By pegging the price of Premium Motor Spirit (PMS) at N145 a litre, the Federal Government has in the last two months saved about N139 billion from subsidy removal.
Before the introduction of the current pricing template of the Petroleum Product Pricing Regulatory Agency (PPPRA), a litre of petrol was selling at N86.50, estimates showed that the government would have been subsidizing the product with about N58 per litre.
The country currently consumes about 40 million litres of PMS daily, which would have amounted to N69.6 billion in one month.
At a regulated price of N86.50, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had said that government was paying about N16.4 billion monthly as subsidy. Kachikwu said that the there was no provision for subsidy in 2016 appropriation, therefore the need to remove fuel subsidy.
According to him, the Federal Government spent N1 trillion in subsidizing petrol in 2015 alone.
Listing the benefits of the new pricing template, Kachikwu said that the new framework solve fuel scarcity crisis by ensuring availability of products at all locations of the country.
He added that the new fuel-pricing regime would also ensure market stability and improve fuel supply situation through private sector participation.
He believed that it would reduce hoarding, smuggling and diversion substantially and stabilize price at the actual product price.
It is also expected to create labour market stability, which will potentially created additional 200,000 jobs through new investments and prevent potential loss of nearly 400,000 jobs in existing investment. The new system is expected to provide government more revenue to address social and infrastructural needs in the country.
Meanwhile, the International Energy Information Administration (IEA) said that fossil-fuel subsidies has reduced from $610 billion in 2014 to $490 billion in 2015.
IEA said in its July Energy report that recent changes prove that fossil-fuel subsidy reform is possible: low oil prices give net importers the room to reform, and reinforce the need for exporters to do so.
It stated: “Fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy. Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels.
“Fossil-fuel subsidies totalled $550 billion in 2013 – more than four-times those to renewable energy – and are holding back investment in efficiency and renewables. In the Middle East, nearly 2 mbpd of crude oil and oil products are used to generate electricity when, in the absence of subsidies, the main renewable energy technologies would be competitive with oil-fired power plants”.
According to the report, in Saudi Arabia, the additional upfront cost of a car twice as fuel-efficient as the current average would, at present, take about 16 years to recover through lower spending on fuel.
This payback period, it noted, would shrink to three years if gasoline were not subsidised. “Reforming energy subsidies is not easy and there is no single formula for success. However, as our case studies of Egypt, Indonesia and Nigeria show, clarity over the objectives and timetable for reform, careful assessment of the effects and how they can (if necessary) be mitigated, and thorough consultation and good communication at all stages of the process are essential”, the report said.
Shell Petroleum Development Company of Nigeria Limited on Monday shut the Trans Niger Pipeline, one of the two major pipelines transporting the nation’s reference crude oil grade, Bonny Light, for export.
This is coming one month after the oil major was forced to shut the pipeline, which was later reopened after repairs.
The TNP transports around 180,000 barrels of crude oil per day to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation at the Afam VI power plant, and liquefied gas exports, Shell said on its website.
The spokesperson for the SPDC, Mr. Bamidele Odugbesan, told our correspondent that the shutdown was as a result of a leak at Bio in Ogoniland, Rivers State.
Recalling that the TNP was shut in June after a leak was found, he said, “Investigation then established that it was a third-party interference and that was resolved.
“This is a fresh leak and we are working towards a joint investigation visit to determine the cause.”
Asked when the pipeline would likely come back on stream, Odugbesan, said, “We can’t determine that at this moment, because we still have to conduct a joint investigation visit.”
The 28-inch TNP, which is operated by the SPDC, was shut down on June 8 after a leak was found at Okolo Lunch near Bonny, according to the company.
Last week, Shell lifted the force majeure – a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances – it declared on Bonny Light exports in early May. The closure of the other major pipeline, the Nembe Creek Trunk Line, after the discovery of a leak, led to the force majeure.
Nigeria’s oil production has recovered to around 1.9 million barrels per day, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said on Friday. Attacks by the militant group, the Niger Delta Avengers, had pushed output to its lowest in over 20 years.
Exports of the Forcados crude blend, loaded from Shell’s Forcados terminal, have been down since February following an underwater pipeline attack.
Kachikwu said that repairs were expected to be completed at the end of this month.
The Speaker, House of Representatives, Yakubu Dogara has said that appropriate sanctions against operators who commit infractions would go a long way in restoring investor confidence in nation’s capital market
He therefore promised that the parliament would strengthen capital market laws to empower regulators to sanction errant operators appropriately.
