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

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  • 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.”

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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