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FG: Fuel, electricity subsidies no longer feasible

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Nigeria can’t go Afghanistan way – Lai Mohammed

The Federal Government may have foreclosed further negotiation on the recent hike in petroleum and electricity tariffs, highlighting that under the prevailing economic conditions, Government can no longer afford fuel subsidy, let alone, supplementing electricity tariff.

The Minister of Information and Culture, Alhaji Lai Mohammed disclosed this at a media briefing in Abuja, stressing that the nation’s revenues and foreign exchange earnings have fallen by almost 60 per cent due to the downturn in the fortunes of the oil sector.

The media briefing, which was on the recent increases in petrol and electricity prices, was jointly addressed by the Minister of Power, Saleh Mamman and Minister of State Petroleum, Timipreye Sylvia.

Mohammed said that despite the economic situation, the government sustained expenditures, especially on salaries and capital projects and stopped unsustainable practices that were weighing the economy down.

“Government can no longer afford to subsidise petrol prices, because of its many negative consequences; these include a return to the costly subsidy regime.

“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this Administration.

“The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good.

“Of course, there is also no provision for fuel subsidy in the revised 2020 budget, because we just cannot afford it,” he said.

The Minister disclosed that from 2006 to 2019, fuel subsidy gulped N10.413 trillion, an average of N743.8 billion per annum.

He said from the figures provided by the NNPC, subsidy was N257 billion in 2006,  N272billion in 2007, N631 billion in 2008, N469 billion in 2009, N667billion in 2010, N2.105 trillion in 2011 and N1.355 trillion in 2012.

He added that fuel subsidy gulped N1.316 trillion in 2013, N1.217 trillion 2014, N654 billion in 2015, N144.3 billion in 2017 N730.86 billion in 2018 N595 billion in 2019 while the figure was not available in 2016.

Mohammed said the long-drawn fuel subsidy regime ended in March 2020, with the Petroleum Products Pricing Regulatory Agency (PPPRA) announcement.

He recalled the PPPRA announced that it begun fuel price modulation, in accordance with prevailing market dynamics, and would respond appropriately to any
further oil market development.

“Recall that the price of fuel then dropped from N145 to N125 per litre, and then to between N121.50 and N123.50 per litre in May.

“With the low price of crude oil then, the cost of petrol, which is a derivative of crude oil, fell, and the lower pump price was passed on to the consumers to enjoy.

“With the price of crude inching up, the price of petrol locally is also bound to increase, hence the latest price of N162 per litre.

“If, perchance, the price of crude drops again, the price of petrol will also drop, and the benefits will also be passed on to the consumers.

“The angry reactions that have greeted the latest prices of Premium Motor Spirit (PMS) are therefore unnecessary and totally mischievous,” he said.

The minister said that the Government is not unmindful of the pains associated with higher fuel prices and it will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians.

“The government is providing cheaper and more efficient fuel in form of auto gas. Also, Government, through the PPPRA, will ensure that marketers do not exploit citizens through arbitrarily hike in pump prices,” he said.

Mohammed also noted that in spite of the recent increase in the price of fuel to N162 per litre, petrol prices in Nigeria remain the lowest in the West/Central African sub-regions.

In a comparative analysis, the minister said a litre of petrol is N332 in Ghana, N359 in Benin Republic, N300 in Togo, N346 in Niger Republic,  N366 in Chad. N449 in Cameroon.

He added that the price of petrol per litre is N433 in Burkina Faso, N476 in Mali, N257 in Liberia, N281 in Sierra Leone, N363 in Guinea and N549 in Senegal.

Outside the sub-region, the minister said petrol sells for  N211 per litre in Egypt and N168 per litre in Saudi,  stressing that with the removal of subsidy, fuel price in Nigeria remains among the cheapest in Africa.

On the service-based electricity tariff adjustment by the Distribution Companies (DISCOS), Mohammed said the government has been supporting the largely-privatized electricity industry.

“To keep the industry going, the government has so far spent almost N1.7 trillion specially by way of supplementing tariffs shortfalls.

“The government does not have the resources to continue along this path.

