NBS: Taraba residents paid highest for petrol in August
Premium motor spirit (petrol) was most expensive in Taraba in August, a report released by the National Bureau of Statistics (NBS) has shown.
According to the premium motor spirit (petrol) price watch report for August, the average price paid by consumers in August increased to N148.78 per litre from N143.63 in July.
“Average price paid by consumers for premium motor spirit (petrol) increased by 2.26 percent year-on-year and month-on-month by 3.59 percent to N148.78 in August 2020 from N143.63 in July 2020,” the report read.
The states where petrol was the most expensive were Taraba at N153.67; Kebbi paid N153.65 and the average price of the product in Abia was N152.00.
The recent increase in the price of petrol is due to the federal government’s decision to cease the payment of fuel subsidy.
At present, petrol sells at between N158 and N162 per litre in Lagos, Nigeria’s commercial capital.
Similarly, the average price of kerosene witnessed a slight increase in August compared to July.
“Average price per litre paid by consumers for National Household Kerosene increased by 3.28 percent month-on-month and by 7.41 percent year-on-year to N346.53 in August 2020 from N335.54 in July 2020,” the NBS said.
Ebonyi, Enugu and Borno paid the highest for kerosene at an average price of N397.62, N395.87, and N393.61 per litre respectively.
The states with the lowest average price per litre of kerosene were Bayelsa (N257.78), Zamfara (N285.56) and Kebbi (N292.26).
According to the Diesel Price Watch report, the average price of the commodity decreased by -1.14 percent month-on-month to exchange at N221.88 from the earlier price of N224.43 in July.
Rivers, Enugu and Plateau had the lowest average prices for diesel at N197.07, N200.50 and N205.83 respectively.
Diesel was most expensive in Borno (N257.92), Adamawa (N246.00) and Taraba (N245.67).
Petroleum products marketers back FG on subsidy removal
The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), has commended the federal government for its decision to allow market forces determine the retail price of petrol.
In a statement on Sunday, Winifred Akpani, DAPPMAN chairman, urged the federal government to take a step further by fully deregulating the downstream sector to allow the sector enhance economic growth.
The government, in March, introduced a price modulation policy where international product prices and associated landing costs in Nigeria are used as input in the determination of final pricing to the local market by the government through the Petroleum Products Pricing Regulatory Agency (PPPRA) and disclosed periodically.
Commending the government for consistently seeking ways to reposition the sector for effectiveness and profitability, Akpani said DAPPMAN remained in full support of the implementation of a fully deregulated regime which will make the downstream sector’s operations more seamless, enhance transparency, competitiveness and sustainable growth.
“DAPPMAN is mindful of the commitment of the government and the functional organs managing the sector to ensuring value to every Nigerian and we salute them for this as we are indeed up against uncertain times,” she said.
“However, we believe that full deregulation of the sector remains the most viable option for Nigeria to effectively navigate this period and ultimately safeguard the future of our economy and wellbeing of 200 million Nigerians.”
Akpani explained that deregulation will open up the sector for fresh investments and diversification which will translate in stable demand and supply regimes that will ensure that consumers have uninterrupted access to affordable quality products without the huge financial burden currently borne by the government.
“DAPPMAN is aware of the considerations that have dogged the issue of deregulation over the years and we believe they are very important,” she said.
“However, we believe these considerations will be duly addressed with a deregulation regime that guarantees long-term benefits and empowers the government to commit savings made in the process to infrastructure development, job creation, agricultural revolution, education and health.
“This will spur the growth of small and medium-scale enterprises (SMEs) as well as large corporates, that would increase Nigeria’s human capacity index, competitiveness and ultimately drive inflow of foreign investments.”
Speaking on the association’s contribution to the fight against COVID-19, Akpani, who is the managing director of Northwest Petroleum and Gas Company Limited, said DAPPMAN contributed towards the upgrade of medical facilities, distributed tens of thousands of masks and sanitizers; and made donations of relief items.
