Connect with us

Business

Deregulation: Nigeria To Earn Over N1trn Annually, FG Confirms

Published

on

The Federal Government has explained its decision to fully remove subsidy from petrol, saying that the country stands to rake in over ¦ 1trillion annually which would be deployed to fund other critical components of the economy.
The Minister of State, Petroleum, Chief Timipre Sylva, disclosed this, yesterday in Abuja, in an interview with some political correspondents.
He said; “I believe that this discussion around subsidy has been a vexed issue that has captured the imagination of this country for a long time now. Successive administrations have attempted to deregulate. But sometimes, some administrations lacked the political will and at other times, the time was not good for it. And why did I say the time was not good for it? Does that imply the time is good for it now?
“The problem around deregulation is that people must understand first, that the product we are talking about is a derivative of crude oil. It is refined from crude oil. Therefore, it has a direct relationship with the price of crude oil. If the price of crude oil goes up, then you expect that it would reflect in the price of the derivative.
“So, the best time to achieve this we looked at was the time when crude oil prices are low so that Nigerians will get the benefit of those low prices. In March, when we announced the deregulation, the prices were low and that advantage was transferred to the consumer.
“So, we brought down the price of petrol. The unfortunate thing is that when we brought down the price of petrol, nobody reacted in the market place. The prices were the same. Nobody reduced their prices because the price of petrol had reduced.
“Even bus fares, taxi fares were the same. It did not go down when we reduced the pump price of petrol. We thought that those people in the market; transport drivers and transport owners would reduce their price. But nobody reduced their prices. But anytime there is even a kobo increase in the pump price of the product, you see that people will increase their prices triple fold and fourfold.
“At this moment, let Nigerians not be fooled; there are people who are ready to take advantage of every situation to create anarchy and chaos. And it is these people that are at work now. Is anybody saying that this policy direction is a wrong policy direction?
“That is the discussion we should be having. If it is a wrong policy direction, why has every successive government attempted to do the same thing? Because it is something that is unsustainable! The subsidy is unsustainable.
“Let us look at it: Subsidy means that you buy the product at a certain price and then you reduce the price and sell it at a loss to the people.
“It is something that is good to do. It is something that our president would like to do so much because of his love for the common man. But is it something that can be sustained in perpetuity? You get the product and sell it less at the pump. And that is not the only subsidy.
“You also subsidise the effects that are used to import the product. So, in the end, the subsidy is going in two ways. It is like burning your candle from both ends. How long can that candle last? So, in the wisdom of the President and all of us, we felt that it was time because this subsidy is something that cannot be sustained in perpetuity. It is time for Nigerians to face reality and do the right thing.
“What is deregulation going to do? It is going to free up a lot more money. At least, from the very beginning, it will save us up to a trillion and more every year. Already, we have taken up the budgetary provision for the subsidy which is about N500billion in the budget.
“Also, we have taken off the excess forex price, that special rate that was given to NNPC which also came at a cost. So, all the money that we used to defend the Naira at that time to subsidise the dollar will now be freed up for development.
“And, I believe that going forward; we will begin to see a lot more developments, a lot more money available to the government that will be put into critical infrastructure instead of being burnt in our cars”.
Sylva added that the subsidy regime was very fraudulent as only a few benefitted from it at the expense of the public.
“Let us look at subsidy critically. Who are the beneficiaries of subsidy? When a few years ago you had this subsidy scam all over the place, all the monies that were taken by all the subsidy thieves, and so on, how many poor people were among those people?
“Subsidy only provides an opportunity for rich and unscrupulous Nigerians to steal and enrich themselves at our expense, at your expense. So, ladies and gentlemen, deregulation is actually a policy direction that is good for the common Nigerian”, he added.

