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FG Reviews Pricing Template, Insists on N145

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  • Petrol: FG Reviews Pricing Template, Insists on N145/litre

The Federal Government on Friday said it had commenced a review of the pricing template for Premium Motor Spirit, popularly known as petrol. It noted, however, that the price of the product would remain unchanged.

According to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, the review became necessary following the various pricing concerns surrounding the actual cost of a litre of PMS.

This is coming as President Muhammadu Buhari, as well as the Federal Executive Council, had directed the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation not to allow the price of petrol to go beyond N145/litre.

Kachikwu, who spoke to journalists during the ongoing oil sector stakeholders meeting at the headquarters of the ministry in Abuja, also insisted that the pump price of petrol was N145/litre and stated that the Petroleum Products Pricing Regulatory Agency was working on a new pricing template for PMS.

The minister, however, did not explain how the PPPRA would review the template and keep the cost of the commodity at N145/litre, considering the fact that the landing cost of PMS was currently around N171/litre.

Kachikwu, who only allowed and responded to two questions from journalists, noted that the aspects of the template that had to do with logistics, profit margins for operators, among others, were being reviewed in the pricing template by the PPPRA.

The minister said, “PPPRA obviously develops the templates and helps us to monitor importation into the country. The template has always been an issue because as prices change in the international market, some of these templates get question mark.

“There are two lines as regards this template; there is the actual cost of landing the product, on the template, and there are other ancillary charges that deal with logistics, profit margins for the operators and all of that.

“As part of this committee’s work, we are also reviewing that template to see whether there are things we need to do to help us ensure that we can accommodate sales at the N145/litre window. So, that is also going to be looked into. The PPPRA is working on that and is heading a special committee on it.”

However, marketers wondered how the template would be reviewed to retain the cost of petrol at N145/litre, considering the price of the commodity in the international market.

An oil marketer who pleaded not to be named because he was not authorised to speak on the matter and was part of the stakeholders meeting, said, “We are all in this together and we are watching and working with them on some of these things, but the truth is that I wonder how we can achieve a target of N145/litre for PMS when the template is reviewed.”

He added, “Marketers have asked for incentives, which include suitable forex (foreign exchange) rates, as well as tax holidays and we hope government will act accordingly in order to enable us to begin importation. If this happens, then, hopefully the template will work and petrol price might stay at N145/litre.”

When asked whether independent marketers were now free to sell petrol beyond the regulated rate set by the government, Kachikwu replied, “There isn’t a multiple price fixing environment where people can work outside the umbrella of what has been fixed.

“What we approved is a modulation of between N135/litre and N145/litre. I’m aware that as of this morning, some people sold at N143, while most of the stations sold at N145. But some recalcitrant individuals sold above that and that is where the law will go after them. So there isn’t an authorisation to sell outside the N135/N145 bracket. Nobody is free to set a price above that.”

Kachikwu said rumours about the actual cost of petrol had increased the difficulties encountered by the NNPC in terms of controlling the cost of the commodity.

He said, “There was a statement credited to me that said that price might be increased to N180. No such statement was made; no such plan is intended. I need to clarify this because sometimes some of these rumour mongers all add to the difficulties NNPC had in terms of being able to control price speculation.

“The President’s mandate on this issue is very specific: we are not increasing price from N145. The essence of our meeting (on Thursday) and the essence of the committee meeting still going on, which began few days ago, is to find mechanisms to ensure that fuel queues do not come back to Nigeria.

“It is to also ensure that the product is available at every time for Nigerians; that private marketers who had pulled out from participation, that we deal with their problems so that they can participate effectively in the supply of petroleum products in the country, all within the parameters of N145 per litre pump price.”

Meanwhile, the Peoples Democratic Party has told the Federal Government to forget about hiking the price of fuel from the “already exorbitant” N145 per litre, saying such would not only be criminal, but inhuman and completely unacceptable.

The party said investigations had shown that the Federal Government had been lying to Nigerians on oil-related issues while using the NNPC to bandy about figures with the intention to arrive at government’s predetermined agenda to increase the price of fuel.

The PDP further alleged that the lingering fuel crisis and its attendant black market costs were only a ploy by the All Progressives Congress-led Federal Government to justify their intended hike of the price.

PDP National Publicity Secretary, Mr. Kola Ologbondiyan, in a statement in Abuja on Friday, said the APC-led government had completely become numb to the sufferings of Nigerians to the extent that it no longer cared about imposing more hardship on the people.

He said instead of making the people suffer more, the Federal Government should come out clear on sleaze in the oil sector under its watch, particularly the shady oil subsidy payouts and illegal lifting of N1.1tn worth of crude using unregistered companies.

Recalling that Vice President Yemi Osinbajo had in December informed Nigerians that the NNPC had been paying subsidy on fuel, Ologbondiyan said the Federal Government had refused to tell Nigerians the beneficiaries, the amount involved and who authorised the payment because of the inherent corruption in the deal.

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

Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Economy

Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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Economy

UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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