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FG Withdrew N359.39bn From ECA for Fuel Subsidy –FRC

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  • FG Withdrew N359.39bn From ECA for Fuel Subsidy –FRC

The Federal Government withdrew the sum of N359.39bn from the Excess Crude Account in 2015 to fund the payment of petroleum products subsidy in 2015, the Fiscal Responsibility Commission has said.

The FRC said this in a report on the Excess Crude Account obtained by our correspondent in Abuja on Monday.

According to the FRC, the withdrawal of N359.39bn to fund subsidy on petroleum products was illegal because it contravened the purpose for which the ECA was set up.

However, the report noted that for the first time, the government withdrew N98.19bn from the ECA to share among the three tiers of government after satisfying the condition stipulated for withdrawing money from the account.

It said the withdrawal was the first time the three tiers of government were sharing money from the ECA when oil prices fell below the budget benchmark in three successive months, indicating that the governments had been sharing money from the account even when the oil prices were above the benchmark.

To show how low the fortune of the country had fallen, the report said the total remittance into the ECA in 2015 amounted to only N48.94bn compared to N796.7bn paid into the account in 2014.

The report said, “The ECA was created as a stabilisation and savings fund to augment budgets, mainly on account of the volatility of the international oil market. The account is, therefore, funded with proceeds accruing from oil revenues in excess of the oil benchmark price as approved in the Medium-Term Expenditure Framework and budget.

“The sum of N458.14bn was withdrawn from the ECA in 2015 compared with N927.33bn withdrawn in 2014. Other than the distribution of N98.19bn shared among the tiers of government, the withdrawal of N359.39bn for the payment of petroleum products subsidy was in violation of Section 35 of the FRA 2007. Such payment was clearly outside the scope of the ECA.

“It is worth mentioning that this is the first time since 2008/2009 when the ECA was utilised for the purpose it is meant for. The oil slump, which started in the second half of 2014, resulted in international oil price falling below the benchmark price continuously more than the three months stipulated as the primary condition for withdrawal from the ECA to augment the budget.”

It also said, “The operation and management of the ECA over the years has been in breach of the FRA 2007, the consequence of which is the difficulty in the implementation of budgets across the three tiers of government with the continued sharp drop in oil revenue.

“The discipline to manage the ECA with prudence was clearly abused. The actual balance in the ECA has become contentious, especially as this has never been disclosed in the budget implementation reports despite repeated suggestions for this to be done.”

The FRC added that the non-disclosure of the opening and closing balances of the account had made the full appraisal of the account impossible.

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 in 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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Economy

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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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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