Business
Governors Lament Rising Petroleum Subsidy
Governors in Nigeria under the aegies of the Nigeria Governors’ Forum (NGF) have lamented over the rising subsidy on petroleum products, particularly Premium Motor Spirit (PMS), saying it has placed immense financial burden on States.
NGF, the umbrella body for the 36 State Governors in Nigeria, disclosed this in a memo forwarded to the House of Representatives.
The memo, which was signed by the Head, Legislative Liaison, Peace and Security, NGF, Fatima Usman Katsina, for Chairman of the Forum, is in response to the call by the House for memoranda by the Ad Hoc Committee on the Volume of Fuel Consumed Daily in Nigeria, tasked with investigating the actual amount of PMS the country consumes daily.
Titled “Findings on the Volume of Fuel Consumed Daily in Nigeria”, and dated July 1, 2022, the memo was addressed to the Committee’s Chairman, Abdulkadir Abdullahi.
It stated in part: “Although the operating environment has significantly worsened since the report was released, with NNPC (Nigeria National Petroleum Company) now consistently reporting zero remittance to the Federation Accountant as profit from joint venture, production sharing contract and miscellaneous operations, the position of the forum remains generally the same”.
The governors referred the House to a November 2021 report by its National Executive Council’s ad hoc committee interfacing with the Nigeria National Petroleum Corporation (NNPC) on the appropriate pricing of PMS in Nigeria, which was chaired by Governor of Kaduna State, Nasir el-Rufai, and had governors of Edo, Jigawa, Ebonyi, Akwa Ibom and Ekiti, as well as the Governor of the Central Bank of Nigeria; Minister of Finance, Budget and National Planning; Accountant-General of the Federation, Group Managing Director of the NNPC and the Permanent Secretary, MBNP.
They also recalled how the report noted that the “federation (FAAC) net oil & gas revenues have been declining since 2019 and are projected to decline significantly in 2022 by between N3bn and up to N4.4bn unless action is taken now.”
The memo further read, “The following are some of the major findings relating to the volume of fuel consumed in the country:
“Remittances to the Federation Account Allocation Committee have continued to shrink as NNPC recovers shortfall quite arbitrarily from the Federation’s crude oil sales revenue. FAAC deductions for PMS subsidy are above 2019 levels, even without adjusting for reduced purchasing power of the naira due to inflation and FX rate deterioration.
“An analysis of the average monthly PMS consumption by states showed that a third of the country accounts for over 65 per cent consumption of PMS. The analysis showed that the following States of Lagos, Oyo, Ogun, Abuja, Delta, Kano, Kwara, Edo, Rivers, Kaduna, Kebbi and Adamawa accounted for 65 per cent of PMS consumption in the country. Most states with high PMS consumption either have borders with neighbouring countries or are in close proximity, this has been an avenue for smugglers to benefit from profitable arbitrage opportunities in PMS pricing.
“Households directly consume only about 25 per cent of the PMS that is consumed nationally, with the remaining three-quarters being consumed by firms, MDAs, transport operators or smuggled to neighbouring countries where the PMS price is nearly three times what it is in Nigeria; and of the PMS consumed by households, the richest 40 per cent of households account for over three-quarters of the PMS purchased by households, while the poorest 40 per cent of households purchased less than 3 per cent of all PMS sold in Nigeria.
“In the current fiscal regime, remittances to FAAC would continue to shrink as NNPC recovers this shortfall from the Federation as a result of crude oil price recovery.
“The report recommended a PMS pricing structure that addresses regional arbitrage and smuggling of PMS and provides additional revenue to the Federation Account.
“There is a significant market opportunity for additional export revenue streams for Nigeria to be had given the price parity with our neighbouring countries.
“Privatisation of the three government refineries as is, or after their full rehabilitation if affordable and viable, and expediting the licensing procedure for modular refineries will reduce the recurring government expenditure on refinery maintenance and increase the country’s refining capacity.”
