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NNPC to pay N874bn in June as subsidy hits N1.82tn

NNPC to pay N874bn in June as subsidy hits N1.82tn

Operators in the oil and gas sector as well as other stakeholders are uncomfortable with the continued rise in the amount spent in subsidising Premium Motor Spirit, popularly called petrol, as it jumped to N947.51bn between January and April 2022.

An analysis of data obtained from the Nigerian National Petroleum Company Limited on Wednesday showed a monthly rise in PMS subsidy spendings by the oil firm, though NNPC described it as under-recovery/value shortfall.

It was also gathered that the oil firm had informed the Federation Account Allocation Committee (FAAC) that it would deduct an estimated value shortfall of  N874.5bn in the May 2022 proceed due for sharing at the June 2022 FAAC meeting.

NNPC has been the sole importer of petrol into Nigeria for several years running. The firm has also been subsidising the commodity all these years.

The President, Petroleum Products Retail Outlets owners Association of Nigeria, Billy Gillis-Harry, explained that the actual cost of petrol without subsidy was usually a little higher than that of diesel.

He told our correspondent that if not for subsidy, PMS would be selling around N550 to N600/litre going by the international cost of crude oil and the fluctuations in foreign exchange.

The approved subsidised pump price of PMS in Nigeria is between N162 to N165/litre, but oil marketers stated that the actual cost should be a little higher or about the same price of diesel had it been PMS was deregulated.

Latest figures obtained from NNPC in Abuja showed how the amount spent on fuel subsidy grew from January to April this year.

In January, February, March and April, the oil firm incurred N210.38bn, N219.78bn, N245.77bn and N271.58bn respectively, while the total during the four-month period was N947.51bn.

“This is unsustainable. In just four months we’ve incurred this much as subsidy on petrol because of our continued dependence on petroleum products imports,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, stated.

He added, “And this is because all our refineries are not yet working despite several promises by government that the plants will start production. The value of the naira is depreciating daily, so what do you expect?

“Nigeria will continue to subsidise petroleum products and that is static at the moment and based on this, our naira will continue to be devalued, because so much dollars are just being deployed in pursuing products.”

On what could be done to remedy the situation, the IPMAN official replied, “Fixing the refineries is supposed to be our priority considering the gains it would have on the economy and the country as a whole.

“The managers of this country should encourage modular refineries in Nigeria. Secondly, even small-scale refineries should be encouraged to come up to boost the moribund refineries we have. Nigeria can even build a brand new refinery from the scratch, it will help us.”

The Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, had earlier told our correspondent that subsidy might hit N6tn in 2022.

“It is a function of how our exchange rate goes. It is a function of how the price of oil goes. If we are lucky and if things are on our side, then it (subsidy) might be less. But if things are not on our side, if you do the current calculation as at today, based on all the numbers today, if things do not improve, it can easily reach N6tn,” he stated.

Commenting on the development, a former President, Association National Accountants of Nigeria, Dr. Sam Nzekwe, stated that the funds spent on petrol subsidy would have been used to address the challenges in other sectors of the economy.

“This is the reason why we have been urging the government to fix our refineries and let us refine our crude here and save the forex being used in importing petrol. We can’t continue spending this much on petrol subsidy,” he stated.

Meanwhile, the NNPC in its most recent presentation to FAAC, informed the committee that more deductions would be made from what would be shared by the three tiers of government this month.

It said, “The value shortfall on the importation of PMS recovered from April 2022 proceeds is N271,125,127,487.58, while the outstanding balance carried forward is N371bn.

“The estimated value shortfall of N874,503,649,663.98bn (consisting of arrears of N371bn plus estimated April 2022 value shortfall of N503,313,767,828.14) is to be recovered from May 2022 proceed due for sharing at the June 2022 FAAC meeting.”

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Nigeria’s Inflation Rate Surges To 19.64%

Nigeria’s Inflation Rate Surges To 19.64%

The country’s Consumer Price Index (CPI), which measures the level of price change in goods and services, hit 19.64 percent in July 2022 from the 18.60 percent recorded in the last month.

This means a 1.82% month-on-month hike, according to the (CPI) report for July 2022 released by the National Bureau of Statistics (NBS) on Monday.

“On a month-on-month basis, the Headline inflation rate in July 2022 was 1.817 %, which was 0.001% higher than the rate recorded in June 2022 (1.816 %),” the NBS added.

“The percentage change in the average CPI for the twelve months period ending July 2022 over the average of the CPI for the previous twelve months period was 16.75%, showing a 0.46% increase compared to 16.30% recorded in July 2021.”

According to the NBS report, the country’s urban inflation increased by 2.08% to 20.09% in July 2022 from 18.01% in July 2021. On the other hand, the rural inflation rate reached 19.22% from 16.75% in the corresponding period of 2021.

“On a month-on-month basis, the food inflation rate in July was 2.04%, this was a 0.01% insignificant decline compared to the rate recorded in June 2022 (2.05%),” the agency equally noted in its latest report.

