tn, while the domestic debt component of the states stood at N2.96tn as of March 31, 2017.

The external debt balance of both the federal and state governments stood at $10.32bn as of June 2015 compared to the $15.05bn recorded as of the end of June this year. This means that within the period, the country’s external debt portfolio had risen by $4.73bn or 45.83 per cent.

The increasing proportion of the foreign debt component reflects a new debt management strategy released by the DMO recently. It also reflects a strategy to reduce high interest payment occasioned by much dependence of domestic debts.

According to the DMO, the country’s new debt management strategy entails balancing the sources of debt to ensure that more resources are borrowed from external sources where the interest rate is seen as lower than interest rates on borrowings from domestic sources.

The Debt Management Strategy 2016-2019 targets the rebalancing of the debt portfolio from its composition of 84:16 (domestic to foreign) to 60:40 by the end of December 2019 (domestic to foreign).

“It supports the use of more external finance for funding capital projects, in line with the focus of the present administration on speeding up infrastructural development in the country, by substituting the relatively expensive domestic borrowing in favour of cheaper external financing,” the DMO said.

Our correspondent reported that the Federal Government spent a total of N1.88tn on domestic debt servicing between 2014 and 2015.

With foreign debt now accounting for 23.44 per cent of the total indebtedness, the Federal Government may achieve the goal of increasing the proportion it to 40 per cent by 2019.

In line with this strategy, the Federal Government recently unveiled a plan to borrow $3bn from foreign sources to refinance some maturing local debts.

The DMO had said that refinancing Federal Government’s maturing $3bn local debts would not only crash the rate of domestic borrowing, but also allow some borrowing space to the private sector.

It stated that borrowing from foreign sources to refinance the local debts would also allow the government time to repay the loans when the economy must have fully recovered from recession and diversified.

The DMO said the move was informed by the lower dollar interest rates in the international capital market, adding that Nigeria was expected to borrow at a rate not higher than six per cent, while issuances of the NTBs in the domestic market were at rates as high as 18.53 per cent.

According to the office, external borrowing is cheaper by about 12 points and will result in substantial cost savings for the Federal Government in debt service costs.

The DMO had said, “Besides reducing the cost of borrowing, the $3bn is expected to be raised for a tenor of up to 15 years, which is very long compared to the maximum tenor of 364 days for NTBs.

“This move will effectively extend the tenor of the government’s debt portfolio. The longer tenor enables the government to repay at a time when the economy would be stronger and more diversified to meet the obligations.”

It added, “The reduction in the level of the FGN’s borrowing from the domestic market will result in a reduction in domestic interest rates and free up borrowing space in the economy, particularly for private sector borrowers.

“The $3bn from the refinancing will also represent an injection of foreign exchange into the economy, which will boost the country’s external reserves.”

The DMO said that the approval of the National Assembly would be obtained for the proposed refinancing before implementation in line with the Debt Management Office Act, 2003.

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

Seplat Petroleum Pays US$564.165 Million to Federal Government in 2020

Published

on

Seplat Petroleum, an indigenous Nigerian upstream exploration and production company, announced it paid a total sum of US$564.165 million to the Federal Government in 2020.

In the report on payments made available to the Nigerian Stock Exchange and seen by Investors King, Seplat Petroleum paid US$389.576 million to the Nigerian National Petroleum Corporation (NNPC) as production entitlement in 2020.

Production entitlement is the government’s share of production in the period under review from projects operated by Seplat.

This comprises crude oil and gas attributable to the Nigerian government by virtue of its participation as an equity holder in projects within its sovereign jurisdiction (Nigeria).

Also, Seplat paid US$130.009 million to the Department of Petroleum Resources in 2020. A breakdown of the amount showed US$111.633 million was paid as royalties while US$18.376 million was paid as fees.

Similarly, US$579,361 was paid as a fee to the Nigeria Export Supervision Scheme.

The energy company made another payment of US$17.935 million in fee for 2020.

While the Nigerian Content Development and Monitoring Board received US$4.826 million in fee from Seplat in 2020.

