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Fashola Raises Hope for Better Electricity Supply

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The Minister of Power, Works and Housing, Babatunde Fashola
  • Fashola Raises Hope for Better Electricity Supply

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on Sunday raised hope for improved electricity supply in the country, assuring Nigerians that power generation would ramp up to 4,000 megawatts within the next six days.

The minister spoke on the Sunday Morning Show of Arise Television, asserting that: “In six days’ time, we will restore generation to 4,000MW,” promising: “By the time you have the hydro station back during the raining season, you will get more.”

Nigerians had been experiencing frequent power outages, which worsened in the last few weeks even as the weather became hotter, provoking bitter complaints from citizens.

But the minister, who also clarified that the N701 billion power intervention fund recently announced by the federal government would be spread over the next three years to give comfort to the operators, explained that the outages were due to low water levels at the nation’s hydro power stations.

As a result, he said, power generation had gone down to 3,400MW.

“For the first time in a long time, this is the peak of very hot weather where the waters in the hydro plants are down,” he said.

The problem, he stated, was compounded by the shutting down of two power stations on Saturday, assuring Nigerians, however, that government was determined to average generation at 3,400MW.

“Two of our plants are down; they are trying to evacuate the condensates. We are, however, keeping power generation at about 3,400MW,” he said, expressing hope that with the advent of the rain season and restoration of the hydro stations, generation would be ramped up to 4,000MW.

Fashola charged gas suppliers and generating companies to do more to produce power since the government had firmed its debt payment plan.

Restating the federal government’s commitment to pay debts owed distribution companies by the ministries, departments and agencies (MDAs), he said he would not make a recommendation to government to pay any kobo of tax payers’ money for any debt that was not properly verified.

He said: “For debts, one of the earliest statements I made was that we will pay all the debts once they are verified and the process of verification is taking place. Right now, we are looking at over 250,000 invoices comprising of I think 4,000 accounts. I won’t make a recommendation to government to pay any kobo of tax payers’ money for a debt I cannot put my signature to.

“And so I have a team doing that, we are making good progress and raising questions. That is how debts are going to be settled, we will pay every debt that is owed and verified.”

The minister also spoke on the President Muhammadu Buhari administration’s economic blueprint and said when properly implemented, it would protect Nigeria from future fall in prices of crude oil.

Fashola noted that five out of the 60 interventions plans under the Economic Recovery and Growth Programme (ERGP) launched last week by President Buhari were related to power supply, stressing that with the private sector controlling the power sector, the role of the government now was policy and coordination, and creating enabling business environment for the investors to deliver.

According to him, the government has the responsibility to ensure that the environment is right.

He said the government had promised to deliver 4000MW of electricity, adding that it was on that basis that the tariff was defined.

He, however, added that the government could not achieve that because of vandalism, which according to him, was the business of government and not that of the operators.

He said: “You see the vice-president and the president are trying to restore calm in the Niger Delta and in the last one month there hasn’t been any major announcement of any vandalism. And so we are now in a state of repairs because hitherto what happened was immediately we repaired, they were broken again. I have meetings with all the operators in the sector, we are meeting in Osogbo tomorrow and that is where the National Control Centre is, and that is part of what I am doing to know the asset by name and not just on papers.”

Fashola said the country was beginning to see the need to generate more power with solar energy and also revive coal because all of the other sources of energy were also subject to their own inherent weaknesses.

“When it is raining, solar is not very efficient and that is when you should go to gas. When it is not raining, your hydro is not good and that is where you should be able to go to coal. This is what needs to be done, but I assure you that it would be done, we will get it right,” he said.
Explaining the federal government’s cross-cutting project development that is devoid of party lines sentiments, Fashola stated that Buhari was not playing politics as elections had been won and lost.

He noted that the president was personally driving the biggest power project in Nigeria, the Mambilla Power Project, which is located in Taraba State, a non-APC state.

According to him, the president is driving the conclusion of the negotiations on the back of his visit to China, stressing that the federal government is close to concluding the negotiations and to start work late this year or early next year.

“President Buhari is not playing politics, he is governing, that is the mandate he has now and so are we his ministers,” he said.

Fashola claimed that when he was a governor, the National Economic Council (NEC) meetings did not hold to discuss deep and very important economic issues because the last administration did not want opposition governors to raise certain questions.

“Elections are over, this is the time to govern and that is what we are doing. How could you possibly, if you talk about road, achieve interconnectivity between states? Assuming we are minded like them, you cut off Ekiti State and go and build roads in Ondo State, apart from Imo State in the South-east, essentially we didn’t win any state. But work is going on in those states,” he explained.

He argued that if all the economic programmes planned by the government were efficiently implemented, Nigeria would have enough economic firepower to withstand any new fall in oil prices in the next 10 years.

According to him, the government would through the Economic Recovery and Growth Programme (ERGP), invest in Nigerians and the local economy to begin to internally source for goods and services needed by Nigerians.

He specifically stated that in the government’s housing programme where a number of houses would be built every year on a Public Private Partnership (PPP) scheme, he had mandated that all the building materials required for the projects across the country be internally sourced, except if they were not found within the country.

He said the government had prioritised its programmes for the country’s road network, adding that roads with higher economic values are being worked on.

“As an economic intervention, our plan is to restore the roads, reduce journey times, improve travel experience and reduce the cost of goods and services so that we can move cargoes and goods across Nigeria, and that is beginning to happen. Coming into 2017, I know which roads need priority attention and how to spend the monies we have. We have toured essentially all the six geo-political regions of the country,” he said.

“When I assumed office, about 206 roads already contracted by previous administrations hadn’t been completed,” he added.

