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NNPCL Not Transparent On Subsidy, Dollar Revenues – World Bank

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Last Updated on December 14, 2023 by Fellow Press

The Nigeria National Petroleum Corporation Limited is not transparent about the financial gains from fuel subsidy removal, the World Bank has disclosed.

This extends to subsidy arrears that are still being deducted and the impact of subsidy removal on federation revenues, the bank noted. The Washington-based made this call in its Nigeria Development Update, December 2023 edition titled, ‘Turning The Corner (from reforms and renewed hope, to results).

This is the Minister of Finance and Coordinating Minister of Economy, Wale Edun, revealed that the government was ready to scrutinise the revenue flow from the NNPCL.

According to the World Bank, while revenue gains from the exchange rate reforms are visible, more clarity is needed on oil revenues, including the fiscal benefits from the PMS subsidy reforms.
It declared, “nominal oil revenue gains have been evident since June; these are mostly categorised as “exchange rate gains”, suggesting that they are due to the naira depreciation.

“Except for the exchange rate-related increases, however, there is a lack of transparency regarding oil revenues, especially the financial gains of the Nigeria National Petroleum Corporation from the subsidy removal, the subsidy arrears that are still being deducted, and the impact of this on Federation revenues. It is also unclear why retail petrol prices have not changed much since August, despite fluctuations in the exchange rate and global oil prices.”

The Bretton Woods institution further expanded that gains in net oil revenue of the federation were lower than what they should have been considering what the removal of fuel subsidy should have added to the accounts.

It stated that fuel subsidy cost the federation about N380bn a month, and once removed, the federation account should have recorded an increase in net oil revenues.

It said, “However, most of the gains in the oil revenues in H2 2023, as reported by OAGF, can be attributed to exchange rate gains. Without exchange rate gains, net oil revenue between January and August would have declined by 0.2 of a percentage point of full-year GDP yoy, all materialising in the July–August period.

“In August, additional revenue from 40 per cent profit of Production Sharing Contracts and the interim yearly dividend were reflected in the accounts. However, these were not as high as what the gains from removing the gasoline subsidy should have been. Given that petrol pump prices have not changed in line with market fundamentals (notably exchange rate movements and global oil prices), there is a risk that the implicit fuel subsidy has reemerged, potentially keeping net oil revenues lower than expected.”

The institution further noted that the reform of fuel subsidy should help the NNPCL to settle its arrears and start paying fully for the Federation’s share of costs in joint venture operations, thereby allowing oil production to gradually increase over time.

Also speaking at the presentation of the report, the Coordinating Minister of the Economy, Edun noted that the removal of fuel subsidy saved the government’s finances.

He stated that while expectations that subsidy removal should boost the government’s revenue, it was faced with debt funding and a high fiscal deficit.

He said, “In terms of the government’s finances, you have rightly pointed out that following the removal of subsidy, there is an expectation that there would be fiscal dividends and it’s fair to say that without it, government finances will be in total disarray now. However, there is debt funding, pressure on fiscal deficit, and on government finances, and borrowings which have been inherited.

“Our levels of borrowing are being reduced and there is a plan to reduce that fiscal deficit over time. On the revenue side, the first source is oil, and I expect that there will be serious scrutiny on oil revenue and production and insistence on raising oil production and similarly that the revenues are brought into the federation account following the constitution. I think there will be added scrutiny, and I am sure NNPC is getting ready for that.”

Edun further declared that there would be a robust rollout of measures to raise tax revenue soon. He, however, highlighted that tax rates would not be increased but a lot would be done regarding efficiency, digitalisation, and improved collection.

He added that waivers and tax incentives would be scrutinised to revamp it and save leakages, particularly among ministries, departments and agencies.

Subsidy removal and controversies

On May 29, President Bola Tinubu announced the removal of fuel subsidy with, “Subsidy is gone,” to free up foreign exchange earnings.

In his August 1 national address, Tinubu disclosed that the Federal Government had saved about N1tn in two months after the removal of the petrol subsidy freeing up funds for other things in the economy.

He said, “In a little over two months, we have saved over a N1tn that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters.”

According to him, the funds saved from subsidy removal “will now be used more directly and more beneficially for you and your families.”

However, there have been concerns that the dividend of subsidy removal has not trickled down to the average Nigerian.

Recently, a former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, alleged that the NNPCL might not be remitting enough dollars to the federation account despite subsidy’s removal.