Dogara stated this at a press briefing in Lagos last Friday after sounding the closing gong at the Nigerian Stock Exchange (NSE).
According to him, capital market regulators must be on top of their responsibilities in order to boost investor confidence in the market.
Dogara, who was a member of the House Committee that investigated the 2009 crash of the stock market, observed that most of the operators who contributed to the crash of the market went unpunished. He said investors would have more confidence in the market if they know that antiquate punish would be given to operators who commit infractions in the market.
“A lot of things are required to be put in place to return investors’ confidence. The regulators need to be at the top of their job. Sanctions must be imposed on operators who commit infractions so that investors would have confidence to participate in the market. Any person who abuses the market should be dealt with in accordance with the laws “he noted.
He stated that capital market regulators should be empowered to sanction operators that arbitrary abuse the market so as to regain investor confidence.
“I guess one of the issues that we must address is the issue of sanction. Even if I am going to lose my money, but seeing that those who perpetuated infractions being dealt with, maybe to some extent I will have the confidence that the market still retains. We need to deepen the market, we need to create and sustain confidence in the market and for confidence to come back we need to do more. When we start sanctioning, confidence will come back to the market,” Dogara said.
Meanwhile, the Speaker has reiterated the commitment of the legislators to compel multinationals oil and gas companies, telecommunication firms and privatised companies to list on the NSE to deepen the market.
Dogara stated that “the flow of resources from citizens to these companies are what make them rich. The only way majority of the citizens can enjoy part of that profit is by listing them on the Nigerian capital market,” he said.
He added that the country would engender economic prosperity through the listing of these companies.
According to him, the House will look at the agreements of some of these companies with the Bureau of Public Enterprises (BPE).
“Where there are clauses that require them to list and they have not done so through the power of oversight. We will ensure that is done or they must be penalised with the provisions of agreement they signed with BPE,” Dogara added.
He said that “there is ongoing discussion about strengthening those clauses in BPE henceforth to ensure that we emphasis that once a company is privatised you must list a reason part of the equity in the market.”
The Lagos State Government has paid the sum of N895.52bn to 256 retirees for the month of June, the state pension commission has said.
It said the beneficiaries, issued retirement bond certificates for the amount, were from the mainstream civil service, local governments, the state Universal Basic Education and other parastatals of government.
A statement by the commission on Sunday said the Director-General, Lagos State Pension Commission, Mrs. Folashade Onanuga, made the disclosure at the presentation of the 28th retirement benefit bond certificates to the beneficiaries in Lagos.
She said that the state government commenced the monthly payment of terminal entitlements in August, 2015, adding that in the last 11 months, a total of N15.44bn had been paid to 3,600 retirees.
She stated that the commission, on behalf of the Lagos State Government was working towards a pension structure that would ensure the commencement of pension payment not later than four weeks after retirement.
“Paying retirees from month to month is part of the agenda for a new Lagos,” she said.
Onanuga assured the retirees that the backlog of pensions and retirement benefits of the state’s retirees would be cleared.
She said the state government would still monitor the welfare of retirees from the state’s civil service despite the fact that payment of their monthly pension had become the responsibility of the Pension Fund Administrators or annuity service providers.
It stated that an interactive platform between the state and the retirees had been scheduled to take place in the third quarter of the year.
“Do not hesitate to report any PFA that is not treating you accordingly,” she stated.
Onanuga urgred the retirees to study carefully the flyers on the key features of the pension benefit options: programmed withdrawal and life annuity, under the Contributory Pension Scheme, before making their decisions.
She emphasised that the commission made the flyers available to enable them to have a full understanding of the two modes of receipt of pension entitlements.
The director-general urged the retirees to be wary of pension fraudsters who have devised various means of extorting retirees.
She advised them to spend wisely and should not engage in extravagant spending.
Trading by banks on behalf of their clients on the Nigerian Interbank Foreign Exchange (NIFEX) has shown increased foreign exchange (forex) allocation to the importation of raw materials and industrial machines by manufacturers. A review of the returns on forex utilisation and source of funds for the week ended July 1, 2016, which was published by some commercial banks last week, revealed an increase in the volume of forex allocations to the sector.
