COVER
Dwindling Allocation: Salaries, Other Recurrent Items to Suffer – NGF
By Joseph Amah, Abuja
The Nigeria Governors’ Forum has lamented that the subsidy on Premium Motor Spirit (petrol), has placed a huge financial burden on the states.
The NGF, which is the umbrella body for the 36 governors of the federation across party lines, made this known in a memo forwarded to the House of Representatives.
The memo is in response to the call for memoranda by the House’ Ad Hoc Committee on the Volume of Fuel Consumed Daily in Nigeria, which is investigating the actual amount of PMS the country consumes daily.
The memo, which was signed by the Head, Legislative Liaison, Peace and Security, NGF, Fatima Usman Katsina, for Chairman of the Forum, was titled ‘Findings on the Volume of Fuel Consumed Daily in Nigeria,’ dated July 1, 2022, and addressed to committee’s Chairman, Abdulkadir Abdullahi.
“Fiscal pressures are growing unsustainably with the PMS subsidy significantly reducing the flow of revenues into the Federation Account. Thirty-five out of 36 states are likely to see transfers from the federation fall (in nominal terms) between 2021 and 2022, with the average decline projected to be about 11 per cent. Most states are already experiencing fiscal stress, with 30 out of 36 states recording fiscal deficits in 2020, including Lagos and every oil-producing state except Akwa Ibom.
“With the projected decline in gross distributable federation revenues in 2022, fiscal deficits and debt burdens will grow even larger and faster. This will mean that transfers from the federation will not be enough to cover even salaries, and certainly not recurrent costs, which are growing in nominal terms.”
The governors referred the House to a November 2021 report by its National Executive Council’s ad hoc committee interfacing with the Nigeria National Petroleum Corporation on the appropriate pricing of PMS in Nigeria, which was chaired by Governor of Kaduna State, Nasir el-Rufai, and had governors of Edo, Jigawa, Ebonyi, Akwa Ibom and Ekiti, as well as the Governor of the Central Bank of Nigeria; Minister of Finance, Budget and National Planning; Accountant-General of the Federation, Group Managing Director of the NNPC and the Permanent Secretary, MBNP.
The memo partly read, “Although the operating environment has significantly worsened since the report was released, with NNPC now consistently reporting zero remittance to the Federation Accountant as profit from joint venture, production sharing contract and miscellaneous operations, the position of the forum remains generally the same.”
The NGF recalled how the report noted that the “federation (FAAC) net oil & gas revenues have been declining since 2019 and are projected to decline significantly in 2022 by between N3bn and up to N4.4bn unless action is taken now.” The memo read, “The following are some of the major findings relating to the volume of fuel consumed in the country:
“Remittances to the Federation Account Allocation Committee have continued to shrink as NNPC recovers shortfall quite arbitrarily from the Federation’s crude oil sales revenue. FAAC deductions for PMS subsidy are above 2019 levels, even without adjusting for reduced purchasing power of the naira due to inflation and FX rate deterioration.
“An analysis of the average monthly PMS consumption by states showed that a third of the country accounts for over 65 per cent consumption of PMS. The analysis showed that the following States of Lagos, Oyo, Ogun, Abuja, Delta, Kano, Kwara, Edo, Rivers, Kaduna, Kebbi and Adamawa accounted for 65 per cent of PMS consumption in the country. Most states with high PMS consumption either have borders with neighbouring countries or are in close proximity, this has been an avenue for smugglers to benefit from profitable arbitrage opportunities in PMS pricing.
“Households directly consume only about 25 per cent of the PMS that is consumed nationally, with the remaining three-quarters being consumed by firms, MDAs, transport operators or smuggled to neighbouring countries where the PMS price is nearly three times what it is in Nigeria; and of the PMS consumed by households, the richest 40 per cent of households account for over three-quarters of the PMS purchased by households, while the poorest 40 per cent of households purchased less than three percent of all PMS sold in Nigeria.
