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NNPC and 49 oil firms owe NDDC accumulated remittances of N1.2 trillion

The NNPC and other 49 oil firms are owing the Niger Delta Development Commission (NDDC) a remittance of N1.2tn in the form of unpaid dues.

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NNPC, IJV model, JV

The Nigerian National Petroleum Corporation (NNPC) and other forty-nine oil firms are owing the Niger Delta Development Commission (NDDC) an accumulated remittance of N1.2 trillion in the form of unpaid dues.

The disclosure was allegedly made by the firm responsible for the collection of the unremitted statutory dues on behalf of NDDC, Paris Trust Limited, on Wednesday in Abuja. According to Paris Trust Limited, all the oil firms have been served letters to that effect since July 26, 2019.

[READ MORE: NDDC begins payment of N20 million to contractors]

Further details: NDDC through its principal partner, Timothy Bagwams, revealed that majority of the firms have failed to remit the statutory 3% of their annual budgets to the Commission since 2015, and this is largely affecting development in the region.

According to Bagwams, the developmental activities of the Commission are funded by monies paid by Government and oil firms in the region, stressing that the failure by these firms to pay up dues means the Commission can only achieve little in addressing the developmental needs of the Niger Delta region.

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Bagwams further disclosed that the NDDC had asked the Federal Government and all the oil and gas firms operating in the region to fulfil their financial statutory obligations to the Commission by remitting all their outstanding remittances to its coffers.

“As I speak with you, the companies are owing NDDC more than N1.2 trillion, and this is why the Commission is achieving little in addressing the developmental needs of the region.”

“Since 2015, the Federal Government has not been remitting its statutory 15% of the total monthly statutory allocations due to member states of the Commission from the Federation Account as well as the 50 per cent of monies due to member states of the Commission from the Ecological Fund.”

“The 15%, according to the provisions of Section 14(2) (a) and (c) of the Niger Delta Development Commission (Establishment, ETC) Act, 2014 represents the contribution of the Federal Government to the Commission.”

[READ MORE: N330 billion Fine: MTN in fresh mess after FIRS queries tax deduction]

Indebted oil firms: Some of the indebted firms listed by NDDC include the NNPC, National Liquefied Natural Gas (NLNG),C, Shell and Agip. Others are Pan Ocean Oil, Petro Bas, Seplat, Moni Pulo Petroleum Development, South Atlantic Petroleum and Zenon, Slumberger and First Exploration, Dubri Oil Company Limited, among others.

In the meantime, the NNPC has confirmed the non-remittance of dues. In its reaction, the NNPC’s General Manager, Group Public Affairs Division, Mr Ndu Ughamadu, confirmed that the Corporation is indeed owing NDDC. He, however, stated that NNPC had started repaying the debts.

“There is nothing wrong in being indebted to someone or an organisation. We are indebted to NDDC, but we reached an agreement with them (NDDC) on repayment and we have started the repayment few months ago.”

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Coronavirus

Smartphone to be used for daily tracking of first set to receive COVID-19 vaccine

Essential workers would get daily text messages on their smartphones enquiring about the side effects.

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Smartphone to be used for daily tracking of first set to receive COVID-19 vaccine

The first set of Americans who get the doses of the first Covid-19 vaccines will be closely monitored by the US Centers for Disease Control and Prevention (CDC) through daily text messages and emails from their smartphones.

This disclosure was made by a federal advisory group on immunization practices during a meeting.

A CDC immunization expert, Tom Shimabukuro, at a meeting of the CDC’s Advisory Committee on Immunization Practices, said that essential workers, who were expected to be the first recipients, would get daily text messages on their smartphones enquiring about the side effects in the first week after they get the shot, and then they would be contacted weekly for 6 weeks.

READ: Polio Debt: Gates Foundation agrees to repay Nigeria’s $76m debt.

Shimabukuro disclosed that those essential workers could be as much as about 20 million people.

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Janell Routh, a CDC medical officer revealed that the advisers also discovered that the CDC and the US Defense Department have set up technical assistance teams to help state and local jurisdictions develop and implement distribution plans, which are due for review and approval by October 16.

While addressing the panel, Routh said, “We are asking states to think broadly. In their plans, I think they should have contingencies for whether there’s an ultra-cold product only or whether there’s more than one vaccine available.”

READ: Official: Japaul confirms it is pulling out of Milost deal

This meeting is coming up at the time when some prominent voices like Bill Gates have expressed their distrust for CDC under its current leadership over their rush for vaccine development which has political undertones.