Speaking during the Bank Directors Summit organised by the Bank Directors Association of Nigeria recently, Sanusi, said, “The exchange rate needs to be stabilised and we have to address the fundamental question, why is there no money coming in?

“Why is the NNPCL not able to bring in dollars? Am sorry this is the question that cost me my job and I will continue asking this question until NNPCL fixes it up or until I die. Where are the dollars? We need to shine a light on the NNPCL. The finance minister cannot tell you because he doesn’t have a monitoring system that reports to him.

“The finance minister can’t tell you how many barrels of petrol we produce and export. It is only the NNPCL that can give those figures. The finance ministry needs to know how much oil we produce daily, how much we sell, and where the money is going. We are no longer paying subsidies so where are the dollars? It was under recovery during the subsidy era and that has been stopped, so where is the money?”

Sanusi noted that the NNPCL was opaque about its dealings, shrouding many of its dealings in secrecy.

NNPCL dollar revenues

Defending the oil company’s finances, the NNPCL’s Chief Financial Officer, Umar Ajiya, who was representing the Group Managing Director, Mele Kyari, disclosed that since the inflow of dollars into the country is tied to oil revenues, the country is facing the consequence of falling oil production, insecurity, and lack of investments in the sector.

He also said the NNPCL had been using its revenue to import refined PMS and service debt. He said, “Just to clarify and let the audience go with a well-balanced information. The inflows of dollars into the country are tied to oil revenues and the oil revenues are driven from oil production.

“The consequence of what we are facing today is a fall in oil production simply because of insecurity and lack of investments. The net dollar accruable from oil operations is what the NNPCL uses to import PMS. The PMS is sold in naira, you can’t sell it in dollars. Consequently, you would find out that the net dollar inflows into the NNPCL coffers are spent on the import of basically PMS and debt service.”

Ajiya stressed that the surplus dollars inflow to the CBN and any other bank in the country can only happen when the country starts producing PMS over its domestic requirement.

According to the CFO, adequate forex inflow can also happen if insecurity is addressed, and such development will attract partners to bring in fresh dollars in the form of investment to oil operations.

He added, “So until such a point where we have excess production over and above what we consume, then we will begin to see much dollar liquidity coming into this country. The whole consumption pattern of most Nigerians is foreign import-dependent and until we come to a position whereby, we begin to consume what we produce and also add value to our raw materials to bring further FX into the country.”

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MKO Abiola’s children who couldn’t buy drugs have died in last 30 years

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Some Of My Siblings, MKO Abiola’s Children Who Couldn’t Afford Drugs Have Died In Last 30 Years – Abdulmumuni Abiola Laments

Abdulmumuni Abiola, one of the sons of late Chief MKO Abiola, has berated his elder brother, Kola Abiola, over the alleged mismanagement of their late father’s wealth and throwing the rest of the siblings into abject poverty.

Speaking in a podcast on Mic On with Seun Okinbaloye, Abdulmumuni lamented that Kola had mismanaged their late father’s wealth and sidelined him and other members of the family to the extent that in the last 30 years, some of Abiola’s children had died because they could not afford to buy medicine to treat and take care of themselves.

Asked if he blamed Kola for the manner in which things had gone and whether he believed the legacy of Abiola would have been properly sustained rather than it was now, Mumuni said, “I definitely do because he was in a better position, especially after the whole crisis.”

Speaking further, Abdulmumuni said, “First of all, if he listens to what my father said in the Will and does what he is supposed to do like every other one has done, there wouldn’t be a problem.

“We have lost so much. There are so much properties my father has in this country that we can never get by because people sit on it and they are using it to take care of their own families. The issue is, who is losing?

“It is our money that they used to buy those things. Those properties now cannot be bought with the same amount, with the kind of money that would be spent today. I’m talking about the silo in Lafia Agil in Kwara State – 20,000 metric tonnes Silo with 10,000 hectares of land. How much would be paid for that land now?

“It is so sad that your father was rich to a certain level and you cannot continue from where he stopped. I would like him to explain to me why exactly he has gone with this direction. It is like going down the deadened road and you are seeing the signs but you are still going.

“This is 30 years down the line. It is not like I waited for a year after my father died and started making these accusations. Abiola’s children who could not buy medicine to take care of themselves have died in this 30 years. This is sad and I’m sure my father will not be pleased about it. So, I am not pleased.”

He added, “I wake up in the morning and my phone is inundated with text messages of people who ask for help. How many people can I help? If I want to help somebody, I need to first help myself. It is important we do things the right way.”

