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FG Considering Options for Rescuing Electricity Industry –BPE

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  • FG Considering Options for Rescuing Electricity Industry –BPE

The Federal Government is considering a number of options, including cost-reflective tariffs and injecting new investors into the electricity distribution and generating companies so as to revive the firms, the Bureau of Public Enterprises has said.

The Director General, BPE, Mr Alex Okoh, said this in an interview with journalists during the presentation of certificates to participants in a workshop on anti-bribery and anti-corruption facilitated by the Director of Malkara Consulting, Australia, Mr Chris Douglas.

Okoh said the options under consideration by the government included the proposal to dilute the investment of the current core investors in the power companies by bringing in new investors as well as increasing tariffs to enable the operators to recover costs and invest in new equipment.

He stated, “It is one of the options (new investors). It is not the only option we are considering; we don’t believe that is the only solution. “If you bring in new investors and you don’t correct the market distortions, it will still be the same result.

“The options include setting the right cost or price framework for the market. If a market cannot guarantee price recovery; as an investor, you come into a business and you cannot recover the cost of doing that business, the likelihood is that you will not do the business in the first place.

“So, there is a whole suite, a whole bouquet of interventions and initiatives that we are looking at, including cost-reflective tariffs. In the case where that is not possible, we are looking at other compensation strategies that we can put in place for the Discos.”

Okoh added, “We also have to look at the capacity of the Discos to technically manage the franchises. We have to look at the capacity of the Discos to invest in the distribution infrastructure – issues around transformers, meters and their revenue collecting assurance programme.

“So, it is a whole bouquet; and if you look at the Power Sector Recovery Programme, it provides a clear road map to resetting the entire industry and making sure that the Discos are able to deliver on power.

“For us, it is not necessarily the process of the sale of the Discos that has created those problems in the distribution network. It is some of the issues of assumptions that were made to make the market viable. Those assumptions have not been implemented yet.”

The BPE boss also stated that 36 per cent of the public enterprises that had been privatised by the agency had not lived up to expectation, adding that those enterprises would be reviewed so that they could be helped to do better.

He said, “We reckon that about 36 per cent of the enterprises that have been privatised so far are challenged in one way or the other. So, those are the ones we want to concentrate on. We want to understand what the issues are; why they did not meet the objectives of privatisation.

“We don’t want to abandon them; we want to bring any kind of intervention that is necessary to put these enterprises back on the path of profitability so that they can render the services for which they were privatised.”

However, Okoh ruled out the possibility of going back to review any transaction that had been concluded in the past except for any glaring case of abuse of process.

Going forward, he added that the concern of the bureau was to put in place a process that would ensure that the right thing was done in the eyes of the public so that this would reduce suspicions that enterprises were being sold to the cronies and friends of people in government.

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.

Economy

COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday

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Oil prices rose further on Wednesday as hope for an effective COVID-19 vaccine and the news that the United States of America’s President-elect, Joe Biden has begun transition to the White House bolstered crude oil demand.

Brent crude oil, a Nigerian type of oil, gained 1.63 percent or 78 cents to $48.64 per barrel at 11:50 am Nigerian time on Wednesday.

The United States West Texas Intermediate (WTI) crude oil rose by 1.36 percent or 61 cents to $45.52 per barrel.

OPEC Basket surged the most in terms of gain, adding 3.16 percent or $1.37 to $44.75 per barrel.

This was after AstraZeneca, Moderna and Pfizer-BioNTech announced the positive results of their trials.

Moderna and Pfizer had claimed over 90 percent effective rate in trials while AstraZeneca said its COVID-19 vaccine was 70 percent effective in trials but could hit 90 percent going forward.

The possibility of having a vaccine next year increases the odds that we’re going to see demand return in the new year,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

Also, the decision of President-elect Joe Biden to bring Janet Yellen, the former Chair of Federal Reserve, back as a Treasury Secretary of the United States is fueling demand and strong confidence across global financial markets.

President-elect Biden’s cabinet choices, particularly Janet Yellen’s Treasury Secretary position, are adding to upside momentum across a broad space of asset classes,” said Jim Ritterbusch of Ritterbusch and Associates.

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Economy

Seyi Makinde Proposes N266.6 Billion Budget for Oyo State in 2021

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The Executive Governor of Oyo State, Seyi Makinde, has presented the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly on Monday.

The proposed budget titled “Budget of Continued Consolidation” was said to be prepared with input from stakeholders in all seven geopolitical zones of Oyo state.

Governor Makinde disclosed this via his official Twitter handle @seyiamakinde.

According to the governor, the proposed recurrent expenditure stood at N136,262,990,009.41 while the proposed capital expenditure was N130,381,283,295.63. Bringing the total proposed budget to N266,6444,273,305.04.

The administration aimed to implement at least 70 percent of the proposed budget if approved.

He said “The total budgeted sum is ₦266,644,273,305.04. The Recurrent Expenditure is ₦136,262,990,009.41 while the Capital Expenditure is ₦130,381,283,295.63. We are again, aiming for at least 70% implementation of the budget.”

He added that “It was my honour to present the Oyo State Budget Proposal for the 2021 Fiscal Year to the Oyo State House of Assembly, today. This Budget of Continued Consolidation was prepared with input from stakeholders in all seven geopolitical zones of our state.”

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Economy

World Bank Expects Nigeria’s Per Capita Income to Dip to 40 Years Low in 2020

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The World Bank has raised concern about Nigeria’s rising debt service cost, saying it could incapacitate the nation from necessary infrastructure development and growth.

The multilateral financial institution said the nation’s per capita income could plunge to 40 years low in 2020.

According to Mr. Shubham Chaudhuri, Country Director for World Bank in Nigeria, the decline in global oil prices had impacted government finances, remittances from the diaspora and the balance of payments.

Chaudhuri, who spoke during the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government, said while the nation’s debt is between 20 to 30 percent, rising debt service remains the bane of its numerous financial issues and growth.

Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.

He said, “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’

“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.”

Nigeria’s per capita income stood at $847.40 in 1980, according to data from the World Bank. It rose to $3,222.69 in 2014 before falling to $2,229.9 in 2019.

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