Also read:  $9.6bn Judgment Debt: Victory in UK court, a huge relief – Lai Mohammed

“To borrow just to subsidize generation and distribution, which are both privatized, will be grossly irresponsible,” he said

The minister noted that in order to protect the large majority of Nigerians, the industry regulator approved that tariff adjustments had to be made only on the basis of guaranteed improvement in service.

“Under this new arrangement, only customers with guaranteed minimum of 12 hours of electricity can have their tariffs adjusted.

“Those who get less than 12 hours supply will experience no increase; This is the largest group of customers.

To address the challenge of arbitrary estimated billing, he said a mass metering programme is being undertaken to provide meters for over 5 million Nigerians.

He said the Programme is largely driven by preferred procurement from local manufacturers to create jobs.

Mohammed said the NERC will also strictly enforce stoppage of estimated billing to ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood.

He disclosed that the government is providing solar power to five million Nigerian households in the next 12 months.

He said the Programme will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation.

The minister also noted that despite the recent service-based tariff review, the cost of electricity in Nigeria is still cheaper or compares favourably with that of many countries in Africa.

According to him, while Nigeria pays N49.75 per kilowatt, Senegal  pays N71.17, Guinea pays N41.36, Sierra Leone  pays N106.02 and Liberia N206.01

He added that Niger Republic pays N59.28, Mali pays N88.28, Burkina Faso pays N85.09, while Togo pays N79.88.

The minister noted that “the timing of the two necessary adjustments, in the petroleum and power sectors” was a coincidence and not a deliberate attempt to inflict pains on Nigerians.

He urged the people to ignore the “opportunistic opposition and their allies” who are playing dirty politics with the issue of petrol pricing and electricity tariff.

“Please note that these naysayers did not complain when the price adjustment led to lower petrol prices on at least two occasions since March.

“Nigerians must therefore renounce those who have latched onto the issue of petrol pricing and electricity tariff review to throw the country into chaos,” he said.

Speaking in the same vein, Sylva said with the loss of 60 per cent of the nation’s national income due to COVID-19, fuel and electricity subsidies were no longer feasible.

He said due to the pandemic, demand for crude oil, the mainstay of the nation”s economy dropped, affecting earnings.

“OPEC said that the only way to increase crude oil prices is to reduce production and we shut down our production to 1.42 million barrel per day from 2 million barrel per day.

“Before COVID-19 crude oil prices was in the range of over 60 dollar per barrel, today, in spite of all the cut in production, we have not been able to achieve more than 45 dollar per barrel.

“You can see that there is a crisis at hand and the only way to adjust is to stop subsidy, which previous administrations have attempted to do.

“We have gotten to that point now,” he said.

The minister called for understanding and support of Nigerians, stressing that it is in the best interest of a sustainable national economy.

 

Economy

Selloffs In MTN, Others Drag Market N25bn Down

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Selloffs In MTN, Others Drag Market N25bn Down

…RT.BRISCOE, Tantalizer lead the losers’ table 

 The equity market on Wednesday lost N25 billion due to selloffs in MTN Nigeria, Dangote Sugar and Guaranty Trust Holding Company (GTCO), among other stocks.

Specifically, the market capitalisation, which opened at N56.670 trillion, shed N25 billion or 0.04 per cent to close at N56.645 trillion.

The All-Share Index also dropped 0.04 per cent, or 43.3 points, to close at 100,032.32, as against 100,075.59 recorded on Tuesday.

As a result, the Year-To-Date (YTD) return slipped to 33.78 per cent.

United Capital led 10 per cent to close at N36.30, Africa Prudential followed by 9.88 per cent to close at N8.90, and Cutix gained 9.86 per cent to close at N6.13 per share.

Oando rose by 5.63 per cent to close at N16.90, and Julius Berger advanced by 4.79 per cent to close at N87.50 per share.

Conversely, RTBRISCOE led the losers’ log with 5.71 per cent to close at 66k, and FTN Cocoa Processors trailed by 4.44 per cent to close at N1.72 per share.

Tantalizer declined by 4.26 per cent to close at 45K, Neimeth International Pharmaceuticals shed 3.53 per cent to close at N1.64 and Consolidated Hallmark Plc lost N3.45 to close at N1.40 per share.

Analysis of the market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up 35.71 per cent.

A total of 1.10 million shares valued at N10.08 billion were exchanged in 8,720 deals, compared to 368.39 million shares valued at N7.42 billion exchanged in 8,151 deals posted previously.