Seplat paid US$21.239 million in taxes to the Federal Inland Revenue Service in 2020.

Therefore, Seplat Petroleum paid a total sum of US$564.165 million to the Federal Government in the 2020 financial year. See the details below.

Continue Reading

Economy

FIRS Sets N5.9 Trillion Revenue Target for 2021

Published

on

firs

FIRS to Generate N5.9 Trillion Revenue  in 2021

Mohammed Nami, the Chairman of Federal Inland Revenue Service, FIRS, on Friday said the agency is projecting total revenue of N5.9 trillion for the 2021 fiscal year.

Nami stated this while meeting with the House of Representatives Committee on Finance led by Hon. James Falake on the Service’s 2021 budget defence of its proposed Revenue and Expenditure Estimates.

According to the Chairman, N4.26 trillion and N1.64 trillion were expected to come from non-oil and oil components, respectively.

However, Nami put the cost of collecting the projected revenue at N289.25 billion or 7 percent of the proposed total revenue for the year, higher than the N180.76 billion spent in 2020 to fund the three operational expenditure heads for the year.

He said: “Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against the budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.

Speaking on while the agency failed to meet its 2020 target, Nami said “There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves travelling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the taxpayers, we pay rent for those offices and this could be the reason why all these things went up.

“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.

 

Continue Reading

Economy

Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom

Published

on

governor-udom-emmanuel

The Governor of Akwa Ibom State, Mr. Udom Emmanuel has signed an agreement for the citing of a multi billion fertilizer plant in his State.

Governor Emmanuel was part of a Nigerian delegation led by the Minister of State for Petroleum Resources, Chief Timipre Sylva, that visited Morocco to set out the next steps of the $1.4 Bln fertilizer production plant project launched in June 2018.

The agreement between the OCP Africa, the Nigerian Sovereign Investment Authority and the Akwa Ibom State Government will birth one of the biggest investments in the fertilizer production industry worldwide.

The signing ceremony took place at the Mohammed VI Polytechnic University (UMP6).

Mr. Emmanuel signed one of the agreements of the partnership, which covers a memorandum of understanding between OCP Africa, the Akwa Ibom State in Nigeria and the NSIA on land acquisition, administrative facilitation, and common agricultural development projects in the Akwa Ibom State.

Speaking while signing the agreement, Governor Emmanuel said, “Our state is receptive to investments and we are prepared to offer the necessary support to make the project a reality.

“With a site that is suitably located to enable operational logistics and an abundance of gas resources, all that is left is for the parties to accelerate the project development process”, Mr. Udom said.

The agreement reached between the Nigerian Government and the OCP further links OCP, Mobil Producing Nigeria (MPN), the NNPC, the Gas Aggregation Company Nigeria (GACN), and the NSIA.

The two partners agreed to strengthen further their solid partnership leveraging Nigerian gas and the Moroccan phosphate.

This project will lead to a multipurpose industrial platform in Nigeria, which will use Nigerian gas and Moroccan phosphate to produce 750,000 tons of ammonia and 1 million tons of phosphate fertilizers annually by 2025.

The visit of the Nigerian delegation to Morocco takes place within the frame of the partnership sealed between OCP Group and the Nigerian Government to support and develop Nigeria’s agriculture industry.

Following the success of the first phase of Nigeria‘s Presidential Fertilizer Initiative (PFI) and the progress of the fertilizer production plant project launched in 2018 by OCP and NSIA, the Moroccan phosphates group and the Nigerian government delegation have agreed on the next steps of their joint project which is rapidly taking shape.

Several cooperation agreements were inked on Tuesday at the Mohammed VI Polytechnic University (UM6P) by OCP Africa and the Nigerian delegation. Through these deals, OCP reaffirms its unwavering support of agricultural development initiatives in Nigeria including PFI.

OCP Africa and the NSIA have agreed, inter alia, to set up a joint venture which will oversee the development of the industrial platform that will produce ammonia and fertilizers in Nigeria.

The OCP has also pledged to supply Nigerian famers with quality fertilizers adapted to the needs of their soil at competitive prices and produced locally.

Continue Reading

Trending