This is as polls conducted in the past 2 months revealed that majority of Americans expressed worry over the rush in vaccine development and a third wouldn’t get inoculated.

Shimabukuro said the quick detection of safety signals was of paramount importance, while also noting that the data gathered could provide reassurance if no safety concerns were detected.

READ: NCC sanctions Airtel, 9mobile for misconduct

While responding to a question over public safety concerns, Shimabukuro said there would be a chance to opt out of the smartphone program. He, however, pointed out that those who had opted out could also decide to opt back in at a later time.

The head of the panel’s Covid-19 vaccines working group, Beth Bell, said that the advisory group would counsel Robert Redfield, the CDC Director, on how best to get a Covid-19 vaccine to Americans. A vote on specifics though, won’t occur until after the U.S. Food and Drug Administration takes action on a vaccine.

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READ: How the proposed minimum wage will affect those earning above N30,000

The committee is made up of 15 voting members, who are mostly medical experts and academics, as well as government and medical industry representatives.

Every jurisdiction is “heavily involved right now in planning” and have been for some time, Routh said. It’s unclear whether states will know which vaccine could be first available. Each has different storage requirements with some needing extremely cold storage.

READ: China’s Covid-19 vaccine may be ready for general public in November 2020

Kathleen Dooling, a CDC epidemiologist who presented to the immunization panel last month, said 10 to 20 million vaccine doses would be available in November if a vaccine is approved before then.

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Business

CBN gives up on its policy of attracting dollars

CBN has given up its policy of attracting ‘hot money’ as it selects an alternative way to fight inflation.

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Godwin Emefiele, CBN expands scope of regional banks in Nigeria, gives compliance timeframe

The Central Bank of Nigeria (CBN) issued a monetary policy communique explaining why it cut its monetary policy rate from 12.5% to 11.5%, the first drop since May 2020 when it slashed MPR from 13.5% t0 12.5%. The cut in rates means it is no longer targeting foreign investor inflow as a basis for keeping the exchange rate stable.

The CBN has held MPR high for years due to high inflationary pressures believing that higher MPRs could lead to a lower inflation rate. However, the Covid-19 pandemic and the increased price of fuel and electricity suggest this is a battle already lost via hawkish monetary policy.

Explore the Nairametrics Research Website for Economic and Financial Data

What they are saying: According to the bank, it believes the higher inflation Nigeria is facing is not due to monetary policy but due to “causal factors” which are outside of its immediate control.

“In the view of the MPC, so far, evidence has not supported the rising inflation to monetary factors but rather, evidence suggests nonmonetary factors (structural factors) as the overwhelming reasons accounting for the inflationary pressure,” the CBN stated.

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READ: CBN offers N1.1 trillion intervention fund to support real, health sectors

The structural factors the CBN is referring to are rising in prices of fuel and electricity as well as cost increases emanating from the devaluation of the naira.

“Accordingly, the implication is that traditional monetary policy instruments are not helpful in addressing the type of inflationary pressure we are currently confronted with,” the CBN added.

These issues mean the CBN faces a quagmire in how to combat inflation as the traditional measures it has typically deployed might not work effectively.

READ: Nigerian banks have written off N1.9 trillion impaired loans in past 4 years

Forgo hot money:  The apex bank toyed with increased MPR to combat the high inflation rate but opined that doing so could lead to an even deeper recession despite the benefits of attracting foreign capital.

“The Committee noted that the likely action aimed to addressing the rise in domestic prices would have been to tighten the stance of policy, as this will not only moderate the upward pressure on prices but will also attract fresh capital into the economy and improve the level of the external reserves. It however, noted that this decision may stifle the recovery of output growth and thus, drive the economy further into contraction.”

READ: CBN Vs NESG: Waving the white flag for the benefit of Nigerians

In 2017, the CBN adopted a hawkish monetary policy stand of increasing MPR and offering interest rates as high as 18% via its open market operations bills.

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  • The policy helped attracted billions of dollars in capital rising to as high as $13.4 billion in 2019. It dropped to as low as $332 million in the second quarter of 2020.
  • Foreign investors have basically stopped inflowing forex into the control as yields have crashed and repatriating it is now a major challenge.

READ: Nigeria’s inflation rate jumps to 12.82%, highest in 27 months

The other option: Deciding against increasing MPR means the CBN had to consider a dovish policy, which requires that they cut monetary policy rates and intervene in sectors of the economy that can address the supply side factors it cited. Supply-side factors are price-related increases emanating from high production, storage, and distribution cost of finished goods and services meaning that price will remain high despite stable or lower demand.

