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Businesses Groan as Diesel Hits N250 Per Litre



  • Businesses Groan as Diesel Hits N250 Per Litre

The price of Automotive Gas Oil, also known as diesel, has risen to a high of N250 per litre, with businesses taking a beating on the back of rising energy costs.

Many businesses in the country rely heavily on diesel-powered generators for electricity as power supply from the national grid remains poor.

Our correspondent observed on Monday that some filling stations in Lagos had increased the pump price of diesel to N250, while many others sold it at around N230-N245.

The average price paid by consumers for diesel increased by 1.76 per cent month-on-month and 14.52 per cent year-on-year to N211.64 per litre in September from to N207.98 in August, according to the National Bureau of Statistics.

It said states with the highest average price were Borno (N245.83), Taraba (N235) and Sokoto (N228.33), while those with the lowest average price were Edo (N197.28), Katsina (N195.63) and Rivers (N190).

The Chief Executive Officer/Executive Secretary, Major Oil Marketers Association of Nigeria, Mr Clement Isong, in an interview with our correspondent, attributed the diesel price hike to the increase in global crude oil prices and inadequate access to foreign exchange at competitive rates by private marketers.

Unlike Premium Motor Spirit (petrol), diesel has been deregulated and its pump price is adjusted to reflect the reality in the global crude oil markets. International oil benchmark, Brent crude, recently rose to a high of $86 per barrel.

“The challenge in Nigeria is that MOMAN members struggle to access forex at competitive rates. If you are going to access forex at N360-N361/$1, then your imports will be uncompetitive; when the NNPC, or whoever else is importing, has access to forex at $305. So, if they try to import, the landing cost of the product will be uncompetitive. They are not importing now because if they do so, they will lose money,” Isong explained.

The Director General, Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, described the impact of the diesel price hike on businesses as “very severe.”

“Our members have been raising concerns about this. Any time there is increase in crude oil price, the flip side for us in the private sector is increase in energy cost. It is a major issue; some businesses consume a lot of energy like those in the manufacturing sector; even hotels and hospitals, they run almost permanently on generators. So, the impact of the diesel price hike will be very high,” Yusuf told our correspondent.

He added, “The high oil price also heavily penalises businesses because their energy costs go up significantly and that affects the cost of production; it affects their prices, sales, turnover and profits. It has a chain effect on their operation. So, it is something to worry about.

“If we our refineries are working well, we would not be subjected to this kind of skyrocketing cost of diesel.”

The LCCI DG said the availability of regular power supply would have helped to reduce the dependence on diesel-powered generators by businesses, adding that the power sector reform had not proved to be successful.

The Vice-President, Industries, Association of Small Business Owners of Nigeria, Mr Kayode Okanrende, said, “Unfortunately this (diesel price hike) is happening at a time when we still believe there is a recession; when we believe that the populace hasn’t got purchasing power to even buy. So, we are constrained to increase prices and yet our costs are increasing.

“In effect, we are torn between the devil and the deep blue sea. What do you do? Lay off staff or negotiate reduction of salaries when people are even crying that the salaries are not even enough to meet their basic needs. We would have been happy if we don’t have to buy diesel; if energy supply had increased.

“Unfortunately, power supply is not increasing; it is virtually even decreasing. So, in effect, what we are doing is that we are killing the so-called real sector. The cost of diesel now is coming to nail the coffin of an ailing industry.”

Okanrende noted that the government should work to ensure the production of diesel in the country, adding, “For as long as we are relying on importation, many vagaries will affect it, which the government has no control over. It is a sad thing that even though we have the crude here, we are still having to rely on other countries to supply diesel to us.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Nigeria, Morocco sign MOUs on Hydrocarbons, Others




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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Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021



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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UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?



UK EConomy contracts

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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