For instance, Zenith Bank Plc’s returns on forex utilisation which put the volume of its transactions at $115,066,665.95 showed that it transacted business with a total of 434 customers. Most of them were corporate customers who bought the greenback from the bank for the importation of industrial raw materials and spare parts, among others. Also, Diamond Bank Plc sold the $42,158,753 it purchased from the NIFEX to 184 of its customers, mainly for the importation of pharmaceutical raw materials, raw materials for construction, agricultural machinery, cement silos for stationary block making, and importation of motorcycles in completely knocked down (CKD) parts, among others. Diamond Bank’s returns on source of funds also showed that it purchased $42,210,497 from the market. Similarly, Union Bank Plc’s returns put the volume of forex transactions by the bank at $142,118,110.69. The bank transacted business with 238 customers and details of the transactions showed that forex was sold for raw material imports, personal income remittances and payment of school fees, among others.
Stanbic IBTC Limited’s returns on forex utilisation also showed that it transacted business with 315 customers who bought dollars to import raw materials and for divestments, among others, just as the bank’s returns on source of funds put the amount of dollars it purchased at $51,761,247.42. Also, FirstBank Nigeria Limited’s returns on forex utilisation showed that its Secondary Market Intervention Sales (SMIS), which was from the Central Bank of Nigeria’s (CBN) special intervention was $26,601,760.48. The bank sold dollars to 139 customers, most of whom were importers of industrial raw materials as well as for petroleum products importers.
While First City Monument Bank Limited’s returns showed that it sold the greenback to 515 customers, its returns on sources of funds put the total amount the bank purchased from the market at $24,140,048. Meanwhile, in furtherance of its efforts to engender transparency and professionalism in the forex market, the CBN at the weekend directed that all forex-related trades by authorised dealers (banks) and corporate institutions in the forex market, with effect from August 1, 2016, must be executed through the FMDQ-advised forex trading auction and surveillance system. The central bank gave the directive in a one-page circular that was signed by its Director, Financial Markets Department, Dr. Alvan E. Ikoku, a copy of which was posted on its website. “All authorised dealers (banks) are expected to execute all forex-related trades among themselves and with their clients (corporate institutions) through the FMDQ-advised forex systems. “The deployment of the FMDQ-advised FX systems will only be to those corporate clients that have been screened and pre-approved by the FMDQ in line with its on-boarding eligibility criteria,” it explained. The central bank also instructed all authorised dealers and corporate institutions in the forex market to ensure strict compliance.
Despite the economic crunch of 2015, the total advertising spend in the country rose to N97.9bn last year, according to the 2015 Mediafacts, which was released on Thursday.
Mediafacts is a key media resource for marketing professionals in West and Central Africa, which is produced annually by mediaReach OMD, a specialist company that provides media planning, buying, control and inventory management services.
The report revealed that the total advertising expenditure for 2015 represented an increase of N4.8bn above the N93.1bn documented in 2014.
According to the report, last year’s electioneering and the successful change of government may have positively impacted on the advertising spend in 2015, as it recorded a positive growth of about 4.8 per cent over the 2014 total media spend.
Mediafacts stated that television stations attracted the highest advertising expenditure of N39bn last year, while the print media, outdoor and radio stations attracted N23.7bn, N20.1bn and N15.1bn, respectively.
It stated that the advertising expenditure that went to the print media last year declined marginally by four per cent, from N25.8bn in 2014 to N23.7bn in 2015.
In addition, the outdoor performed better the previous year when it attracted N20.5bn advertising spend against N20.1bn in 2015.
However, the TV and radio stations in Nigeria attracted more advertising spend of N39.0bn and N15.1bn in 2015, compared to N34.6bn and N12.1bn the previous year.
Mediafacts put the advertising expenditure in the first and second quarters of 2015 at N23bn each, while the third and fourth quarters of the year recorded N29.8bn and N22.1bn, respectively.
“The highest spend for 2015 was recorded in quarter three (N29.8bn), which represents 30 per cent of the total spend,” the report stated.
On regional basis, Lagos State attracted the highest advertising expenditure of N53.1bn, followed by the North-Central (N12.1bn), South-West (N10.2bn) and South-South (N10bn).
“The highest spend for 2015 was recorded in Lagos (54 per cent); followed by the North-Central zone (12 per cent), while the North-East took the rear position. The paltry spend, less than one per cent in the North East, was traceable to the spate of insurgency in the region,” the report stated.
The Managing Director/Chief Executive Officer, mediaReach OMD, Mr. Tolu Ogunkoya, said, “Nigeria’s media is one of the most vibrant in Africa. State radio and TV stations have near-national coverage and operate at federal and regional levels.
“All 36 states run at least one radio network and a TV station. There are hundreds of radio stations and terrestrial TV networks, as well as cable and direct-to-home satellite offerings.”