“In the current fiscal regime, remittances to FAAC would continue to shrink as NNPC recovers this shortfall from the Federation as a result of crude oil price recovery.
The report recommended a PMS pricing structure that addresses regional arbitrage and smuggling of PMS and provides additional revenue to the Federation Account. There is a significant market opportunity for additional export revenue streams for Nigeria to be had given the price parity with our neighbouring countries.
“Privatisation of the three government refineries as is, or after their full rehabilitation if affordable and viable, and expediting the licensing procedure for modular refineries will reduce the recurring government expenditure on refinery maintenance and increase the country’s refining capacity.”
The governors also noted that there were also economic risks highlighted in the report. “Fiscal pressures are threatening Nigeria’s recovery, as rising prices continue to push millions into poverty,” they stated.
The memo further read, “Rising prices are pushing millions of Nigerians into poverty. Rising inflation between 2020 and 2021 is expected to have pushed an additional 5-6 million Nigerians into poverty. Food insecurity is increasing in both poor and non-poor households, with some adults skipping meals. Because inflation is high, even if it remains stable, it will continue to push many more Nigerians into poverty.
“With the coming into effect of the Petroleum Industry Act, gross oil & gas revenues could be (much) lower than currently projected because of the new fiscal terms and the earmarking of deductible revenues specified in the PIA, and that could reduce net oil & gas revenues even further.”
The NGF stated that greater accountability and transparency around oil and gas revenues “are the only immediate options for easing the pressure on government finances and maximising socially responsible profit gain.”
N175 Per Litre, Marketers Plan Strike, Queues Worsen
Meanwhile several petrol stations are now dispensing petrol at over N175/litre, higher than the government-approved N165/litre price. This is as oil marketers insist on embarking on strike from next week if the government fails to pay them.
Some outlets in Lagos that sold the commodity at N169/litre last week had to adjust their pumps on Wednesday, as they dispensed PMS to motorists at N175/litre.
Also, queues by motorists at filling stations, which have persisted in Abuja and environs since February this year, gradually resurfaced in parts of Lagos on Wednesday.
Our correspondent also observed that many fuel stations, particularly those belonging to members of the Independent Petroleum Marketers Association of Nigeria, (IPMAN) were shut due to a lack of products to sell to customers.
Gegu Oil, Eterna and Oando stations at the Dutse end of the Kubwa-Zuba Expressway in Abuja, for instance, had remained shut for days for lack of products to sell, despite the heavy queues of motorists in a nearby NNPC retail outlet.
Amidst these concerns, oil marketers under the aegis of Abuja-Suleja IPMAN, stated on Wednesday that their proposed strike would go ahead next week if the government fails to substantially clear the bridging claims for transportation of petrol being owed marketers.
Last week, oil marketers warned that Nigeria could witness “the mother of all queues” soon if the Federal Government fails to pay the 12 months bridging claims being owed operators in the downstream oil sector.
They had also denied being paid N74bn by the Federal Government as bridging claims for the transportation of petroleum products.
The Federal Government through its Nigeria Midstream and Downstream Petroleum Regulatory Authority had said last week that it paid N74bn as bridging claims to oil marketers for the transportation of petroleum products across the country in seven months.
But the Secretary, Abuja-Suleja IPMAN, Mohammed Shuaibu, whose unit covers Abuja, Kogi, Niger and parts of Nasarawa and Kaduna, told our correspondent on Wednesday that though some members had confirmed the receipt of payments, a host of others had yet to receive theirs.
“Few of our members have confirmed receiving alerts, but the majority have not been paid and so the decision to embark on the mother of all strike still stands, except we get our payments,” he stated.
Shuaibu added, “Many independent marketers are closing shop and because of these debts. We cannot continue to fold our hands. We are sorry about the hardship, but the government has to pay us, otherwise we will withdraw our services.”
