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Fuel prices: Information Minister defends President Buhari’s comparison of Saudi with Nigeria

The government justified the President’s comparison of Nigeria with other oil-producing countries.

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Fuel prices: Information Minister defends President Buhari's comparison of Saudi with Nigeria, FG reiterates commitment to implement reform of broadcasting code, Border to remain closed till Benin, Niger meet Nigeria's conditions, FG vows , Lai Mohammed: Nigeria’s non-oil exports increased to N2 trillion, COVID-19: FG to deploy police, army for enforcement

The Federal Government has defended itself over President Muhammadu Buhari’s 2020 Independence speech when he compared fuel price in Saudi Arabia with Nigeria.

The government argued that the comparison made by the President Buhari on fuel prices between Nigeria, Saudi Arabia and other countries is justified.

This was disclosed by the Minister of Information and Culture, Alhaji Lai Mohammed, during a session on a Radio Nigeria current affairs programme, “Radio Link’’ on Saturday in Abuja.

Back story: Nairametrics reported when Buhari said in his Independence Day broadcast that “we sell petrol at N161 per litre when same is sold at N168 per litre in Saudi Arabia; N211 per litre in Egypt; N362 per litre in Ghana; N362 per litre in Chad, and N346 per litre in Niger Republic. It does not make sense for petrol to be cheaper in Nigeria than Saudi Arabia.’’

Minister’s defence 

The minister argued that there was nothing wrong in making such a comparison. He said;

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Some people have said why should we compare ourselves to Saudi Arabia with better infrastructure and higher wages. Our answer to that is very simple. Saudi Arabia has 34 million people while Nigeria has 200 million people. Saudi Arabia produces 10 million barrels of crude oil per day, while Nigeria produces at its best, 2.1 million barrel per day. Their population is about one-sixth of Nigeria’s population and they are blessed with more resources. Therefore, they can afford to pay higher wages and build infrastructure. Our argument must be put in proper perspective. As we have said, whatever money we make from the subsidy removal, we will invest in infrastructure development.

The minister commended organised labour for its understanding and patriotism in suspending its planned strike to protest the fuel price deregulation and the electricity tariff adjustment.

He noted that the suspension of the strike by the Nigeria Labour Congress, the Trade Union Congress and their affiliates averted a “national calamity’’.

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According to him, after spending sleepless nights engaging with organised labour, the two congresses agreed with the government that the fuel deregulation was inevitable.

“The moment we lost as much as 60 per cent of our earnings and suffered a kind of shock in crude oil prices, we must deregulate. Between 2006 and 2019, we paid N10.413 trillion in fuel subsidies; an average of N743.8 billion per annum,’’ he lamented.

He added that the country right now cannot afford the subsidy regime.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Energy

FG hires litigation firm, Franklin Wyatt, in legal battle with Eni S.p.A

The Ministry of Petroleum Resources has hired a litigation firm to assist in its dispute with Eni S.p.A over oil rights and bribery allegations.

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FG estimates that alternative petrol, CNG would cost N97 per litre, New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC, autogas, FG to establish petroleum depot, oil and gas logistic centre in Akwa Ibom

The Federal Ministry of Petroleum Resources has employed the services of Franklin Wyatt, a litigation settlement specialist, to take part in the talks with Eni S.p.A in a long-running dispute over oil rights and bribery allegations.

According to Bloomberg, the London-based consultancy, Franklin Wyatt, was contracted by the Minister of State for Petroleum Resources, Timipre Sylva, to represent and advise the Federal Government on outstanding commercial and legal issues over Oil Prospecting License 245 (OPL 245), through a letter dated June 29 and addressed to Matthew Carey, the Managing Partner of the firm.

This disclosure was made by the spokesman for the Minister of State for Petroleum, Garba Deen Muhammad.

The letter to the firm partly reads, “This serves as confirmation that Franklin Wyatt’s recruitment was approved by Nigeria’s president, Muhammadu Buhari, and may be produced as evidence of the firm’s authority to represent the ministry in discussions with relevant counterparties.”

