Connect with us

Business News

Nigeria: A Nation that Flares and Imports Gas

Published

on

Share

By Nick Agule

About a week ago, it was reported that cooking gas prices in Nigeria were up by as much as 100% as the Federal Government (FG) began the implementation of a 7.5 per cent Value Added Tax (VAT) on Liquified Petroleum Gas (LPG) imports. It was reported that Nigerians may be forced as a consequence of the skyrocketing LPG prices also known as cooking gas to resort to alternative sources of fuel including firewood.

This news hit me hard because in all my over 25 years working in the oil and gas industry mostly for international oil companies, I was oblivious that Nigeria imports LPG! Perhaps I never thought this was a possibility given that the country produces and flares gas! How can a country turn around and import a commodity it produces it bountiful and sets fire on? This is the question that agitated my mind since the news broke of the VAT levy on LPG imports.

It is common knowledge that Nigeria has been exporting crude oil and importing refined products which is bad business but to flare gas and turn around to import same is insane! If I may use an analogy, when we sell crude and import refined products, it is like a farmer who after harvesting yams, sells the raw yams and then uses the money made to go buy pounded yam for the family at restaurants. Even as bad as this is, we can excuse the farmer because he is making money selling yams before using it to buy pounded yam! But to flare gas and then turn around to import it is akin to a farmer who after harvesting yams, sets fire to the yams and burns them to zero value. This same farmer then looks for money elsewhere to go and buy pounded yam for the family! No matter how this is analysed, this farmer will be condemned as a mental case! No rational human being will set the harvest on fire and then go to another producer to buy the same commodities! But this is exactly the situation of Nigeria. Not only is the country losing value in flaring her produced gas and then going to buy it at high prices, but there is also huge environmental damage to both humans and the environment resultant from the perpetual flares dotted all over the Niger Delta! That more trees will now be felled to provide firewood for cooking exacerbates the environmental damage.

The World Bank projected in 2017 that almost 8 billion cubic meters of gas was flared annually in Nigeria according to satellite data. Nigeria’s oil Minister Chief Timipre Sylva is reported to more recently to have said about 3 billion cubic meters of natural gas was lost to gas flaring in the first five months of 2020. The loss was valued at $230 million. This is even more puzzling why a nation will decide to set fire on about a quarter of a billion dollars’ worth of a commodity annually and then turn around to import same commodity from other countries at high prices!

According to a Survey, despite the presence of the Nigeria Liquefied Natural Gas company (NLNG), which largely produces natural gas and Liquefied gas, Nigeria imports around 70 per cent of LPG for domestic use, with the balance of about 30 per cent sourced locally by dealers.

Global Finance Digest said the price of 12.5 kg cooking gas which sold at around N3,500 eight months ago is now going for N6,500 in Lagos and Ogun states after the FG began implementation of the 7.5 per cent VAT on LPG imports. The Executive Secretary, Nigerian Association of Liquefied Petroleum Gas Marketers, Bassey Essien, said the cost of 12.5kg gas could hit N10,000 in December if the government do not take time to address this surge.

To even think that the FG was levying VAT on locally produced LPG and allowed the imported LPG to be sold VAT-free is inexplicable. One would have expected the FG to levy duty and VAT on the imported LPG instead so that it will create a competitive advantage for local producers over the imported products. This is a big thumps-down on the economic management acumen of the FG to have allowed this situation to happen!

The National Chairman, Liquefied Petroleum Gas Retailers Association of Nigeria, Michael Umudu, said there were three factors that caused the surge in price of LPG:

About 70 per cent of the gas we consume in Nigeria is imported and importers have to contend with the high cost of foreign exchange.

There is a rise in the price of petroleum products in the international market and because of that, thus the cost of LPG has equally gone up. So importers now pay more on imports.

The government added VAT on imported LPG which has exacerbated the price hike of cooking gas.

In his own reaction to the development, the spokesperson of the Nigerian National Petroleum Corporation (NNPC), Garba-Deen Muhammad, is reported to have said the Minister of State for Petroleum Resources, Chief Timipre Sylva, had said the commodity (LPG) was deregulated. Mr Sylva himself is reported to have said a media briefing that “We are not in position to determine gas pricing because gas is not a regulated product. But, of course, we are also very concerned that prices are rising and so I am actually doing something about it in the interest of the ordinary Nigerian.”

