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Petrol Import Loss Hits N1.4tr

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  • Petrol Import Loss Hits N1.4tr

Nigeria records about N1.4 trillion yearly as under-recovery from its importation and sale of Premium Motor Spirit at N145 per litre, Petroleum Resources Minister Ibe Kachikwu said yesterday.

He spoke at a meeting in Abuja where stakeholders in the Liquefied Petroleum Gas (LPG) sector met to review the challenges of the LPG market.

Kachikwu explained that it was time Nigeria began to look at alternative fuel sources, such as LPG, which are clean and less expensive.

He said President Muhammadu Buhari would in the next two months launch an infrastructure rebirth plan with which the country would leverage to attract private finance to upgrade her oil and gas infrastructure.

Said the minister: “Clean energy is very essential and we need to move away from complete utilisation in our transport sector of only PMS which is creating a lot of under-recovery of N1.4 trillion per annum of exposure to the government.

“At the end of the day, we begin to go into other components of cleaner fuels and rely less on the PMS that is gotten from out of the country.”

Asked to clarify if the figure on petrol under-recovery was annually and how the government felt about it, Kachikwu replied: “Yes, currently. That is being addressed at a very high level and I don’t want to go into that.”

In March, the Nigerian National Petroleum Corporation (NNPC) disclosed that its expenditure on petrol subsidy was N774 million daily, and that 50 million litres was consumed across the country everyday.

NNPC’s Group Managing Director Dr. Maikanti Baru described the amount as “under-recovery”, adding that the huge fund was due to the proliferation of filling stations in communities with international land and coastal borders across the country.

Kachikwu also indicated that the government would launch an infrastructure rebirth plan for the oil and gas industry. The rebirth plan he noted, will enable private investors put in money in key infrastructure assets across the entire value chain of the sector.

“I think government is focused in all the areas. We are hoping to launch an infrastructure rebirth map for the oil sector over the next two months, and I hope His Excellency, the President will launch that.

“The effect is that it will be to open up tariff and create policy positions that will enable people to actually go in and invest in critical infrastructure that is needed because anywhere you go, whether it is distribution of petroleum products massively through trucks and rather than through pipelines, whether it is being able to take crude into refineries or distribute gas throughout the country, infrastructure is so key.

“There are lots of stranded gas and power everywhere. Distribution is key; infrastructure is key. We need to find a way of finding enough incentives to enable the private sector go in very bullishly and put the money where it is supposed to be,” he explained.

On the significance of the LPG meeting, Kachikwu said: “Coming from this meetings we are having, we will come up with recommendations of what DPR needs to do to deepen licensing issues and enforcement issues, but over and above just going after individuals who have done it wrongly; what are the incentives, schemes and structures we need to put in place, and it just goes to tell u where the storage capacities for the gas we have been buying; where are the official distribution and sales centers? If we deepen the regulation, deepen the licensing and enforcement, we should be able to get there.”

He noted: “But, like you know, we already have a gas policy which was approved at FEC and all of this is in there. What this group is going to do is to take a piece of that as it concerns LPG and say how we can take that policy document and expand and activate the whole LPG.”

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 Prices Decline on Rising COVID-19 Cases

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Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally

Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.

Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.

global Oil prices While the price of US West Texas Intermediate (WTI) crude oil dipped from $40.97 per barrel it traded on Thursday to $38.78 on Friday.

Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.

As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.

This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.

In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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