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NNPC Records N240bn Loss in 13-month Petrol Supplies

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  • NNPC Records N240bn Loss in 13-month Petrol Supplies

Between March 2017 and March 2018, a period of 13 months, the Nigerian National Petroleum Corporation (NNPC) incurred a loss of N240,304,755,518 as under-recovered expenditure in importing petrol at the international market price and selling at the federal government’s regulated pump price of N145 per litre, according to the corporation’s monthly financial report.

Also, the report, which showed that 80.26 million litres of petrol was consumed in March 2018, also indicated that in February 2018, Nigeria’s oil production volumes declined by about 7.588 million barrels on account of multiple production shut-ins mostly on crude oil export terminals and pipelines.

Under-recovery is another term to describe subsidy, which arises as a result of the difference between the landing cost of refined products and the official prices.

The corporation in its March 2018 financial and operations report – the latest so far, indicated that it lost N240.3 billion for keeping petrol pump price at N145 per litre at that period, and this loss represents the amount that should be paid to it afterwards as petrol subsidy claims, assuming the federal government is still operating the subsidy regime.

The monthly report was released in Abuja by the NNPC and obtained by THISDAY.

According to the NNPC report, N240,304,755,518 was recorded as under recovery for the 13-month period; N17,619,360,579 recorded as crude oil losses; products losses was N8,334,022,400; while pipeline repair and management costs resulted in N129,688,449,152.

A further breakdown of the figures indicated that in March 2017, NNPC recorded an under-recovery of N8,206,727,836; in April, it was N8,206,727,836; and in May, it was N7,743,923,020; and between June, July, August, September, October, November, and December of 2017, the corporation netted under-recoveries of N11,792,197,288; N10,250,012,947; N7,938,985,582; N7,521,590,052; N6,848,622,525; N16,785,193,827; and N15,676,576,185, respectively.

In January 2018, it recorded N45,782,705,844 as under-recovery; N59,519,058,738 in February; and then N34,032,433,839 in March.

NNPC said: “In the downstream sector, NNPC continued to ensure increased petrol supply and effective distribution across the country. In March, 2018, 2.49 billion litres of petrol were supplied by NNPC translating to 80.26 million litres/day to sustain seamless distribution of petroleum products and zero fuel queue across the nation.

“The corporation is maintaining an eagle eye on the daily or petrol evacuation figures from depots across the nation, and engaged where necessary the Nigerian Customs Service (NCS) through existing Joint Monitoring Team.

“In March 2018, pipeline break stood at 224, of which 25 pipeline points either failed to be welded or ruptured/clamped. Thus 199 pipeline points were vandalised as against 125 recorded last month. PHC-Aba and Aba-Enugu pipeline segment accounted for 177 points or 88.94 per cent of the affected pipeline points.”

“NNPC transferred the sum of N73.01 billion into Federation Account for the month under review. From March 2017 to March 2018, Federation, JV, and FG for debt repayment received the sum of N851.65 billion, N672.02 billion and N6.33 billion respectively,” said the report

The NNPC further explained that while the country’s total oil production at that period was 56.24 million barrels, it could not get about 7.588 million barrels to the surface and market because it had issues at the Qua Iboe, Forcados, Bonny, Bonga, and Agbami oil terminals.

Based on the report’s claim that the average price of crude oil at that period was $63.37 per barrel, THISDAY’s calculations indicated that about $480,851,560 (7.588 million barrels multiplied by $63.37 per barrel) may have been the possible monetary loss from the shut-ins.

It stated that out of the 56.24 million barrels of crude oil and condensate that was produced, and which represented an average daily production of 2 million barrels, Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 33.44 per cent and 38.14 per cent respectively, while Alternative Financing (AF), Nigerian Petroleum Development Company (NPDC) and independents accounted for 13.55 per cent, 7.32 per cent and 7.54 per cent respectively.

On the production shut-ins, the report stated that at the Qua Iboe Terminal, about 160,000 bpd of oil was shut-in throughout February 2018 due to the aging facilities and integrity issues.

At the Bonny Terminal, it noted that the Trans Niger Pipeline (TNP) was shut down from February 13 to 16, 2018 due to a leak in the Bodo area with the loss of approximately 120,000 bpd of production.

At the Forcados Terminal, it explained that about 180,000 bpd of production was deferred due to shut down of the Trans Forcados Pipeline (TFP) as a result of leakage of hot taps in the Oteghele axis for five days in February 2018.

The Bonga Terminal, it noted, experienced about 55,000 bpd of shut-in due to plant shutdown for water flood gray lock leak repairs from February 4 to 15, 2018.

In addition, it said a shut-in of 215,000bpd was experienced as a result of complete shut down for water flood gray lock leak repairs for five days at the Bonga Terminal.

At the Agbami Terminal, it said production was shut-in for seven days to mitigate the impact of wind direction on flare that set off smoke and thermal alarms resulting to the shut-in of about 24,000 bpd.

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.

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

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Nigerian Brand, JR Farms Acquires 11% Stake in Rwandan Firm

JR Firms, an agribusiness firm with headquarters in Nigeria, has announced partnership with Sanit Wing Rwanda through the acquisition of 11 per cent stake in the company.

The CEO of the company, Mr Rotimi Olawale, explained in a statement that the partnership was in furtherance of its goals to ensure food security, create decent jobs and raise the next generation of agrarian leaders in Africa.

The stake was acquired through Green Agribusiness Fund, an initiative of JR Farms designed to invest in youth-led agribusinesses across Africa.

Sanit Wing Rwanda is an agro-processing company that processes avocado oil and cosmetics that are natural, quality, affordable, reliable and viable.

