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Nigeria Records N125.5bn Oil Revenue Shortfall in Q1

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By Mathew Dadiya, Abuja

Nigeria has started feeling the impact of the COVID-19 on the global oil price as the country recorded a princely N125.52 billion drop in oil revenue in the first quarter of 2020.

The shorfall represented 31% of the prorated amount that is supposed to have been realized by the end of that first quarter.

 

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed disclosed this on Thursday while briefing State House Correspondents after the National Economic Council (NEC) meeting at Presidential Villa, Abuja.

The Minister said that the net oil and gas revenue and influx to the federation account in the first quarter of 2020 amounted to N940.

91billion.  

Mrs Ahmed regretted that the COVID-19 has resulted in the collapse in oil prices saying that it will impact negatively on the nation’s economy and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings. 

According to her, 40% of the population in Nigeria, today, are classified as poor – the crisis will only multiply this misery.  

Worried by this indication, the Minister pessimitically said that the could could dip into a recession this year due to the ravaging effect of the Covid-19 on the global economy.

The Minister said: ”The economic growth in Nigeria, that is the GDP, could in the worst case scenario, contract by  as much as –8.94% in 2020.  But in the best case,   which is the case we are working on, it could be a contraction of –4.4%, if there is no fiscal stimulus.  

”But with the fiscal stimulus plan that we are working on, this contraction can be mitigated and we might end up with a negative –0.59% .

”The National Bureau of Statistics (NBS) has made an assessment, so it is the NBA assessment that Nigeria will go into a recession measuring at an average of -4.4%. But with the work that the Economic Sustainability Committee is doing bringing stimulus packages, we believe that we can reduce the impact of that recession. And if we applied all that have been proposed and we are able to implement it we may end up with a recession that is -0.4 per cent. In any case, we will go into recession but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it come 2021. 

”As a result of that the President set up the Presidential Economic Sustainability Committee in addition to the COVID-19 Response Committee that has been set up, the Presidential Task Force that is chaired by the SGF as well as the Crisis Management Committee that I chair. ”

The minister explained that the FG is committed to supporting the financial viability of states, including the suspension of payments in respect of commitments, debts that have been secured with ISPOs by the states at the federal levels.  

”So, we have already implemented suspension of deductions of a number of loans that have been taken by the states from April and also in May, ” she said.

“The Economic Sustainability Committee is responsible for providing overall strategic vision, policy direction and general oversight of the implementation amongst others”, the minister said. 

”We also had discussions with the World Bank.  The World Bank Country Director was invited into the meeting and he spoke to the meeting in respect of their assessment of the impact of COVID-19 on the economy and also their review of the measures that government has taken.  

”As you know, some of these measures include the N500billion that the president has approved to support healthcare facilities and provide relief to tax payers as well as incentives that would be provided to employers to retain and recruit staff during the lockdown period. 

”This package also includes the increase in the social register by one million households to 3.5million for cash transfer programmes and palliatives and other social safety net programmes. 

”The World Bank maintains that the impact of the COVID-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession.  The World Bank planned a proposed package for immediate fiscal relief for the FG.  This will also involve policy-based policy budget support for the FG, focusing on measures to maintain macro financial stability and create fiscal space for proposed stimulus. 

”The World Bank package has also got a proposal of $1.5billion for the states and this package will be dedicated to the states.  And it will be a programme for results which the states are already used to implementing, ”she said.

Mrs Ahmed also disclosed that the immediate fiscal relief for the states, will include the acceleration of an existing programme to enable disbursement by end of September.  

She added that the proposed $1.5billion plan will by end of September, would have been disbursed to the states.  

”We are looking at an average of between N150billion to N200billion based on the plan to the 36 states.  These are states that have already made some particular commitments and achievements so that they will be able to get immediate disbursements of parts of these funds., ” she explained.      

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Oil & Gas

Why we are Recording Increased Oil Production – Edun

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The Federal Government says improved security in the Niger-Delta is responsible for the increased crude oil production to 1.65 million barrels per day as against the 1.25 million bpd previously recorded.

Mr Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, stated this in Abuja at a Podcast hosted by Bruit Costaud in collaboration with Ballard Partners of U.

S.A.

Reports says the immediate past Minister of Information and Culture, Alhaji Lai Mohammed is the Managing Partner of Bruit Costard, a lobbyist and public relations firm and an affiliate of Ballard Partners.

According to Edun, the quickest way to get revenue for critical infrastructure is to shore up oil revenue.

“This is quickest way of giving the government the needed revenue to address our urgent needs.

“The government doesn’t have enough revenue for critical infrastructure and social services which are crucial to Nigerians now.

“The prices are still elevated and as you know in June 2023, the oil production and sales were roughly 1.25 million barrels per day.

“Now, it is up to 1.65 million barrels per day, that is one source of bringing in dollars and revenue into the government coffers that is non-inflationary,’’ Edun said.

Edun added that non-oil revenue as well as revenues from taxation were also critical to government.

“If you know about Mr President’s antecedent, the first thing he did in Lagos as governor was to get hold of the revenue.

“What he did was to deploy digitisation.  He used the latest technology to block the leakages and to improve the efficiency of monitoring and collection.

This is exactly the same thing we are doing at the federal level now.

“The revenue of the Federal government has been totally revamped.

“There has been application of technology to ensure what is due to the federal government, particularly from its various revenue-earning arms,  agencies,  companies, and enterprises is not taken,’’ he said.

The minister said that plans were ongoing to give incentives to small, medium and larger businesses. (NAN)

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Oil & Gas

Dangote Petroleum Refinery Begins Production of Diesel, Aviation Fuel – Official

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Dangote Petroleum Refinery has commenced production of diesel and aviation fuel.

