The Nigerian Senate is to set take away the ownership and responsibility of road construction, rehabilitation and maintenance from the Federal Government with a newly introduced bill.
The Chairman, Senate Committee on Federal Roads Maintenance Agency (FERMA), Senator Gershom Bassey, disclosed this in an interview in Abuja on Sunday. He added that if passed and signed into law by the President, the responsibility of road construction, rehabilitation and maintenance would be the duty of foreign and local investors.
According to Gershom Bassey, the PDP Senator representing Cross River South Senatorial District, the legislation was a no brainer as it was clear that the Federal Government was experiencing serious challenges carrying out this duty. Over the years, roads all over the country had gone terribly worse due to lack of maintenance by the various Governments, who are in charge.
Meanwhile, Mr Bassey, while speaking on the amendment of the Federal Road Maintenance Agency (FERMA) Act, said the Act stipulates that the Petroleum Products Pricing Regulatory Agency to remit 5% of its pump price template to FERMA, Punch reported.
However, the Senate disclosed that since 2007 till date, the accumulated sum, which has not been remitted by the PPPRA, is about N870 billion. He added that the lawmakers were fully convinced the Federal Government was incapable of fixing roads across the country with the funds from the yearly budget.
“The PPPRA has not remitted any amount to FERMA or to the state agencies since the law was signed. The last figure we had when we started our investigation was that the unremitted funds had accumulated to N870bn which is due to both FERMA and the states’ road agencies.
“We must find a solution. The new legislation that the Senate is working on now seeks to move road construction and maintenance of the federal budget and let the private sector come in. There is no rocket science here. This idea has been working in other parts of the world and it cannot be different in Nigeria.
“Money will automatically flow into our roads because the private sector will be willing and ready to invest since they know it’s a thriving business and they would recoup their money,” Gershom Bassey said.
The proposed bill is expected to draw a framework for the private sector to come through the creation of the Federal Road Authority (FRA) which would absorb FERMA. The Federal Road Authority would be funded through an infrastructure fund and will own all roads in the country, with its only priority being to deliver good roads all over the country.
Hedge funds, institutional investors rush to own stakes in Bitcoin
Hedge funds are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.
With global economic uncertainty gradually becoming a daily norm, institutional and hedge funds around the world have been rushing to have a stake in crypto assets which all have been outperforming other financial assets in 2020).
Just recently, a popular hedge fund based in New York –Grayscale Investments –caught the investment world by surprise by buying up Bitcoin (BTC) at a great rate in recent months.
Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been seeking for other options, not just to provide returns, but also to hedge their existing portfolio from downside risks. Neo said:
“Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin. I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.”
In addition, Paul Cappelli, a portfolio manager at Galaxy Fund Management, explained in detail the reasons for this demand. According to him, “we’re seeing increased interest from multiple levels of investors’ wealth channels, independent RIAs, and institutions.
“The recent BTC halving came at an interesting time amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.”
Also, Michael Sonnenshein, the Managing Director of Grayscale Investments, explained briefly why his firm uses Bitcoin as an option in hedging its firm’s portfolio position.
“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks,” he said.
What you need to know about Hedge Funds
They are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.
Measures introduced by Nigeria to ensure transparent use of the $3.4 billion IMF loan
Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.
Following the approval and disbursement of $3.4 billion Rapid Financing Instrument (RFI) to Nigeria, which is the largest COVID-19 emergency financing package so far released by the International Monetary Fund (IMF), the multilateral financial institution now expects transparent and accountable use of the funds.
The IMF’s financial assistance to Nigeria is meant to support the healthcare sector, stabilise the economy, and protect jobs and businesses that have been severely impacted by the pandemic.
The Bretton wood institution has been disbursing funds to work closely with member countries to ensure transparent and judicious use of the financial support, while making sure they are used for the intended purpose.
The IMF’s mission chief for Nigeria, Amine Mati, during a conversation, pointed out the measures to be taken by Nigeria in order to enhance transparency and governance in the use of the $3.4 billion IMF emergency financing.
According to the IMF chief, the Nigerian Government had committed to undertake an independent audit of crisis mitigation spending and related procurement processes, as well as to publish procurement plans and notices for all emergency response activities which include the names of companies that were awarded the contracts and the beneficial owners.
Mr. Mati also disclosed that special budget lines are to be created to record all crisis emergency response measures, which are published daily on Nigeria’s treasury online portal. These measures will not only ensure that financial assistance received as part of the COVID-19 response is used for its intended purposes, but will also significantly strengthen the oversight of the entire budget used for the government’s crisis response.
— IMF (@IMFNews) May 31, 2020
Implementing these measures will help to drastically reduce the governance and transparency challenges as well as corruption vulnerabilities of a country like Nigeria. Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.
Brent crude drops, as traders focus on OPEC+ meeting
OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day in May and June after the deadly COVID-19 pandemic weakened demand.
Brent crude price dropped by around 0.77%, to $37.55 a barrel, on the first trading session of June.
The slump in the price comes after it posted its strongest monthly gains since 1999.
“The focus is very much on OPEC+,” OCBC economist, Howie Lee, told Reuters referring to OPEC and its allies including Russia. OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day in May and June after the deadly COVID-19 pandemic weakened demand.
“We might see a cautious pullback in (crude) prices given that downstream prices haven’t caught up … but if OPEC+ does come up with a three-month extension, there’s a possibility that prices may hit the $40 level,” Howie Lee added.
Algeria, which presently holds the OPEC presidency, has started a move that an OPEC+ meeting scheduled for June 9-10 be brought forward to ease oil purchases for countries such as Saudi Arabia, Iraq, Kuwait, and Russia, who raised no objection.
“It’s been widely interpreted as likely to lead to an extension of the current production cuts,” CMC Markets’ chief market strategist, Michael McCarthy, said.
“Oil prices have come down slightly in our session but they’re still at elevated levels. I suspect that’s the key driver of prices on Friday night and should keep prices reasonably well supported today,” McCarthy added.