Markets

NNPC’s Refineries Contributed Only 0.55% to Nigeria’s GDP in 2016, Says Report

Published

6 years ago

April 3, 2018

NNPC’s Refineries Contributed Only 0.55% to Nigeria’s GDP in 2016, Says Report

A study commissioned by the Nigerian Natural Resource Charter (NNRC) and conducted by the Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan on the contributions of the four refineries owned and operated by the Nigerian National Petroleum Corporation (NNPC) to Nigeria’s Gross Domestic Product (GDP) has showed that their average contribution was just about 0.55 per cent as at 2016.

The study also stated that the contribution of the refineries to the GDP of other sectors of the Nigerian economy as at that time was 0.18 per cent, in addition to a -1.69 per cent contribution of the refineries to the gross net output in the country’s economy.

Report of the study was presented at a stakeholders’ workshop on ‘assessing petroleum sector wealth: NNPC’s contributions to the economy,’ recently in Lagos.

It focused on the contribution that NNPC refineries and pipelines have made to the Nigerian economy in 2016. Its estimations were done along the lines of direct contributions; indirect contributions and induced contributions, as well as their contributions with respect to Gross Domestic Product (GDP); Gross Net Domestic Product (GNDP); value-added; indirect taxes; compensation in terms of wages and salaries for employees; as well as employment.

The report noted that its assessment of value-added was made up of wages and salaries; operating surplus and depreciation, while indirect taxes included value added tax (VAT); excise and custom duties.

According to it, the refineries contribution to value added in the economy was 0.35 per cent; contribution to indirect taxes in the economy was 0.19 per cent; contribution to compensation of employees in the economy was 0.13 per cent; while NNPC refineries & pipelines’ contribution to employment in the economy was 0.05 per cent.

“The small contribution of NNPC refineries and pipelines across measures can be related to the sector’s low capacity utilisation – 18 per cent for quite some time now. This has led to an unprecedentedly high importation of its products at the expense of the economy as every item of import is a leakage in the system. The importation is making negative contribution to the economy,” said the report.

It added: “The sector has also been running at a huge loss thereby reducing its contribution to the economy. There is a need for concerted efforts to promote accountability in the management and turn-around-maintenance of the refineries.

“The existing refineries and pipelines at full capacities appear inadequate to fully satisfy domestic demand for petroleum products as a rigorous CGE modelling exercise reveals.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

3 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

Published

4 days ago

September 4, 2024

Samed Olukoya

Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

4 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.