The governors noted that there were also economic risks highlighted in the report. “Fiscal pressures are threatening Nigeria’s recovery, as rising prices continue to push millions into poverty,” they said.
According to the memo, “Rising prices are pushing millions of Nigerians into poverty. Rising inflation between 2020 and 2021 is expected to have pushed an additional 5-6 million Nigerians into poverty.
“Food insecurity is increasing in both poor and non-poor households, with some adults skipping meals. Because inflation is high, even if it remains stable, it will continue to push many more Nigerians into poverty.
“Fiscal pressures are growing unsustainably with the PMS subsidy significantly reducing the flow of revenues into the Federation Account.
“Thirty-five out of 36 states are likely to see transfers from the federation fall (in nominal terms) between 2021 and 2022, with the average decline projected to be about 11 per cent. Most states are already experiencing fiscal stress, with 30 out of 36 states recording fiscal deficits in 2020, including Lagos and every oil-producing state except Akwa Ibom.
“With the projected decline in gross distributable federation revenues in 2022, fiscal deficits and debt burdens will grow even larger and faster. This will mean that transfers from the federation will not be enough to cover even salaries, and certainly not recurrent costs, which are growing in nominal terms.
“With the coming into effect of the Petroleum Industry Act, gross oil & gas revenues could be (much) lower than currently projected because of the new fiscal terms and the earmarking of deductible revenues specified in the PIA, and that could reduce net oil & gas revenues even further”.
Consequently, the NGF stated that greater accountability and transparency around oil and gas revenues “are the only immediate options for easing the pressure on government finances and maximising socially responsible profit gain.”
Business
Wigwe’s Luxury Yacht Goes For N8.74 Billion After Legal Proceedings
The daughter of late Nigerian banking executive, Herbert Wigwe has sold her father’s luxury yacht for $6.5 million which is the equivalent of N8.74 Billion following legal proceedings involving her, Otutochi Wigwe, and the company holding the vessel, Grosvenor Marine Ventures Limited.
This was contained in an online report obtained by The Tide Source in Port Harcourt recently.
The Source further clarified that $6. 5 Million dollars or N8.74 Billion was the asking price as at March this year but was unable to prove, if the said amount was exactly what the vessel went for.
The yacht, known as Chitochi, is a 2016 Custom Line 108 superyacht measuring approximately 33 metres (108 feet) in length. The transaction was handled by international yacht brokerage firm IYC, with its sales and charter consultant, Mark Elliott, overseeing the sale.
The disposal of the high-value vessel followed legal steps taken to address the corporate status of Grosvenor Marine Ventures Ltd., the company through which the yacht was held.
Otutochi Wigwe reportedly approached a court in the British Virgin Islands (BVI) to secure the restoration of the company to the corporate register, a move that enabled the necessary legal steps towards the sale of the vessel.
The proceedings were central to resolving the corporate issues affecting the company and facilitating the transaction, underscoring the legal complexities that may arise when valuable assets are held through corporate entities in foreign jurisdictions.
The sale is also significant in the context of estate administration, as luxury yachts require substantial financial commitments to maintain, even when they are no longer actively used by their owners or beneficiaries.
Such vessels typically attract considerable expenses, including crew salaries, insurance premiums, berthing charges, routine servicing and other maintenance costs, making their continued ownership a major financial responsibility.
Beyond the recurring expenses, luxury yachts are depreciating assets that may lose value over time. Their disposal can therefore form part of a strategy to preserve estate value, reduce liabilities and convert an expensive asset into liquid funds.
Wigwe, who was the former Group Chief Executive Officer of Access Holdings, died on February 9, 2024, in a helicopter crash in California, United States, alongside his wife, Chizoba; their son, Chizi; and former Nigerian Exchange Group chairman, Abimbola Ogunbanjo.
His death was widely mourned across Nigeria’s banking and business communities, where he was recognised for his contributions to the financial services industry, entrepreneurship and philanthropy.
