Business
Nigerian Govt to borrow N11tr, spend N3.36tr on subsidy
Ahead of the 2023 budget presentation, the Federal Government, yesterday, insisted that petroleum subsidy would remain in place until mid-2023. In addition, the government will borrow over N11 trillion and sell national assets to finance budget deficit next year.
The Minister added that the Federal Government is proposing an aggregate expenditure of N19.76 trillion for the 2023 financial year, a 15.37 per cent increase from the amount earmarked in the 2022 budget, with a projected deficit of N11.30 trillion, 54 per cent higher than the previous budget’s estimated deficit.
This was disclosed by the Minister of Finance and National Planning, Zainab Ahmed, while appearing before the House of Representatives Committee on Finance in Abuja, to defend the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
She also said the government’s budget deficit is expected to exceed N12.42 trillion if it should keep petroleum subsidy for the entire 2023 fiscal cycle. According to the Minister, the government is proposing to spend only N3.36 trillion for petrol subsidy in 2023 based on the 18-month extension announced early 2022.
Recall that last week, the Minister had disclosed that government was spending N18.39 billion daily on PMS.
Zainab said the Federal Government was projecting the total revenue of N8.46 trillion, out of which N1.9 trillion is expected to come from oil-related sources while the remaining is to come from non-oil sources.
Meanwhile, the Federal Government is expected to peg crude oil price at $70 per barrel with projected daily oil production fixed at 1.69 million barrels per day at an exchange rate of N435.57 per dollar, while real Gross Domestic Product (GDP) is projected at 3.7 per cent and inflation at 17.16 per cent.
Explaining two scenarios of the budget deficit to the committee, the Minister said the first option involves retaining the petrol subsidy for the entire 2023 fiscal year.
According to her, in the first scenario, the deficit is projected to be N12.41 trillion in 2023, up from N7.35 trillion budgeted in 2022, representing 196 per cent of total revenue or 5.50 per cent of the estimated GDP. In this option, she said government would spend N6.72 trillion on subsidy.
Ahmed said the second option involves keeping subsidy till June 2023 and that this scenario will take the deficit to N11.30 trillion, which is N5.01 trillion of the estimated GDP. In this option, PMS subsidy is projected to gulp N3.3 trillion.
She noted that the first option is not likely to be achievable based on the current trend, while the second option would require tighter enforcement of the performance management framework for government-owned enterprises (GOEs) that would significantly increase operating surplus in 2023.
The projected deficit under the second option, the Minister said, is expected to be financed through new borrowings from local and international sources. This will include a total of N9.32 trillion in new borrowings, comprising N7.4 trillion from domestic sources and N1.8 trillion from foreign sources.
The government is expected to generate N206.1 billion from privatisation proceeds and N1.7 trillion in multilateral project-tied loans.
The two proposals have budget deficits far above the stipulated threshold in the Fiscal Responsibility Act. According to the existing Act, the deficit must not exceed three per cent of the GDP. The deficit could jump higher if the petrol subsidy is not terminated by June 2023 as President Muhammadu Buhari earlier said.
However, the law makes provision for the President to cross the threshold with the approval of the National Assembly.
Ahmed stated further that crude oil production challenges and PMS subsidy deduction by NNPC Limited constitute a significant threat to the achievement of government’s targets, as seen in the 2022 performance up to April.
She noted that the draft MTEF/FSP was prepared against the backdrop of continued global challenges occasioned by lingering COVID-19 pandemic effects, as well as higher food and fuel prices due to the Russia/Ukraine war.
She said: “The budget deficit is projected to be N11.30 trillion in 2023, up from N7.35 trillion in 2022. The draft 2023-2025 MTEF/FSP has been prepared against the backdrop of continuing global challenges occasioned by lingering COVID-19 pandemic effects, as well as higher food and fuel prices due to the war in Ukraine.
“Overall, fiscal risks are somewhat elevated, following weaker-than-expected domestic economic performance and structural issues in the domestic economy.
“Revenue generation remains the major fiscal constraint of the Federation. The systemic resource mobilisation problem has been compounded by recent economic recessions. Efforts will however focus on improving tax administration and collection efficiency.
“Bold, decisive and urgent action is urgently required to address issues of revenue underperformance and expenditure efficiency at national and sub-national levels.”
The Minister, while responding to questions from members of the James Faleke-led committee, said oil production had declined in the country.
