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NNPC Restores Normal Supply of Petrol at Cost of N1.4tn

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NNPC Nigeria
  • NNPC Restores Normal Supply of Petrol at Cost of N1.4tn

Exactly six months after the Nigerian National Petroleum Corporation (NNPC) assumed the sole importer of petrol in October 2017 and struggled to meet the country’s need, the corporation has finally normalised the supply of the product, with depot owners now selling at official ex-depot price, investigation has revealed.

The corporation’s inability to bridge the supply gap created by the refusal of the private marketers to import petrol, had led to fuel crisis, which marred the Christmas celebration and lingered into the first quarter of 2018.

However, NNPC’s success was achieved at a great cost to the country as the Minister of State for Petroleum, Dr. Ibe Kachikwu had revealed that the corporation’s under-recovery, which is the loss incurred by selling the imported product at official prices of N133 per litre at the depots and N145 at the pumps, had hit N1.4 trillion yearly.

Despite the low pump price of N65 paid by Nigerians, there was allegation of massive corruption in the subsidy regime when subsidy claims rose to N1.1 trillion, against the N286 billion budgeted in 2011 by the federal government.

But the recent revelation by the petroleum minister is an indication that at a pump price of N145, the NNPC incurs a loss of N1.4 trillion yearly to subsidise petrol and ensure that Nigerians get the product at the official N145 pump price.

Investigation at the weekend revealed that with the NNPC’s efforts, which have ensured that the country is flooded with petrol, some of the depot owners were selling at N133 per litre, against N160, they were selling the product early this year.

Some marketers, who received the allocation from the NNPC were, however, still selling slightly above the official ex-depot price.

Investigation also gathered that the slight increase was not significant to fuel a hike in the N145 pump price.

For instance, 15 depot owners and six major marketers had stock of petrol at the weekend.
The 15 depots include, AA Rano, Aiteo, Bound Oil, Bovas, Chi-Pet, D-Jones, First Royal, Folawiyo, Gulf Treasure, Integrated Oil, MRS, Obat, Africa Tanker, Wosbas and NIPCO Plc.
It was learnt that the major marketers dispense the product to only their dealers at N145 and pay them extra margins to enable the dealers sell at the same N145 at the filling stations.

But some of the 15 depot owners sell at between N134 per litre and N136.50 per litre, against the N123.28 – N133.28 ex-depot price band recommended by the Petroleum Products Pricing Regulatory Authority (PPPRA) on May 11, 2016 when this current pricing regime took effect.

The NNPC had on March 5, 2018 announced that it was spending N774 million daily as subsidy on the 50 million litres of PMS consumed across the country.

The corporation had attributed the huge under-recover to the proliferation of filling stations in communities with international land and coastal borders across the country.

The Group Managing Director of NNPC, Dr. Maikanti Baru had explained that the multiplication of filling stations had energised unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in Nigeria.

Kachikwu at the weekend restated that the NNPC was spending enormous resources to subsidise petrol.

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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