But the question that is left to be answered is why the FG is not regulating LPG? If the FG has been regulating the prices of petrol with trillions of Naira paid in subsidies annually, then why leave LPG unregulated?

Recommendations

In the short term, the FG must take immediate measures including requesting the NLNG to increase supply to the LPG market. This will ensure more supply to market with consequent fall in prices.

In the medium term, the FG must read the riot act to the upstream oil companies in Nigeria to harness and utilise produced gas. One gas is produced, it must be used. This will make more gas available to the Nigerian economy for cooking, electricity generation, fuel for vehicles etc.

In the long term, the FG must have a zero gas flares policy and impose punitive duties on imported LPG to make it uneconomical to import. This make Nigeria self sufficient in gas supply thus taking off the pressure on the forex market by importers who source the dollar to import gas into Nigeria.

The FG must regulate the LPG market. With the Petroluem Industry Act (PIA) setting up a regulator – Nigerian Midstream and Downstream Petroleum Regulatory Authority – LPG must come under a regulator to create an enabling environment for local producers to thrive.

Conclusion

Nigeria is blessed with a huge abundance of human and natural resources. Governments at all levels must work assiduously to unlock value from these resources. A situation where Nigeria is flaring a vital and valuable resource – Gas – and then importing it from other countries is an embarrassment that must not be allowed to fester into the New Year 2022!

Business News

CBN Shakes Up Banking Sector: A Paradigm Shift Unveiled

Published

on

dailyasset-greetings
Share

By Ademola Oyetunji 

In a surprising turn of events on Wednesday, the Central Bank of Nigeria (CBN) dissolved the boards of three prominent commercial banks – Keystone, Polaris, and Union Bank. This move, although unanticipated, transpired despite the Central Bank’s recent endorsement of these banks’ financial soundness.

Governor Olayemi Cardoso, at his inaugural address during the Chartered Institute of Bankers of Nigeria (CIBN) annual dinner last year, had lauded Nigeria’s financial sector’s resilience in 2023.

Stress tests conducted on the banking industry indicated its strength under various economic scenarios. However, Cardoso highlighted the need for banks to reassess their responsible banking framework, a sentiment echoed by President Tinubu.

President Tinubu’s evident discontent with the Godwin Emefiele-led CBN triggered a comprehensive review of the financial system. A special investigator, Jim Obazee, was appointed to conduct a forensic investigation into Emefiele’s tenure, with damning revelations emerging. Recent developments suggest the initiation of a full-blown financial system reform.

The CBN’s dissolution announcement and the subsequent appointment of new executives for the affected banks, including Yetunde Oni, Mannir U. Ringim, Hassan Imam, Chioma A. Mang, Lawal M. Omokayode, and Chris Onyeka Ofikulu, might mark the beginning of implementing the investigation’s recommendations – a significant cleanup of the financial sector.

Allegations surfaced during the investigation, suggesting non-cooperation from some bank executives and Emefiele’s questionable acquisitions through proxies and cronies. Cardoso may have secured presidential approval for the CBN’s decisive action.

The CBN cited various infractions by the banks, including regulatory non-compliance, corporate governance failures, and activities threatening financial stability. Despite the challenges, the CBN assured the public of depositors’ fund safety and its commitment to upholding a safe, sound, and robust financial system.

The Special Investigator’s report revealed documents pointing to Emefiele’s involvement in Titan Trust Bank and Union Banks’ acquisitions with ill-gotten wealth. The CBN’s swift replacement of the ousted chief executives received widespread commendation, especially from high-net-worth stakeholders aiming to avert a crisis of confidence within the affected banks.

Adewale Aderounmu, an industrialist, applauded the CBN for implementing effective policies under Olayemi Cardoso’s leadership, despite detractors’ actions against the Naira. Ayomide Deepak, an Abuja-based stockbroker, welcomed the action but emphasized the need for caution in handling revelations from the investigation to prevent further economic challenges.

As the CBN wields its regulatory hammer on these banks, the hope is that other bank executives and investors will learn valuable lessons for the sake of the economy. The CBN’s action is perceived as a strategic move aimed at revitalizing the economy and financial system, not a mere vendetta.

