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Senate Approves $5.5bn Foreign Loan as External Debt Rises to $15.4bn



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  • Senate Approves $5.5bn Foreign Loan as External Debt Rises to $15.4bn

The Senate Tuesday approved the request by the executive to raise $3 billion from the international capital market (ICM) through a Eurobond or Diaspora Bond issue or a combination of both to refinance maturing domestic debts, and raise another $2.5 billion from multilateral donor institutions to fund the capital component of the 2017 budget.

The approval coincided with the latest data released by the Debt Management Office (DMO) Tuesday showing that Nigeria’s debt stock hit N20 trillion as of September 30, 2017, with the foreign component accounting for 23.04 per cent or N4.694 trillion ($15.40 billion) of the total debt stock.

The approval by the Senate followed the adoption of the recommendations of its Committee on Local and Foreign Debts chaired by Senator Shehu Sani (Kaduna, APC).

But before the loan request was approved, the Deputy President of the Senate, Senator Ike Ekweremadu, who presided over Tuesday’s plenary, had charged the DMO to monitor Nigeria’s debt profile to ensure it remains within acceptable limits.

“Let me state clearly that this Senate will continue to partner with the federal government on matters that concern the ordinary people of Nigeria. The implementation of the 2017 budget is key because any Appropriation Act that is not implemented is worthless,” he said.

Senator Yusuf Abubakar Yusuf (Taraba APC) said while borrowing to refinance local debt could be deemed a good model, the government must be careful as its workability would depend on Nigeria’s foreign reserves and exchange rate stability.

“If our foreign exchange rate is very low, if it fall as low as N500 to a dollar, we are going to have a very serious challenge generating enough foreign exchange to pay our foreign debt.

“We have to be seen to be a lot more cautious, not just saying that the interest rate (for external borrowing) is low and the cost of refinancing the loan will be low.

“We must also take cognisance of the fact that whatever happens will have an impact on our foreign exchange rate,” Yusuf said.

Also contributing to the debate, Senator Gbenga Ashafa (Lagos APC) said the loan was critical to the success of the 2017 budget.

“If we consider the projects that these loans are supposed to fund, they are spread across all the geopolitical zones. They covers power, rail, roads, water and others,” he said.

Last October, President Muhammadu Buhari had sought expeditious approval of the foreign loan request.

Some of the projects to be funded from the loans include the Mambilla hydropower project, second runway at the Nnamdi Azikiwe International Airport, Abuja, counterpart funding for rail projects, and the construction of the Bodo-Bonny road.

Also at plenary Tuesday, the Senate mandated its Committees on Finance and Banking, Insurance and Financial Institutions to investigate allegations of unremitted revenue from stamp duties in the last five years.

This, it said, was due to the need to harness all sources of revenue to the government and curb all forms of wastefulness, corruption and diversion of funds.

The resolution followed a motion sponsored by Senator John Owan Enoh (Cross River, PDP) and 11 others who expressed concern over report by the School of Banking Honours that showed that over N7 trillion in stamp duties from cashless transactions remained unpaid to the federation since 2015.

The motion stated: “Worried that the provision for stamp duty in the revenue framework of the nation’s annual budget for 2015, 2016 and 2017 had been N8.713 billion, N66.138 billion and N16.96 billion, respectively despite the above report.

“We have been apprised of the anti-stamp duties collection stance of the Nigerian inter-Bank Settlement System (NIBSS) which is currently being accused of systemic diversion of huge revenue flows from stamp duty collection on electronic transfer receipts on online banking transactions and the necessity to demand notice on all unremitted stamp duties.”

Owan also queried how the projection on stamp duties dropped from N66 billion in 2016 to N16.9 billion in 2017.

Adopting the prayers of the motion, the Senate commended the School of Banking Honours for bringing the issue of unremitted revenue from stamp duties to the public’s notice, and for insisting on probity of the NIBSS.

The School of Banking Honours is a body corporate approved through registration by the Nigerian Copyrights Commission, to research into banking operations, facilitate collaboration between banks, ensure collaboration between banks and the government, and represent the government in facilitating the imposition and monitoring of stamp duties on all electronic cash transactions.

Total Debt Rises to N20tn

Meanwhile, data released Tuesday by the DMO has shown that Nigeria’s total public debt stock, comprising the federal government, states and the Federal Capital Territory (FCT) stood at N20.373 trillion as of September 30, showing a marginal increase of 3.6 per cent from N19.637 trillion as of June 30.

A breakdown of the country’s debt stock, according to a statement, indicated that domestic debt accounted for 76.96 per cent of the total debt stock while external debt accounted for 23.04 per cent.

The DMO put the domestic debt stock at N15.679 trillion, an increase of 4.1 per cent compared with N15.034 trillion as of June 30.

On the other hand, external debt stock stood at N4.694 trillion ($15.390 billion), reflecting a marginal rise of 1.9 per cent from N4.602 trillion as of June 30.

“The debt data lends credence to the government’s claims that the public debt stock is skewed in favour of domestic debt which is partly responsible for the high debt service figures,” the statement explained.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


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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