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External Reserves Drop to 11-Year Low of $28.1bn

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Bureau Of Engraving And Printing Prints New Anti-Counterfeit 100 Dollar Bills

The nation’s external reserves fell to $28.1bn on January 28, the lowest level since 2005, data from the Central Bank of Nigeria showed on Friday.

The foreign exchange reserves had stood at $29.13bn a month ago, the data showed.

On December 31, 2015, the reserves closed at $29.070bn, reflecting a decline of 15.79 per cent year-on-year from $34.52bn a year ago.

During the first 11 days of this year, the foreign reserves fell by $288m, and stood at $28.782bn on January 11.

It had recorded $28.895bn on January 8 and $28.931bn on January 7, the CBN statistics showed.

The stoppage of foreign exchange sale to Bureau De Change operators has failed to prevent massive decline of the nation’s foreign reserves, which dropped by $108m three days after the move by the CBN.

The rate at which the reserves fell in the three days after the ban was more than what was recorded between December 31, 2015 and January 11, 2016, the CBN data showed.

The CBN had claimed that with the continued depletion of the foreign reserves, providing forex to the BDCs was no longer sustainable.

The CBN Governor, Mr. Godwin Emefiele, said between July 2014 and January this year, the country’s external reserves had suffered a great pressure from speculative attacks, round-tripping and front-loading activities by players in the foreign exchange market.

These, he noted, had led to a decline in the reserves from $37.3bn in June 2014 to $28bn currently.

There have been several calls for flexibility in the foreign exchange policies of the CBN as businesses continue to suffer from the restrictive policies of the central bank.

The Managing Director, International Monetary Fund, Christine Lagarde, had in a meeting with President Muhammadu Buhari earlier this month stressed the need for flexibility with monetary policies in order not to deplete the reserves.

She said, “We believe that with very clear primary ambition to support the poorer people of Nigeria, there could be added flexibility in the monetary policy, particularly if as we think the price of oil is likely to be low for longer (period).

“The occurrences should not deplete the reserves of the country, simply because of being seemingly rigid. I’m not suggesting that rigidity be totally removed, but some form of flexibility would help.”

Lagarde also said, “A nation’s foreign reserves are usually an indication of the health of its international trade, with import-dependent countries often disadvantaged in their current account balance as a result of forex expenditure outstripping income.

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

Oil Marketers Fix Pump Prices as PPPRA Remains Silent

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Filling Stations Fix Pump Prices Amid Pricing Confusion

Oil marketers across the country have started fixing their own pump price for petrol over silent of the Petroleum Products Pricing Regulatory Agency (PPPRA).

According to Tunji Oyebanji, the Chairman, Major Oil Marketers Association of Nigeria, and Managing Director/Chief Executive Officer, 11 Plc, certain members of the association had to fix their pump price between N148-N148.80 per litre.

He said oil marketers are interpreting PPPRA silence as ‘a go ahead’ to adjust price according to the recent increase in ex-depot price.

“There is a need for some clarity. If we are to fix the price of the product, we should be told so. There is a lot of confusion and people are not clear as to the direction. All we have is silence,” he added.

Earlier this week, the PPPRA increased ex-depot price by N6 to N138.62/litre in line with the latest deregulation plan to allow market forces dictate the nation’s pump price and finally put an end to fuel subsidy that over the years has enriched few people at the expense of national growth and development.

However, the Nigeria Union of Petroleum and Natural Gas Workers and the Petroleum and Natural Gas Senior Staff Association of Nigeria have voiced their opposition to the deregulation of the downstream petroleum sector when the country is still depending on importation for refined products.

Since the PPPRA announced a new price band of N140.80 to N143.80 per litre in the month of July, it has remained silent on August despite raising the ex-depot price on Monday.

Forcing filling stations to start fixing their pump prices. For instance, Conoil and Total filling stations opposite the headquarters of the NNPC increased their petrol prices to N148.7 per litre and N148.8 per litre, respectively.

While the Independent Petroleum Marketers Association of Nigeria, South West chapter directed all members to increase the pump price of petrol to N150 per litre.

