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Subsidy Removal Drags Down Petrol Consumption By 28%

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Average daily petrol consumption in Nigeria has fallen by 28 per cent since President Bola Tinubu scrapped subsidy on the fuel at the end of May.

Average daily petrol consumption fell to 48.43 million litres in June, down from the previous average of 66.9 million, according to figures released to Reuters by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

The subsidy regime had kept prices cheap for decades but it became increasingly expensive for the country.

Nigeria reportedly spend $10 billion last year on subsidy-leading to wider deficits and driving up government debt.

Since the subsidy was ended a black market in neighbouring Cameroon, Benin and Togo that relied on petrol smuggled from Nigeria has collapsed.

Despite having spent $2.41 billion on the subsidy in the first five months, Nigeria could save up to $5.10 billion this year from scrapping the petrol subsidy and from FX reforms, the World Bank said on June 27.

Corroborating the development the president of Petroleum Retail Outlet Owners Association of Nigeria (PETROAN) , Billy Gillis-Harry, told LEADERSHIP that his Association has developed a framework that could support government transparently and effortlessly collate adequate consumption data on petroleum consumption in the country.

Gillis-Harry, in a telephone conversation told our Correspondent that PETROAN has evolved the Petroleum Products Passport, PPP, a tool that can be perfectly deployed by the industry to transparently monitor products supply and distribution across the country.

While, commending the present administration for mustering the political will to exit the petrol subsidy regime the PETROAN president called for sustainable efforts to fix the nation’s refineries.

Meanwhile, the projected mass rollout of Compressed Natural Gas, CNG, refilling outlets across all states of Nigeria is becoming a reality with seven banks ready to manage revolving fund facility from the African Development Bank, AfDB.

The Independent Petroleum Marketers Association of Nigeria, IPMAN had sealed the deal with the bank following removal of petrol subsidy.

National President of IPMAN, Elder Chinedu Okoronkwo disclosed this development to LEADERSHIP on phone.

Our Correspondent gathered that the Association made the approach after it conducted a market survey on the cost of converting existing petrol stations to CNG outlets

LEADERSHIP authoritatively reports that the IPMAN has already commenced identification of members interested in co-locating CNG dispensers and infrastructure on their existing petrol retail outlets .

The exercise is to identify qualified potential candidates for loans to support it’s target of establishing 10-20 colocated CNG stations in each state of the federation during the first phase of its planned nationwide rollout.

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Job Losses, Factory Closures Loom As Unsold Goods Pile Up — MAN

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AGAINST the backdrop of sustained pressure in the foreign exchange market and high cost of production, the Manufacturers Association of Nigeria, MAN has indicated that inventory of unsold goods is escalating to levels now threatening the existence of companies operating in the production sector of the economy with attendant job losses.

Findings show that as of the weekend the foreign exchange market had recorded over 254 per cent plunge in the value of the naira since flotation of the currency by the Central Bank of Nigeria (CBN) in June 2023.

Recall that the naira traded for N471 per dollar in the official I&E market on June 13, 2023 before the floatation of the currency, but exchanged for N1,665.50 to a dollar as at February 23, 2024 on the Nigerian Foreign Exchange Market (NAFEM), indicating a depreciation of more than 253.6 per cent over the eight-month period. The forex crisis is also stoking inflation, and coupled with high energy costs, purchasing power has continued plummet, stifling demand for goods.

Speaking on the impact of this development on the manufacturing sector, Director General, MAN, Segun Ajayi-Kadir, said: “There are reports that across the board, many warehouses and plants of many manufacturing firms are stockpiled with unsold goods manufactured last year. “The development is as a result of the devastating effects of the exchange rate crisis, inflation, fake and sub-standard goods, smuggling and other macro-economics challenges.”

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CBN Lifts Ban On BDCs, Introduces New Operational Mechanism

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In a major development aimed at financial stability and strengthening the naira, the Central Bank of Nigeria (CBN) plans to resume its weekly intervention in the country’s foreign exchange (FX) market through the Bureau de Change (BDC) operators.

In 2021, the central bank, in a bid to achieve its mandate of safeguarding the value of the local currency, ensuring financial system stability, and shoring up external reserves, announced the immediate discontinuance of foreign currency sales to Bureau de Change (BDC) operators in the country.

However, the resumed intervention, which would reportedly commence today for funding as well as Tuesday for collection, will see the apex bank inject FX into the subsector in a bid to rescue the naira from further depreciation against major currencies, particularly the US Dollar. The collection will be at designated CBN branches in Lagos, Abuja, Kano, and Awka, while details of the naira accounts to be credited for funding bidding will also be made available today.

CBN is also expected to publish the list of eligible BDCs to benefit from its funding using certain compliance criteria.National Executive Council of Association of Bureau De Change Operators of Nigeria (ABCON) hinted on the latest developments through a memo to its members over the weekend.

The association also warned members that it will no longer be business as usual under the new supervisory regime of the central bank, as any infringement or infraction would result in outright revocation of license and prosecution.

ABCON said through the association’s various engagements with the central bank, in conjunction with ABCON’s strategic partners, CBN had agreed to its request, under the bank’s supervision, to inject liquidity into the market through a weekly intervention beginning today.

CBN assured ABCON that the new circular on the Revised Regulatory and Supervisory Guidelines to BDCs, which was introduced over the weekend, was only a draft exposure that required the association’s inputs before the release of the final guidelines by the apex bank.

To that effect, the letters of the guidelines were not cast in stone, the association’s leadership told its members, who had been worried over the sweeping reforms in the document, which, among other things, prescribed N2 billion and N500 million minimum capital for national and state BDCs, respectively.

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