Print Friendly, PDF & Email
Continue Reading

Business

FG Pays N405bn Interest On CBN Loans Outside Budget 

Published

on

The Federal Government has paid an interest of N405.9 billion from January 2022 to April 2022 on loans it got from the Central Bank of Nigeria (CBN) through the Ways and Means Advances.
This is according to data obtained from the government’s Medium-Term Expenditure Framework and Fiscal Strategy Paper 2023-2025.
There was, however, no budgetary allocation for it in the 2022 budget.
The Federal Government had previously spent N912.57bn in 2020 and N1.12tn from January to November last year on interest on Ways and Means Advances, despite the lack of budgetary allocation for it in the budgets.
CBN said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy, to the detriment of domestic prices and exchange rates.
“The direct consequence of Central Bank’s financing of deficits are distortions or surges in monetary base leading to adverse effect on domestic prices and exchange rates i.e macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.
The World Bank, in November last year, warned the Federal Government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this often put fiscal pressures on the country’s expenditures.
According to the World Bank, the CBN’s financing and the fuel subsidy tended to adversely affect investments in human and physical capital.
It said the government had always under-budgeted for debt service because it failed to consider the cost of ways and means financing in its debt service allocation.
Also, a global credit rating agency, “Fitch Ratings”, in January 2021, raised concerns over the Federal Government’s repeated recourse to its ways and means facility with the central bank.
The agency said using Central Bank’s financing in Nigeria could raise risks to macro-stability in the context of weak institutional safeguards that preserved the credibility of policymaking and the ability of the central bank to control inflation.
Ways and Means Advances is a loan facility used by the central bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law.

Print Friendly, PDF & Email
Continue Reading

Business

Oil Firms Get Safe Oil Transport Route

Published

on

Oil companies in Nigeria now have a safe transport route for their crude oil following the inauguration of the new Amukpe-Escravos Pipeline.
This is sequel to the vandalisation of the 180,000 barrels Trans-Niger pipeline by oil thieves, causing oil majors to abandon the facility.
The new crude oil transportation choice will decrease incidents of oil theft, which has affected the revenues of many oil companies in Nigeria and by extension the country’s economy.
According to reports, the new pipeline has a capacity to move 160,000 barrels of crude oil per day and the 67-kilometre-long pipeline is mostly underground, which hides it away from the prying eyes of oil thieves and pipeline vandals.
Sources say the dewatering for the new pipeline would be completed on Friday, while site Acceptance Test is being conducted with the movement of commercial-quantity crude volumes.
Already, some top players in the oil industry have started leveraging the new pipeline, one of which is Seplat Energy.
The Nigerian-based major oil company, which is listed on the floor of the Nigerian Exchange and the London Stock Exchange, said it has started commercial transportation of crude oil via the Amukpe-Escravos Pipeline.
Seplat Energy’s CEO, Roger Brown, said the development would aid the firm and guarantee a better delivery for stakeholders.
He continued that the commercial launch of the pipeline is very important for the company in the country as it offers more safe export routes which will guarantee higher revenues and profit-making for the company and enable the company to make a larger contribution to the country’s economy.
Meanwhile, Seplat and other top oil firms had relied on the Trans-Niger pipeline to move their crude products.
The pipeline was attacked recently, causing oil companies to abandon it. It has been difficult for oil firms in Nigeria to move products due to oil thefts which is the main reason the country has failed to meet its daily Organisation of Petroleum Exporting Countries (OPEC) quota of 1.77 million barrels of crude oil export.
The severity of the problem caused major companies to receive just five per cent of all crude volumes between October 2021 and February, this year which were transported via the Trans-Niger pipeline.
The economy received further blow recently as an oil pipeline with the capacity to move 180,000 barrels of crude daily across the country was hit by oil thieves, forcing it to halt the transportation of oil since June.

This further worsens the various incidents of crude oil theft which have become a challenge in the upstream sector, which stakeholders see as organised.

Bloomberg quoted an insider who is familiar with the issue as saying that the Trans-Niger pipeline has not been officially closed with the communication bandwidth which is about 15 per cent of the country’s average daily output.

