The former Governor of the Central Bank of Nigeria, Muhammed Sanusi II has said that Nigeria is the only oil-producing nation that does not get the benefit of rising oil prices.
Sanusi, who disclosed this in an interview on Arise TV, explained that all the proceeds Nigeria makes when crude oil price goes up is lost as she pays subsidy for importing refined petroleum products.
According to him, government’s dependence on oil by successive administrations has impacted the economy negatively.
He said, “Over 90% of what government earns comes from the oil sector and oil is a commodity, the price goes up and down. We set up the country to suffer.
“First of all, you will fix a price for petroleum product even though you are not refining your petroleum products. How can you fix a price for a product you do not produce? We produce crude oil but the price we fixed was for refined petroleum product.”
Alternative power source
The immediate past Emir of Kano explained that the nation can develop an interest in producing solar panels using sands, iron bars and other resources at the nation’s disposal. He said such an effort will provide electricity, create jobs, and boost the economy.
Thumbs up for government
Sanusi lauded the efforts of the President Muhammadu Buhari administration for auditing and publishing NNPC account for the first time in two decades.
“Now, we need to look at those accounts and ask questions so that more and more of that money won’t just be drained but rather get to the central bank. The central bank has the foreign exchange reserves to protect the currency,” he said.
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On recent ban on the importation of goods that are locally produced, he tasked the Ministry of Trade to support the CBN on compliance.
According to him, the Ministry of Trade needs to work on compliance and the nation should look into how to work with other African countries.
Naira falls across forex markets as CBN moves against IMTOs
The exchange rate at the black market where forex traded unofficially depreciated at N477/$1.
On January 22, 2021, the exchange rate between the naira and the dollar depreciated closing at N394.17/$1 at the NAFEX (I&E Window) where forex is traded officially.
Forex turnover, however, dropped by about 42.2% as pressure on the foreign exchange market continues.
The Central Bank of Nigeria (CBN) in a new circular, read the riot act to the International Money Transfer Operators (IMTOs) as they have threatened to sanction some of them who still facilitate diaspora remittances in naira, contrary to its earlier directive that it must be in foreign currency.
Also, the exchange rate at the black market where forex traded unofficially depreciated at N477/$1. The exchange rate at the parallel market closed at N475/$1 on the previous trading day of January 21, 2021, representing a N2 drop.
The exchange rate disparity between the parallel market and the official market is about N82.83, representing a 17.36% devaluation differential.
The Naira depreciated against the dollar at the Investors and Exporters (I&E) window on Friday, closing at N394.17/$1. This represents a 17 kobo drop when compared to the N394/$1 that it closed on the previous trading day.
- The opening indicative rate was N393.15 to a dollar on Friday, this represents a N1.01 gain when compared with the N394.16 to a dollar that was recorded on Thursday, January 21, 2021.
- The N395 to a dollar was the highest rate during intra-day trading before it closed at N394.17 to a dollar. It also sold for as low as N390/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dropped by 42.2% on Friday, January 22, 2021.
- According to the data tracked by Nairametrics from FMDQ, forex turnover declined from $77.04 million on Thursday, January 21, 2021, to $44.51 million on Friday, January 22, 2021.
- The exchange rate is still being affected by low oil prices, dollar scarcity, a backlog of forex demand, and a shaky economy that has been hit by the coronavirus pandemic.
- There are fears that the exchange rate at the black market might be under pressure in the coming weeks as importers scramble for dollars to meet their demands.
Oil price steady rise
Brent crude oil price is at about $55.34 per barrel as of Monday morning, as it moves towards the $60 mark, a strong sign that global demand could sustain price increases in 2021.
- This appears as a boost to Nigeria as the country’s crude oil price benchmark for 2020 was $40 while it projected an oil production output of 1.8 million barrels per day.
- Nigeria has a production capacity of 2.5 million barrels per day but is subject to OPEC’s crude oil production cuts, which are expected to help sustain higher oil prices.
- The higher oil prices and steady production output have positively impacted Nigeria’s external reserves, rising sharply to $36.304 million according to central bank data dated January 14, 2020.