Backstory

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Nairametrics earlier reported that the Nigerian government, at a hearing into the alleged corruption linked to Eni and Shell’s acquisition of OPL 245, called for a guilty verdict and an advance payment of about $1.1 billion for damages, in one of the oil industry’s biggest-ever corruption trials.

Eni has also accused both Nigeria and US investment firm for assisting the country with its litigation against the Italian oil firm and accused Royal Dutch Shell of a lack of transparency in the $1.1 billion energy deal.

What you should know

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  • The 2011 purchase of OPL 245 by Eni and Royal Dutch Shell Plc has been subject to years of legal wrangling. The two companies, as well as some current and former executives, are on trial in Milan for allegedly making corrupt payments during the deal.
  • Italian prosecutors have accused the companies of moving $1.1 billion into a Nigerian government escrow account to obtain the license in 2011, about $800 million of which was then used to pay bribes into private pockets.
  • The current Nigerian government, which came to power five years ago, joined the case in 2018 as a civil party and asked for at least $1.1 billion in damages, while prosecutors are seeking a jail term of eight years for Eni Chief Executive Officer Claudio Descalzi. The tribunal is expected to rule early next year.

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Energy

Nigerian firm set to raise $1.2 billion to purchase electricity meters

MAPCo plans to raise N480 billion to purchase electricity meters and to help the DISCOs plug revenue gaps in their operations.

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The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

A Nigerian firm, Meter Assets Finance and Management Company (MAPCo), has concluded plans to raise N480 billion ($1.2 billion) over the next 3 years, to purchase electricity meters and help the electricity distribution companies (DISCOs) plug revenue gaps in their operations.

This is also in line with the Federal Government’s initiative to ensure that all electricity consumers are metered, which will put an end to estimated billing by the DISCOs.

According to a report from PricewaterhouseCoopers, less than one-tenth of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty. As a result, distribution companies have to estimate bills, resulting in constant conflict with the consumers that delay payments.

The Chief Executive Officer of New Hampshire Capital, Onion Omonforma, said the Meter Assets Finance and Management Co. hopes to end the practice of estimated billings by raising funds to purchase and supply meters to consumers.

New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture, known as MAPCo, for investors to either buy equity or inject debt into the company.

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What they are saying

Omonformaa said, “The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the metering gap. MAPCo will collect the cost of the meters from consumers at a premium over the next 10 years. The meters will be handed over to the power-distribution companies once paid off.’’

While disclosing that MAPCo plans to issue a N100 billion bond in the next year, Omonforma also pointed out that roadshows have been planned for the U.S. and Europe, and will include local institutional investors.

He said, “We envisage that a lot of people who are looking for a long-term instrument will key into it,”

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It can be recalled that apart from repealing the estimated billing methodology in determining tariffs for electricity consumers; the Federal Government had insisted that all consumers must be metered, as part of the condition for a tariff increase.

Also, as part of the agreement reached with the organized labor in respect of the tariff increase; the Federal Government disclosed that the National Mass Metering Programme will be accelerated, with the distribution of 6 million meters to Nigerians for free.

What this means

A huge number of electricity consumers across the 36 states and the FCT are still unmetered by their respective DISCOs. This initiative by MAPCo will help bridge the existing gap, with more electricity consumers acquiring a prepaid meter and doing away with the controversial estimated billing.

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Energy

N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners

The auditors of NNPC have raised doubts over the inability of the Corporation to continue as a going concern following rising and humongous losses.

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NNPC

According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.

READ: U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy

In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.

READ: NNPC reveals survival strategies to cope with oil sector downturn and new normal

What you should know

  • In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
  • NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
  • In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
  • The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.

READ: NNPC explodes, denies custody of $3.5 billion subsidy fund

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What to expect

  • The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
  • To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
  • The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
  • The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.

READ: Nigerian Stock market records sixth consecutive losses, investors lose N15.55 billion

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READ: NNPC to end oil-for-fuel swap system

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