Print Friendly, PDF & Email
Continue Reading

Business

Govt Designates Dry Ports As Ports Of Origin, Destination

Published

on

The Federal Government, through its Federal Ministry of Transportation, says it has started moves to designate Inland Dry Ports (IDP’s) as Ports of origin and destination across the country.
Executive Secretary, Nigerian Shippers Council (NSC), Mr Emmanuel Jime, stated this during the launch of the Operational Manual for Inland Dry Ports in Nigeria, which provides the processes and procedures for the Inland Dry Ports.
Mr. Jime, who pledged that operators and the regulators would be mandated to abide by the processes in the manual to address the gaps, boost transparency, and accountability in the sector, said modalities are being put in place.
“The Federal Ministry of Transportation has begun moves to designate Inland Dry Ports in Nigeria as ports of destination and ports of origin to enable them function the same way a seaport will function.
“In addition to this, agencies of government, as present inside the seaports, will be present inside the Inland Dry Ports.
“As a matter of fact, we expect the Inland Dry Ports to be more efficient than the seaports because we are learning from the mistakes made at the seaports in order not to replicate the same at the dry ports.
“As you are aware, the Council is the supervising and implementing agency of the Dry Port projects in the country”, he said.
The NSC Chief explained that activities in the manual include container import by rail, container export by rail, container import by truck, container export by truck, customs controls and empty container storage.
“The Inland Dry Port projects were conceived as part of the Federal Government’s reform programme in the Transport sector to promote efficient transportation, enhance efficiency at our ports and to engender trade facilitation.
“Consequently, the Federal Executive Council granted approval for the establishment of Inland Dry Ports in March, 2006 at six locations across the Country namely: Isiala- Ngwa – Abia State; Erunmu Ibadan- Oyo State; Heipang Jos – Plateau State; Funtua – Katsina State; Maiduguri – Borno State and Dala, Kano State which is to be commissioned very soon.

“Address Dry Port operations procedures as it relates to export and import activities; align Dry Port Operations to international best practices; and ensure standard quality control in dry port operations.

“The Manual, according to him, is based on best international practice adapted to suit the Nigerian context. Indeed each dry port will have its specialties, organisational implementation, layout constraints, and services offered and would therefore amend aspects of the manual on a case-by-case basis.

“It may be pertinent to state that this Manual would be used as a measure of performance by the regulator (in this case, the Nigerian Shippers Council) and will be subjected to future review to be in tandem with obtainable best practices, upon agreement of the two parties (the operator and the regulator).

“The launching of the Manual marks yet another milestone in the successful development and operation of the IDP projects in Nigeria”, he stated.

Earlier, the Minister of Transportation, Alhaji Mu’azu Jaji Sambo, explained that the projects were conceived as part of the Federal Government’s Ports Reform Programme designed, among others, to decongest the seaports, while also taking shipping and port services closer to importers and exporters in the hinterland.

Represented by the Ministry’s Deputy Director, Inland Container Depot, Mr. Ewache Victor, the Minister said in addition to the above six gazetted Inland Dry Ports, approval was also granted for the upgrade of Kaduna ICNL Bonded Terminal to a full-fledged Dry Port.

“This was on the request of the Kaduna State government in 2008 resulting in approval by the Federal Executive Council. In April, 2018, the Kaduna Inland Dry Port was officially gazetted as a port of Origin and Final Destination, considering the level of development and the commitment of the Concessionaire to the project.

“Also, other Inland Dry Ports are being processed in the following locations: Elolo ICD, Kebbi State by Deltatlantic Nig. Limited; Dagbolu ICD, Osun State by Osun State Government; Onitsha ICD, Anambra State by Sea Shipping Agency Limited; Ibadan ICD, Oyo State by CRCC Construction Company Limited; AMES Edo ICD, Edo State by Atlantic Marine and Engineering Services Limited; Bauchi ICD, by Bauchi State Government; Enyimba Economic City ICD, Abia State.”

Print Friendly, PDF & Email
Continue Reading

Trending