Connect with us
nairametrics

Business News

Petrol: OMCs to resume importation of Petrol

Petroleum Products Pricing Regulatory Agency says that permits had been given to several OMCs to start importing petrol alongside the NNPC.

Published

on

Crude oil prices rally as investors remain optimistic about oil production cut ,Brent Crude continues to rally as businesses resume around the world, Brent crude,, Petrol: OMCs to resume importation of Petrol, Crude oil prices drop, geopolitical tension strengthens, OPEC and Alliance Output Cut are not enough to mitigate Brent’s Oversupply Issues, Brent crude falls, global investors fear strengthened on resurgence of COVID-19 cases, Brent crude drops, as COVID-19 caseloads rise in the world’s largest economies

According to local media reports, private oil marketing companies (OMCs) have now joined the Nigerian National Petroleum Corporation (NNPC) in the importation of petrol. This was based on information from the Petroleum Products Pricing Regulatory Agency (PPPRA) that permits had been given to several OMCs to start importing petrol alongside the NNPC. The General Manager, Corporate Services, PPPRA, Kimchi Apollo, revealed that the agency recently issued Quality Management (QMs) which empowers OMCs to import petroleum products.

Prior to this development, the NNPC has been the sole importer of petrol for over two years. The steep devaluation in the local currency in the wake of the 2015/16 oil price crash as well as an increase in crude prices that ensued thereafter led to a surge in the landing cost of petrol. The reluctance of the government to adjust the retail price of petrol to align with market realities made it unprofitable for OMCs to continue to import petroleum products.

As such, NNPC had to step in to continue to supply the market. This, however, came at a huge cost to the nation, as NNPC reported subsidy payments as “under-recoveries” being the excess of the landing cost of petrol over the price sold to OMCs. According to the Nigerian National Petroleum Corporation (NNPC), the federal government paid N752bn as petrol subsidy in 2019, equivalent to 62% of the amount spent on capital expenditure in the year (N1.2trn).

Although we believe the decision of the PPPRA to allow OMCs import petrol directly will improve the thin margins of players in the downstream sector, we note that the gains could be short-lived and eroded when oil prices trend higher, if the federal government maintains control over the retail price of petrol. Based on our pessimistic case, OMCs will hands off the importation of petrol if the rebound in oil prices pushes the landing cost of petrol to a discount of c.10% from the current retail cap of N125/litre.

(READ MORE: Brent crude price increases, as businesses resume around the world)

GTBank 728 x 90

We recall that on 18 March 2020, the Federal Government (FG) announced a reduction in the retail price of Premium Motor Spirit (PMS) to N125/litre from N145/litre, following the revision of its Ex-Coastal price to N99.44/litre (Previously; N117.6/litre) and Ex-Depot price to N113.28/litre (previously; N133.28/litre). This came on the heels of the global pandemic which led to an unprecedented decline in oil prices and by extension reduction in the landing cost of petrol. Subsequently, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, noted that the country will no longer pay for under-recovery or subsidy on petrol, a move that we believe signals the liberalisation of the downstream sector. However, we are uncertain on the reaction of the government when the landing cost of petrol rises as oil prices recover in the international market.

READ FURTHER: Alert: Nigeria ranks 3rd in Canada Express Entry invitations ratings 


CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

NIGERIA.

GTBank 728 x 90
Fidelity ads
Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Financial Services

CBN grants Greenwich Trust Limited operational license for merchant banking

CBN has upscaled Greenwich Trust Limited to the status of a merchant bank.

Published

on

NSE Market Data, NSE records total transactions of N121.99 billion in August , 2019 events in the Nigerian capital market and outlook for 2020, Why you might need a capital market lawyer

The Central Bank of Nigeria (CBN) has upscaled Greenwich Trust Limited and granted it, operational license for merchant banking in the country.

According to an official statement released by the firm, the entity would be known as Greenwich Merchant Bank Limited. This license allows Greenwich Merchant Bank to upscale and offer such diverse services as corporate banking, investment banking, financial advisory services, securities dealing, treasury wealth and asset management, etc., making it possible to provide increased value to stakeholders beyond its previous scope.

Recall that the minimum capital requirements for establishing a merchant bank according to Merchant Banking Licensing Regulations in 2010 are N15 billion

(READ MORE: CBN debits banks N216.1 billion for CRR compliance)

With the addition of Greenwich Merchant Bank, Nigeria now has six merchant banks. The others are; FBN Quest, Coronation Merchant Bank, DSH Merchant Bank, Nova Merchant Bank and Rand Merchant Bank.

GTBank 728 x 90

About Greenwich Trust Limited

Greenwich Trust Limited is an investment banking firm duly registered with relevant authorities such as the Nigerian Securities and Exchange Commission (SEC). It is a diversified firm with subsidiaries such as Asset management, GTL Properties, GTL Securities Limited, Cedar Express Limited and Meyer Plc.

Continue Reading

Business News

Emirates Airlines banned from operating in Nigeria

UAE’s Emirate Airline has been banned from operating in Nigeria.

Published

on

Just in: FG bars Air France, KLM and other foreign airlines, FG to spend N13 billion for automation projects in 4 airports, domestic flights, international passengers, Coronavirus: FG enforces immediate screening of travellers at airports with new directive

Emirates Airline has been added to the list of airlines which have been banned from operating in  Nigeria. The ban will take effect from the 21st of September.

