- FG to Further Slash Oil Benchmark to $20 Per Barrel
The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said the Federal Government is in the process of reducing oil benchmark for 2020 to $20 per barrel, according to Reuters.
In March, the Federal Government had slashed oil benchmark from $57 per barrel to $30 after oil price plunged more than 70 percent due to the COVID-19 pandemic.
The fall in global oil price plunged Nigeria’s foreign revenue generation and further eroded the nation’s fiscal buffer needed to cushion the negative impact of the pandemic.
Like other nations struggling with the negative impacts of COVID-19, Nigeria has approached multilateral and other financial institutions for financial assistance amid mounting foreign and local debts.
However, in a web conference which focuses on the impact of low oil prices on the nation’s economy, Ahmed said the government is in the process of lowering oil benchmark for the year again to $20 per barrel.
“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” the minister said at the conference.
According to a recent report, over 60 cargoes of Nigerian oil remained unsold as demand for the commodity dropped by more than 30 million barrels per day in April alone. Forcing the government to cut the 2020 budget by N1.5 trillion to reflect the nation’s current economic position.
The central bank devalued the Naira by 15 percent to slow down the rising capital flight and reduce the impact of weak revenue on the nation’s reserves. Inflation rate rose to 12.26 percent in March while the unemployment rate stood at 23.1 percent but expected to surge to 30 percent this year as the impact of COVID-19 crystalises.
FG Spends N10 Trillion on Petrol Subsidy in 14 Years – NNPC
NNPC Says FG Has Spent N10 Trillion on Petrol Subsidy in the Last 14 years
The Nigerian National Petroleum Corporation said the Federal Government spent a total sum of N10 trillion on petrol subsidy between 2006 and 2020.
This was disclosed on Saturday by Mele Kyari, the Group Managing Director, NNPC, during an interview on Liberty FM, Kaduna.
According to the NNPC boss, the federal government removed petrol subsidy because of the fraud perpetrated by some cabals in the oil industry.
He said the beneficiaries of petrol subsidies were marketers who smuggled federal government subsidised product into neighbouring countries for bigger gains.
The NNPC boss said these marketers made more profits by producing fake documents to collect subsidy for fuel they never imported or sold.
He said, “The crude oil is a global commodity and its price is not hidden. Everyone can calculate and know how much the cost of every final product from the crude at international market is.
“Since the inception of the country, the government has been paying subsidy on petrol to make it cheaper for Nigerians to buy below the cost price.
“This subsidy is designed to assist the masses of Nigeria; that is the intention, but in reality, the masses are not the beneficiaries. First, the masses are not the owners of the exotic cars buying fuel, owning the filling stations and doing the oil business.
“This subsidy that the government has been paying over the years is the root of all the atrocities and fraud committed in this country.
“If you look at it from 2006 till 2020, we have spent over N10tn on fuel subsidy. Apart from that, there is also subsidy on foreign currencies. Everybody knows how much is dollar in the market, but government is also subsidising it. So, this and the fuel subsidy within this period is around N14tn to N15tn.
“What was happening with the subsidy is that, some marketers were smuggling fuel to other neighbouring countries because it was cheaper in Nigeria due to the subsidy.
“Another one is those who use fake documents and bring to government to collect subsidy for fuel they never imported and the previous government was paying them.
“So, it was not the masses of Nigeria that were enjoying this subsidy except some cabals, who are rich and powerful.”
Nigeria’s Oil Sales Revenue Plunges by 75 Percent
Oil Sales Revenue Declined by 75 Percent to $55.29 Million
Nigeria’s oil revenue plunged by 74.89 percent in July, according to the latest report from the Nigerian National Petroleum Corporation (NNPC).
Oil sales revenue declined to $55.29 million in the month under review, down from $219.58 million recorded in June and $120.50 million in May.
The record fall in global oil prices and demand due to COVID-19 plunged Nigeria’s crude oil sales from $336.65 million posted in January to $281.14 million in February, $184.59 million in March and $148.86 million in April.
This was after Brent Crude oil, against which Nigerian crude oil is priced, plunged to as low as $15.98 per barrel in April, down from $70 per barrel it was sold in January.
Oil and gas constitute 50 percent of the Nigerian government revenues and over 90 percent of export earnings despite accounting for just about 10 percent of the nation’s GDP.
“A total export sale of $84.63m was recorded in July 2020, decreasing by 66.95 per cent compared to last month. Crude oil export sales contributed $55.29m (65.34 per cent) of the dollar transactions compared with $219.58m contribution in the previous month,” the NNPC said in its latest monthly report.
NNPC said gas exported in the month stood at $29.33 million.
“July 2019 to July 2020 crude oil and gas transactions indicated that crude oil and gas worth $3.91bn was exported,” it added.
According to the report, the federation crude oil and gas lifting are broadly classified into equity export and domestic, and are lifted and marketed by the NNPC while the proceeds remitted into the Federation Account.
It said, “Equity export receipts, after adjusting for joint venture cash calls, are paid directly into Federation Account domiciled in the Central Bank of Nigeria.”
Rivers State Partners Shell Nigeria on Assa North Gas Project
Rivers State, Shell Nigeria Partner on Assa North Gas Project
Rivers State and the Shell Petroleum Development Company of Nigeria Limited (SPDC) have partnered to build SPDC’s Assa North Gas project, with a capacity of 300 million standard cubic feet of gas per day.
According to the people familiar with the project, it has the potential to be one of the largest domestic gas projects in Nigeria when completed.
Mr. Eloka Tasie-Amadi, the State Commissioner for Chieftaincy and Community Affairs, who spoke at the inauguration event, urged the comrade Orikoha Ekwueme-led newly elected officials of the Cluster Development Board to use the opportunity of leadership to make positive impacts that will improve living standards in their communities.
“The state government is always available to support you. Always speak with your people, including the Community Trust Committees (which were also newly inaugurated). Adequate communication will ensure the buy-in of all your stakeholders.
“Leadership is more of sacrifice; not an opportunity for personal benefit”, he said.
Also, speaking was Mr Igo Weli, the General Manager External Relations, SPDC, said, “The Global Memorandum of Understanding (GMoU), that you signed today, sets the framework for a long-term partnership between SPDC JV and the Egi/Igburu Cluster. The GMoU runs on the principle of community-led development. Today, SPDC JV commits to providing funding to help you realise your community development aspirations.
Represented at the ceremony by SPDC External Relations Manager for Projects and Opportunities, Dr Banji Adekoya, he asked the CDB to “be prudent and implement projects and programmes that will deliver maximum benefits to the Egi/Igburu communities. Note that government, SPDC JV, and the communities that you represent will hold you accountable for the judicious utilisation of the development funds.”
“With the inauguration, SPDC reiterates the company’s commitment to the Assa North Gas Project and to making it an exemplary one, particularly in Nigeria’s quest for energy sufficiency, for power generation and industrialisation,” he said.
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