Ahmed said: “My understanding is that security agencies and the national oil company (NNPC), as well as the regulators, have been working very hard to find solutions and what they tell us is that they are beginning to see improvement.
“From the performance in April at 1.3 million barrels per day and by July it was 1.4 million. We do hope that the increase will be very significant because it’s costing us not just N3.2 billion in terms of security cost, it’s costing us the revenue we have earned. At 39 per cent, the oil and gas revenue as at April is at very low performance.”
On the issue of the Morocco-Nigeria gas pipeline, she said: “The Federal Executive Council, a few weeks ago, approved funding for the feasibility study, which means that it’s still at the feasibility study phase. The national oil company can provide the details.”
Ahmed said the Petroleum Industry Act (PIA) has given the NNPC Limited some independence from the federation and has to perform in line with the laws of the Company and Allied Matters Act.
“A lot of the expenditure the federation used to carry will now be carried by NNPC Limited. NNPC will be paying taxes and dividends and we believe in the medium term the federation will end up earning more revenue.
“It also means that the NNPC will need to go and borrow money on its own. That will improve efficiency in the company. They have to pay dividends and royalties to the federation which they were not doing before,” she said.
According to her, the government is projecting oil production of 1.69 million barrels per day for next year.
“Based on the projection of NNPC, they are hoping that all the measures taken now are going to result in increased production and we hope it works out. If it doesn’t, the deficit situation we found ourselves in will be even worse,” she said.
The Minister said Nigeria has been able to consistently, without fail, service her debt and the country does not have any projections, even in the near future, to fail in that obligation.
Ahmed said although the amount currently used in servicing debt in the country has overshot what was appropriated for in the budget, measures have been put in place to manage the situation.
She said: “In the budget, what we had planned was 60 per cent of revenue to debt but we had some months when the ratio goes up to 90 per cent.
“We actually follow the Medium Term Debt Management Strategy very strictly; the debts are not taken haphazardly and they are planned. They are appropriated and then we borrow against appropriation.’’
Speaking on the implication of the foregoing, the Minister disclosed that government may not be able to make provision for treasury funded capital projects in the 2023 fiscal year.
Chairman of the committee, James Faleke, said the current financial situation in the country requires that all revenue sources are explored as the government is short of revenue.
Business
Businesses count losses amid power outage in Bauchi, Gombe, and Jigawa
Business owners in Bauchi, Gombe and Jigawa are recording losses due to week-long blackout ocassioned by vandalism of the power transmission line in parts of northern Nigeria.
The sudden disruption in electricity supply in the past days, also affected essential services such as water, sanitation, street lighting and healthcare delivery as most hospitals have been operating without light.
Some of the affected businesses including shop keepers, millers and artisans, who spoke while reacting to a survey by the News Agency of Nigeria (NAN), described the situation as “pathetic”.
The survey examined the perennial collapse of national grid and the need for alternative power supply in the country.
Rice millers in Gombe had decried the impact of the erratic power supply on their businesses.
A Miller, Musa Arab, at Nassarawo Industrial Layout in Gombe, said the trend was crippling their operations as they relied on electricity supply from the grid to process paddy.
He said the mills were not operational power outage as they could not afford exorbitant pump prices of petrol or diesel to run their machines.
This, he said, reduced the volume of rice supply to the market and posed serious challenge to food security.
“We must invest in power because it is the biggest determining factor for industries to thrive.
“I have over 20 workers in my mill, and we have 100 mini rice mills here, so you can imagine those who have no jobs for the past 10 days.
“Government must go tough on those responsible for the perennial grid collapse because some persons may be benefitting from it,” he said.
Also, Yusuf Ibrahim said the situation might trigger the already fragile inflation, as prices of local varieties would shot up ocassioned by the diminish supply.
He said that some had jerked up their charges to cover the expenses on diesel thereby affecting rice prices.
A check by NAN at the Gombe Main market showed that a 100 kilogramme of rice was sold for between N120,000 and N160,000, as against N110,000 and N150,000, before the blackout.
Mr Usman Sani, a rice dealer, attributed the hike in price to low supply of the produce to the market in spite of the number harvest recorded this cropping season.
He said the prices had decreased slightly at the onset of the harvest, however, it showed sprawling increase due to power outage.
“The price of rice is already dropping as a result of harvest but the trend reverse since the blackout in the past days “ he said.
Ugochukwu Daniel, a bartender in Bauchi, decried the epileptic power supply in the country, adding that lack of durable energy supply would retard Nigeria’s quest to attain social and economic greatness.