*Ademola Oyetunji writes from Ibadan.

Continue Reading

Business News

Firm Blazes The Trail To Revolutionise  Nigeria’s Transport Sector

Published

on

Share

Independent Capital, a visionary project finance firm has blazed the  trail in the country by championing green innovation and facilitating as well as  supporting green innovative projects in Nigeria.

This is coming on the heels of the plan by the Nigerian government to introduce gas-powered vehicles in the country as a fallout of the removal of fuel subsidies.

The Chief Executive Officer (CEO) of the firm, Dr.

George Nwangwu who announced this in a statement in Abuja on Tuesday, said it was aimed at  a transformative leap towards sustainable transportation in the country.

He said with the company’s fusion of financial expertise, a profound understanding of environmental and social impact, a commitment to reducing carbon emissions and  improving transportation quality, “the company aims to reshape the nation’s mobility landscape for a cleaner and more prosperous future”,adding that “it is charting new territories in the realm of sustainable finance by announcing ambitious plans that signify a paradigm shift in Nigeria’s approach to eco-friendly initiatives”.

Similarly, Nwangwu said, its strategic approach combines financial expertise with a profound understanding of environmental and social impact, positioning the firm as a catalyst for positive change in the country’s transportation sector.

He added that the  cornerstone of Independent Capital’s visionary plans involves the unbundling of its three-wheeler Electric Vehicle (e-trike) which signals a significant move towards eco-conscious mobility.

 The CEO further said that the company is committed  to establishing a robust network of solar-powered charging infrastructure to support the operations of its e-trike fleet as the  innovative strategy not only tackles the obstacles associated with adopting electric vehicles but  would also actively contribute to the establishment of a sustainable energy ecosystem.

“We are dedicated to reducing carbon emissions, alleviating congestion and improving the overall quality of transportation for the Nigerian population. Independent Capital aims to create a greener and more efficient transportation ecosystem that enhances the lives of individuals and contributes to a cleaner environment, “he noted.

According to the firm’s CEO, in response to the recent removal of fuel subsidies, the Nigerian market is experiencing a fundamental shift, creating an opportune moment for innovative solutions in the e-mobility sector which “Independent Capital is well-positioned to capitalize on this shift by introducing sustainable transportation alternatives that cater to the evolving needs of the market”.

Also, speaking, the Chief Finance Officer (CFO) of the company, Mr.Moses Saromi said “with the e-mobility sector undergoing significant developments, driven by environmental concerns, technological advancements and shifting government policies our firm is poised to play a pivotal role in shaping the future of transportation in Nigeria,”

He revealed that  the demand for e-mobility solutions in Nigeria is projected to grow exponentially by 15% CAGR and thus, Independent Capital stands at the forefront of providing sustainable alternatives to traditional vehicles and that with  a focus on e-trikes, the company strategically positions itself to capture a significant share of the expanding market to  meet the diverse needs of individual consumers and delivery services to the Nigerian society.

He added that in  the pursuit of a cleaner and more efficient transportation ecosystem, Independent Capital remains a driving force in the nation’s journey towards a greener future.

Continue Reading

Business News

Dangote Refinery Port Facility Receives Maiden Crude Cargo

Published

on

Share

Dangote Petroleum Refinery and Petrochemicals plant has purchased 1 million barrels of Agbami crude grade from Shell International Trading and Shipping Company Limited (STASCO), one of the largest trading companies in Nigeria as well as globally, trading over 8 million barrels of crude oil per day.

The STASCO cargo contained 1 million barrels from Agbami and sailed to Dangote Refinery’s Single Point Mooring (SPM) where it was discharged into the refinery’s crude oil tanks.

The maiden 1 million barrels, which represent the first phase of the 6 million barrels of crude oil to be supplied to Dangote Petroleum Refinery by a range of suppliers, should sustain the initial 350,000 barrels per day to be processed by the facility.

The next four cargoes will be supplied by the NNPC in two to three weeks and the final of the six cargoes will be supplied by ExxonMobil.

This supply will facilitate the initial run of the refinery as well as kick-start the production of diesel, aviation fuel, and LPG before subsequently progressing to the production of Premium Motor Spirit (PMS).

This latest development will play a pivotal role in alleviating the fuel supply challenges faced by Nigeria as well as the West African countries.