Experts have attributed the whole confusion to poorly planned deregulation strategy. According to Mr Afolabi Olawale, the General Secretary, NUPENG, any deregulation based on the importation of refined products is not going to ease the burden of Nigerians.

He said, “Our position is that we don’t support any form of deregulation that is based on importation. We support deregulation that is based on local refining of products.

“If we are refining in the country, a lot of costs will be taken away and Nigerians will be able to benefit. But as long as we are not refining, Nigerians will keep experiencing an increase in fuel prices if crude oil price continues to rise.

“Nigerians are suffering; the country is in a dire situation, considering the impact of the COVID-19 pandemic. Things are hard, and we add a higher cost of transportation to it; it is going to be a very terrible period for Nigerians.”

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Lagos Lowers Land Use Charges, Waives N5.75bn in Penal Fees

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Lagos Reduces Land Use Charges to Pre-2018 Fees

In a bid to ease economic burden and support growth across Lagos State, the commercial hub of Nigeria, the state government has reduced land use charges and other penal fees.

Dr. Rabiu Olowo, the Commissioner for Finance, disclosed this on Wednesday in a statement titled ‘Speech delivered by the honourable commissioner for finance at a press briefing on the 2020 new land use charge law.’

Lagos State Government said land use charges and other fees are revised down to pre-2018, adding that the state will henceforth uphold the 2018 method of valuation.

Accordingly, the state waived the penal fees for 2017, 2018 and 2019. Translating to N5.75 billion in potential revenue.

“In addition to this, there is also a 48 per cent reduction in the annual charge rates,” Olowo stated.

He further stated that owner-occupied residential property was lowered from 0.076 per cent to 0.0394 per cent; industrial premises of manufacturing concerns, from 0.256 per cent to 0.132 per cent; and residential property/private school (owner and third party, from 0.256 per cent to 0.132 per cent.

Olowo added that commercial property — used by the occupier for business purposes — was reduced from 0.76 per cent to 0.394 per cent; and vacant properties and open empty land, from 0.076 per cent to 0.0394 per cent.

While the annual charge rate for agricultural land was revised down by 87 per cent from 0.076 per cent to 0.01 per cent.

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Economy

FG Spends N2.37 Trillion on Petrol Importation in 13 Months, Says NNPC

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Petrol Importation

NNPC Sells 950.67m Litres of Petrol In May

The Federal Government imported petrol valued at N2.37 trillion into the country in thirteen months, according to the Nigerian National Petroleum Corporation (NNPC).

On Wednesday, the corporation said revenue from the sales of white products stood at N2.39 trillion between May 2019 and May 2020.

It, therefore, stated that petrol contributed about 98.84 percent or N2.37 trillion of the total sales generated during the period.

In May, the corporation said it realised N92.58 billion from the sale of petrol. NNPC said the product was sold through its subsidiary, the Petroleum Products Marketing Company (PPMC).

According to the May 2020 version of the corporation’s Monthly Financial and Operations Report quoted by Kennie Obateru, the Group General Manager, Public Affairs Division, NNPC, 950.67 million litres of white products (only petrol) was sold by PPMC in the month.

This, he said “comprised 950.67 million litres of Premium Motor Spirit, popularly called petrol, only, with no Automotive Gas Oil or Dual Purpose Kerosene.”

“There was also no sale of special product in the month.”

Nigeria continues to depend on importation for its petrol supplies due to local dilapidated refineries that have failed to operate at optimal level despite billions of dollars budgeted for maintenance yearly.

Experts have said petrol importation is one of the main reasons the nation’s foreign reserves continues to struggle, especially at a period when oil prices are trading at a record low with broadly low demand for the commodity.

Nigeria’s foreign reserves is presently hovering around $36 billion, down from its record high of $45 billion attained in June 2019. The decline has also impacted the ability of the Central Bank of Nigeria to support the Nigerian Naira.

The Naira has been devalued by 15 per cent in the last four months and was recently adjusted from N361 a US dollar to N381 per US dollar on the Investors and Exporters forex window to ease the pressure on the reserves.

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