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Cost of Imported Goods to Surge in 2020

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  • Cost of Imported Goods to Surge in 2020

Costs of imported goods are expected to surge next year as the United Nations shipping agency, International Maritime Organisation (IMO), get ready to enforce its low Sulphur policy.

In 2016, IMO announced a new global sulphur regulation for marine vessels in a move to curb rising air pollution-related diseases.

The new IMO mandated all shipping companies to maintain 0.5 percent sulphur content, down from the current 3.5 percent maximum.

However, because shipping companies are now required to either install exhaust gas cleaning systems or switch to a low sulphur refined fuel that cost more to purchase, the cost of imported goods would surge starting from next year as the additional cost would be passed on to final consumers.

A recent data by the Nigerian National Bureau of Statistics showed that Nigeria’s import through the sea rose by N253.3 billion in the second quarter of 2019 to N3.35 trillion, while export rose by just N7.3 billion or 2.88 percent. An indication of the significance of import to the Nigerian economy.

Experts estimated that the new regulation could saddle the global shipping sector with about $40 billion in additional cost, while few others are saying it could even rise to $60 billion.

Also, this is expected to weigh on the entire global trade as over 90 percent of world trade transport are done by the sea.

Costs of low sulphur fuel like the diesel and jet fuel are predicted to increase substantially as producers would inflate prices with an increase in demand. This could add as much as 20 percent to fuel costs.

In Nigeria, a 20 percent increase in diesel would hurt the already struggling economy as both multinational companies and small businesses largely relied on diesel generators for operations.

Tunde Leye, a Lagos-based analyst with SBM Intelligence, said: “Businesses may struggle to survive, or in the best case scenario, would at least downsize.”

According to the International Air Transport Association (IATA), fuel consumption accounts for almost 25 percent of operating expenses in the aviation industry.

“The potential jet fuel price increase might pose a risk for airline profitability and risk management,” IATA said in a report.

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 long experience in the global financial market.

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Economy

Criminals Vandalise 65 Pipeline Points in April

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65 Pipeline Points Vandalise in April

The Nigerian National Petroleum Corporation has said 65 pipeline points were vandalised in the month of April by criminals.

In the corporation report released on Wednesday for the month of April, NNPC said this represents a 240 percent increase from the 19 points recorded in the month of March 2020.

The report also noted that Nigeria’s total crude oil production rose by 3.17 million barrels or 5.28 percent to 63.19 million barrels in the month of March, representing a daily average of 2.04 million barrels per day.

Meanwhile, in another related development, the NNPC said it incurred over 200 percent operating deficit in the month of April.

It said, “The report in April 2020 indicates an increased trading deficit of N30.81bn compared to the N9.53bn deficit posted in March 2020.

“The current hike of over 200 per cent is attributed to the 29 per cent increased deficit for NPDC due to ongoing coronavirus-related impact of reduced exports, coupled with the upsurge in corporate headquarters deficit arising from terminal benefits made to retired staff.”

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Economy

NNPC Operating Deficit Hits N30.81bn in April

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NNPC Operating Deficit Rises by Over 200% to N30.81bn in April

The Nigerian National petroleum Corporation (NNPC) said its operating deficit rose N30.81 billion in the month of April.

In the corporation’s latest financial and operational activities report for April, it says the over 200 percent loss was recorded through the Nigerian Petroleum Development Company, a subsidiary of the Nigerian National Petroleum Corporation.

It said, “The report in April 2020 indicates an increased trading deficit of N30.81bn compared to the N9.53bn deficit posted in March 2020.

“The current hike of over 200 per cent is attributed to the 29 per cent increased deficit for NPDC due to ongoing coronavirus-related impact of reduced exports, coupled with the upsurge in corporate headquarters deficit arising from terminal benefits made to retired staff.”

It added, “In addition, PPMC, NGMC and Duke Oil Incorporated posted reduced surpluses arising from the COVID-19 effect of reduced demand, fluctuating prices and marketers’ unwillingness to lift products thus affecting revenue.”

Meanwhile, the report also stated that the corporation supplied a total of 0.94 billion litres of petrol, representing about 31.37 million litres per day, in the month of April.

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Nigeria’s Population to Hit 791m, Surpasses China by 2100 – Report

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Nigeria’s Population to Surpasses China by 2100 – Report

A recent report has predicted that Nigeria’s population will surpass that of China by the year 2100.

The new research conducted by the University of Washington’s Institute for Health Metrics and Evaluation projected that China’s population would peak at around 1.4 billion in four years time and moderated to about 732 million people by 732 million.

While Nigeria’s population is expected to rise more than the Chinese to 791 million by the same year to emerge the world’s second largest country after India.

The reduction in population was a result of the projected drop in global fertility rates going forward. However, the research predicted that the population of sub-Saharan Africa, the world’s poorest region, would triple in size to over three billion people by 2100.

Prof. Christopher Murray, a researcher and former Director of the Harvard Centre for Population and Development, said the surge in population in the region would lead to migration to many European and Asian nations with far less manpower as of the time.

Murray said, “We will have many more people of African descent in many more countries as we go through this.

“Global recognition of the challenges around racism are going to be all the more critical if there are large numbers of people of African descent in many countries.”

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