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Fuel Scarcity: Transport Fares Rise by 24%, Says NBS

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Kerosene
  • Fuel Scarcity: Transport Fares Rise by 24%, Says NBS

The fuel scarcity currently being experienced in many parts of the country is taking its toll on Nigerians, with the average cost of transportation rising by 23.99 per cent in December, an analysis of a report prepared by the National Bureau of Statistics has revealed.

The report for December 2017 covers bus journey within the city; bus journey intercity, state route, charge per person; air fare charge for specified routes single journey; journey by motorcycle (Okada); and waterway passengers’ transport.

The average fare paid by commuters for bus journey within the city increased by 23.99 per cent month-on-month and 14.78 per cent year-on-year to N171.34 in December 2017 from N138.19 in November 2017, the report stated.

The report, which was obtained on Friday by our correspondent, said states with the highest bus journey fare within city in December 2017 were Cross River (N242.73), Jigawa (N250.00) and the Federal Capital Territory (N375.63).

On the other hand, the report gave states with the lowest bus journey fare within city in December 2017 as Bauchi (N80), Anambra (N102.21) and Borno (N105.71).

It said, “Average fare paid by commuters for bus journey intercity increased by 14.04 per cent month-on-month and 5.22 per cent year-on-year to N1,716.26 in December 2017 from N1,505 in November 2017.

“States with the highest bus journey fare intercity in December 2017 were Abuja FCT (N5,019), Adamawa (N3,242) and Benue (N2,803) while states with the lowest bus journey fare within city in December 2017 were Yobe (N1,000), Enugu (N1,063) and Kano (N843.75).”

For air passengers with specified routes, the report said the average fare paid for a single journey increased by 2.75 per cent month-on-month and 8.58 per cent year-on-year to N33,386 in December 2017 from N32,492 in November 2017.

It explained that states with the highest air fare in December 2017 were the FCT (N49,500), Edo (N41,000) and Jigawa (N40,000) while states with the lowest air fare in December 2017 were Kogi (N25,000),Katsina (N26,000) and Nasarawa (N27,000).

For motorcycle commuters, the report said the average fare paid by them for a journey (per drop) increased by 15.93 per cent month-on-month and 2.20 per cent year-on-year to N112.19 in December 2017 from N96.77 in November 2017.

States with the highest journey fare by motorcycle (per drop) in December 2017 were given as Ondo (N197.67), Rivers (N194.29) and Bayelsa (N190) while states with the lowest journey fare by motorcycle in December 2017 were Ekiti (N56.15), Bauchi (N60) and Niger (N55.45).

Speaking on the impact of the fuel crisis on the economy, financial analysts said there was a need for the Federal Government to adopt a “smartcard initiative” to address the issue.

They said this would enable interested owners of commercial vehicles, including official vehicles owned by educational institutions, hospitals, religious bodies and government agencies to register and obtain smartcards for purchasing fuel at regulated prices from petrol stations owned by the Nigerian National Petroleum Corporation.

The Head, Banking and Finance Department, Nasarawa State University, Uche Uwalaka, while speaking during a chat with our correspondent, said the model which had already recorded huge success in Egypt and Libya would help to address the lingering issue of fuel scarcity in the country.

He said the need to adopt the model had become imperative following the claims that the N145 per litre pump price of petrol was no longer sustainable as a result of the high price of crude oil in the international market.

Uwaleke, an Associate Professor of Finance, recommended that with the smartcards which would be swiped at the NNPC filling stations, consumers would be able to buy a limited amount of subsidised fuel, and would need to pay a market price for any extra amount of fuel needed.

He added that private car owners, on the other hand, would be expected to buy fuel at market prices from petrol stations operated by the private sector.

He said, “The NNPC cannot continue to shoulder the responsibility of petroleum products imports alone without the support of the private sector.

“Indeed, many have argued that fuel subsidies come with negative consequences for the economy including encouraging wasteful energy consumption, creating fiscal burdens on government budgets, increasing health and environmental costs of fossil fuels as well as helping to promote inequality.

“In fact, studies have shown that the richest 20 per cent of households in low and middle-income countries use six times more subsidised fuel than the poorest 20 per cent.

“But then, it is equally a fact that the removal of subsidy would have catastrophic consequences for the poorer strata of the society.”

He added, “Therefore, the right balance that guarantees minimal distortion to the economy is for Nigeria to domesticate a model which has been used with some degree of success in some oil producing countries in Africa notably Egypt and Libya.

“It is the fuel smartcard initiative whereby interested owners of commercial vehicles, including official vehicles owned by educational institutions, hospitals, religious bodies and government agencies would be required to register and obtain the card for purchasing fuel at regulated prices from the NNPC petrol stations.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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