Commodities

Refiners Predict Petrol Prices to Fall to N300/Litre with Adequate Local Crude Supply

Published

4 months ago

June 10, 2024

The pump price of Premium Motor Spirit (PMS), commonly known as petrol, could drop to N300 per litre once local production ramps up significantly, according to operators of modular refineries.

This projection hinges on the provision of sufficient crude oil to domestic refiners, which they say would undercut the exorbitant costs currently imposed by foreign refineries.

Speaking under the aegis of the Crude Oil Refinery Owners Association of Nigeria (CORAN), the refiners stressed the urgency for the government to ensure a steady supply of crude oil to local processing plants.

They argue that the reliance on imported petroleum products has been economically disadvantageous for Nigeria.

Eche Idoko, Publicity Secretary of CORAN, emphasized that the current high costs could be mitigated by boosting local production.

“If we begin to produce PMS in large volumes and ensure adequate crude oil supply, the pump price could be reduced to N300 per litre. This would prevent Nigerians from paying nearly N700 per litre and stop foreign refiners from profiting excessively at our expense,” Idoko stated.

The potential price drop follows the model seen with diesel, which experienced a significant price reduction once the Dangote Petroleum Refinery began its production.

“Diesel prices dropped from N1,700-N1,800 per litre to N1,200 per litre after Dangote started producing. This is a clear indication that local production can drastically reduce costs,” Idoko explained.

In a previous statement, Africa’s richest man, Aliko Dangote, affirmed that Nigeria would cease importing petrol by June 2024 due to the Dangote Refinery’s capacity to meet local demand.

Dangote also expressed confidence in the refinery’s ability to cater to West Africa’s diesel and aviation fuel needs.

Challenges and Governmental Role

However, achieving this price reduction is contingent on several factors, including the provision of crude oil at the naira equivalent of its dollar rate.

CORAN has advocated for this approach, citing that it would bolster the naira and reduce the financial burden on refiners who currently buy crude in dollars.

The Nigerian government has shown some commitment towards this goal. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed that a framework has been developed to ensure consistent supply of crude oil to domestic refineries.

“We have created a template for the Domestic Crude Oil Supply Obligation to foster seamless supply to local refineries,” Komolafe stated.

Industry Reactions

Oil marketers have welcomed the potential for reduced petrol prices. Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the Dangote Refinery’s impact on petrol prices.

“We expect the price of locally produced PMS to be below the current NNPC rate of N565.50 per litre. Ideally, we are looking at a price around N500 per litre,” Maigandi noted.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Commodities

Osun Government Tackles Gold Mining Company Over Alleged Tax Evasion

Published

2 days ago

September 26, 2024

Ugwoke Ogbodo

The Osun State Government has raised serious concerns about the operations of the Segilola Gold Project, managed by subsidiaries of Thor Explorations Ltd, a UK-based company listed on the Toronto Stock Exchange.

According to Prof. Lukman Jimoda, the Special Adviser to the Governor on Mining and Mineral Resources, the state’s investigation revealed various unethical business practices, including alleged tax evasion, use of proxies, and failure to comply with environmental rules and regulations.

The companies involved—such as SINIC Engineering, ATF Consulting, Monurent Nigeria, and others—are reportedly engaged in outsourcing employment and operations to undisclosed third parties without proper documentation or environmental compliance.

Prof. Jimoda highlighted that the federal constitution places environmental oversight under the concurrent list, allowing the state to assess companies’ operations for economic and environmental impacts.

He emphasised that the Segilola project, despite its significant production since 2019, has resisted complying with extant laws like the Personal Income Tax Act (PITA) and the Company Income Tax Act (CITA) which govern tax levies.

He also expressed concerns over pollution, including particulate emissions and possible acid drains from waste rocks, which pose serious environmental risks to the state.

The state government is therefore demanding the payment of accrued taxes and environmental development levies, as well as proper documentation for all involved parties.

The Special Adviser stressed that Osun has not received its due revenue from the Segilola project for over three years, despite its bankable gold production since 2019.

“The government is prepared to take necessary actions to ensure compliance and safeguard the state’s environmental and economic interests”, the Special Adviser noted.

Also speaking, the Financial Consultant to the Office of Mining and Mineral Resources, Dr. Wale Bolorunduro while presenting his report said the allegations against Thor Explorations Ltd and its subsidiaries mark a significant moment for Osun State, as the government seeks to reclaim its financial rights and ensure compliance with tax regulations.

Particularly troubling is the claim that Osun State’s interests in Tropical Mines Ltd were strategically diminished without due financial compensation, raising questions about the fairness of the company’s practices in Nigeria versus its compliance with international standards in the UK and Canada, where it is publicly listed,” Bolorunduro stated.

Governor Ademola Adeleke’s administration has emphasized the need for due payments to be made, while also ensuring that business operations continue smoothly. This balanced approach underscores the state’s willingness to foster investment, but not at the expense of its fiscal health or integrity.

Responding to the allegations that the Adeleke Dynasty is involved in the management of the Segilola Gold Project, Commissioner for Information and Public Enlightenment, Oluomo Kolapo Alimi denied the report, noting that those holding a stake or the other in the gold firm areas shortchanged the Osun state government.

Denying the allegations, the company noted that it has consistently demonstrated a commitment to being a law-abiding, transparent corporate entity, fulfilling all tax obligations and royalty payments in full and on time.

Segilola Country Manager, Austin Menegbo, said, “We maintain detailed records and have receipts for all royalty payments made to the Federal Government, as well as tax remittances to the State Government. These documents are readily available for verification.