Daniel said that she spent much on fuel to run power generator for refrigrator and lightening the beer parlour, to enable her to keep the business running.
He said that businesses could only thrive in an enabling environment with stable electricity supply, to enhance wealth creation and reduce poverty among Nigerians.
“My trade is about chill drinks and it survives on electricity to operate otherwise you will out of bussiness.
“Without electricity there is nothing you can do, and not only business but about everything. We depend on it,” he said.
Similarly, Samuel Adamu, said the persistent power outage had forced him to patronised charcoal for ironing clothes in spite of its high cost and cumbersome processes.
He said that most cleaners in the area had resorted to fabricated iron charcoal in spite of hike in its prices which suddenly jumped from N5,000 to N15,000.
Adamu said the situation also encouraged division of labour in laundry to cut cost and make some gains.
“Presently, I do wash the cloth, and engage someone for ironing. The charge is N300 per set as against N150”.
While advocated development of renewable energies to enhance power supply in the country, Adamu urged security agencies to entensify efforts towards electrical installations in the country.
In the same vein; Mr Muhammad Adamu, Chairman, Jigawa State House Assembly Commitee on Power and Energy, said the Jigawa Electricity Law 2024, made sound provisions to improve power generation and distribution in the state.
This, he said, was an offshoot of the devaluation brought about by the 5th alteration of the constitution, where removed power from the executive legislative list and to the concurrent list.
“It empowered the state houses of assembly to enact laws on power.
“The committee has also carefully pursued the bill and reviewed its structure and the promise it holds for the state power sector, infrastructure and the overall economy of the state.
“The new law will pave way for the establishment of Jigawa Electricity Commission, to regulate the state’s electricity market,” he said.
According to Adamu, the law will protect residents and investors in the energy sector through ensuring prepaid meter installation and possibility of recouping investor’s funds as well as address vandalism.
“The law will lead to provision of reliable, affordable and sustainable power, essential for development of all sectors of the economy, particularly in rural areas,” Adamu said.
“Vandalism will be over because we pay Kano Electricity Distribution Company (KEDCO) money for powered supplies, but whenever there is problem of damages or broken down transformers, it is either the communities or individuals that pay for the repairs”.
Business
Mercedes urges delay of EU tariffs on Chinese electric vehicles
The head of German luxury carmaker Mercedes-Benz, has called for the European Union to de-escalate the dispute with China over tariffs on electric cars.
“We need more free trade instead of new trade barriers.
“That is why it is important to find a solution that suits both the EU and China,” chief executive Ola Källenius told the Monday edition of Bild newspaper.
“The negotiations for this take time. In order not to jeopardise them, the EU should postpone the enforcement of the planned tariffs,’’ he said.
At the start of the month, a majority of EU countries paved the way for additional tariffs of up to 35.3 per cent on battery-powered electric vehicles imported from China.
Germany, however, voted against the measure amid concerns over retaliatory actions which could hurt the country’s giant car industry.
The European Commission had pressed for extra tariffs after an investigation accused Beijing of subsidising domestic electric car manufacturers, and thus distorting the market in the EU.
But whether the import tariffs would actually come into force at the beginning of November is still up to the commission.
The plans can still be dismissed if Brussels reaches a solution with China at the negotiating table.
Business
ACCI moves to promote business connections, balance work-life
The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.
The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.
Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.
He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.
“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.
“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.
“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.
“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.
According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.
“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.
“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.
“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.
“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.
The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.
Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.
He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.
The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.
The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.
Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.
He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.
“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.
“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.
“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.
“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.
According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.
“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.
“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.
“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.
“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.
The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.
Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.
He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.
-
Business3 years ago
Facebook, Instagram Temporarily Allow Posts on Ukraine War Calling for Violence Against Invading Russians or Putin’s Death
-
Headlines3 years ago
Nigeria, Other West African Countries Facing Worst Food Crisis in 10 Years, Aid Groups Say
-
Foreign2 years ago
New York Consulate installs machines for 10-year passport
-
Technology2 months ago
Zero Trust Architecture in a Remote World: Securing the New Normal
-
Entertainment2 years ago
Phyna emerges winner of Big Brother Naija Season 7
-
Business6 months ago
Nigeria Customs modernisation project to check extortion of traders
-
Business8 months ago
We generated N30.2 bn revenue in three months – Kano NCS Comptroller
-
Headlines5 months ago
Philippines’ Vice President Sara Duterte resigns from Cabinet