The vision of the company is to become the leading producers of best quality avocado and avocado by-products in Africa by creating value across the avocado value chain.

With focus on bringing together over 20,000 professional Avocado farmers on board and planting of three million avocado trees by 2025 through contract farming, the company currently works with One Acre Fund in supply of avocado to its processing facility.

The products of the company which include avocado oil, skin care (SANTAVO), hair cream and soap are being sold locally and exported to regional market in Kenya.

With the new partnership with JR Farms- the products of the company will enjoy more access to markets focusing on Africa and the European Union by leveraging on partnerships and trade windows available.

Aside funding, the partnership comes with project support in areas of market exposure, capacity building, exposure and other thematic support to grow the business over the next four years.

JR Farms has agribusiness operations in Nigeria, Rwanda, United States and Zambia respectively.

In Nigeria, the company deals in cassava value chain processing cassava to national staple “garri” which is consumed by over 80 million Nigerians on daily basis, while in Rwanda, it works in the coffee value chain with over 4,000 coffee farmers spread across the East Central African country.

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

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Shut Down Depots Selling Petrol Above Approved Price – Marketers

The Federal Government should close down depots that are selling petrol above the approved price, oil marketers said on Thursday.

National President, Independent Petroleum Marketers Association of Nigeria, Sanusi Fari, said the sale of petrol above government approved price by depot owners would soon lead to a hike in the commodity’s pump price.

Fari told journalists in Abuja that the government through its agencies such as the Department of State Services and the Department of Petroleum Resources should curb the development to avoid crisis in the downstream oil sector.

He said some private depot owners were selling at N165 per litre to independent marketers, way above the government stipulated price of N148 per litre.

Fari said, “Our challenge is the inconsistency in the pricing of petrol. Up till a week ago, government was still insisting that the February price for petrol remained unchanged.

“And most of the private depot owners are selling above the government stipulated price. As at today ( February 25, 2021) private depot owners are selling at N165 per litre to independent marketers.”

He added, “In the last six years, only NNPC imports refined products into this country and these tank farms buy their products from NNPC under a controlled price.

“This has affected our businesses seriously because government is insisting that we sell at the rate of N165, which is not going to work.”

The IPMAN president said filling station owners buy the product at N165 per litre from the private depots and incur other expenses such as transportation, rent, etc.

“So government cannot expect us to sell less than what we buy,” he said.

Fari added, “This is why we are calling on government and agencies that are saddled with the responsibility to control petrol pricing to urgently clamp down on depots that are selling above the stipulated price.”

The Nigerian National Petroleum Corporation, the country’s sole importer of patrol, recently stated that it never hiked the cost of petrol to depots.

It also enjoined the depot owners to sell the product at the approved rate and called on the DPR to enforce the stipulated price across the depots.

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Nigeria Will Benefit Less From African Trade Deal – NESG

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Nigeria Will Benefit Less From African Trade Deal – NESG

Nigeria and other resource-based countries will benefit less from the African Continental Free Trade Area than economies that are more diversified, the Nigerian Economic Summit Group has said.

The NESG, a private sector-led think-tank, said in its 2021 Macroeconomic Outlook that Nigeria could reap more gains through export diversification away from crude oil.

It said trade in Africa remained dominated by raw materials and less processed products, adding that on average, minerals and agriculture accounted for 44 per cent and 16 per cent of intra-African trade respectively between 2007 and 2017.

The NESG said, “Evidence has shown that African economies that are more diversified and have improved transport infrastructure, would benefit more from the trade pact than others that are resource-based and agricultural dependent.

“Putting this in context, South Africa currently accounts for 40 per cent of intra-African manufacturing imports. On the other hand, resource-based countries, such as, Algeria, Egypt and Nigeria – which collectively account for approximately 50 per cent of Africa’s GDP – contribute only 11 per cent to intra-African trade.”

“Another bone of contention is the issue of ‘rules of origin’, which constitutes a significant risk factor. This implies that protectionism practices by some countries could constitute a setback for the establishment of the ambitious single market for Africa. But there are several reasons to be optimistic,” it added.

The group said the World Bank estimates revealed that the AfCFTA would promote manufacturing exports over natural resources, agricultural and services exports, and that manufacturing exports would account for one-third of the projected total exports of $2.5tn by 2035.

It said, “Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of nine per cent of the country’s total exports.

“This suggests that efforts should be directed at strengthening domestic value chains, particularly the agro-allied industrial base.

“To achieve this, there is a need to attract private capital, most especially, FDI, that would allow for knowledge and technological transfers.”

According to the NESG, for Nigeria to maximally benefit from the trade deal, there is an urgent need to also address transport infrastructure bottlenecks and provide improved logistics.

It said, “Finding a lasting solution to the Apapa gridlock by creating similar ports in other regions of the country, so as to ensure speedy clearance of consignments needs to be prioritised.

“Nigeria also needs to set standards for locally-made goods to enhance their attractiveness in the regional market.

“The Nigerian government as a matter of urgency needs to operate an efficient and corruption-free land border system, so as to guide against the importation of low-cost sub-standard products into the country.

“It is only when these and many more reforms are implemented that Nigeria can begin to reap the benefits of the trade deal.”

The group noted that owing to the outbreak of COVID-19, the implementation of the AfCFTA was postponed from July 1, 2020 to January 1, 2021.

It said, “The key goal of the free trade pact is to expand the volume of intra-African trade, which stood at 16 per cent in 2018 .“Till date, 36 countries, including Nigeria, have ratified the agreement. The trade deal is expected to create a single market with a combined GDP of $2.5tn and total population or market size of 1.2 billion.”

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