“The claims of environmental and operational non-compliance are not true as we have sufficient evidence to prove that we have followed all necessary protocols for environmental assessments and regulatory filings, including environmental compliance monitoring and mitigation of potential environmental impacts. In addition, we are regularly audited by the Federal Ministry of Environment and the Ministry of Solid Minerals Development and to date, there has been no claim of pollution or environmental violations against the company.

“As one of Nigeria’s leading mining companies, we remain committed to contributing to the economic growth of the state and the country while adhering to the highest ethical and operational standards. We shall continue to maintain an open line of communication with relevant authorities to ensure that our operations are aligned with both federal and state laws.”

Commodities

Price of Cooking Gas Rises by 70%, Households and Small Businesses Suffer

Published

2 days ago

September 26, 2024

Bassey Marshall

Nigerians have expressed dissatisfaction over the continuous increase in the price of cooking gas.

Investors King gathered that despite the removal of Value Added Tax (VAT) on cooking gas since October 2023, the price of cooking gas continues to soar, now with a 70 percent increase as reported by the National Bureau of Statistics (NBS).

The price of refilling a 12.5kg cylinder of gas cost N9,194.41 as of 2023, however, as of August 2024, it surged to N15, 552.56, according to the National Bureau of Statistics (NBS).

This increase has had a great effect on households and small-scale businesses, including caterers and food vendors whose daily business depends on gas.

Many Nigerians have seized various opportunities to air out their frustration.

An X user, Abiodun Adeleke queried the sudden increase in the price of gas.

Adeleke, who wondered how Nigerians would be able to survive the economic hardship, observed that the recent increase in the price of the commodity reflects a 100 percent increase.

He wrote, “12.5kg cooking gas is now N19,000. Just months ago, it was N9,000. That’s a 100 percent hike in less than a year. How are people surviving this economy?”

Another user, Isaac Ajani with the handle @IsaacAJCityTexa tackled the FG’s claim of importing gas.

He wrote, “And FG/NNPC boasting they are exporting gas now,that Nig has huge quantity of natural gas,why d locals/residents are buying it higher,coal/dual purpose Dpk out of reach @1600perkg,in what way is FG relieving d residents of utility bills.”

Also sharing his frustration, another user with the handle @PerplexedNGN who claimed to be a resident of Lagos confirmed the increase describing it as crazy.

His words “I already bought ₦17,000 here in Lagos.

It’s honestly crazy. I don’t know where the common man will run to after this one too soon becomes unaffordable for the common man. 12.5kg gas was about ₦,3500-₦4,000 up until April/May 2022, just recently over 2 years ago.”

Food vendors and caterers are also feeling the heat.

Mary Olabuson, a caterer in Lagos State recounted how the price of cooking is affecting her business.

She recounted how she rejected a job after the price of cooking gas swallow most of the budget.

“I had a client call me for a job, but after calculating the cost, gas alone took up a huge chunk of the budget. In the end, I had to turn down the offer because the client couldn’t afford my revised rate,” she said.

Commodities

Rising Cocoa Prices Draw New Farmers, But Swollen Shoot Disease Remains a Threat

Published

1 month ago

August 19, 2024

Samed Olukoya

As the October cocoa harvest approaches, optimism is growing among West African farmers buoyed by soaring cocoa prices.

However, the industry faces persistent challenges, particularly from swollen shoot disease, which continues to threaten cocoa production despite favorable weather conditions.

Moussa Konate, a cocoa farmer from a small plantation in Ivory Coast, is seeing the fruits of a brighter season.

His trees are now laden with healthy, green pods, a promising sign after last year’s devastating crop loss due to disease.

The upcoming harvest is expected to be significantly better, buoyed by the arrival of essential pesticides and improved weather conditions attributed to the La Niña phenomenon.

Yet, while the outlook is improving, the cocoa industry in West Africa remains fraught with challenges. Swollen shoot disease, an incurable viral infection, remains a significant hurdle.

The disease reduces the yield of infected cocoa trees by up to 70% and is forcing many farmers to cut down not only diseased trees but also those nearby, as a preventative measure.

The economic landscape is more promising. Cocoa prices have surged to record levels, driven by ongoing supply shortages and increased demand.

Analysts forecast that prices could average around $7,000 per ton in 2024, a significant drop from the highs earlier this year but still well above historical norms.

This price surge is attracting new entrants into cocoa farming, particularly in regions like Cameroon and Nigeria, where farmers are reporting impressive yields and substantial earnings.

In contrast, established cocoa giants like Ivory Coast and Ghana are grappling with persistent issues.

Despite attempts to adjust farmgate prices and combat the disease, many farmers still struggle with limited resources.

The high costs of pesticides and fertilizers remain out of reach for many, and illegal mining activities, particularly in Ghana, are exacerbating the problem by destroying valuable agricultural land.

The broader West African cocoa belt is seeing mixed results. Early indicators suggest that Ivory Coast could experience a 10% increase in output this season, reaching about 2 million tons.

However, the spread of swollen shoot disease and irregular weather patterns pose ongoing risks.

In Ghana, where aging trees and diseases are also prevalent, farmers are calling for higher prices to support their operations and curb the impact of illegal mining, which threatens their land and livelihood.

Despite these challenges, there is a glimmer of hope. Improved weather conditions and rising prices are revitalizing the industry, drawing new investment and boosting the spirits of many farmers.

Nevertheless, experts emphasize the need for continued support and coordinated efforts to address disease management and sustainable farming practices to ensure the long-term health of the cocoa sector.