Mr Anthony Chiejina, Group Head, Corporate Communications, Dangote Group, confirmed this in a statement to newsmen in Lagos.

Chiejina quoted the President of Dangote Group, Alhaji Aliko Dangote, to have elatedly thanked President Bola Ahmed Tinubu for his support, encouragement and thoughtful advice towards the actualisation of this project.

Dangote also thanked the Nigerian National Petroleum Company Ltd.

, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and Nigerians for their support and belief in the historic project.

According to him, “We thank President Tinubu for his support and for making our dream come true.

“This production, as witnessed today, would not have been possible without his visionary leadership and prompt attention to details.

“His intervention at various stages cleared all impediments, thereby accelerating the actualisation of the project.

“We also thank the NNPCL, NUPRC and NMDPRA for their support.

“These organisations have been our dependable partners in this historic journey.

“We also thank Nigerians for their belief and support in this project,” he said.

Dangote said: “We have started the production of diesel and aviation fuel, and the products will be in the market before the end of the month.

“This is a big day for Nigeria. 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.

“This is a game changer for our country, and I am very fulfilled with the actualisation of this project.

“The refinery has so far received six million barrels of crude oil at its two SPMs located 25 kilometres from the shore.

“The first crude delivery was done on Dec. 12, 2023, and the 6th cargo was delivered on Jan. 8, 2024,” he added.

He said that the refinery can load 2,900 trucks a day at its truck-loading gantries.

He added that the products from the refinery will conform to Euro V specifications.

Dangote boss said that the refinery design complies with the World Bank, US EPA, European emission norms, and Department of Petroleum Resources (DPR) emission/effluent norms. State-of-the-art technology.

“I must extend our sincere appreciation to our Bankers and financiers, both local and offshore, who demonstrated a great deal of patience, in seeing us through many difficult times.

“In the same vein, we thank the Government of Lagos State, under the leadership of Babajide Sanwo-Olu, who has been incredibly proactive in ensuring that the many challenges we encountered in the course of executing this project were quickly resolved.

“I thank him immensely.

“I also sincerely thank our host communities and their traditional leaders for their sustained patience, forbearance, and admirable willingness to work with us to find amicable and win-win resolutions to the many issues we have had to deal with as the construction of this huge facility progressed.

“Our staff have also contributed so immensely to the success of this project. I thank them profusely,” Dangote added.(NAN)

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Oil & Gas

Refinery Rehab: Don’t Expect Immediate PMS Price Crash, Experts Tell Nigerians

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Some Oil and Gas Experts have said that the coming on stream of both Port Harcourt and Dangote refineries may lead to some marginal reduction in the cost of petroleum products and not a significant price crash.

The experts made this known in an interview on Sunday in Abuja.

According to them, some ancillary costs such as freight and port charges, among others would have been eliminated to achieve the marginal reduction.

The Federal Government had on Dec.

21, announced the mechanical completion and flare start-up of the Port Hacourt Refining Company Limited (PHRC) and the subsequent streaming of its phase two in 2024.

This, according to the Minister of State Petroleum (Oil), Sen.

Heineken Lokpobiri, will herald the commencement of the production of petroleum products after the Christmas break.

The PHRC comprised of two refining units, with the old plant having a refining capacity of 60,000 barrels per day (bpd) and the new plant 150,000 bpd, both summing up to 210,000 bpd.

Reacting to the development, an Associate Professor of Energy and Natural Resources, University of Abuja, Olanrewaju Aladeitan, said there should be some marginal reduction in petrol prices as some ancillary cost would have been eliminated.

However, he explained that the price of petroleum products may not come down significantly as to describe it as crashing.

“The price may not come down significantly considering the fact that crude oil and condensates supply for the domestic market under the Petroleum Industry Act is going to be based on a willing supplier and a willing buyer basis.

“And the fact that the supply of crude oil will be commercially negotiated having regard to prevailing international market price for similar grades of crude,” he said.

With this provision, he said there would be no dedicated percentage of crude for local refineries.

“Hence international market price which of course is denominated in dollars will still be the determinant of cost of the crude oil that would be refined.

“So I do not see how the price of Petroleum products will crash,” Aladeitan said.

Also speaking, Mr Yushau Aliyu, an Economic Expert, said reaching to a mechanical test of the refinery after a very long fruitless effort was an indication that part of our refined Premium Motor Spirit (PMS) deficit would be attended.

Aliyu described it as a good signal of recovering in the forex deficit which dominated the dwindling liquidity crisis.

“In addition, the new Nigerian National Petroleum Company Limited (NNPC Ltd.) is responding to the immediate solution for availability of PMS in the economy.

“We are expecting the NNPC Ltd.’s retail stations to reduce their pump price due to absence of landing cost in the short term effects,” he said.

Another oil and gas expert who preferred to remain anonymous said it was obvious that some people in the oil and gas sector were engaged in an act of sabotage.

He frowned at the situation where the government preferred to spend so much, including foreign currency, to import fuel, rather than fix it refineries.

“They claim that the 60,000 barrels capacity refinery in Port Harcourt is back on stream, while the 150,000 barrels capacity will work soon.

“We are waiting to see them work, including that of Warri and Kaduna. When they are put to use, let’s see why fuel prices will not crash,” the expert said.

NAN reports that pump price of PMS has increased to N660 per litre at various fuel stations, while NNPC Ltd.’s retail outlets sell at N617 since the removal of subsidy in May 2023 due to high crude cost and high foreign exchange rate.

The after effect of the removal and high cost of fuel brought untold hardship and suffering on Nigerians due to inflation, increase in goods and services, among others. (NAN)

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