Economy

Federal Executive Council Divided on Nigeria Air — Amaechi

Published

4 years ago

May 24, 2019

Federal Executive Council Divided on Nigeria Air — Amaechi

The Federal Executive Council is divided on the modality for the establishment of the proposed national carrier called Nigeria Air, the Minister of Transportation, Rotimi Amaechi, announced on Thursday.

Amaechi, who disclosed this during his valedictory press briefing in Abuja, also revealed that China had insisted that Nigeria opened a sinking fund and an escrow account in order to be able to seamlessly repay the loans which Nigeria borrowed from the Asian country for the construction of rail projects, particularly the Abuja-Kaduna rail.

The minister stated that members of the federal cabinet had different beliefs and positions as regards the establishment of a national carrier for Nigeria, but was quick to state that the project had not been abandoned.

He said, “On national carrier, (the) cabinet is divided on the issue of modality. There are those who believe that the Federal Government should invest and then we can sell the equity later.

“There are also those who believe that no, and from day one they say let us get investors in and give them the franchise of Nigeria Airways or Air Nigeria or whatever it is called. That is where we are and that is what held it down. But as for whether it is still in our plan, it is and has not been abandoned.”

In September 2018, media reported the suspension of the planned commencement of operations of Nigeria Air by the Federal Government.

Although no reason was given for the suspension at the time the project was suspended, it was gathered then that the national carrier initiative had been put on hold in the interim.

The Federal Government, through its Ministry of Transportation, the Aviation arm, had announced in July that Nigeria Air would commence operation before the end of 2018.

“I regret to announce that the Federal Executive Council has taken the tough decision to suspend the national carrier project in the interim. All commitments due will be honoured. We thank the public for the support as always,” the Minister of State for Aviation, Hadi Sirika, had tweeted in September 2018.

On the loan repayment issue, Amaechi told the Permanent Secretary of the Federal Ministry of Transportation, who was also at the briefing, to ensure that the Nigerian Railway Corporation opened the required accounts that would help in the repayment process.

The minister also revealed that nothing had been repaid by the government to offset the loan which Nigeria got from China for the Abuja-Kaduna railway.

He said, “Permanent Secretary holds him (NRC boss) to that instruction and the instruction is that all the money you get from Kaduna-Abuja railway every month, put it in an account. Remove the cost of operation. Whatever remains, let us start paying back, let’s develop a sinking fund or an escrow account where we pay that money into.

“So that we can even on our own start the payment before the Federal Government starts paying. Why I say this is because when we got to China, they insisted because of what they experienced with Kenya, Somalia and Sudan on their inabilities to pay back.”

He explained the purpose the two accounts would serve, adding that the Chinese insisted that Nigeria must open the accounts.

Amaechi added, “They insisted that we must open two types of accounts, an escrow account and a sinking fund account. The sinking fund account will require that every year we will put money there which is for the repayment of the loan, while the money for the management of that operation will be put in the escrow account.

“Let them put that money in the required account. But for now, nothing has been repaid. It is good you asked that question because I gave them that instruction and I’m not sure it’s been implemented up till now.”

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria Spends N16.126 Billion Daily on Petrol Subsidy

Published

5 days ago

March 17, 2023

Samed Olukoya

Nigeria’s daily consumption of Premium Motor Spirit (PMS) commonly known as petrol has risen to 80 million litres, according to the latest data from the Nigerian Petroleum Company Limited (NNPCL).

A breakdown of the data showed that 558.83 million litres of petrol were evacuated between March 4 and 10, 2023, translating to an average daily consumption of 79.83 million litres.

In February 2023, the Group Chief Executive, NNPCL, Mele Kyari had put petrol consumption at around 66 million litres of petrol and declared that the corporation was spending about N202 on every litre of PMS consumed across the country.

“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/litre.

“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month,” the GCEO had stated.

Therefore, going by Kyari’s estimation that Nigeria spent N202 a litre as a subsidy will put Nigeria’s daily petrol subsidy cost at N16.126 billion and N483.769 billion per month.

However, the national petroleum corporation has been lamenting the huge resource spent on subsidizing fuel when the majority of people benefiting from it are a few criminals smuggling it to neighbouring countries.

NNPCL explained the danger of the continued practice on the corporation’s cash flow, adding that the funding had been ongoing without refunds from the Federal Ministry of Finance, Budget and National Planning, despite the fact that subsidy had been budgeted for in the Appropriation Act.

