Business
Petrol Subsidy, Oil Theft Push Nigeria’s Currency Past N700/$1 in Parallel Market
The inability of Nigeria to take advantage of rising international oil prices due to massive oil theft, skyrocketing petrol subsidy which remains a drain on the economy as well foreign exchange (FX) speculation by currency traders, among others have combined to push the naira to a record low of N710/$1 on the parallel market.
The development comes against the backdrop of seemingly unbridled borrowing and rising debt service cost which exceeded the country’s revenues by as much as N310 billion in the first quarter (Q1) of 2022 and continues to rise.
The naira depreciated to N710$1 on the parallel market on Wednesday, compared with the N670 to a dollar it closed the previous day. In the past few days, the naira exchange rate against the dollar has been on the decline on the parallel market.
Also, recent data from the Debt Management Office (DMO) revealed that yield on the 13 tracked Nigeria Eurobond prices has continued to dwindle.
The Eurobond price which opened trading in 2022 at $105.087 had dropped to $74.785, representing a decline of $30.30 or 28.8 per cent.
Nigeria recently called off plans to sell Eurobonds this year due to the fear that it might be faced with low patronage as the country’s fundamentals continue to weaken.
In June, the Debt Management Office (DMO) put Nigeria’s total public debt (federal and state governments) at N41.6 trillion or $100.07 billion,” at the end of the first quarter of 2022.
To compound its economic challenges, Nigeria’s main source of FX revenue which is crude oil has also become a source of concern as the crisis in the sector continues to overwhelm the players.
Out of the 1.772 million barrels per day crude oil allocated to the country by the Organisation of Petroleum Exporting Countries (OPEC) in June, Nigeria was only able to produce 1.158 million bpd, according to the latest Monthly Oil Market Report (MOMR).
At a conservative average price of $110 per barrel for the month, a THISDAY analysis showed that Nigeria’s daily underperformance pegged against the OPEC quota yielded a whopping 614,000 bpd or 19.034 million barrels deficit for the month.
A further breakdown revealed that valued against the daily oil price for the period, Nigeria may have lost as much as $2,093,740,000 to its inability to, for months, increase the country’s production level.
For a country with huge foreign exchange shortages, if the loss had been plugged, it could have helped the cash-strapped federating units (states and local governments) embark on major projects.
It is worthy to note that the Nigerian National Petroleum Company Limited (NNPC) has not been able to contribute a kobo to the federation account this year.
Identifying massive crude oil theft as one of the reasons for its inability to meet its oil quota, the federal government had months ago, deployed heavy military presence in the Niger Delta to curb the menace. But even that move has not helped much. The navy appears either unwilling or unable to curb the menace.
Indeed, the top hierarchy of the navy fighting the menace in the Niger Delta have been fingered by locals and several top Nigerians of complicity in the growing oil theft.
A former Chief of Naval Staff, Vice Admiral Ibok-Ete Ibas, had admitted when he lamented the involvement of naval personnel in the illicit oil bunkering and theft in the country, warning them to desist.
“Any act of collusion with criminals or saboteurs of measures emplaced to checkmate illegalities will be met with stiff sanctions in accordance with the law of the land,” he had warned at the decoration of newly promoted rear admirals at the navy headquarters in Abuja.
Although there is no official figure for crude oil stolen on a daily basis, industry players put the losses between 200,000 bpd to 400,000 bpd.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently set up a committee to investigate the actual number. The group is yet to submit its report.
Tied to the country’s under-production, a few weeks ago, the NUPRC Chief Executive, Mr Gbenga Komolafe, revealed that Nigeria lost $1 billion in revenue during the first quarter of this year due to crude oil theft, warning that the development was a threat to the economy of Africa’s top producer.
Komolafe noted that of the 141 million barrels of oil produced in the first quarter of 2022, only about 132 million barrels of oil were received at export terminals.
