The Federal Government of Nigeria is responsible for 80% of the country’s debt profile of N25.7 trillion, which comprises of 68% or N17.48 trillion domestic borrowing, and 32% or N8.22 trillion external debt, according to the Debt Management Office (DMO).
“As of June 2019, our debt profile was N25.7 trillion. This includes the Federal and State Governments and the Federal Capital Territory. We call it the total public debt. Out of this total, the Federal Government is responsible for 80% of the debt,” Patience Oniha said.
According to Punch, the Director-General of the DMO, Patience Oniha, while addressing the House of Representatives Committee on Public Accounts yesterday, said the funds were paid directly to the Central Bank of Nigeria (CBN), which ensured the money was used appropriately, fitting the purpose it was borrowed for.
According to the DMO boss, public debt currently stands at 25% of Gross Domestic Product (GDP). She said that the DMO serves as an advisory body to the Federal Government on debt management.
Oniha, explaining the debt situation, disclosed that over 85% of the country’s budget deficit was funded through borrowings sourced from different multilateral organisations as approved by the Federal Executive Council. She also said the DMO had helped the country secure debt relief.
“The DMO began operation in 2000 due to Nigeria’s debt management problems, which made the country to seek debt relief. If you look back several years, over 85 per cent of budget deficits are funded by borrowing, which the DMO undertakes as approved by the Federal Executive Council and the National Assembly.
“We borrow from various sources such as the multilateral, the World Bank, the Islamic Development Bank, the African Development Bank, the China-EXIM and we also issue products in the international market. Locally, we are also very active in domestic borrowing; we issue treasury bills and Federal Government Treasury Bonds,” said Patience Oniha.
However, Wole Oke, the Chairman of the Committee, reiterated the importance of having all the relevant information documented due to the statements made by the Minister of Finance, Zainab Ahmed concerning the challenges facing revenue generation for the 2020 budget.
The chairman said that the committee had made it a priority to monitor the Ministries, Departments and Agencies (MDAs) to stop abuse of the law in the area of revenue generation and remittances. He also emphasized on the need for MDA transparency and accountability in spending generated revenue.
The conundrum in the retail pricing of PMS
Considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol.
The decision of the Petroleum Products Pricing Regulatory Agency (PPPRA) to reduce the pump price of Premium Motor Spirit (PMS), also known as petrol, to N121.50 per litre from N123.50 per litre has been met with stiff resistance from oil marketing companies (OMCs). The Independent Petroleum Marketers Association of Nigeria (IPMAN) have also stated that it impossible for its members to sell petrol at the new price floor of N121.5 per litre.
We recall that on 18 March 2020, the Federal Government (FG) reduced the retail price of Premium Motor Spirit (PMS) by c.14% to N125/litre from N145/litre, following the global pandemic which led to an unprecedented decline in oil prices and by extension a reduction in the landing cost of petrol. Subsequently, the FG announced a further reduction to N123.50 which took effect on April 1, 2020. Earlier this month, the FG directed a reduction in the pump price of Premium Motor Spirit (PMS) for the third time to N121.50 per litre. We note that the adjustments in the retail price is in line with the directive from PPPRA on a monthly review of the pump price, depending on prevailing market realities.
In our view, considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol. With the gradual relaxation of lockdown measures by countries who are starting to reopen their economies alongside the historic production cuts of OPEC+ which took effect last month (a 9.7mb/d oil production cut for May and June), we think the risks to oil prices are tilted to the upside in the near term.
Since hitting a two-decade low of US$19.33 on 21 April when the retail price of petrol was pegged at N123.50, brent crude prices have gained c.105% to close at US$39.54 on 3 June. Against this backdrop, we expect that the retail price of petrol should rather be adjusted upwards to reflect current market realities. The current situation appears no different from historical trends where the FG becomes reluctant to effect an upward adjustment in the retail price of petrol during periods of rising crude prices. This has often resulted in the renewed payments of the age-long fuel subsidy. We also think oil marketing companies (OMCs) who have only recently begun to import petrol alongside the Nigerian National Petroleum Corporation (NNPC) due to more favourable pricing could halt importation once again if domestic retail prices become unfavourable.
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NLC hastens House of Reps to criminalise casualization of workers
NLC has appealed with Speaker of the House of Representatives to hasten the labour act amendment and put an end to the casualization of workers.
The Nigerian Labour Congress (NLC) has appealed to Femi Gbajabiamila, Speaker of the House of Representatives to hasten the labour act amendment and put an end to casualization of workers.
He added that when amending the Labour Act, labour unions should be made more independent and every Nigerian worker should be allowed to join the union of his choice.
According to the NLC Chairman, Mr Ayuba Wabba, the prevalent practice of casualising workers has become a form of ‘modern day slavery’ and should be ended through legislation, NAN reports.
Wabba, who visited the Speaker, alongside other members of the NLC leadership urged the green chambers leader to strengthen the union through its legislations, as can be seen in other countries.
Gbajabiamila assured the congress leaders that the house of representatives is willing to work with the union, in line with its motto “Nation Building, a Joint Task”.
He noted that the House of Representatives already has plans to amend the Labour Act, and urged the union leaders to speedily bring in their input as time is of essence.
“You should do that on time because time is of the essence so that we pass it very quickly,” Gbajabiamila said.
He assured them that strengthening the NLC, which happens to be an umbrella body of unions in the formal and informal sector, is key as it would encourage a stronger democracy in the country protecting the interest of Nigerians.
What you should know
Casualisation is the practice of employing temporary staff for short periods and is often aimed at saving costs.
The Labour Act (Amendment) Bill 2019 awaiting second reading by the House proposes criminalising employing of workers on casual contracts beyond six months. It also proposes that any casual workers sacked by an employer after six months will be entitled to the benefits of full-time workers for six months, and prohibits outsourcing to third parties.
Lekki regional road: Sanwo-Olu revokes land titles of Elegushi Royal family
Babajide Sanwo-Olu to reclaim the encroached alignments of the Lekki Regional Road, the state government has revoked the land titles
In line with the order from Lagos State Governor, Babajide Sanwo-Olu, directing the Ministry of Physical Planning and Urban Development to reclaim the encroached alignments of the Lekki Regional Road, the state government has revoked the land titles and planning approval on sections of Elegushi Royal Family land.
The affected sections of the land fall within the designated Right-of-Way (RoW) of the road which is about to be constructed.
According to the Commissioner for Physical Planning and Urban Development, Dr. Idris Salako, the revocation is meant to remove all impediments to the ongoing construction.
“The part of the Elegushi Chieftaincy Family layout, which falls within 29 coordinates in the 500 hectares approved for the family in the 1991 Lagos Metropolitan Master Plan, was found in the alignment” he explained.
“Consequently, take notice that by virtue of Section 21(1) (a) of Lagos State Urban and Regional Planning and Development Law, 2015, I hereby revoke in part, a section of Elegushi Chieftaincy Family Layout that falls within the established coordinates.”
Salako noted in his statement that the ministry is acting on the governor’s orders to mop out all structures including private housing estates and shanties that encroach the Right of Way, and invoking the necessary sections to cancel the planning approval on layout captured in the affected coordinates.
Sanwo-Olu had flagged off the construction of the 8.75 kilometer-long road on Saturday, and given the supervising ministry the orders to reclaim the alignments that were gazetted for the road.
As part of the Lagos Metropolitan Master Plan, the road is a precursor to the proposed fourth mainland bridge, which the governor has said will start in early 2021.