This was announced by the Minister of Aviation, Hadi Sirika in a social media statement on Friday.

“The PTF subcommittee met today with EU Ambassadors to discuss Lufthansa, Air France/KLM ban. The meeting progressed well. Emirates Airlines’s situation was reviewed & they are consequently included in the list of those not approved, with effect from Monday the 21st Sept 2020.” Sirika stated.

This comes as the UAE government has been accused of not renewing visas of Nigerians in Dubai and also rumours of a VISA ban for Nigerians applying for visas.

GTBank 728 x 90

Last month, the UAE embassy in Nigeria denied there is a VISA ban on Nigerians entering the Middle Eastern country. They said: “At the onset of the COVlD-19 pandemic, the UAE took a number of precautionary measures to combat the virus’ spread, including the temporary suspension on issuing UAE visas for all nationalities as of March 17, 2020.

After entering the recovery phase of the pandemic, the UAE eased some measures on July 7, permitting visitors from various countries to adhere to the necessary precautionary measures, including by showing negative PCR test results within 92 hours of travelling to the UAE. This includes those visiting from Nigeria.”

Continue Reading

Energy

CBN introduces N250 billion stimulus package for gas investment to ease pain of fuel price increase

The CBN has introduced a stimulus package to help stimulate investment in gas as an alternative to fuel.

Published

on

To test FX market, CBN pumps $50 million, CBN issues guidelines to Finance Institutions on establishment of Subsidiaries and SPVs, CBN injects $2.63 billion to defend naira in one month, CBN’s COVID-19 N50 billion targeted credit facility, CBN’s heterodox policies buoys credit growth

As part of the palliative following the sharp increase in the price in the pump price of petrol, the Central Bank of Nigeria (CBN) has introduced a N250 billion stimulus package under a National Gas Expansion Programme that it hopes will help stimulate investment in the gas value chain and spur its use in transportation as an alternative to fuel-powered cars.

Large scale projects under this intervention programme will be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while small scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) and/or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium Enterprises Investment Scheme (AgSMEIS).

This initiative is to be implemented in collaboration with the Federal Ministry of Petroleum Resources.

The objectives of the facility include;

  • Improved access to finance for private sector investments in the domestic gas value chain.
  • Stimulate investments in the development of infrastructure to optimize the domestic gas resources for economic development.
  • Fast track the adoption of Compressed Natural Gas (CNG) as the fuel of choice for transportation and power generation, as well as Liquefied Petroleum Gas (LPG) as the fuel of choice for domestic cooking, transportation, and captive power.
  • Fast track the development of gas-based industries particularly petrochemical (fertilizer, methanol, etc) to support large industries such as agriculture, textile, and related industries.
  • Provide leverage for additional private sector investments in the domestic gas market.
  • Boost employment across the country.

The activities that are eligible under the intervention shall include;

GTBank 728 x 90
  • Establishment of gas processing plants and small scale petrochemical plants.
  • Establishment of gas cylinder manufacturing plants.
  • Establishment of L-CNG regasification modular systems
  • Establishment of autogas conversion kits or components manufacturing plants.
  • Establishment of CNG primary and secondary compression stations.
  • Establishment and manufacturing of LPG retail skid tanks and refilling equipment.
  • Development/enhancement of autogas transportation systems, conversion, and distribution infrastructure.
  • Enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets.
  • Establishment/expansion of micro-distribution outlets and service centres for LPG sales, domestic cylinder injection, and exchange and
  • Any other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources.

The aggregators, manufacturers, processors, wholesale distributors, and related activities shall be funded under the Power and Airline Intervention Fund (PAIF), while the Small and Medium-scale Enterprises (SMEs) and retail distributors shall be funded by NIRSAL Microfinance Bank under AgSMEIS.

For the manufacturers, processors, wholesale distributors, etc, the term loan shall be determined based on the activity and shall not exceed N10 billion per obligor. The working capital shall be a maximum of N500 million per obligor.

While for the small and medium enterprises, the term loan shall be based on the activity and shall not exceed N50 million per obligor. The working capital shall be a maximum of N5 million per obligor.

Interest Rate

The interest rate under the intervention shall be at not more than 5% per annum (all-inclusive) up to February 28, 2021, thereafter, interest on the facility shall revert to 9% per annum (all-inclusive) with effect from March 1, 2021.

Loan Tenor and Moratorium

The manufacturers, processors, wholesale distributors, will have term loans which shall have a maximum tenor of 10 years (not exceeding December 31, 2030) with a maximum of a 2-year moratorium on principal repayment only. The working capital facility of 1 year with a maximum rollover of not more than twice, subject to prior approval.

The small and medium enterprises (SMEs) and retail distributors will have term loans that shall have a maximum tenor of 5 years (not exceeding December 31, 2030) with a maximum of 2 years on principal repayment only. The working capital facility of 1 year with a maximum rollover of not more than twice and subject to prior approval.

This new initiative involves getting many vehicles to run on gas by collaborating with investors to build the required infrastructure such as pipelines and petrol stations. It is also expected to help accelerate the use of natural gas and end gas flaring.

GTBank 728 x 90
Fidelity ads

Continue Reading
Advertisement
Advertisement
Advertisement
ikeja electric
Advertisement
Patricia
Advertisement
FCMB ads
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
first bank
Advertisement
bitad
Advertisement
deals book
Advertisement
financial calculator
Advertisement
deals book
Advertisement
app
Advertisement