Wigwe’s passing left behind an estate whose administration involves the management of assets and other financial interests, a process that can require legal and financial decisions to protect the interests of the estate and its beneficiaries.
The sale of Chitochi highlights the challenges associated with managing high-value assets held through corporate structures, particularly where the relevant companies and legal proceedings fall under different jurisdictions.
The $6.5 million transaction brings the yacht’s ownership chapter to a close while illustrating how legal procedures, financial considerations and estate management can intersect in the administration of the assets of a prominent business figure.
‘’We determined to get all our equipments and machinery functioning as we progress. For now we’ve about 105 workers, comprising daily paid harvesters and regular staffs. But aside these 105 staffs we also employ daily slashers who for now are about 100.
“During peak periods, hopefully on or before January 2026 we hope to increase our work force for maximum production”, the firm’s management Stated.
King Onunwor
Business
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Business
Traders Decry Continuous Increase In Prices Of Foodstuffs
Some traders at the Rumuwoji Market popularly known as Mile 1 Market have decried the continuous increase in the prices of food stuffs and other items in the ember season.
This was made known by the traders when The Tide visited the market recently.
The traders revealed varying changes in the prices of foodstuffs, with some commodities recording higher increase than others .
A trader Mrs Charity Obinna, at the market, said the price of yam remained the same last week and this week compared to the prices from last month to this month, adding that only a difference of about N100 to N200 was seen.
Another trader, Chukwuebuka Livinus who deals on garri, reported that the prices of some food commodities had been changing frequently.
According to him, the price of a bag of garri increased from N45,000 last week to N58,000 this week, representing an increase of N13,000.
Livinus described the increase as scary and called on the government to do something about it, especially as we get closer to the festive period.
A trader that deals on vegetables, Mrs Joy reported that a significant increase in the prices of pepper rose from N20,000 last week to N40,000 this week.
Similarly, the price of a bag of melon (egusi) increased from N420,000 toN490,000 this week.
In a separate report, Mrs Charity Obinna said that foodstuffs were generally cheaper last month than this month, with price differences ranging from N150 to N200 for some items.
Meanwhile, Giff Okoro reported a decrease in the price of tomatoes. According to her, a quantity of tomatoes that cost N45,000 last month now sells for N25,000, indicating a reduction of N20,000.
Another trader, Usman Ibrahim said the cost of transporting goods from the communities to urban areas where they are sold is one of the major reasons for high cost of goods.
He said transport cost has doubled due to the cost of petroleum products in Nigeria, adding the whole cost is part of the goods because “entrepreneurs must cover their cost and make their gains .
Ibrahim called on the government to help farmers and traders even with little capitals to expand and sustain their business.
Another trader, Mrs Choice Promise a fish retailer said a cartoon which sold at #35,000 last week now sells at #50,000 .
Promise complained that there is no gain or profit because the price has drastically increase and most people cannot afford to buy fish again.
“Mr. President’s Renewed Hope Agenda recognizes that economic ambition requires dependable infrastructure,” Tegbe said.
He added that investments in electricity infrastructure would strengthen the foundations for business expansion, employment and economic growth.
The Kankia substations comprise two 60 MVA, 132/33 kilovolt (kV) facilities designed to strengthen the transmission network serving Katsina State and neighbouring areas.
Tegbe said the infrastructure would improve the network’s ability to distribute available electricity, supporting commercial activities and household welfare.
He also urged residents to protect the facilities against vandalism and other activities that could disrupt electricity infrastructure, asking them to report suspicious activities to TCN or security agencies.
Katsina State Governor, Dikko Umaru Radda, described the project as a significant investment in the state’s electricity infrastructure.
Radda stated that improved electricity supply could support industrial development, economic growth and public service delivery.
He further commended the President, the Federal Ministry of Power and TCN for completing the project.
It would be noted that the latest projects come amid a broader government’s drive to address bottlenecks in Nigeria’s electricity transmission network, which has constrained the amount of electricity that can be delivered to distribution companies and end users.
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