According to him, television viewing in Nigeria is concentrated in urban areas, adding, “There are more than 100 national and local press titles, some of them are state-owned. They include well-respected dailies, tabloids and publications, which champion ethnic interests.
“By 2014, 70.3 million Nigerians were online (Internetworldstats.com). Mobile phones are commonly used to access the web. Most Internet users are young, educated and urban,” he stated.
Ogunkoya noted that Nigeria’s economy was the largest in Africa, while its manufacturing sector was the third largest on the continent, producing a large proportion of goods and services for the West African sub region.
He said, “Oil has been a dominant source of income and government revenues since the 1970s. Following the 2008-2009 global financial crises, the banking sector was effectively recapitalised and regulation enhanced.”
The Central Bank of Nigeria says it is examining the potential and future risks of the recent exit of the United Kingdom from the European Union.
The UK had a few days ago exited the EU following the results of a referendum it conducted.
The Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade, said the central bank was monitoring the Brexit development but noted that the perspective of the risks facing Nigeria’s financial system as a result of the situation was a welcome development.
She spoke in Lagos at a one-day breakfast session focusing on the implications of Brexit on the Nigerian banking industry.
The forum was organised by the Centre for Financial Studies, an arm of the Chartered Institute of Bankers of Nigeria.
Alade, who was represented at the event by the Director, Monetary Policy, CBN, Mr. Moses Tule, said, “At the CBN, we are trying to dimension what the risk areas are. Certainly, we will very much like to key into any new developments either seminars or symposia that may be organised on this area in the country.”
She added, “But in the meantime, as the European Union itself is trying to dimension what the risks are, we are doing the same thing here because it’s a volatile situation. The Brexit is not going to be as chaotic as the 2008 global crisis but it presents opportunities and losers.”
The President/Chairman of Council, CIBN, Professor Segun Ajibola, remarked that Brexit would impact trade agreements, global economic union, currencies and exchange rate regimes
He said, “For Nigerian banks, it throws open a number of pressing issues such as lending and borrowing relationship, entered into under the aegis of Europe, correspondence banking relationship, entered into on the strength of Europe, and its impact on bank customers whose deposits and assets are in affected currencies.
“It also throws up issues such as treatment to be given to the differentials in currency values in the books of banks under the International Financial Reporting System.”
The Chief Executive Officer, Proshare Nigeria Limited, Mr. Femi Awoyemi, said that the Federal Government and financial institutions needed an extensive analysis and recommendations on what he described as the “new society.”
Following the Brexit, the expert noted that there was the need to train currency dealers in financial institutions.
Awoyemi charged the CIBN to develop a curriculum to train new set of financial service providers as a direct response to the expected developments that would attend the unfolding scenarios in Europe.
Indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, Oando Plc, has announced a profit after tax of N4.1bn for the three-month period ended March 31, 2016.
The results were delayed due to what the company described as an exhaustive audit process overseen by external auditors, Ernst & Young.
The firm noted in a statement that extension approvals regarding the financial statements were sought and received from the Securities and Exchange Commission and the Financial Reporting Council.
For the financial year ended December 31, 2015, the group reported a revenue of N161.50bn as against N92.91bn in 2014.
The group loss before income tax was N32.74bn as against a loss of N88.73bn recorded in 2014.
The N4.1bn profit after tax for the first quarter of 2016 represents 120 per cent increase compared to a similar period of 2015. The company’s financial highlights also indicate that turnover decreased by 34 per cent, with N64bn realised in the first three months of 2016 compared to N97.1bn for the same period last year.
Global crude pricing fluctuation, the firm said in a statement, had changed the corporate landscape for oil companies, and “has had far-reaching economic implications on Oando and many other indigenous firms in the industry.”
According to the firm, the Q1 results are a welcome contrast for investors and shareholders alike following its dismal 2015 financial performance, which was significantly impacted by impairments and foreign exchange pressures.
Commenting on the performance, the Group Chief Executive, Oando Plc, Mr. Wale Tinubu, highlighted the company’s drive to ensure profitability going forward.
He said, “This first quarter of 2016 demonstrates our dedication to return our business to profitability by the end of the year. We have implemented constructive corporate initiatives, which are driving forces for our business in this new global reality of economic restraint and lower oil prices in our industry.
“The successful and ongoing implementation of these initiatives reiterates our strategy of growth, deliverables and a return to profitability by the end of 2016.
He added, “As a group, we have placed our focus on growing our upstream higher margined business, while still holding fundamental interests in the midstream and downstream sectors. We look forward to a rewarding year, where we will solidify our aspirations and return to profitability.”
