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Osinbajo Defends Nigeria’s $73bn Debts

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  • Osinbajo Defends Nigeria’s $73bn Debts

Vice-President Yemi Osinbajo on Tuesday defended Nigeria’s $73bn debts despite admitting that the debt profile grew by another $10bn between 2015 and this year.

In 2015, the VP said the debt size was $63bn, growing by $10bn to hit $73bn in 2018.

However, Osinbajo, who spoke during a town hall meeting with Nigerians in Abuja, defended the debt profile, arguing that the country was still within the safe region, especially when compared with other countries.

He said people had misconceptions when they argued that the present administration of President Muhammadu Buhari was piling up more debts than its predecessors.

Osinbajo dismissed those who expressed such fears and gave an analysis on why he believed debts were not the country’s major problems.

Osinbajo argued that the country’s debts rose the “sharpest” between 2010 and 2014 when oil prices were also quite high.

He explained, “I want to give you the facts and figures on the debt issue. The dollar-denominated debts of Nigeria –that is the debts of the Federal Government, the states and local governments.

“In 2010, Nigeria’s debt was $35bn; 2011, it was $41bn; in 2012, it was $48bn; in 2013, it became $64bn; 2014, it rose to $67bn; 2015, it fell to $63bn; 2016, $57bn; 2017, $70bn; 2018, it is $73bn.

“So, the difference between 2015 and now is $10bn.

“One of the things that I always want you to bear in mind is that when oil prices were at their highest, between 2010 and 2014, that was when we had the sharpest rise in debts.”

The VP further argued that before people reached the conclusion that Nigeria was piling up much debts, they must also check the debt to Gross Domestic Product rate.

He stated, “Our debt to GDP is one of the lowest among the countries that are frequently compared to us. Our debt to GDP is 20 per cent. When you compare it to other countries, you will see that Ghana is about 68 per cent, whereas Ethiopia’s is 48 per cent. In terms of the size of our economy and debt, we are doing okay.”

But, he also informed his audience that the country had a challenge with revenue collection, which did not match its debt profile.

Osinbajo added, “We are not collecting enough revenue compared to what we want to spend.

“Are we collecting enough taxes? If you look at the Federal Inland Revenue Service Figures, it say 914 Nigerians pay the self-assessed tax of more than N10m. Of the 914, 912 live in Lagos and the other two live in Ogun State.

“No other Nigerian outside of Lagos and Ogun pay the self-assessed tax of more than N10m. So, we are simply not collecting enough revenue.”

To address the revenue collection gap, he said the Federal Government and the states were already discussing harmonising tax collections.

Osinbajo also spoke on the government’s N-Power Programme, saying that it would target additional one million beneficiaries in the next phase.

“At the moment, we have taken up to 500,000 and in the next phase, we are looking at another 200,000 and closely followed by another 300,000.

“In all, we will be employing up to a million, and that will be the largest post-tertiary job programme in the entire Africa.

“The reason why we have done this is that of the employment problems that we have, we may not be able to engage everybody but at least the government must give some direct provision of jobs.”

Commenting on the current strike by the Academic Staff Union of Universities, the VP said much as the government would continue to engage the union in discussions, it did not support the idea of spending over 70 per cent of the country’s annual budget on the payment of salaries.

“We are dealing with a population of about 200 million people who depend on a budget of about N8.6 trillion (2017) and of that amount, 70 per cent of it goes to salaries and overheads, and it goes to less than two million people.

“It is impossible to answer to all of the monetary needs of people by the size of the federal budget”, the VP said.

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

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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