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Budget: FG Adjusts 2018-2020 MTEF/FSP by N1.5tn

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  • Budget: FG Adjusts 2018-2020 MTEF/FSP by N1.5tn

The Federal Government on Monday gave details of the adjustments it made to the 2018-2020 Medium-Term Expenditure Framework and Fiscal Strategy Paper, explaining that they were incorporated in the 2018 budget proposal presented to the National Assembly on November 7 by President Muhammadu Buhari.

The President, had before the budget presentation, submitted an earlier version of the MTEF, but captured the revised version in the budget estimates now before the lawmakers.

The Minster of State for Budget and National Planning, Mrs. Zainab Ahmed, told the House of Representatives in Abuja that about N1.5tn adjustments were made to the MTEF, particularly on the revenue projections for the 2018 budget.

Buhari had laid a total budget size of N8.61bn before the National Assembly on November 7 based on the revised MTEF.

Ahmed, who appeared before the joint Committees on Finance, Appropriation, Aid/Loans/Debt Management, said additional N710bn was added to the MTEF from oil operations.

She stated that another N320bn was from Production Sharing Contracts, while exercise duties on cigarettes and alcoholic beverages would add N60bn.

The minister also informed the committee that improvement in revenues by the Federal Inland Revenue Service would add another N100bn, besides N2bn import duty expected from luxury cars and goods imported by the super-rich.

Ahmed said as much as N250bn of unspent funds from the 2017 budget had also been factored into the revised MTEF.

The minister explained that the adjustments also meant that the N2.005tn deficit in the 2018 budget was lower by N940bn, compared to 2017.

“The total deficit is still within the allowable threshold. The deficit will be financed by both domestic and eternal borrowing,” she stated.

According to the minister, the total projected revenue for the budget is N6.6tn, or 30 per cent higher than 2017.

She gave other indices of the budget to include daily oil production target of 2.3 million barrels; $45 crude oil benchmark price; reduced fiscal deficit of 2.5 per cent; GDP growth rate of 3.57 per cent; and an exchange rate of N305 to the dollar.

The session, which was presided over by the Chairman, House Committee on Finance, Mr. Babangida Ibrahim, was held to give the executive the opportunity to defend the MTEF prior to its passage by the House.

Last week, lawmakers had opposed the MTEF on the grounds that the content was different from the budget proposal submitted to the National Assembly by Buhari.

By the requirements of the Fiscal Responsibility Act, 2007, the National Assembly must first approve the MTEF before passing the next budget, which is already awaiting debate by lawmakers in both chambers of the National Assembly.

Major ministries and agencies of government, including the Ministry of Finance, Nigerian National Petroleum Corporation, Federal Inland Revenue Service, Department of Petroleum Resources, Nigeria Customs Service, Debt Management Office and the Central Bank of Nigeria, largely adopted the presentation of the minister.

But the committee was not satisfied with the submissions of the agencies on independent revenues, saying that there was still much emphasis on crude oil revenue by the government.

The members directed the Minister of Finance, Mrs. Kemi Adeosun, to urgently submit an updated report on independent revenue component of the budget up to the month of November.

Meanwhile, the CBN defended the government’s decision on the 41 items prohibited from accessing foreign exchange.

The Deputy Governor of the apex bank, Mr. Bayo Adelabu, argued that the policy was introduced to encourage growth in the manufacturing and agricultural sectors of the economy.

He stated, “We still have the items on the restriction list because some of these items can actually be produced locally.

“Take ceramics and tiles for example, we can produce them. The restriction even encouraged many companies to invest massively in agriculture and there is a boost in the local industries.

“Lifting the ban will affect the huge investments of some of these companies.”

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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Economy

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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Economy

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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