As oil prices gradually increased, Oando said it commenced 2016 with a reinvigorated strategy hinged on key corporate initiatives to drive the company back to profitability and ensure fiscal efficacy.
To optimise its balance sheet, the company said it focused on aggressive debt reduction and recapitalisation.
The group said it had successfully restructured its existing debt through a N94.6bn medium-term note with a local consortium with lower interest rates and a renewed five-year tenor.
Its upstream subsidiary, Oando Energy Resources, completed its 2015 year-end summary of reserves, recording a six per cent growth in 2P net reserves from 420.3 million barrel of oil equivalent to 445.3mmboe.
The Executive Chairman, Lagos State Internal Revenue Service, Mr. Olufolarin Ogunsanwo, says taxation is the future of Nigeria following the drop in oil prices.
He made the declaration in a keynote address at a symposium on taxation organised by the Lagos chapter of the Society of Women in Taxation, an arm of the Chartered Institute of Taxation of Nigeria.
The forum was tagged, ‘Tax education/career development for secondary school students in Lagos State.’
Ogunsanwo said, “Many states in Nigeria can no longer pay salaries as a result of over dependence on oil; It is therefore not out of place to say taxation is the future of Nigeria.”
According to the LIRS boss, a tax is an imposition by the government on individuals, corporations, goods and service which no direct benefits is derived but for the benefit of all.
He added that for any tax to be valid, it must be backed up by law.
The President, CITN, Dr. Teju Somorin, while presenting a paper titled: Choosing taxation as a profession’, said the first step in becoming a tax professional was to study a course in taxation.
She said, “The CITN is ensuring that taxation is studied in higher institutions at the levels of Ordinary National Diploma, Higher National Diploma and Bachelor of Science.
“There is a curriculum for both the OND and the HND programmes at the polytechnic. This curriculum was adopted by the National Board for Technical Education and you can also have a second degree in taxation.”
According to Somorin, prospective candidates can also become a member of the institute through professional examinations organised by the CITN, adding that “irrespective of the professional background, you can register to take the examination from the foundation level and you will qualify to be a professional in taxation.”
Meanwhile, the Executive Chairperson, Society for Women in Taxation, Lagos Chapter, Mrs. Dena-Rose Ajayi, explained that the objective of the symposium was to educate the youths, saying “as the tax leaders of tomorrow they need to imbibe the tax culture early in life.
Ajayi said she believed the participating students could imbibe the culture of taxation from the symposium
Despite the appreciable progress recorded in the foreign exchange market since the Central Bank of Nigeria (CBN) announced its new foreign exchange policy, manufacturers in the country have decried their inability to get the greenback to import raw materials for production.
They have therefore called on the federal government to create a special window to enable them access foreign exchange for importation of raw materials.
Speaking on behalf of his colleagues in a chat with journalists during a public lecture he delivered at the University of Lagos, the Group Managing Director of Vitafoam Nigeria Plc, Mr. Taiwo Adeniyi, enjoined the federal government to take urgent steps to address the matter to save the economy.
According to him, “The first half of the year was not good for manufacturers, a lot of policy changes have taken place but it is too early to begin to think that they will have any impact on businesses yet. On the 20th of last month when the CBN announced the new foreign exchange policy, a huge amount of dollars was released into the system and everybody thought it was going to continue that way.”
He added: “ As I speak to you now, we are made to do future placements for dollars. It is tenured 30, 90 days for anyone to be able to access the dollars. The question I asked them is if I am told I can only get the greenback every 90 days what happens before the 90 days? I should fold my hands and wait for what I don’t have guaranty I am going to get. For some time now we have bided for N282, N285/$ and we didn’t get it. All we were told is “your bid is not successful.”
He added: “Where should manufacturers go to get dollars to buy raw materials? We have repeatedly asked this question without an answer. We have asked the government to create a window for the real sector, not traders to access the dollar to get materials to produce and sustain the economy. If that does not happen we will remain where we are. Half year is gone, the second half is year and we still do not have direction.”
Government, he stated, can identify the real manufacturers by checking their status with the Manufacturers Association of Nigeria (MAN) and other organs of government. He advised the federal government to set up committees to visits local manufacturers to see what they are doing and arrange for them to get dollars for raw materials.
“In-fact we have been asked to fill foams with the Raw Materials Research Council (RMRC) to confirm what materials we need for production, that we have done. They issues licences for imports of raw materials, if you don’t have the licence how possible is it for you to import. They know who the manufacturers are, it is not rocket science, “he said.