“When we started with the 206 roads, the total contract sum was N2.2 trillion and the amount that had been paid was about N700 billion. So, we were out by N1.5 trillion, and I don’t have that budget in my ministry, we had to make choices. The choices we made were based on which roads carried the heaviest traffic so we could make impact, which roads carried Nigeria’s energy need like the fuel cargoes because there must be priorities; which roads sustain lives in terms of delivering food and the food basket of Nigeria is from the Middle Nelt up north, so it is those roads that help Nigerians get on with their lives,” he explained.

On housing, the minister stated that some states had offered to contribute land for the National Housing Scheme, adding that the housing units would be built in larger quantities after the first pilots have been completed.

“We are getting lands from the states; they are choosing the location where I believe they want their housing estates to be located. The housing units must pass through tests of acceptability and affordability for the people that they would be built for, and that was why I alluded to consultations, which we spent the last year doing,” Fashola added.

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

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Economy

Fitch Ratings Lifts Nigeria’s Credit Outlook to Positive Amidst Reform Progress

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fitch Ratings - Investors King

Fitch Ratings has upgraded Nigeria’s credit outlook to positive, citing the country’s reform progress under President Bola Tinubu’s administration.

This decision is a turning point for Africa’s largest economy and signals growing confidence in its economic trajectory.

The announcement comes six months after Fitch Ratings acknowledged the swift pace of reforms initiated since President Tinubu assumed office in May of the previous year.

According to Fitch, the positive outlook reflects the government’s efforts to restore macroeconomic stability and enhance policy coherence and credibility.

Fitch Ratings affirmed Nigeria’s long-term foreign-currency issuer default rating at B-, underscoring its confidence in the country’s ability to navigate economic challenges and drive sustainable growth.

Previously, Fitch had expressed concerns about governance issues, security challenges, high inflation, and a heavy reliance on hydrocarbon revenues.

However, the ratings agency expressed optimism that President Tinubu’s market-friendly reforms would address these challenges, paving the way for increased investment and economic growth.

President Tinubu’s administration has implemented a series of policy changes aimed at reducing subsidies on fuel and electricity while allowing for a more flexible exchange rate regime.

These measures, coupled with a significant depreciation of the Naira and savings from subsidy reductions, have bolstered the government’s fiscal position and attracted investor confidence.

Fitch Ratings highlighted that these reforms have led to a reduction in distortions stemming from previous unconventional monetary and exchange rate policies.

As a result, sizable inflows have returned to Nigeria’s official foreign exchange market, providing further support for the economy.

Looking ahead, the Nigerian government aims to increase its tax-to-revenue ratio and reduce the ratio of revenue allocated to debt service.

Efforts to achieve these targets have been met with challenges, including a sharp increase in local interest rates to curb inflation and manage public debt.

Despite these challenges, Nigeria’s economic outlook appears promising, with Fitch Ratings’ positive credit outlook reflecting growing optimism among investors and stakeholders.

President Tinubu’s administration remains committed to implementing reforms that promote sustainable growth, foster investment, and enhance the country’s economic resilience.

As Nigeria continues on its path of reform and economic transformation, stakeholders are hopeful that the positive momentum signaled by Fitch Ratings will translate into tangible benefits for the country and its people.

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Seme Border Sees 90% Decline in Trade Activity Due to CFA Fluctuations

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The Seme Border, a vital trade link between Nigeria and its neighboring countries, has reported a 90% decline in trade activity due to the volatile fluctuations in the CFA franc against the Nigerian naira.

Licensed customs agents operating at the border have voiced concerns over the adverse impact of currency instability on cross-border trade.

In a conversation with the media in Lagos, Mr. Godon Ogonnanya, the Special Adviser to the President of the National Association of Government Approved Freight Forwarders, Seme Chapter, shed light on the drastic reduction in trade activities at the border post.

Ogonnanya explained the pivotal role of the CFA franc in facilitating trade transactions, saying the border’s bustling activities were closely tied to the relative strength of the CFA against the naira.

According to Ogonnanya, trade activities thrived at the Seme Border when the CFA franc was weaker compared to the naira.

However, the fluctuating nature of the CFA exchange rate has led to uncertainty and instability in trade transactions, causing a significant downturn in business operations at the border.

“The CFA rate is the reason activities are low here. In those days when the CFA was a little bit down, activities were much there but now that the rate has gone up, it is affecting the business,” Ogonnanya explained.

The unpredictability of the CFA exchange rate has added complexity to trade operations, with importers facing challenges in budgeting and planning due to sudden shifts in currency values.

Ogonnanya highlighted the cascading effects of currency fluctuations, wherein importers incur additional costs as the value of the CFA rises against the naira during the clearance process.

Despite the significant drop in trade activity, Ogonnanya expressed optimism that the situation would gradually improve at the border.

He attributed his optimism to the recent policy interventions by the Central Bank of Nigeria, which have led to the stabilization of the naira and restored confidence among traders.

In addition to currency-related challenges, customs agents cited discrepancies in clearance procedures between Cotonou Port and the Seme Border as a contributing factor to the decline in trade.

Importers face additional costs and complexities in clearing goods at both locations, discouraging trade activities and leading to a substantial decrease in business volume.

The decline in trade activity at the Seme Border underscores the urgent need for policy measures to address currency volatility and streamline trade processes.

As stakeholders navigate these challenges, there is a collective call for collaborative efforts between government agencies and industry players to revive cross-border trade and foster economic growth in the region.

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CBN Worries as Nigeria’s Economic Activities Decline

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.

The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.

According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.

The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.

Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.

Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.

Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.

The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.

The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.

While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.

It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.

As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.

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