- This is the highest level since July 2020 and a sign that higher oil prices and steady output levels may be contributing significantly to Nigeria’s foreign exchange position.
Nigeria rising external reserves
- The external reserve has risen to $36.508 billion as of January 21, 2021.
- Nairametrics had earlier reported that the government may have taken receipt of the $1-1.5 billion World Bank loan.
- The external reserves have increased by $1.135 billion since December 31, 2020, when it closed the year at $35.3 billion.
- Nigeria also needs the external reserves to hit $40 billion if it is to adequately meet some of the pent up demand that has piled up since 2020 when oil prices crashed and the pandemic caused major economic lockdowns.
Covid-19: Sanwo-Olu discloses how Lagos intends to fund vaccination programme
Lagos government has disclosed that it is in talks with the organised private sector to raise funds required to purchase vaccines.
Lagos State Governor, Babajide Sanwo-Olu, has revealed how the state government intends to fund the vaccination programme as they fight the Covid-19 pandemic.
The Governor said that although the Lagos State Government had earmarked billions in fighting the scourge of the Covid-19, his administration was engaging with the private sector as the amount they had would not be enough.
This disclosure was made by the governor while appearing on a Channels Television programme, Sunday politics, on Sunday, January 24, 2021.
What the Lagos State Governor is saying
Sanwo-Olu said, “The conversations are still at various levels. We are speaking with the organised private sector so they can help us raise some of the finance that is required.
“We have our friends in the private sector who are saying to us that they understand this is a public health issue but we also can work with you. The citizens are your citizens but they also are our staff.’’
The governor also said that his administration did not need to vaccinate over 20 million residents of the state against the deadly coronavirus pandemic.
He said, “It is important for me to make this. We don’t have to vaccinate the 20 or 22 million population that we have. The plan is to ensure that there is herd immunity and that typically speaks about 50 to 60 percent of your population, that is the kind of target that you really meet.
“We have started a conversation with some of the vaccine manufacturers. Pfizer for example. I have made contact with them. Johnson and Johnson are not out yet; the Moderna has written to us and we have written back to them.”
What this means
- The Lagos State Government is looking for private sector participation to help raise funds to fund the purchase of Covid-19 vaccines due to budgetary shortfalls.
- The state, which has become the epicenter of the coronavirus pandemic in the country through the vaccination programme, is trying to get most of its population immune from the Covid-19 disease.
FG refunds Bayelsa State N27 billion as amount spent on federal projects
The Bayelsa Government has received N27 billion approved as refund by FG for federal projects executed by the state.
The Federal Government has refunded N27 billion to Bayelsa State as the money the State government spent on federal projects since 2005 to date.
This was disclosed by the Bayelsa State government on Sunday, as it said the amount is not up to the N38 billion approved by the FG as refunds for federal road projects.
State Governor, Douye Diri said that the state only received an N27 billion cash refund, meanwhile, the Technical Adviser on Treasury and Accounts to the governor, Timipre Seipulo, disclosed that the debt instrument issued by the federal government had a tenor of between four to five years maturity.
Seipulo added that the refund was implemented such that the states would wait between four to five years to access the full amount approved by the FG, therefore States could only get discounted refunds from the FG.
He added that the N27 billion amount was discounted 71% from the total N38 billion expected value.
What you should know
Nairametrics reported in November 2020, that Promissory notes worth N148.141billion were approved by the Senate as a refund to Bayelsa, Cross River, Ondo, Osun, and the Rivers States for projects executed on behalf of the Federal Government.
The amount due to the five states was N148.14billion and broken down as follows:
- Bayelsa was allotted N38.40billion
- Cross River was allotted N18.39billion
- Ondo was allotted N7.82billion
- Osun was allotted N4.57billion
- Rivers was allotted N78.95billion
Nairametrics also reported that the Governor of Rivers State, Nyesom Wike, stated that the Federal Government refunded the South-South State the sum of N78 billion, representing the amount spent on federal roads by the state.