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Petrol Price Hike, Ailing Refineries, Others Marred Buhari’s First Term

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  • Petrol Price Hike, Ailing Refineries, Others Marred Buhari’s First Term

In this report, OKECHUKWU NNODIM analyses some of the industry issues and promises made by the government in the oil and gas sector during the first term of President Muhammadu Buhari

President Muhammadu Buhari and his party, All Progressives Congress, made several promises before the 2015 general elections that eventually brought Buhari to power. Buhari also made a lot of promises when he assumed office in 2015, especially in the oil and gas sector. Industry observers stated that considering the enormous importance of the oil sector, which accounts for more than 70 per cent of Nigeria’s exports and foreign exchange earnings, according to the data from the National Bureau of Statistics, the President had to retain the position of the Minister of Petroleum Resources and appointed Ibe Kachikwu as the Minister of State for Petroleum Resources. The President and Kachikwu went further to make other promises in the oil sector road map called “7 Big Wins”, which was inaugurated by Buhari in October 2016. While some of the targets of the Buhari administration for the oil sector were achieved, many others that largely affect most Nigerians have not been fulfilled. Below are some of the unresolved and partly resolved issues by this government.

Abysmal performance by refineries

The Buhari government had promised to increase the performance or output of Nigeria’s refineries to about 90 per cent by 2019. Unfortunately, this is not so, despite the fact that the first tenure of this administration had recently elapsed and a new one has started. Nigeria’s refineries in Port Harcourt, Kaduna and Warri have been performing poorly. In fact, the latest data from the Nigerian National Petroleum Corporation in its most recent monthly and financial report for January 2019, put the monthly consolidated operational performance of the refineries at 5.5 per cent. This, of course, is a far cry from 90 per cent operational performance that was targeted by the current government when it came onboard in 2015.

In May 2017, Kachikwu, while speaking as a guest on BBC Hard Talk in London, vowed to resign if the country failed to attain self-sufficiency in the refining of petroleum products by 2019. When asked to state the year that Nigeria would be self-sufficient in refining petroleum products, Kachikwu replied, “I have said 2019, and that is the target that I gave.”

On whether he would leave office if he failed to achieve the target, the minister replied, “Yes, of course. That is the reason why you are in government.”

The minister, during the interview, revealed that the government’s target was to get the refineries working at 90 per cent operational capacity. “Those refineries were down before the President came. Since coming, we’ve been able to get them back to produce seven million litres versus zero. That’s not the 90 per cent template but we’re now refurbishing the refineries.”

Petroleum products imports persist

Nigeria’s inability to revamp its refineries had made it tough for the country to meet its petroleum products’ needs through domestic refining, a development that had made the country to depend largely on imported finished products of crude oil. Figures from the NBS showed that the amount spent by the Federal Government on the importation of petrol increased by nearly 50 per cent to N2.95tn. The bureau stated that Nigeria spent N1.97tn on petrol imports in 2017, N1.63tn in 2016 and N1.14tn in 2015. The importation of Premium Motor Spirit, popularly called petrol, accounted for 22.4 per cent of the nation’s total imports in 2018, up from 20.6 per cent in 2017, 18.4 per cent in 2016 and 17 per cent in 2015. This showed that petrol imports increased under the current administration.

Petrol subsidy/under-recovery still on

The Nigerian National Petroleum Corporation, as a supplier of last resort, is still spending humongous sums subsidising petrol under the current government. Although the corporation now refers to it as under-recovery, it still spends heavily on petrol subsidy. Buhari had pledged to address the issue of subsidy, as many Nigerians had condemned the corruption associated with the scheme in the past administrations. In December last year, NNPC said it was subsidising Premium Motor Spirit, popularly known as petrol, by about N1.5bn every day. Although the corporation insisted that it was not paying subsidy on petrol, as it had no parliamentary approval for such, it revealed that what the NNPC incurred as under-recovery on PMS was between N20 and N25 per litre as at that time.

The NNPC is the sole importer of petrol into Nigeria, a role it had maintained for more than a year after oil marketers stopped importing the commodity due to the Federal Government’s decision to halt the payment of fuel subsidy to marketers. NNPC’s Group Managing Director, Maikanti Baru, has explained that the corporation imports about 60 million litres of petrol daily and evacuates about 50 million litres. With the importation of 60 million litres daily and an under-recovery of N25 per litre, the corporation was spending about N1.5bn every day subsidising petrol as of December last year. Sources at the oil firm, however, stated that the figure had been fluctuating depending on the price of crude oil in the international market.

Petrol price increase

In May 2016, the Federal Government tried to put an end to the subsidy regime on petrol and approved an increase in the pump price of the commodity from N86.5 to N145 per litre. Kachikwu announced this in Abuja and stated that the decision was in order to increase and stabilise the supply of the product. The minister had also stated that any Nigerian entity was free to import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies. But up till date, most oil marketers are not importing PMS, as NNPC remains the major importer of this commodity. The inability of other marketers to import this product often results in scarcity, although the NNPC had worked tirelessly to halt all forms of petrol scarcity by embarking on massive imports of the commodity. For instance, in December 2017 and early 2018, the country witnessed widespread fuel scarcity for several weeks.

Petroleum Industry Bill still being delayed

Prior to the general elections in 2018, the APC and its presidential candidate, Buhari, had campaigned that their government would ensure the speedy passage of the Petroleum Industry Bill. The PIB had been delayed for several years by previous governments. Experts and industry operators believe that the bill would address many shortcomings in the sector if passed by the government and implemented. But the PIB, which is supposed to address legislative limitations of petroleum sector laws, after being split into four, has not been passed. A part of the bill called the Petroleum Industry Governance Bill, was close to being signed into law, after scaling through the National Assembly in 2018. But up till today, that part of the petroleum bill, PIGB, and other sections of the PIB have not been passed into law.

NNPC monthly financial reports

Although the government has recorded some modest achievements in the oil sector, observers see the publication of the monthly financial and operations reports of the NNPC as one feat that should be lauded. Stakeholders say the corruption cases at NNPC seem to be abating under the current government. The Nigeria Extractive Industry Transparency Initiative, in one of its summarised statements about the national oil firm, stated, “It is clear that there is an ongoing reform in NNPC and the oil sector in general.” The oil firm had since May 2015 carried out several initiatives geared towards reducing corruption and ensuring transparency at the NNPC. The monthly financial and operations report is one of such initiative.

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

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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Economy

France, Nigeria to Build New Partnership

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France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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