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Fuel Subsidy, Bane Of Nigeria’s Economy – World Bank

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The World Bank has said that increasing fuel subsidy puts the Nigerian economy at a high risk.
It also noted that subsidy payments could significantly impact public finance and pose debt sustainability concerns.
Stating this in a new biannual report known as Africa’s Pulse, bank said Nigeria is projected to have a 3.8 per cent growth in 2022, adding that as an oil-dependent country, weak oil production hampers economic recovery.
It continued that the increasing fuel subsidy poses a high risk to the country’s economic growth, despite the increase in oil prices.
“Growth in Nigeria is forecast to increase to 3.8 per cent in 2022 and stabilise at 4 per cent in 2023-24. Real GDP growth was revised up by 1.2 percentage points for both periods compared with the previous forecast. Nigeria’s economy is still dependent on the oil sector. Oil-related revenue contributes 40 to 60 per cent of fiscal revenue, while oil and gas account for 80 to 90 per cent of total exports.
“Weak oil production, below the OPEC quota, held back the recovery process. Although at a slower pace than the average seven per cent during the boom period, growth prospects for the Nigerian economy are somewhat bright thanks to high oil prices coupled with reforms initiated by the passing of the Petroleum Industry Act and the completion of the Dangote refinery expected in 2023.
“Risk remains high on increasing fuel subsidies, which could weigh heavily on public finance and pose debt sustainability concerns. Nevertheless, public debt as a percentage of GDP is currently moderate”, the report said.
According to the World Bank, the high level of oil prices will affect countries that are shielding the impact on their consumers through fuel subsidies, such as Nigeria and Ethiopia.
It added that the high cost of fuel subsidies, due to the increase in oil prices, may deteriorate the country’s fiscal balance.
In 2021, the Nigerian National Petroleum Corporation said fuel subsidy gulped N1.43tn, although there was no record for under-recovery in January.
The National Assembly has approved N4tn as fuel subsidy bill for 2022, which is an increase of 179.72 per cent over the previous year’s subsidy bill.
However, experts have warned the Federal Government that the N4tn fuel subsidy bill would adversely affect the country’s economy.
The Country Director, World Bank, Shubham Chaudhuri, had said Nigeria’s decision to postpone the full deregulation of the downstream sector of the petroleum industry by 18 months might cost the country over N4tn in subsidy payments on petrol in 2022.
The World Bank’s Country Director, however, noted that while the World Bank could come up with advice on subsidy removal, its role was certainly not to dictate as it had no ability to do such.
Chaudhuri said: “With economics, really, you are not meant to make a political decision. What you are meant to do is to lay out what are the cons and consequences of different decisions.
“So that is what we are doing, we are just being very clear that this would come with a fiscal cost and the fiscal cost is the number, perhaps N4tn this year.”
He said despite the fact that the price of oil had gone up, the rise in global crude oil prices was not helping Nigeria that much.

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Firm Launches New Radio Campaign For Product

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An oil and gas firm, 11 Plc, has launched a new jingle for its mobil super lubricants.
The firm in a statement recently indicated that it is the sole distributor of Mobil fuel and lubricant brands in Nigeria, noting that the radio campaign was aimed at making the brand Nigerian customers’ choice.
“The campaign, which hit the airwaves three weeks ago, was launched to create fresh awareness for all category users of the premium lubricants during the Easter and Ramadan period and beyond”, the statement said.
According to the firm, Mobil Superbrand is a global family of premium passenger vehicle engine oils that provides different levels of protection to match whatever conditions users of the products may encounter.
The company said its vision was to be the number one business group in Nigeria in terms of sustained service, quality and reliability and the first brand of preference by the consumers whilst conducting operations with high safety standards and environmental compliance.
It added that it aimed to provide the best in class products, services and solutions to customers with a focus on safety and environmental standards.

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Arik Air Explains Flight Cancellation In PH Airport

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Arik Airline has clarified that the incident that resulted in passengers getting stranded at Port Harcourt Airport last Tuesday was due to adverse weather conditions.
This was disclosed in a statement signed by the Public Relations Manager of the airline, Adebanji Ola.
Some passengers of the Arik Air had expressed frustration over being left stranded at Port Harcourt Airport after their flight to Lagos was abruptly cancelled.
The affected passengers, scheduled for the flight from Port Harcourt to Lagos State, got upset by the development, and took to social media platforms to express their grievances.
Nevertheless, the airline had in the statement, reiterated its commitment to safety, highlighting its strict policy to avoid flying in inclement weather conditions, which they said had necessitated the cancellation of the affected flight.
It extended its apologies to customers whose travel plans were disrupted by the unforeseen circumstances, reaffirming its dedication to prioritising passenger welfare.
“We are aware of a recent story circulated in social media alleging that passengers were left stranded at Port Harcourt Airport under our care. It is imperative that we provide clarity on this matter to rectify any misconceptions.
“In the evening of Tuesday, April 2, 2024, our flight W3 744 Lagos-Port Harcourt was compelled to make an air return due to adverse weather conditions, specifically heavy rainfall and thunderstorms in Port Harcourt.
“Consequently, both the Lagos-Port Harcourt (W3 744) and Port Harcourt-Lagos (W3 745) flights had to be cancelled.
“It is crucial to note that by the time of the cancellation, our banking facilities at the airport had ceased operations, rendering funds unfeasible at that moment.
“However, the passengers were promptly briefed on the situation and advised to return the following day for re-protection on available flights”, it stated.
The statement added that on Wednesday, April 3, 2024, all the affected passengers from both Lagos and Port Harcourt were successfully accommodated on available morning and evening flights.

Corlins Walter

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Settlement On Course For Redundancy Benefits – Aero Airline 

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The Aero Contractors Airline has affirmed  its commitment to clear the remaining five per cent of redundancy benefits owed its workers.
Managing Director and Chief Executive Officer of the airline, Captain Ado Sanusi, in a press release said the firm was intensifying efforts to address outstanding financial commitments.
He faulted the move by workers union, the National Association of Aircraft Pilots and Engineers (NAAPE), to issue a press statement, despite ongoing efforts to resolve the issue amicably.
“This should not be an opportunity for disharmony, dialogue is a process. There was a letter written, there was a process agreed upon, and all of a sudden they went to the press. We are ready to resolve the issue”, the CEO stated.
NAAPE had recently issued a letter threatening to go on a protest over non-payment of outstanding redundancy benefits to its members.
The group accused the management of Aero Contractors of depriving the affected former workers access to their entitled benefits.
The protest letter, addressed to the management of the airline, read in part: “Consequent upon the avalanche of complaints received from our members who have been deprived of their fundamental entitlements and denied the rightful collection of their redundancy benefits in the last seven years and given the anguish and mental agonies suffered by them, We are compelled, as responsible representatives of these eminent men/women, including the dead, to protest through this letter and express our bitterness over management’s seeming lackadaisical attitude, insincerity and insensitivity to the continued wellbeing of these great Nigerians”.
The Aero CEO, however, clarified that in the last seven years, the company has paid approximately 95 per cent of the redundancy benefits.
“We should be given credit because this management initiated the process of paying off redundancy. We want our prospective investors to understand that we are a very responsible company, and we take our obligations seriously, not only for staff but also in other areas.
“We update them on a day-to-day basis to ensure business continuity. It is a very tough environment in which we are operating”, he said.
Sanusi stressed the importance of maintaining transparency and communication with stakeholders throughout the process.
He said despite challenges posed by fluctuating exchange rates and fuel costs, Aero Contractors remained steadfast in its efforts to uphold its obligations and ensure business continuity.

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