Jaiz Bank led the activity log-in volume with 528.49 million shares worth N1.15 billion, Cutix followed by 194.64 million shares worth N1.19 billion.

Zenith traded 77.75 million shares valued at N3.11 billion to lead the log-in value, Universal Insurance transacted 36.26 million shares worth N12.35 million and FCMB sold 33.88 million shares worth N257.09 million. 

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Economy

Stock Market Maintains Positive Trends, Up 0.11%

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Stock market maintains positive trends, up 0.11%

…Redstarex, Deap Capital lead the losers’ table 

 The Nigerian stock market maintained its positive trends on Tuesday, increasing the overall market index by 0.11 per cent.

Investors gained N62 billion or 0.11 per cent as the market capitalisation, which opened at N56.608 trillion closed at N56.670 trillion.

The All-Share Index also advanced by 0.11 per cent or 109.3 points to close at 100,075.59, compared to 99,966.28 recorded on Monday.

As a result, the Year-To-Date (YTD) return rose to 33.84 per cent.

Sustained by interest in Tier-one banking tickers such as Zenith Bank, FBN Holdings, United Bank For Africa (UBA), and Access Corporation, alongside United Capital, UACN and other advanced equities drove the market’s positive performance.

Meanwhile, market breadth closed positive with 19 gainers and 15 losers on the floor of the Exchange.

On the gainers’ table, United Capital led by 10 per cent to close at N33, Cutix Plc followed by 9.84 per cent to close at N5.58 and Sunu Assurances gained 7.75 per cent to close at N1.39 per share.

Cornerstone Insurance rose by 7.69 per cent to close at N2.10 and UACN went up by 7.42 per cent to close at N15.20 per share.

On the other hand,  Redstarex led the losers’ table by 9.82 per cent to close at N3, and McNichols Plc trailed by 9.01 per cent to close at N1.01 per cent.

Deap Capital Management and Trust Plc lost 5.77 per cent to close at 49k, Eterna Plc declined by 4.44 per cent to close at N17.20 and Universal Insurance shed 2.78 per cent to close at 35k per share.

Analysis of the market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up 0.78 per cent.

A total of 368.39 million shares valued at N7.42 billion were exchanged in 8,151 deals, compared with 362.43 million shares valued at N7.37 billion exchanged in 8,405 deals posted previously.

Zenith Bank led the activity table in volume and value with 57.42 million shares worth N2.25 billion, and Access Corporation followed with 36.75 million shares valued at N707.17 million.

Guaranty Trust Holding Company(GTCO) also sold 29.16 million shares valued at N1.33 billion, Jaiz Bank traded 28.34 million shares worth N60.94 million and UBA transacted 20.31 million shares valued at N466.16 million.

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Economy

Sanitary Pads: Reps Query Minister Over N65m Spent On New Year Party, Others

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 The Minister of Women Affairs, Mrs Uju Kennedy-Ohaneye has drawn the ire of the House of Representatives following the unguarded manner she allegedly spent monies which included expenditures of N45 million for a New Year party and, N20 million for sanitary pads.

The House of Representatives which has now queried the minister, also frowned on her other unrelated expenditure which includes N1.5 million for vehicle fuel.

Rep. Kafilat Ogbara, Chairman, House Committee on Women Affairs, led the interrogation of the Minister, over the non-payment of N1.5 billion to contractors despite the fund release in Abuja.

She said that the investigative hearing was aimed at uncovering the truth and not witch-hunting the Minister and the officials of the ministry.

The committee also investigated the alleged diversion of funds meant for contractor payments, following a petition from contractors.

The committee also sought clarification on funds appropriated for the African First Lady’s mission and the whereabouts of the N1.5 billion meant for contractor payments.

The minister however denied the allegations of misappropriation, overspending, and non-payment to contractors.

The procurement officer confirmed contractors’ claims, and the Director of Finance and Administration acknowledged only paying approved contracts.

It would be recalled that the committee had at its last sitting summoned the minister to appear before it to explain the rationale behind the non-payment.

The committee also ordered the stoppage of all 2024 contract processes by the Ministry of Women’s Affairs until the whereabouts of the money for the said contracts are determined

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