“But there is a budget provision for it (subsidy). Our country has decided to do this. So, we are happy to deliver this, but it is also a drain on our cash flow, and I must emphasize this.

“For as we continue to support this, you will agree with me that it will be extremely challenging for us to continue to fund this from the cash flow of the company when you do not get refunds from the Ministry of Finance,” Kyari had stated in Abuja.

Economy

Scarcity of Fuel and Naira Set to Plunge Over 28 Million Nigerians into Crisis

Published

5 days ago

March 17, 2023

Samed Olukoya

A latest report by Cadre Harmonise has revealed that over 28.4 million Nigerians in 26 states and the Federal Capital Territory are expected to face severe crises between June and August this year due to the scarcity of fuel and naira.

This projection includes 18,000 Internally Displaced Persons (IDPs).

Cadre Harmonise is a tool developed as an early warning system to prevent and manage food and nutrition crises in Nigeria.

The report was released in Abuja on Thursday, covering 26 states in Nigeria. It was also stated that about 17.7 million people, including 14,000 IDPs in 26 states and the FCT, were already in crisis or worse by May 2023.

The report pointed out that the naira redesign was one of the major drivers of the crisis in Nigeria, as the withdrawal of old naira notes from circulation created a serious bottleneck to households’ ability to access cash and food commodities.

The prolonged scarcity of Petroleum Motor Spirit commonly called petrol, and the associated hike in the pump price of the commodity across the states led to an astronomical rise in transport fares and cost of food products in Nigerian markets.

The report also highlighted the consistent rise in the price of food commodities and agricultural inputs across Nigerian markets as a major driver of food insecurity. For instance, the consumer price index, which measures inflation, grew from 15.7 percent in February 2022 to 21.9 percent in February 2023 (that is a 39.49 percent point increase) year-on-year.

Insecurity, especially insurgency in the North-East states, particularly in Borno, Adamawa, and Yobe, was also identified as a persistent challenge in the report.

The Cadre Harmonise report was produced with technical and financial support from global, regional, and national partners including the United Nations Food and Agriculture Organisation, World Food Programme, Save the Children, UNICEF, Mercy Corps, among others.

Economy

Cash Crunch, Economic Uncertainty Bolster Inflation Rate to 21.91% in February – NBS

Published

1 week ago

March 15, 2023

Samed Olukoya

Nigeria’s inflation rate continues to upward trend in February as economic uncertainty amid a chronic cash crunch crippled economic activities.

The Consumer Price Index (CPI), which measures the inflation rate, grew at 21.91% rate in the month of February, a 0.09% increase from 21.82% recorded in January, the National Bureau of Statistics (NBS) stated.

On a yearly basis, the inflation rate was 6.21% higher than the 15.70% filed in February of 2022.

According to the NBS, the headline inflation was bolstered by Bread and Cereal (21.67%), Actual and Imputed Rent (7.74%), Potatoes, Yam and Other Tubers (6.06%), Vegetable (5.44%) and Meat (4.78%).

On a monthly basis, inflation moderated by 0.16% in the month under review to 1.71% when compared to 1.87% reported in January 2023. Indicating that in February 2023 price level was 0.16% lower relative to January 2023.

The percentage change in the average CPI for the twelve months period ending February 2023 over the average of the CPI for the previous twelve months period was 19.87%, showing a 3.15% points increase compared to 16.73% recorded in February 2022.

Food Inflation

Nigeria’s food inflation rate grew at a whopping 24.35% rate on a year-on-year basis in February 2023 as a few money continues to chase limited food items due to the nation’s new bank policy that made it impossible for people to access their deposited money in the bank.

This was 7.24% points higher when compared to the 17.11% recorded in February 2022. The rise in food inflation according to NBS was caused by increases in prices of Oil and Fat, Bread and Cereals, Potatoes, Yam and Other Tubers, Fish, Fruits, Meat, Vegetable, and Food Product etc.

On a monthly basis, the food inflation rate was 1.90% in February 2023, representing a 0.18% increase from 2.08% in January 2023.

However, the average annual rate of food inflation for the twelve-month ending February 2023 over the previous twelve-month average was 22.12%, which was a 2.44% points increase from the average annual rate of change recorded in February 2022 (19.69%).