“On easing the stance of policy, the MPC was of the view that this action would provide cheaper credit to improve aggregate demand, stimulate production, reduce unemployment, and support the recovery of output growth. Members were of the opinion that the option to lose will complement the Bank’s commitment to sustain the trajectory of the economic recovery and reduce the negative impact of COVID-19. In addition, the liquidity injections are expected to stimulate credit expansion to the critically impacted sectors of the economy and offer an impetus for output growth and economic recovery,” the CBN stated.

READ: Labour sets September 30th as deadline to go on strike

What this means: By dumping inflation targeting from the demand side, the CBN is betting that spending money on stimulus programs will pay off down the road as cheaper long term credit will reduce cost of goods and services and will eventually reflect in the lower inflation rate.

  • The CBN did not state where it sees the inflation rate and when it will drop to its new target by relying on supply-side management as strategy.
  • The downside of this strategy is that there is very little impetus for foreign investors to purchase CBN securities at very low-interest rates.
  • This shuts the door to the reliance of foreign portfolio inflows to shore up dollar reserves leaving us with investors who may want to return to the stock market.
  • If oil prices fail to pick up and foreign investor inflow is not forthcoming, then there will likely be heavy pressure on the CBN effectively worsening things.

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Business

De facto Government: CBN explains why it will keep funding the economy

The Central Bank of Nigeria provided reasons why it will keep spending on development activies such as its intervemtion funds in the agricultural and energy sectors.

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CBN website states oil price is still $61, Naira under pressure as Nigeria records poor export earnings, 4 key sectors the CBN plans to pump money into

The Central Bank of Nigeria provided reasons why it will keep spending on development activities such as its intervention funds in the agricultural and energy sectors. The central bank has carried on as a form of de facto government in recent years particularly in the Covid-19 months, funding several developmental activities and sectors in the economy.

The explanation was provided in its monetary policy communique read out by the CBN Governor, Godwin Emefiele following the end of the monetary policy committee meeting held on Tuesday.

READ: Despite COVID-19, top Nigerian Banks declare N36.7 billion dividends

According to Mr. Emefiele, it will keep spending because the Federal Government is currently incapable of funding development programs because it is facing revenue shortfalls. The CBN reckoned that the economy is faced with likely stagflation (a combination of an economic recession and high inflationary environment) even as Nigerians still have to deal with an increase in fuel and energy prices. It opined that it had to work harder to combat the pressure the price increases will have on Nigerians.

“The Committee was therefore of the view that to abate the pressure, it had no choice but to pursue an expansionary monetary policy using development finance policy tools, targeted at raising output and aggregate supply to moderate the rate of inflation.

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“At present, fiscal policy is constrained and so cannot, on its own lift the economy out of contraction or recession given the paucity of funds arising from weak revenue base, current low crude oil prices, lack of fiscal buffers and high burden of debt services.

Explore the Nairametrics Research Website for Economic and Financial Data

“Therefore, monetary policy must continue to provide massive support through its development finance activities to achieve growth in the Nigerian economy. This is the reason MPC will continue to play a dominant role in the achievement of the goals of the Economic Sustainability Program (ESP) through its interventionist role to navigate the country towards a direction that will boost output growth and moderate the level of inflation.”

As part of its plans to inject stimulus into the economy, the central bank committed to a stimulus package of about N1.1 trillion through the government’s Economic Sustainability Plans revealed in June.

READ: Banks lay-off 2,477 staff during lock-down

CBN to the rescue: Over the last few months the CBN has been at the forefront of leading developmental activities in the country despite overseeing monetary policy and not fiscal policy.

  • The role it is currently playing should be that of the Ministry of Finance, but with government revenue on decline, it believes it has no choice but to come in as a spender of last resort.
  • The CBN through its development finance responsibilities has the powers to fund activities in the economy that it believes will create jobs and reduce the inflation rate.

READ: UK financial institution to put $5 billion to work in Nigeria, others 

But more recently, it has been criticized for expanding its balance sheets and playing too big a role in backstopping nearly all major developmental programs of the Buhari administration.

  • The CBN is currently spending trillions funding the agricultural sector
  • It has also set aside hundreds of billions of naira in funding SME’s through NISRAL and partner microfinance banks
  • There is also several targeted private sector spending in the areas of power, healthcare, real estate, entertainment etc.

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