Asked if he has spoken with Kola about his grievances, Mumuni said he is talking about the properties in Nigeria only.

He said, “You must understand that I’m talking about their properties in Nigeria only. This is not where Abiola has his wealth. Abiola had those companies in Nigeria just to help Nigerian people.

“They were losing money and they were building money. But he did this (established companies in Nigeria) because he knew they needed something to do so that they don’t pick up guns. He (Abiola) understood that.

“Abiola’s wealth was from outside this country. He was an accountant and when he was the state director of ITT, there was money that owed the company, when he was able to retrieve the money from the military government then, he went back to his masters in England.

“They wanted to offer commission but he asked them to give him shares. So, my father has shares.

“I told brother Kola when I got back that I don’t want to disturb him about the money outside Nigeria. That it is for him, he should do whatever he wants with it. But the ones in Nigeria, we will die there.”

Abdulmumuni said he had taken over Concord Newspaper but “at the time we took it, he took me to Kabiyesi Akiolu’s Palace to tell me why I should leave the place.”

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Accept FG offer above N60,000 as new minimum wage, Opeyemi Bamidele to labour

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The Senate Leader, Senator Opeyemi Bamidele, APC, Ekiti Central has pleaded with the Nigeria Labour Congress, NLC and the Trade Union Congress, TUC
to accept whatever the federal government offered them above N60,000 as the new minimum wage.

Bamidele urged the NLC and TUC to toe the path of dialogue and peace in the negotiation of a new minimum wage, which the President had promised to send a bill to the National Assembly for this purpose.

The Senate Leader has reiterated the need for Nigerians to demonstrate more patriotic spirit and oneness in their daily activities as the nation journeys through its socio-political trajectory towards the promised land.

He made the call in an Eid-el-Kabir message by his Directorate of Media and Public Affairs on Sunday, just as he highlighted some achievements of the administration of President BolaTinubu.

Bamidele said, “The federal government has conceded to N60,000, which translates to a 100 percent increase. But both NLC and TUC turned down this offer, leading to a two-day industrial action.

“The federal government has promised to make more concessions in this respect. As the federal government reveals its new offer, I plead with the organised labour to accept it in the national interest. The economy will remain in this condition. Collectively, we are taking multi-pronged measures to reverse disturbing economic indicators.”has conceded to N60,000, which translates to a 100 percent increase. But both NLC and TUC turned down this offer, leading to a two-day industrial action.

“The federal government has promised to make more concessions in this respect. As the federal government reveals its new offer, I plead with the organised labour to accept it in the national interest. The economy will remain in this condition. Collectively, we are taking multi-pronged measures to reverse disturbing economic indicators.”

While identifying with all Muslim faithful nationwide, Bamidele who noted that Nigerians, regardless of religion and tribes, should team up with and rally support for the Tinubu administration to safely steer the ship of the nation into a successful end, emphasised that no nation could travel the journey of national rebirth alone without the unwavering support of its citizens not minding their political, cultural and social backgrounds and orientations.

He assured that the current administration would leave no stone unturned in alleviating the economic hardship being faced by the majority of Nigerians and re-offer them a sense of pride in their home country.

In the spirit of the season, the Senate Leader urged all Muslims to emulate love and good neighbourliness exemplified by Prophet Mohammed (SWAT) during his time and how he related very well with people of other faiths and nationalities.

Bamidele who appealed that the ongoing reengineering efforts of the Tinubu Administration could only yield democratic dividends in an atmosphere devoid of insecurity, but where lives and property are protected, said: “Just to mention a few among ongoing projects like the 700 kilometres Lagos-Calabar Coastal Highway, the establishment of N50 Billion Pulako Initiative and annual recruitment of 30,000 new police personnel are Key Performance Indicators of this government.

“Only recently, this government declared a state of emergency in agriculture and launched the National Agricultural Development Fund with N100 billion, in addition to the Dry Season Farming Initiative and the Green Imperative Programme to ensure food security across the land.

“All these and other components of the 8-point Renewed Hope Agenda require the patriotic support and prayers for their deliverables to multiply at the doorsteps of Nigerians in the remaining three years of the first term of this government.”

He further urged the Muslim faithful to use the season of Eid el-Kabir to pray for the leaders of the country for divine wisdom and understanding that can match the enormous tasks of leading the country especially at a time when economic realities are not favourable around the world.

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