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Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

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  • Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

The Minister of Budget and National Planning, Senator Udo Udoma, explained why the Federal Government could not achieve its 2018 revenue target, stating that some one-off items listed for implementation in the fiscal year could not be actualised.

He gave the one-off items to include the N710bn from Oil Joint Venture Asset Restructuring and N320bn from the revision of the Oil Production Sharing Contract Legislation.

The minister said the one-off financing items had already been rolled over to the 2019 budget.

The 2018 budget, signed by President Muhammadu Buhari on June 20 last year, had total spending of N9.1tn.

The capital expenditure was to gulp 31.5 per cent of the total expenditure at N2.87tn, while recurrent non-debt spending was put at N3.51tn in 2018.

There was also a provision of N2.01tn for debt servicing, which is 21 per cent of the total budget while a provision of N177bn to retire maturing bond to local contractors was made by the government.

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 was 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 and N207.51bn from Value Added Tax and N324.86bn from Customs while N57.87bn was expected to come from federation account levies.

In the same vein, 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.

Speaking during a meeting with the House of Representatives Joint Committee on Finance, Appropriation, Planning and Economic Development on the 2019 revenue and expenditure projections as contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper 2019-2021, the minister stated that the Federal Government was determined to improve its revenue generation this year.

Details of the fiscal operations of the Federal Government as contained in the Central Bank of Nigeria’s economic report for the fourth quarter of 2018 showed that the government had not been able to generate adequate revenue to meet its expenditure.

For example, in the first quarter of last year, the Federal Government’s retained revenue was put at N884.88bn while its expenditure was N2.01tn. This resulted in a fiscal deficit of about N1.13tn.

In the second quarter of last year, the Federal Government earned N1.12tn while its expenditure was N1.63tn, resulting in a deficit of N504.8bn.

For the third quarter, the revenue of the Federal Government was put at N1.03tn with the expenditure of N1.89tn, leading to a deficit of N855.09bn.

For the fourth quarter, the fiscal deficit widened to N910.4bn as the government was only able to generate N916.44bn to take care of its total expenditure of N1.82tn

But the minister said the government was already taking a number of steps to shore up revenue to fund the 2019 budget.

Among other initiatives aimed at expanding the fiscal space, the minister stated that the Federal Government would intensify efforts to improve public financial management through the comprehensive implementation of the Treasury Single Account, the Government Integrated Financial Management Information System and the Integrated Payroll and Personnel Information System.

Also, he said the Department of Petroleum Resources had been directed to, within three months, complete the collection of past dues on oil licence and royalty charges, including those due from the Nigerian Petroleum Development Company which it had agreed to pay since 2017.

Udoma also said the Ministry of Finance, working with all the relevant agencies, had been authorised to take action to liquidate all recovered, unencumbered assets within six months.

Among other revenue generating initiatives, he said the President had directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance customs collections efficiency from the current 64 per cent to up to 90 per cent over the next few years.

He indicated that in spite of the challenges that militated against the realisation of targeted revenues, the revenues generated in 2018 showed a significant improvement over that of 2017.

The minister said he expected further improvement this year with the sustained implementation of the Economic Recovery and Growth Plan.

The minister explained that the ERGP guided allocations in the Federal Government budget because it sets out the key execution priorities of the government for the growth and development of the economy.

The government, he added, was encouraged by the results so far attained after implementing the plan for about two years.

He said the economy had exited recession and was on the path of growth, even though it took time for the impact to be fully felt by a significant number of people.

“It takes time, and will take some more efforts but we will keep working on it so as to fully realise the objectives of the ERGP. The implementation of the ERGP will create growth and jobs and reduce poverty,” he said.

Explaining the basis for some of the assumptions in the MTEF/FSP, the minister said the oil price benchmark was arrived at after extensive consultations with industry experts and consultants.

He expressed optimism that the $60 per barrel crude oil benchmark projected for 2019 was achievable as oil was currently trading at about $67 per barrel.

On the limitation imposed by OPEC production quota, the minister explained that there was no quota set for condensates by OPEC.

Nigeria, he said, could use condensate production to augment its production.

“Mr President has directed the NNPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day,” he added.

He explained that in allocating funds in the 2019 budget proposals, priority was given to critical infrastructure 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

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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Economy

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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