Reacting to the concerns, the spokesperson, NMDPRA, Kimchi Apollo, earlier told our correspondent that the petrol price had not changed from the approved N165/litre price, as he also stated that efforts were on to settle to bridging claims being owed the marketers.
Meanwhile, there were indications that long queues were beginning to resurface in Lagos State and its environs on Wednesday, as findings showed that filling stations were beginning to sell petrol above N175 per litre.
The Federal Government and oil marketers are yet to come to a compromise on how much a litre of petrol should be sold, and marketers are beginning to sell products at prices not approved by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
Marketers, however, said they could no longer bank on the Federal Government’s promise to pay the claims, while they continue to run at a loss for selling petrol at N165 per litre.
Marketers had held a similar meeting with the NMDPRA two weeks ago, where they aired their grievances on the high costs of running their petrol stations.
Also, the Depots and Petroleum Products Marketers Association of Nigeria had hinted that it would be impossible for its members to keep prices at N165/litre when the landing costs to their stations were already on the high side.
NLC President Wabba Calls for Fixing of Refineries, Subsidy Removal
As a solution, the President of Nigeria Labour Congress (NLC), Ayuba Wabba has told the federal government to fix the nation’s refineries and get rid of subsidy payments.
He also advocated the participation of private investors in building refineries adding that importation of fuel poses threats to the country.
Wabba revealed these in a presentation made to the House of Representatives ad hoc committee investigating daily PMS consumption in the country.
According to the Labour leader: “We do believe that even if there is subsidy, it cannot be at the level quoted by authorities in the sector. In our document on the oil sector, we have outlined conditions precedent for removing subsidies, if any, including fixing the refineries, creating conditions for private sector participation in the building of refineries, even if they are modular.
“Sadly, we are not aware if any of the terms and conditions we have recommended have been met, several years after. We are nonetheless conscious of the fact that the continuous opaque importation of PMS holds clear and present danger to the country.
“On the other hand, the transparent operation of the importation of PMS has two major advantages. The first advantage is that, knowing the exact volume of PMS the country needs and publicising it will deter further falsification of imports, hopefully,” Wabba said.
Nigeria and other UN Member States have pledged to prevent a repeat of the devastating health and socio-economic crises caused by COVID-19 and shore up the world’s ability to head off another pandemic.
All 193 UN Member States adopted a political declaration at a high-level meeting on Pandemic Prevention, Preparedness and Response at the ongoing 78th session.
Adopting a milestone political declaration at the first-ever summit on pandemic prevention and response, nations also committed to get back on track to reach the 2030 Sustainable Development Goals (SDGs)
“[This] is a historic milestone in the urgent drive to make all people of the world safer, and better protected from the devastating impacts of pandemics,” Tedros Ghebreyesus, Director-General of the UN World Health Organisation (WHO), said.
“I welcome this commitment by world leaders to provide the political support and direction needed so that WHO, governments and all involved can protect people’s health and take concrete steps towards investing in local capacities, ensuring equity and supporting the global emergency health architecture that the world needs.”
The declaration was the result of months of intense negotiations to refine and agree on actions at the national, regional and global levels. It will be submitted to the General Assembly in due course for formal endorsement.
The political declaration asserts the need for Member States to conclude negotiations on a formal agreement on pandemic prevention, preparedness and response, known also as the Pandemic Accord – and make targeted amendments to International Health Regulations – by May next year.
It also calls on States to address the negative, physical and mental health impacts of health-related misinformation, disinformation, hate speech and stigmatization, especially on social media platforms.
Instead, it calls for public information campaigns based on science and the facts.
Member States also committed to strengthening health work forces and rapid response capacities, surveillance, and local manufacturing abilities, so countries can meet their own needs to prevent, prepare for and respond to pandemics.
Speaking at the summit, UN Secretary- General, Antonio Guterres, recalled that the global response to COVID-19 showcased both human ingenuity and exposed society’s shortcomings.
