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NECA, CIBN, MAN, Others Back Sanusi’s Call for Fuel Subsidy Removal

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  • NECA, CIBN, MAN, Others Back Sanusi’s Call for Fuel Subsidy Removal

Against the backdrop of the statement by the Emir of Kano, Mallam Muhammad Sanusi II, that the country was on the brink of bankruptcy, the Nigeria Employers’ Consultative Association and other stakeholders have asked the Federal Government to scrap fuel subsidy.

Sanusi, a former governor of the Central Bank of Nigeria, said on Tuesday that fuel and electricity subsidies as well as debt servicing had continued to eat into government revenue and urged President Muhammadu Buhari to stop the subsidy regime, which he described as fraudulent.

NECA, in its reaction to the Emir’s statement on Wednesday, described fuel subsidy as a conduit for corruption.

The Director-General, NECA, Mr Timothy Olawale, in a telephone interview with one of our correspondents, noted that the association had made its position known on the issue, arguing that the Federal Government should allow market forces to determine the fuel price.

“The fuel subsidy should be scrapped. This has always been the position of NECA. As far as we are concerned, fuel subsidy is a conduit for corruption. It is a means of enriching certain individuals. Such money going into fuel subsidy should be channelled into a productive sector of the economy and not consumption,” he said.

On the issue of debt servicing, the NECA boss described the situation where the FG was spending over 30 per cent of the budget on debt servicing as unsustainable.

“There will be little or nothing left for infrastructure, after recurrent expenditure must have been removed also. It portends a bleak future for the nation, and a burden for the generation yet unborn; it is like going into slavery. It is not sustainable,” Olawale added.

The President, Chartered Institute of Bankers of Nigeria, Dr Uche Olowu, also described fuel subsidy as unsustainable.

“But they (government) must find a way of how they can cushion the effect when they remove the subsidy. There will be pain in the short term. But in the long term, they will use the money from that subsidy to upgrade infrastructure that will encourage wealth creation activities, which will increase employment,” he said.

The Corporate Affairs Director, Manufacturers Association of Nigeria, Mr Ambrose Oruche, said the Organised Private Sector, which MAN belongs to, had taken a position on fuel subsidy in 2014, supporting the removal of fuel subsidy and saying that the money should be invested in infrastructure.

He told one of our correspondents that the body had yet to take a new official position on the current argument about subsidy removal and debt servicing.

The Centre for Social Justice said the continued retention of the fuel subsidy scheme would worsen the funding crisis currently facing the country.

The Lead Director, CSJ, Mr Eze Onyekpere, told one of our correspondents that the country’s revenue profile was not looking better.

“Continuing subsidies on petrol will compound our funding crisis. So, I support the Emir of Kano that the fuel subsidy should be removed because it is in line with what we have been talking about,” he said.

Onyekpere said there might be a critical challenge in the realisation of the revenue and funding needed to implement the 2019 budget.

This, according to him, is against the background of the revelation by the immediate past Minister of Finance, Mrs Zainab Ahmed, that only 55 per cent of the 2018 revenue projections were realised.

He said the revenue underperformance followed the trajectory in previous years where the Federal Government consistently failed to realise budgeted revenue.

Onyekpere said, “We are worried that despite the price of crude oil selling above the benchmark price in the last couple of years, we have hardly met the production target of 2.3 million barrels a day. The recent disclosure that the country produces less than two million barrels a day falls in line with the trajectory of this challenge.

“The dominance of oil in the revenue profile, as well as the relatively meagre revenue expected from the non-oil sector, compounds the revenue challenge. Increasing recurrent expenditure accruing from the increased public minimum wage will imply that we have to partly fund salaries with borrowed money which is not sustainable either in the short, medium or long term.”

He said proceeds from the solid minerals sector were still very low, despite overwhelming evidence of massive illegal mining, adding that revenue leakages from operating surpluses of agencies of government as well as non-remittance had yet to be fully addressed.

A professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Ogun State, Sheriffdeen Tella, said although the amount expended on fuel subsidy and debt servicing was huge, the country could not go bankrupt.

But he argued that development in some sectors would continue to suffer, saying debt servicing was becoming a big problem that the government must be concerned.

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

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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