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Fuel Scarcity, High FX Rate Spike Inflation in Nigeria

Rising cost of living amid forex scarcity pushed inflation to a new record high of 21.09 percent in October 2022



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Nigerian government statistical agency, the National Bureau of Statistics (NBS) reveals increase in the price of fuel, scarcity of foreign exchange, added with disruption in food supply chain pushed headline inflation in the country to a new record high of 21.09 per cent in October 2022.

This is 0.32 per cent higher than 20.77 per cent reported in September, meaning the cost of living is skyrocketing in the west African Nation.

NBS stated that among others, “Likely factors responsible for the increase in annual inflation rate (year-on-year basis), are: disruption in the supply of food products; increase in cost of importation due to the persistent currency depreciation; and a general increase in the cost of production, such as increase in energy cost.”

While inflation has been on the increase year-on-year, the statistics body revealed that there had been a decline in headline inflation month-on-month in the last three months due to a decline in the changes in the food index. It concluded this might be predicated on the current situation of the nation’s harvesting season.

Explained to the public during its ‘Consumer Price Index October 2022’ report, the NBS stated that “In October 2022, on a year–on–year basis, the headline inflation rate was 21.09 per cent.” This was 5.09 per cent points higher compared to the rate recorded in October 2021, which was 15.99 per cent.

It confirms that “This shows that the general price level for the headline inflation rate increased in October 2022 when compared to the same month in the preceding year (i.e., October 2021) by 5.09 per cent. On a month-on-month basis, the Headline inflation rate for October 2022 was 1.24 per cent, this was 0.11 per cent lower than the rate recorded in September 2022 (1.36 per cent). This means that in October 2022 the general price level for the headline inflation rate (month–on–month basis) declined by 0.11 per cent.”

The statistical office also exposed that urban inflation rate had risen to 21.63 per cent while rural inflation was now 20.57 per cent.

NBS went further to reveal that increases in the prices of bread, cereals, potatoes, yams, other tubers, oil and fat pushed food inflation to 23.72 per cent in October.

Its report highlights flood-ridden Kogi as the worst hit, with inflation hitting 25.15 per cent in the month in the Confluence state.

The nation’s statistics body said, “In October 2022, all items inflation rate on a year-on-year basis was highest in Kogi (25.15 per cent), Bauchi (23.45 per cent), Ondo (23.45 per cent), while Plateau (19.02 per cent), Borno (19.31 per cent) and Nasarawa (19.39 per cent) recorded the slowest rise in headline, repeating years.

In October, fuel scarcity hit different parts of the nation, with filling stations selling petrol above the government-approved price of N180-N185/litre. Such affected the price of transportation as public transport workers transferred this increase in cost to commuters, leading to weeks of protests in the commercial city of Lagos.


Inflation and Forex Mismanagement Drive Petrol Truck Prices from N7M to N25M



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The Chairman of the Independent Petroleum Marketers Association of Nigeria in the Satellite Depot branch, Akin Akinrinade, has raised an alarm over the rising cost of petrol trucks in Nigeria.

According to Akinrinade, the cost of a petrol truck has surged from N7 million in May to an astonishing N25 million at present, attributed to inflation induced by poorly managed foreign exchange rates.

Akinrinade pointed out that the forex mismanagement has significantly impacted the landing cost of premium motor spirit (PMS), commonly known as petrol, consequently leading to a surge in pump prices.

The unstable business environment, coupled with the astronomical rise in expenses, has created challenges for marketers in the downstream oil sector.

Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), highlighted in October 2023 that foreign exchange challenges have hindered private companies from importing petroleum products.

As a result, the NNPCL has become the exclusive importer of petrol.

The decision to limit private entities from importing fuel comes after President Bola Tinubu’s initiatives aimed at deregulating the fuel market.

Initially, the plan was to allow private companies to import fuel starting June 2023, aligning with efforts to balance the market after removing petrol subsidies.

The ripple effects of the soaring petrol costs are already evident, with commercial transporters increasing fares, and private car owners seeking fuel-saving alternatives.

As Christmas approaches, the surge in demand for interstate travel is expected to further elevate costs, posing financial challenges for many Nigerians amidst stagnant income levels.

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Nigeria’s Presidential CNG Initiative Allocates N100bn for CNG Buses and EV Adoption




The Presidential Compressed Natural Gas (CNG) Initiative has allocated N100 billion to expedite the deployment of CNG buses nationwide, according to a statement released on Wednesday.

The initiative, designed to catalyze an Auto-gas and Electric Vehicle (EV) revolution in mass transit and transportation, aims to enhance sustainability and cost-effectiveness.

The statement revealed that the fund would be instrumental in supporting the adoption of auto-gas and electric vehicles, signaling a commitment to a more sustainable and economical future in the transportation sector.

The Presidential CNG Initiative plans to leverage over 11,500 CNG and electric-fueled vehicles, along with the deployment of 55,000 conversion kits.

This strategic approach is intended to reduce transportation costs for Nigerians and mitigate the challenges posed by the rising cost of living.

Under the Renewed Hope Agenda, the Presidential CNG Initiative is dedicated to realizing the President’s vision, guided by its steering committee led by FIRS Chairman Zacch Adedeji.

The statement highlighted recent achievements, including strategic technical partnerships and the ongoing commissioning of CNG Conversion centers in key states such as Lagos, Abuja, Kaduna, Ogun, and Rivers.

Several more centers are slated for commissioning in the coming weeks, reflecting the initiative’s momentum and commitment to achieving its objectives.

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Nigeria’s Power Transformation: 53 Projects Worth N122bn on Track for May 2024 Completion



power project

The Central Bank of Nigeria (CBN), in collaboration with the Transmission Company of Nigeria (TCN) and power distribution companies, is set to complete 53 power projects by May next year.

Valued at N122 billion, these projects aim to add over 1,000 megawatts to TCN’s wheeling capacity.

During a recent tour of three ongoing projects in Lagos, TCN’s Programme Coordinator, Mathew Ajibade, assured that the projects were not abandoned, refuting speculations.

He confirmed that work is progressing smoothly and is expected to be completed by May 2024, as initially planned.

Assistant Director/Head of Infrastructure Finance Office at the CBN, Tumba Tijani, highlighted the CBN’s support for the power sector, revealing that the bank released a loan at a 9% interest rate in August last year for the projects.

The funding, part of the Nigeria Electricity Market Stabilisation Facility-3, amounts to N122,289,344 and aims to address transmission/distribution bottlenecks, enhance supply to end-users, and unlock unutilized generation capacity.

Tijani disclosed that N85.43 billion has been disbursed into the Advance Payment Guarantee account of the 53 contractors responsible for executing the projects.

The comprehensive project list includes the delivery of power transformers, re-conductoring existing transmission lines, upgrading existing substations, and constructing 33KV line bays.

The initiative reflects a concerted effort to enhance Nigeria’s power infrastructure and meet growing energy demands.

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