While rapid test and vaccine development were notable achievements, there were also a lack of preparedness, disproportionate impacts on the world’s poorest and vaccine hoarding by wealthy nations.
“We must not repeat the mistakes of the past when the next pandemic strikes – as we know it will – and other health threats emerge,” he said.
Reiterating the importance of the declaration, the UN chief urged countries to support the WHO, including increasing their financial contributions.
Tinubu Attends NASDAQ, Rings Closing Bell
President Bola Tinubu on Thursday, rang the bell at the National Association of Securities Dealers Automatic Quotation System (NASDAQ), becoming the first African Head of Government to do so.
The president rang the bell at the world’s financial capital, New York and became the first African President to perform such task.
NASDAQ is world’s second largest stock exchange.
Tinubu, while performing the task, was in company of some Nigerian business leaders and officials of the Nigerian Exchange Ltd. (NGX).
The President also used the opportunity, presented by the historic moment, to advance his foreign investment push in front of financial markets at the famous stock exchange.
“It’s a great honour for me to be here. I am happy to bring Nigeria to your doorsteps and I am honoured that we are here, today, with a bubbling Nigerian stock market that will evolve in the West African sub-region.
‘’The greatest economy in Africa is Nigeria. There is an immense opportunity in Nigeria, where you can invest your money without fear,” the President said.
He said that his government would address longstanding problems and impediments, such as the recent economic policies taken since assumption of office in May.
He said these include restoration and unification of the foreign exchange rate market to a stable and trustworthy level.
According to him, this will allow new investors to bring their money and be free of worries about whether they can take it out at any point in time.
“You’re free to take in your money and bring out your money. I count on you to invest in Nigeria,” the President said.
Tinubu Woos Investors at Nigeria-US Business Roundtable
President Bola Tinubu has assured prospective investors of his administration’s determination to adopt necessary fiscal and regulatory measures toward the ease of doing business in Nigeria.
At the Nigeria-U.S. Executive Business Roundtable, the President said he recognised that investment capital is cowardly in nature.
He said that was the reason behind his bringing successful Nigerian industrialists and public officials to share their experiences and operational plans, respectively.
Tinubu said this was in addition to all he had done to boost the confidence of the global investment community in Nigeria, by reforming the fiscal, monetary, regulatory and tax policy environment.
“Nigeria is an opportunity that is impossible to replicate or find elsewhere in any part of the world. We have brilliant young people who both innovate and consume at a large scale.
‘’Our entrepreneurial spirit is a major part of what makes our market totally unique, aside from demography.
‘’Nigerians build businesses and Nigerian businesses partner with other businesses to conduct larger business.
‘’There is enough value to spread around. Be careful of what you hear about Nigeria. You may be dissuaded out of a major opportunity that others will take up.
‘’We are here for you. We will give you all the support you need to succeed and succeed abundantly,” the President said.
On behalf of the U.S. Government, U.S. Deputy Treasury Secretary Wally Adeyemo, told U.S. business leaders he came back from Nigeria on an official visit that later became a fact-finding mission.
“In Lagos, I saw, first-hand, some of the major reforms you implemented as the Governor of Lagos and the transformative effect on Nigeria’s commercial capital.
‘’People have attested to the fact that the reforms you have put in place as President are quickly enhancing confidence.
‘’American business is paying attention to that and from what we have seen for ourselves, Nigeria is proving to be a new frontier for investment.
‘’We will encourage our companies from our end as those reforms continue to deepen,” Adeyemo said.
The American Business Council President, Mr Sops Ideriah, said that the extensive turnouts at the roundtable by American business chief executives was impressive.
According to him, the turnouts served as a testament to the degree to which confidence is rising in response to the actions and words of the President.
He said that this was with respect to ease of doing business, investment promotion, and his willingness to intervene to clear the historical concerns of American business people about doing business in Nigeria.
“Having all the stakeholders in the room, His Excellency, the President of Nigeria being here, from government actors at the federal and state level to ministers and tax authorities present, as well as private sector industrialists in Nigeria.
