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Budget: FG to Spend N1.16tn More in 2018



  • Budget: FG to Spend N1.16tn More in 2018

The country’s national budget will rise by N1.16tn in 2018, according to projections contained in the 2018-2020 Medium Term Expenditure Framework and Fiscal Strategy submitted to the National Assembly by President Muhammadu Buhari.

The President forwarded the MTEF/FSP to the National Assembly on Tuesday, with a covering letter read to members of the House of Representatives by the Speaker, Mr. Yakubu Dogara.

Details of the MTEF, obtained in Abuja on Thursday showed that the Federal Government would spend N8.60tn next year, up from the N7.44tn appropriated in 2017.

The difference of N1.16tn represents a “15.5 per cent” increase over the budget of the current year.

This will also mean additional deficit in the 2018 budget size of up to N592.75bn or “25.0 per cent” over the N2.36tn deficit contained in the 2017 budget.

In 2016, the country’s budget was N6.06tn.

The details of the MTEF reveal that the anticipated aggregate revenue to fund the 2018 budget will be N5.65tn “or 11.0 per cent or N562.50b over the 2017 estimate of N5.08tn.”

Major expenditure heads include N12.12tn for recurrent and N2.03tn for capital expenditure.

The government projects the country’s Gross Domestic Product to grow by 3.5 per cent in 2018, but inflation will “moderate to 12.42 per cent.”

The government arrived at this, using a crude oil production projection of 2.3 million barrels per day in 2018, with a benchmark price of $45 “and an average exchange rate of N305/$1.”

Daily oil production is expected to be 2.4mbpd in 2019 and 2.5mbpd in 2020.

In 2017, oil production suffered setbacks before it later climbed to 2.2mbpd. The benchmark for 2017 was $44, while the exchange rate was also N305/$1.

Generally, the government hopes that oil production will rise, owing to improved security and consultations with groups in the Niger Delta region.

For instance, it said pipeline vandalism dropped to 94 points in April 2017, compared to 214 vandalised points in the same period in 2016.

The document added, “The nominal GDP is expected to increase from N104.79bn in 2017 to N134.7bn in 2020.

“Similarly, consumption expenditure is projected to grow from N83.66 in 2018 to N107.77bn in 2020. These are reflective of a gradual recovery of the economy.”

The MTEF merely gives a general outlook of the government’s plans for 2018-2020.

Specific details, particularly in respect of the 2018 budget, are expected to be contained in the estimates of the budget that will soon be presented to the National Assembly by Buhari.

By the provisions of the Fiscal Responsibility Act, 2007, the National Assembly is to first consider and approve the MTEF/FSP before the estimates of the budget will be presented to lawmakers.

Meanwhile, the House in plenary asked the government to recover the $14.29bn gas flare fines owed the country by International Oil Companies from 2008 to 2016.

The House also called for a status report on the damage caused by gas flaring in affected communities.

The resolution was passed following a motion moved by a member from Edo State, Mr. Johnson Agbonayinma, and six other lawmakers.

The motion read partly, “The House is aware that the Federal Government, in a bid to discourage gas flaring and encourage the redirection of gas flared from waste to wealth, and to save the environment and the lives of the people living in the gas flared environment, imposed a penalty of $3.5 per 1000 SCF of gas flared by oil companies.

“(The House is) also aware that the Deputy Director and Head, Upstream of the Department of Petroleum Resources, while speaking at a conference in Houston, Texas, USA, recently, said that the country had lost $14,298bn between April 2008 and October 2016 in form of penalties for gas flaring, which the IOCs failed to pay.

“In a similar vein, the Nigeria Extractive Industries Transparency Initiative, in its latest Oil and Gas Audit Report, noted that firms operating in the country had failed to abide by the regulating penalty of $3.5 for every 1000 SCF of gas flared by oil companies.

“(The House is) concerned that multinational oil companies, which adhere strictly to internationally acceptable environmental best practices in their countries and other parts of the globe, have refused to pay the agreed penalties on gas flared in Nigeria.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial market.

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Nigeria’s Main Refineries Record N406.62bn Loss in Two Years



modular refinery

Port Harcourt, Kaduna, Warri Refinery posts N406.62bn Deficit in Two Years

Nigeria’s three main refineries recorded N406.62 billion loss in two years, according to the audited financial statements from the Nigerian National Petroleum Corporation (NNPC).

The three refineries located in Port Harcourt, Kaduna and Warri have a combined installed capacity of 445,000 barrels per day, however, the refineries have continued to function below the installed capacity.

The audited report showed the Kaduna refinery posted N64.34 billion loss in 2018, better than the N111.89 billion loss reported in 2017.

While Warri refinery filed N44.44 billion loss for 2018, also better than the N81.60 billion loss posted in 2017.

Port Harcourt refinery reported N45.59 billion loss in 2018, down from N55.76 billion loss posted in 2017.

The Nigerian government has spent billions of US dollars in maintaining and trying to improve the dilapidated refineries over the years. However, because of the inability of the three refineries to meet daily petrol demands of the Nigerian people, the Federal Government resulted to importation that has eroded the nation’s foreign reserves.