“This decline is attributed to a reduction in the prices of some food items like Tubers, Maize, Garri, and Vegetables.

“The average annual rate of food inflation for the twelve-month period ending July 2022 over the previous twelve-month average was 18.75%, which was a 1.42% points decline from the average annual rate of change recorded in July 2021 (20.16%).”

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Nigeria’s SEC says its Capital Market Master Plan is protecting investors, enhancing market confidence

Nigeria’s SEC says its Capital Market Master Plan is protecting investors, enhancing market confidence

Nigeria’s Securities and Exchange Commission (SEC) has stated that its Capital Market Master Plan (CMMP) initiative is promoting transparency, protecting investors and enhancing market confidence.

The SEC stated this in a statement on Sunday in Abuja, disclosing the success of the scheme in the last 8 years, according to NAN.

It said the 10-year CMMP was launched in November 2014 to reposition Nigeria as an attractive investment destination.

What they are saying

The SEC disclosed that the plan was launched to make Nigeria a viable investment destination and critical facilitator of capital formation for accelerated growth and development.

It added that initiatives launched under the scheme include direct cash settlement, regularisation of multiple subscriptions, and introduction of the electronic dividend management system and dematerialisation of share certificates.

The commission also stated that it was ready to hold its second Capital Market Committee (CMC) meeting for exchange of ideas among market stakeholders.

  • The meeting would be an avenue to provide feedback to the SEC on how to continuously address challenges, improve market operations and enhance its regulatory framework.
  • ”It is an industry-wide committee comprising members of SEC, representatives of capital market operators, trade groups and other stakeholders.
  • During the meeting, issues on implementation of the ten-yeah CMMP, Fintech roadmap, the commodities trading ecosystem roadmap and matters relating to the economy will be discussed,” the SEC said.

In case you missed it

  • Recall Nairametrics reported in May, that the Securities and Exchange Commission (SEC) had released new rules for Digital Assets as part of its effort to regulate digital/virtual assets such as Bitcoins and NFTs.
  • This is contained in a recently released document titled, “New Rules on Issuance, Offering Platforms, and Custody of Digital Assets” essentially legalizing digital assets such as cryptocurrencies in Nigeria.
  • SEC said Digital Asset players will now include Digital Asset Offering Platforms (DAOPs), Digital Asset Custodians (DACs), Virtual Assets Service Providers (VASPs), and Digital Assets Exchange (DAX).
  • The rules apply to all platforms that support the trading, exchange and transfer of virtual assets, all issuers and sponsors of virtual/digital assets, including international and non-residential issuers and sponsors; and any operator that aggressively targets Nigerian investors.

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E-payments in Nigeria hit N204.5 trillion between January and July 2022 – NIBSS

E-payments in Nigeria hit N204.5 trillion between January and July 2022 – NIBSS

The Nigeria Inter-Bank Settlement Systems (NIBSS) has said that transactions worth N204.5 trillion were performed electronically in Nigeria between January and July this year through the NIBSS Instant Payment platform (NIP). This shows a 40% increase in e-payments in the country when compared with N145.8 trillion recorded in the same period last year.

The surge in electronic transactions shows that more Nigerians are embracing the cashless policy of the Central Bank of Nigeria (CBN).

According to NIBSS, the value of e-payment recorded was a reflection of the increase in the volume of deals within the period. The NIP volume rose to 2.7 billion in the seven months, showing a 42% increase over 1.9 billion recorded in the same period last year.

Data provided by NIBSS

Monthly analysis

  • An analysis of the 7 months data just released by NIBSS showed that the NIP platform recorded N26.6 trillion transactions in January. Year on year, this was a 43.7% increase over N18.5 trillion recorded in the same month of last year.
  • Similarly, in February, deals worth 27.2 trillion were sealed over the electronic platform. Compared with February 2021 when N18.3 trillion was recorded, this represented 48.6% growth.
  • In March, the platform recorded N31.8 trillion in transactions, a 44.5% increase over the N22 trillion recorded in the same month last year.
  • The value of transactions on the NIP platform stood at N29.2 trillion in April this year. This also shows a 41.6% increase over the N20.6 trillion recorded in April 2021
  • In May, the value of e-payment transactions stood at N29.6 trillion, a 43% increase compared with N20.7 trillion recorded in the same period last year.
  • The NIP transactions rose to N31.7 trillion in June 2022, a 37% growth over N23.1 trillion posted same time in 2021.
  • The data for July also reflected a 31% increase from N22.4 trillion last year to N29.3 trillion this year.

The NIBSS Instant Payments (NIP) is an account-number-based, online-real-time Inter-Bank payment solution developed in the year 2011 by NIBSS. It is the Nigerian financial industry’s preferred funds transfer platform that guarantees instant value to the beneficiary.

According to NIBSS, over the years, Nigerian banks have exposed NIP through their various channels, that is, internet banking, bank branch, Kiosks, mobile apps, Unstructured Supplementary Service Data (USSD), POS, ATM, etc. to their customers.

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