‘’We are very positive about the potential of Nigeria and we are just reinforcing to our colleagues the message about the economic opportunities that exist there,” Ideriah said.
Acting Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji, assured the American captains of industry that the nation’s apex tax authority would not focus on taxing the seed.
He said it would focus only on the proportionate taxation of the fruit of fully formed industry, through efficient policy synergy with Nigeria’s sub-national authorities.
“The President is a business enabler, not a handicapper. Everything we do will be geared toward making your tax assessment and payment processes as digitally efficient and transparent as possible.
‘’We are not after the seed, but the fruit and we will keep to this commitment,” Adedeji said.(NAN)
The Nigerian National Petroleum Company (NNPC) Limited, has signed up as a participant of the United Nations Global Compact, thereby becoming the first state-owned oil company to join the global initiative.
Group CEO of NNPC Ltd, Malam Mele Kyari, signed the Letter of Commitment, at the ongoing UN General Assembly (UNGA), signifying its participation in the UN Global Compact in New York.
A statement by the NNPC Ltd management, on Thursday, said the company signed up in a short ceremony on the sidelines of President Bola Tinubu’s session during the Global Africa Business Initiative (GABI) at the ongoing general assembly.
In a speech shortly after the signing, Kyari said the NNPCL’s participation in the UN Global Compact was a further testimony to Nigeria’s commitment to work with global partners towards attaining a just Energy Transition.
Kyari added that with this development, NNPCL supports the Ten Principles of the UN Global Compact on human rights, labour, environment, and anti corruption.
He described the NNPCL as a dynamic global energy company with businesses and operations across the entire spectrum of the energy value chain.
“We are committed to making the UN Global Compact and its principles part of our strategy, culture and day-to-day operations of our Company.
“We will engage in collaborative projects which advance the broader development of goals of the United Nations, particularly the Sustainable Development Goals (SDGs),” Kyari added.
Earlier in her remarks, the Executive Director, UN Global Compact Network, Nigeria, Ms Naomi Nwokolo described NNPCL’s move to become a participant of the UN global initiative as pivotal step in fostering a culture of ethical business conduct, environmental stewardship, and social responsibility.
With Nigeria being one of the largest producers of crude oil in Africa, a transition from an energy system driven by fossil fuels to one based on renewable energy will have far reaching positive impact, serving as a catalyst for sustainability in-country, on the continent and the world at large.
The UN Global Compact, formally inaugurated in July 2000, is a voluntary UN agreement designed to encourage companies around the world to develop, implement, and disclose responsible and sustainable corporate policies and practices. (NAN)
By Raphael Atuu, Abuja
Minister of Water Resources and Sanitation, Professor Joseph Terlumun Utsev has called on Nigerians to come up with creative ideas and suggestions on how best to overcome challenges facing the country.
Engineer Utsev made the call on Wednesday, when he received members of the Nigerian Economic Summit Group (NESG) in his office in Abuja.
According to him, the administration of President Bola Tinubu was committed to making lives meaningful for all citizens and was ready to welcome creative ideas that will enable the country surmount its challenges and better the living condition of citizens.
He acknowledged the key role the Nigerian Economic Summit Group has played over the years in promoting and championing reforms of the Nigerian economy and called for synergy between the group and the Ministry to achieve the desired result.
Acting Chief Operations Officer and Senior Fellow Economic Policy, Strategy and Competitiveness, Dr Tayo Aduloju had explained that the group, which is non – profit, non -partisan private sector organization with a mandate to promote and champion the reform of the Nigerian economy into a modern globally and competitive one was at the ministry to seek partnership in the areas of providing useful ways of improving water , sanitation and hygiene in the country as well as how to make water a business .
The Minister had earlier played host to a delegation from the World Bank led by Jun Matsumoto, which were at the ministry to also seek partnership for the promotion of irrigation farming and effective utilization of dams for agriculture.
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