A recent report from the NNPC showed that Nigeria spent N2.37 trillion on petrol importation between May 2019 and May 2020 despite the nation struggling with falling foreign reserves due to low oil prices.

The weak foreign reserves has disrupted the nation’s economic outlook and weighed on the Nigerian Naira. The Naira has been devalued by 15 percent this year and was recently adjusted from N360 per US dollar exchange rate to N380/US$ for importers and investors to ease pressure on the nation’s foreign reserves.

Last week, at a summit organised by Seplat, Mallam Mele Kyari, the Group Managing Director, NNPC, said the three refineries were all idle despite the money being spent on them.

In Nigeria today, we are importing practically every petroleum product that we consume in this country.

“We are working to make sure that we are able to fix our refineries,” Kyari stated.

All hopes are now on Dangote’s refinery.

Aliko Dangote, Africa’s richest man and the world’s richest black man, is presently constructing a 650,000 barrels per day refinery.

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Osinbajo Says FG Plans to Create 5 Million Jobs



Buhari and Osinbajo

FG to Create 5m Jobs from Strategic Investments in Manufacturing, Agriculture

Vice President, Prof. Yemi Osinbajo, has said the Federal Government plans to create at least 5 million jobs in the next few years.

Osinbajo, who spoke at the Virtual Presidential Policy Dialogue Session organised by the Lagos Chamber of Commerce and Industry (LCCI), said the Buhari-led administration is focused on job creation.

He, therefore, stated that this would be achieved with strategic investments in key sectors like the manufacturing and agriculture sectors.

The Vice President said, “We are to create jobs and boost our national housing programme. We would be intentional in the support of manufacturers in using our local raw materials. We are seriously engaging the use of cement in building our roads, as it will be cheaper for us and more durable.

“We are targeting electrification of five million households with solar power, and we are supporting SMEs, especially in the pharmaceuticals to enhance the production of personal protective equipment.”

Mrs. Toki Mabogunje, the President of LCCI, who also spoke at the event, expressed concerns over the failure of the Nigerian Customs Service to adhere to the Executive Order which forbids Customs checkpoints around the ports and within given geographical delimitations in the country.

She also noted the slow pace of reforms in the oil and gas sector, one of the nation’s main sectors. According to her, the oil and gas sector was another cause for worry, saying up till now the PIB passed has not been signed by President Muhammadu Buhari.

According to her, “Closure of the land borders has enormous implications for cross border economic activities around the country. The indications are now that the closure is indefinite. While we share the concern of government on issues of security and smuggling, we believe that the indefinite closure of land borders is not the solution to the problem.

“We are excited about the signing of the AFCTA. But we need to get ourselves ready for the pressure of competition inherent in the continental economic integration agenda. A number of commitments were made about the creation of an environment that would enable the private sector to be competition ready. But not much has happened in this regard so far.

“We are aware of the efforts of government to fix our infrastructure, including roads and railways, but funding has remained a major challenge. We would like to see a new funding model with much bigger focus on private sector capital within a Public Private Partnership [PPP] framework for infrastructure development in the country.

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Fuel Scarcity: NUPENG to Commence Strike on Monday



Petrol Importation

Lagosians Should Brace for Fuel Scarcity as NUPENG Embarks on Strike

Nigerians should brace for fuel scarcity as the national leadership of the Nigeria Union of Petroleum and Natural Gas (NUPENG) directed all petroleum tanker drivers to withdraw their services from Lagos State starting from Monday, 10 August 2020.

In a statement released by NUPENG on Friday, the union said the directive followed the failure of various authorities in Lagos State to address three major issues that had impacted the operations of petroleum tanker drivers in the state for several months.

The statement signed by the National President, Williams Akporeha and the General Secretary, Olawale Afolabi, NUPENG and titled title ‘NUPENG leadership directs withdrawal of services by petroleum tanker drivers in Lagos State with effect from Monday, August 10, 2020,’ noted that members of the union are frustrated and pained by the barrage of challenges faced while carrying out their activities in Lagos State.

NUPENG said, “The entire rank and file members of the union are deeply pained, frustrated and agonised by the barrage of these challenges being consistently faced by petroleum tanker drivers in Lagos State and are left with no other option but to direct the withdrawal of their services in Lagos State until the Lagos State Government and other relevant stakeholders address these critical challenges.

“It is sad and disheartening to note here that we had made several appeals and reports to the Lagos State Government and the Presidential Task Force for the decongestion of Apapa on these challenges but all to no avail.

NUPENG listed the major challenges faced by petroleum tanker drivers in Lagos State as extortion and harassment by various security agents and, area boys’ (miscreants).

This menace must stop and the leadership of these security operatives in Lagos State must go all out to call their men to order with immediate effect.

The Union added that it is sad that the security agents who were expected to ensure the free flow of traffic and protection of road users were the same people using their uniforms and arms to intimidate, harass and extort money from petroleum drivers in Lagos State.

Therefore, it said it had embarked on an indefinite strike to force the Lagos State Government to address the situation.

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