“This indicates that over nine million barrels of oil were lost to crude oil theft … this amounts to a loss in government revenue of about $1 billion … in just one quarter,” Komolafe added.
However, any hope of a quick recovery from the current economic downturn remains forlorn with fresh data from the NNPC indicating that subsidy on petrol now exceeds the country’s total revenues from the sales of crude oil and gas.
Information from the NNPC’s monthly presentation to the Federation Account Allocation Committee (FAAC) meeting held Tuesday, obtained yesterday showed that in the first half of 2022, petrol subsidy claims surpassed oil and gas revenue by a whopping N210 billion.
In addition, within the period under review, the NNPC recorded N2.39 trillion as gross revenues from oil and gas receipts, while subsidy claims amounted to N2.6 trillion.
The data further revealed that N1.59 trillion was used to cover part of the subsidy costs in the last six months, leaving an outstanding balance of N1.01 trillion to be recovered from July 2022 proceeds in August.
Nigeria is currently facing an economic crisis with rising debt servicing costs, fuel subsidy payments, which from all indications could exceed the budgeted N4 trillion this year as well as a massive drawdown on its Excess Crude Account (ECA).
The federal government is projecting that petrol subsidy would rise to N6.72 trillion in 2023, if the country decides to continue with the controversial policy.
In January, February and March 2022, data indicated that petrol subsidy payments gulped N210.38 billion, N219.78 billion, and N245.77 billion, respectively while in April, Nigeria spent N271 billion and N327.07 billion in May 2022 to cater for the shortfall of the importation of petrol.
A further breakdown of the subsidy claims showed that N564.65 billion was carried forward from the previous month as an unrecovered value shortfall and N263.95 billion from May 2022 subsidy outstanding, including N501.30 billion for the current month’s subsidy cost. Overall, the value shortfall for the period stood at N1.32 trillion.
Of the total figure, NNPC deducted N319.18 billion from the federation account, leaving an outstanding balance of N1.01 trillion to be carried forward and recovered from July proceeds due in August.
To compound the current subsidy crisis, Nigeria does not know its exact daily consumption of petrol and is believed to be subsidising neighbouring countries due to the arbitrage created by the subsidy in Nigeria.
The problem is expected to even worsen in 2023 with a current projection of as much as N6.72 trillion by the country in its 2023-2035 medium-term expenditure framework & fiscal strategy paper (MTEF&FSP).
Earlier in the year, the federal government deferred the planned petrol subsidy removal by 18 months, saying the impact would be too negative on the poor and the less privileged.
Nigeria imports all its petrol because it does not refine a drop of the product in the country as all the refineries have been non-functional for years. It operates a swap oil-for-petrol regime which is largely seen as opaque.
Added to that, it has in recent years experienced massive oil theft, deteriorating upstream infrastructure, critically reducing its capacity to push enough barrels into the international market.
In a related development, an oil pipeline capable of hauling 180,000 barrels per day across Nigeria has ceased transporting crude since mid-June due to theft, a person familiar with the information, told Bloomberg yesterday.
The Trans-Niger Pipeline (TNP) has yet to be formally shut, said the person who declined to be identified because the information isn’t public. The link’s capacity is about 15 per cent of Nigeria’s most recent average daily output, according to Bloomberg calculations.
Nigeria, Africa’s largest oil producer and a member of OPEC has tried to stamp out sabotage on its pipeline network in recent years.
Producers received as little as five per cent of crude volumes pumped through the pipeline between October 2021 and February, an industry union reported earlier this year.
It reflects a larger issue for Nigeria, which is facing shrinking investment and hasn’t been able to meet its OPEC+ oil-production quota in order to benefit from a surge in prices.
The TNP was illegally tapped in about 150 places, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) said in March when local government checked some of the areas where the theft occurred.
TNP is the same line that has recently drawn comments from Chairman of Heirs Holdings, Mr Tony Elumelu, among several industry operators who have raised the alarm on the growing oil theft in the country.
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
-
Foreign3 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