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Economy

2018 Budget: FG Records N1.1tn Deficit in Eight Months

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  • 2018 Budget: FG Records N1.1tn Deficit in Eight Months

Between January and August, the Federal Government recorded a fiscal deficit of N1.14tn in its operations, figures obtained from the Budget Office of the Federation have revealed.

The 2018 budget which was signed by President Muhammadu Buhari had a total spending of N9.1tn made up of N2.87tn for capital expenditure, N3.51tn for recurrent (non-debt) expenditure while N2.01tn was projected to be spent on debt servicing.

The N9.1tn budget was expected to be financed from N2.99tn to be generated from oil revenue, N31.25bn from Nigeria Liquefied Natural Gas dividend while N1.17bn is expected to be realised through revenue from minerals and mining.

To fund the budget, the Federal Government had planned to generate N658.55bn from Companies Income Tax; N207.51bn from Value Added Tax; N324.86bn from Customs while N57.87bn was expected to come from federation account levies.

The government was expected to raise N847.95bn through independent revenue from its agencies, while tax amnesty income, signature bonus and unspent balance from previous years were to provide N87.84bn, N114.3bn and N250bn respectively

Details of the performance of the 2018 budget which was captured in the 2019 Budget Call Circular showed that as of the end of August, the Federal Government’s actual revenue was N2.48tn.

The budget circular, which was signed by the Minister of Budget and National Planning, Senator Udo Udoma, noted that the N2.48tn actual revenue represented about 52 per cent of the N4.78tn pro-rata budget.

It attributed the shortfall of 48 per to the underperformance of both oil and non-oil revenue sources.

The circular said, “The shortfall in Companies Income Tax collections may be partly due to seasonal factors as most companies remit their income taxes during the second half of the year.

“The slow recovery in economic activities that drive consumption and the lingering security issues contributed to the underperformance of other non-oil revenue sources like Value Added Tax.

“The delay in the implementation of other revenue initiatives like the restructuring of

JV (Joint Venture) oil assets and tighter performance management of Government Owned Enterprises further explain the weak non-oil revenue performance.”

In terms of expenditure, it said out of the total appropriation of N9.12trn, the sum of N3.64tn had been spent between January and August.

This, according to the document, represents a shortfall of about N2.44tn over the prorated expenditure sum of N6.08tn for January to August.

A breakdown of the N3.64tn showed that a total amount of N1.83tn had been released for non-debt recurrent expenditure for the payment of salaries, pensions, and overheads among others.

It said, “Releases for capital expenditure only commenced after the 2018 budget was signed into law on June 20, 2018.

“Revenue shortfalls and the need to meet non-discretionary recurrent spending such as payment of salaries and debt service further affected the level of capital expenditure in the period.

“A total of N486.29bn was released by October 17, 2018 for capital projects.

“In effect, a deficit of N1.14tn was incurred as at end of August 2018, which is about 58 per cent of the budgeted deficit for the full year.”

Similarly, the document stated that the sum of N1.54tn had been released to cover debt service obligations during the eight months period.

It said the N3.64tn released during the eight months period excluded the N486.29bn which was released to agencies of government on October 17for the execution of capital projects.

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

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

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Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Economy

Petrol Landing Cost Jumps to N186, Oil Hits $64

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Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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Economy

FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

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FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

The Federal Government has said about 100 million Nigerians will be lifted out of poverty through the National Gas Expansion Programme (NGEP).

The Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed this on Monday during the inauguration of the NGEP in Ado Ekiti, Southwest.

Sylva said the project was “a practical demonstration of President Muhammadu Buhari’s commitment to lift 100 million Nigerians out of poverty by using gas value chain as catalyst for social and economic development in Nigeria”.

The minister said, “The programme has its main objective to reinforce and expand gas supply as well as stimulate demand in Nigeria through effective and efficient mobilisation and utilisation of all available assets, resources and infrastructure in the country.

“The programme is geared towards the implementation of Mr President June 12, 2019 promise to take hundred million Nigerians out of poverty within the current decade by ensuring that locally produced, available, accessible and affordable fuel is sufficiently supplied across the country”.

Sylva added that Nigeria was richly endowed with mineral resources, specifically, hydrocarbons, crude oil and natural gas with proven gas reserves of over 200 trillion cubic feet of natural gas, which he said had presented the country with opportunity to use gas as a catalyst for social economy renaissance.

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