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Senate to go Ahead With Subsidy Payment Probe

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  • Senate to go Ahead With Subsidy Payment Probe

The Senate on Wednesday rejected the report by its Committee on Petroleum (Downstream), which probed the current scarcity of Premium Motor Spirit (petrol) in the country.

Many senators, who spoke on the report, which was presented by the Chairman of the committee, Senator Kabiru Marafa, said it was silent on the payment of subsidy on the commodity without the approval of the National Assembly.

Officials of the government had confirmed that the landing cost of petrol was N171 per litre but the official pump price was N145.

The President of the Senate, Bukola Saraki, based on the criticisms of the lawmakers, reassigned the investigation to the Committee on Public Accounts.

Saraki, however, asked the Marafa-led committee to investigate the allegation in the report that a surplus of 5.9 billion litres of petrol could not be accounted for. The committee was also mandated to review its recommendations on the solutions to the lingering fuel scarcity.

At the investigative hearing conducted by the committee, Mafara had barred the Minister of Petroleum Resources, Ibe Kachikwu; and the Group Managing Director, Nigerian National Petroleum Corporation, Maikanti Baru, from answering questions on the alleged illegal subsidy payment.

Few days earlier, the senator had vowed that the Federal Government would be made to account for the payment of the differential between the landing cost and the pump price.

Speaking on the report on Wednesday, Senator Ali Aidoko observed that the fundamental issue, according to the oil marketers, was that of subsidy, “but the committee is telling us they did not discuss subsidy.”

“There were differentials and the committee was silent on it. This looks like a report of the NNPC,” he added.

Senator Nafada Bayero also faulted all the recommendations in the report except the one calling for full deregulation of the downstream sector.

“It looks like a report that was imported to the Senate. The committee should go back and bring its own report, not the one written for it,” Nafada said.

Similarly, Senator Dino Melaye stated that the report, if adopted, would strengthen the corruption that was already going on in the oil industry.

“It is unlawful for any government to spend government money without appropriation. As we speak, monies are being released without appropriation. Go back, sit down and do a holy exercise,” he said.

The Minority Leader, Senator Godswill Akpabio, Senator Solomon Adeola and Senator Stella Oduah also criticised the report.

Saraki asked Marafa to respond to the issues raised against the report.

Marafa said the report, which was signed by 13 out of the 23 members of the committee, was an interim one, and that the probe into subsidy payment was not one of its mandates.

He also maintained that probing alleged fuel consumption volume fraud was most critical to ascertaining the quantity for which subsidy might have been paid by the NNPC.

He explained that the NNPC was importing 1,206,900,000 litres of petrol monthly at an average consumption of 35 million litres daily.

Quoting from the report, he said, “The NNPC said the country consumed between 27 million and 30 million litres per day from January to September and 30 million to 40 million litres per day from September to December.

“The marketers, on the other hand, received from the government about N1,669,180,182 at the Central Bank of Nigeria’s rate of N305 to a dollar to import the PMS from January to August 2017. This means that the marketers were supposed to bring into the country about 3.8 billion litres of the PMS at a landing cost of N133. In other words, marketers’ supplies were supposed to serve the country for about 109 days at 35 million litres daily in 2017.”

Saraki recommended that the issue of subsidy should be separated from volume fraud and the scarcity, which still persists in some parts of the country.

After the plenary, Marafa told journalists that the insistence on probing the subsidy payment was political.

He said, “I respect their opinions, but the chamber is home to different shades and manners of persons, but I stand by my report. Today, the APC (All Progressives Congress) is in power and some people are not happy about it. You cannot be talking about N26 subsidy when you do not even know what you consume.

“I thank them for their contributions and condemnation, but it’s all politics. Today, because the APC is in power, everybody wants to talk about it (subsidy); I will not do it. I will establish the volume first.”

The House of Representatives also on Wednesday summoned Kachikwu and Baru over the reintroduction of subsidy on petrol.

The House described the development as an illegality, having been done without recourse to the National Assembly.

A motion moved by a member from Kogi State, Mr. Karimi Sunday, on the floor of the House, indicated that the NNPC spent “over N300bn” on subsidy from January to December 2017.

Karimi informed the House that in the first three months of the year, the oil corporation had already recorded an “under recovery” of N46.86bn.

“This trend continued at an increasing rate all through 2017. As of December, over N300bn had been expended on petrol subsidy for 2017 alone. This trend continues till date,” the lawmaker added.

He recalled that Vice-President Yemi Osinbajo and Kachikwu had admitted in December 2017 that the Federal Government, through the NNPC, was paying N26 on each litre of petrol to soak up the difference between the landing cost of N171 and the official pump price of N145.

“This happened despite the fact that the Executive said that it had removed subsidy. Besides, there was no parliamentary approval for subsidy payment in the 2017 Appropriation Act,” Sunday told the House.

Members, however, noted that the subsidy paid out in 2017 was not only illegal but was also unclear who collected it since the NNPC was the sole importer of petrol last year.

A member from Kwara State, Mr. Pattegi Ahman, asked whether the NNPC, a government corporation, was paying itself subsidy.

The Chairman, House Committee on Petroleum Resources (Downstream), Mr. Joseph Akinlaja, confirmed that the government truly paid over N300bn on fuel subsidy in 2017.

However, he informed his colleagues that when his committee made some inquiries, the information it got was that the money was used to clear arrears of subsidy owed marketers.

Kachikwu and Baru are to appear before the joint Committees on Finance/Petroleum Resources (Downstream) to explain who earned the N300bn subsidy.

The session, which was presided over by the Speaker, Mr. Yakubu Dogara, also recommended that the government “should make provision for subsidy payment in the 2018 Appropriation Bill should it deem it fit to continue subsidy payment under any guise whatsoever.”

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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