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Senate Probes Kachikwu, DPR Over Oil Lease Renewal

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  • Senate Probes Kachikwu, DPR Over Oil Lease Renewal

The Senate has resolved to investigate Nigeria’s imminent loss of $10bn to illegal discounts and rebates granted by Federal Government officials in the process of oil and gas lease renewal.

Adopting a motion moved at the plenary on Wednesday titled: ‘Irregularities in the Ongoing Oil and Gas Lease Renewal and Massive Loss of Government Revenue’, the lawmakers fingered the Presidency; Minister of State for Petroleum Resources, Dr. Ibe Kachikwu; and the Department of Petroleum Resources for the alleged revenue loss.

The motion was moved by the Chairman of the Senate Committee on Petroleum (Upstream), Senator Omotayo Alasoadura, and co-sponsored by Senators Baba Garbai, James Manager and Gershom Bassey.

The Senate unanimously resolved to mandate the Committee on Petroleum Resources (Upstream) “to investigate all issues relating to the ongoing lease renewal being undertaken by the Minister of State for Petroleum Resources and the Department of Petroleum Resources, and to report to the Senate the anomalies in the ongoing lease renewal process and identify appropriate measures to correct the said anomalies.”

Seconding the motion, Senator Rafiu Ibrahim urged the lawmakers to extend the probe to the Presidency as the final approvals for the lease contracts were from there.

Ibrahim said, “The only observation I have on this motion is that for the fact that Mr President is the Minister of Petroleum Resources, maybe that is why this motion is not mentioning the Minister of Petroleum Resources. But we are aware that the minister of state ordinarily does not have the final approval for this type of case.

“There is a board of the NNPC, the ministry and it is out there – though it has yet to be substantiated – that the Chief of Staff to the President is a member of the board and is literally in charge of the board and the ministry.

“I will just want the prayer to expand those to be called in the investigation. It is in the rumour mill that the Chief of Staff is in charge of the NNPC and the Ministry of Petroleum Resources, so that the minister cannot just come and say he is not the one in charge. In our law, there is no space for minister of state; so, a minister of state cannot give a final approval.”

Senator Shehu Sani said an investigation of the matter might lead the lawmakers into unravelling more irregularities in the petroleum sector.

Alasoadura pointed out that under the provision of extant laws, failure to pay royalties was a ground for revocation of leases and a legal barrier to renewal of applicable leases.

He said there was a subsisting legal framework and due process mandated by extant laws for the renewal of leases that were due for renewal.

The lawmaker added, “The Senate is concerned that the irregularities being perpetrated by the Minister of State for Petroleum Resources and the Department of Petroleum Resources in the ongoing lease renewal process is capable of denying government revenue in excess of $10bn as a result of illegal discounts and rebates in the process of lease renewal.

“The Senate is concerned that the Department of Petroleum Resources has wilfully and deliberately refused to provide the Senate Committee on Petroleum Resources (Upstream) with relevant information and data related to the ongoing lease renewal.”

In his remarks, Deputy President of the Senate, Ike Ekweremadu, who presided over the session, called for a transparent probe, stating that the country’s major problems could be linked to enforcement and regulation.

According to him, the country has sufficient rules to guide Nigerians in almost all sectors.

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

World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms

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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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Economy

Nigeria’s Food Inflation Hits 40.66% Year-on-Year in May 2024

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Nigeria’s food inflation rate surged to 40.66% on a year-on-year basis in May 2024, a significant increase from 24.82% recorded in May 2023.

The latest figures from the National Bureau of Statistics (NBS) highlight the rising cost of essential food items, exacerbating the economic challenges faced by many Nigerians.

The NBS report attributes the steep rise in food inflation to substantial price increases in several staple items.

Notably, the prices of Semovita, Oatflake, Yam flour, Garri, and Beans saw considerable hikes.

In addition, the cost of Irish Potatoes, Yams, Water Yam, Palm Oil, and Vegetable Oil also climbed significantly. Within the protein category, Stockfish, Mudfish, Crayfish, Beef, Chicken, Pork, and Bush Meat experienced notable price jumps.

The month-on-month food inflation rate in May 2024 was 2.28%, reflecting a slight decrease of 0.22 percentage points from the 2.50% recorded in April 2024.

This month-to-month decline was due to a slower rate of price increases for Palm Oil, Groundnut Oil, Yam, Irish Potatoes, Cassava Tuber, Wine, Bournvita, Milo, and Nescafe.

Despite the minor monthly decrease, the average annual food inflation rate for the twelve months ending May 2024 was 34.06%.

This marks a significant rise of 10.41 percentage points from the average annual rate of 23.65% recorded in May 2023.

The sharp rise in food inflation is raising concerns among economic analysts and policymakers, as it significantly impacts the cost of living for Nigerians.

The rising food prices are straining household budgets and contributing to an overall inflation rate that threatens economic stability.

In response to the inflationary pressures, the Nigerian government and relevant stakeholders are being urged to implement effective measures to stabilize food prices and address the underlying causes of inflation.

Efforts to boost agricultural productivity, improve supply chains, and tackle market inefficiencies are seen as critical to mitigating the inflationary trend.

The NBS report underscores the urgent need for comprehensive strategies to manage inflation and ensure food security for the population.

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Nigeria’s Inflation Rate Climbs to 33.95% in May, NBS Reports

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The National Bureau of Statistics (NBS) has revealed that Nigeria’s headline inflation rate rose to 33.95% in May 2024, a slight increase from the 33.69% recorded in April.

This 0.26 percentage point rise underscores the ongoing economic challenges the country faces as it continues to grapple with rising prices and economic instability.

The report highlights that on a year-on-year basis, the headline inflation rate increased by 11.54 percentage points compared to May 2023, when the rate was 22.41%. This significant annual increase indicates a persistent upward trend in the cost of living for Nigerians over the past year.

However, the month-on-month analysis presents a mixed picture. The headline inflation rate for May 2024 was 2.14%, slightly lower than the 2.29% recorded in April 2024. This 0.15 percentage point decrease suggests a marginal slowdown in the rate at which prices are rising month by month.

Urban vs. Rural Inflation Rates

The NBS report also provides detailed insights into urban and rural inflation dynamics. In urban areas, the inflation rate in May 2024 stood at 36.34% on a year-on-year basis, a substantial 12.61 percentage points higher than the 23.74% recorded in May 2023.

On a month-on-month basis, urban inflation was 2.35%, down by 0.32 percentage points from April 2024’s rate of 2.67%.

Conversely, the rural inflation rate for May 2024 was 31.82% year-on-year, which is 10.63 percentage points higher than the 21.19% recorded in May 2023.

Month-on-month, rural inflation slightly increased to 1.94% from 1.92% in April 2024, indicating a steady rise in prices in rural regions.

Implications and Responses

The continuous rise in inflation, particularly in urban areas, poses significant challenges for the Nigerian economy.

The increase in prices for essential goods and services such as food, transportation, and housing is putting immense pressure on household budgets and the overall standard of living.

Economic analysts suggest that the persistent inflationary pressures are driven by several factors, including supply chain disruptions, increased production costs, and fluctuating exchange rates. The impact of these factors is felt more acutely in urban areas, where the cost of living is inherently higher.

In response to these inflationary trends, policymakers are under pressure to implement measures that can stabilize prices and ease the financial burden on citizens.

Strategies such as tightening monetary policy, increasing food production, and improving supply chain efficiency are being considered to curb the rising inflation.

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