Designed for 100% Nigerian crude with the flexibility to process other crudes, the 650,000 barrels per day Dangote Petroleum Refinery can process most African crude grades as well as Middle Eastern Arab Light and even US Light tight oil as well as crude from other countries.

Dangote Petroleum Refinery can meet 100% of the Nigeria’s requirement of all refined products, gasoline, diesel, kerosene, and aviation jet, and also have surplus of each of these products for export.

The refinery was built to take crude through its two SPMs located 25 kilometres from the shore and to discharge petroleum products through three separate SPMs. In addition, the refinery has the capacity to load 2,900 trucks a day at its truck loading gantries.

Dangote Refinery has a self-sufficient marine facility with the ability to handle the largest vessel globally available. In addition, all products from the refinery will conform to Euro V specifications.

The refinery is designed to comply with US EPA, European emission norms, and Department of Petroleum Resources (DPR) emission/effluent norms as well as African Refiners and Distribution Association (ARDA) standards.

President of Dangote Group, Mr. Aliko Dangote stated: “We are delighted to have reached this significant milestone. This is an important achievement for our country as it demonstrates our ability to develop and deliver large capital projects. Our focus over the coming months is to ramp up the refinery to its full capacity. I look forward to the next significant milestone when we deliver the first batch of products to the Nigerian market.”

Country Chairman of Shell Companies in Nigeria, Mr. Osagie Okunbor stated: “We welcome the startup of a refinery that is designed to produce gasoline, diesel, and low-sulphur fuels for Nigeria and across West Africa and are happy to be enabling it.”

Continue Reading

Read Our ePaper

Top Stories

NEWS6 hours ago

FCT HOS: Why President Tinubu Extends Atang’s Tenure By 6 Months

ShareBy Laide Akinboade, AbujaPresident Bola Ahmed Tinubu, has approved the extension of Atang Udo Samuel, as the the Head of...

NEWS6 hours ago

FGGC Benin Emerges Winner of 2023 National Senior Secondary Schools’ Debate

ShareBy Tony Obiechina, AbujaThe Federal Government Girls College, Benin has emerged overall winner of the 2023 National Senior Secondary Schools’...

NEWS6 hours ago

We’re Meeting Our Targets on Airport -Kuje Road Construction – Wike

ShareBy Laide Akinboade, AbujaThe Minister of the Federal Capital Territory (FCT), Mr Nyesom Wike, haom Wednesday,  expressed satisfaction with the...

NEWS6 hours ago

Osun to Partner FG on Culture, Tourism Development

ShareFrom Kunle IdowuGovernor Ademola Adeleke has secured a partnership deal with the Ministry of Tourism on the development of tourism...

POLITICS6 hours ago

I Didn’t Call for Ganduje’s Resignation – Alia

ShareFrom Attah Ede, MakurdiGovernor Hyacinth Alia of Benue has denied calling for the resignation of Alhaji Abdullahi Ganduje, the All...

POLITICS6 hours ago

Mutfwang Meets PDP North Central Leadership Calls for Unity among Officials

ShareFrom Jude Dangwam, JosThe Executive Governor of Plateau State, Barrister Caleb Manasseh Mutfwang has called for unity a purpose among...

POLITICS7 hours ago

FG Seeks Swedish Govt Support on Technical Education

ShareBy Tony Obiechina, Abuja The Federal Government is seeking the support of the Swedish Government to help drive its ongoing...

Metro7 hours ago

FG Declares March 29, April 1, Public Holiday to Mark Easter Celebration

ShareThe Federal Government has declared Friday, March 29, and Monday, April 1, as public holidays to mark the Easter celebration.This...

NEWS7 hours ago

Nigeria Prepared to Expedite Sustainable Dev’t in Collaboration with Partners — Tinubu

SharePresident Bola Tinubu yesterday said his administration is committed to deepening democracy by ensuring adherence to the rule of law...

NEWS7 hours ago

Police Engage Bandits in Gun Battle, Kill two, Arrest One in Benue

ShareFrom Attah Ede, Makurdi Men of the Benue State Police Command yesterday engaged bandits in gun duel in Mba-Mtsar village,...

Copyright © 2021 Daily Asset Limited | Powered by ObajeSoft Inc