Malabu: FG asks Shell, Eni to pay $1.1bn advance for damages
The federal government has asked Eni and Royal Dutch Shell to make an advance payment of $1.092 billion as damages for their involvement in the OPL 245 scandal, Reuters is reporting.
At an ongoing hearing into the corruption that allegedly took place during the acquisition of the Malabu offshore oil field, Lucio Lucia, lawyer for the Nigerian government, said the advance payment would be part of a larger damages package to be decided by the court.
The federal government alleges that the $1.1 billion paid by the companies were siphoned by government officials and Dan Etete.
In July, the prosecutors urged the court to fine Eni and Shell and some of their executives including Claudio Descalzi, Eni CEO.
On April 9, 1998, the federal military government awarded OPL 245 to Malabu Oil and Gas Ltd, which was said to be owned mainly by Mohammed Abacha, son of the Sani Abacha, and Etete, who was the petroleum minister at the time.
On July 2, 2001, President Olusegun Obasanjo revoked Malabu’s licence and assigned the oil block to Shell — without a public bid. Malabu went to court, but ownership was reverted to it in 2006 after it reached an out-of-court settlement with the federal government.
Shell fought back and commenced arbitration against Nigeria, but when President Goodluck Jonathan came to power in 2010, the controversy appeared to have been resolved with Shell and Eni agreeing to buy the oil block from Malabu for $1.1 billion.
In January, a federal capital territory (FCT) high court in Gwagwalada issued a warrant of arrest against Dan Etete, former minister of petroleum, over his alleged involvement in the $1.1 billion Malabu oil deal.
Mele Kyari: Outburst against removal of fuel subsidy is misplaced
Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), says the outburst against the removal of fuel subsidy is misplaced.
He stated this on Wednesday during an interview with Channels TV.
The federal government, in March, had announced that the Petroleum Products Pricing Regulatory Agency (PPPRA) would modulate pricing in accordance with prevailing market dynamics.
In line with the directive, the ex-depot price of petrol as determined by the Petroleum Products Marketing Company (PPMC) increased from N138.62 to N151.56 per litre in September 2020.
The ex-depot price is the cost at which the product is sold to marketers.
Following the ex-depot adjustment, the retail price of petrol has now risen to as high as N160 per litre, and opinions have been divided on the increase, considering the effects of the coronavirus pandemic on the economy.
However, according to Kyari, subsidy removal comes with a lot of gains, especially for the ordinary people.
“Every corruption that you are aware of in the downstream sector of this industry is one way or the other connected to fuel subsidy,” he said.
“It’s very understandable for people to get angry that prices have gone up. Just like the price of every commodity, when it goes up, there can be challenges that people will naturally face.
“But when prices go up, the other natural thing that must happen is that your income needs to increase so that you are able to procure the things that are now delivered at higher prices.
“You can’t do this anywhere in the world if there is no productivity and there will be no productivity except there is growth in infrastructural development, industries are able to work and there’s a connection between production and consumption.
“What subsidy does is to remove that connection and people are literally smoking cigarettes and expecting results. It requires courage to make this decision; only a Buhari regime can make this decision. The reason is very simple. People will not appreciate the fact that the lost opportunity is a situation where you have been spending an enormous amount of resources — over N10 trillion in the last eight to nine years — all trying to service that and that also includes the elements of FX resources that are lost to this.
“Subsidy itself, by every minute, is an elitist thing. It’s only the elite who would have three, four, five cars in the house, fill the tanks and also feel comfortable doing this. The ordinary man is the non-beneficiary. First, he loses in infrastructure; hospitals are not built; schools are not built and ultimately, the brunt of even corruption in the downstream sector is transferred to the ordinary man. Overall, you lose nothing and you get nothing.
“So, when people get angry, there is outburst of anger and this will come in from people who practically are not aware of this situation, are not aware of the losses, and most importantly, are being engineered into making those statements. We understand this very perfectly.
“So the outburst is very understandable, but I also believe very strongly that it is misplaced because Nigerians are not aware of the opportunities lost.”
Kyari maintained that the removal will eventually lead to a decrease in the prices with time, adding that the resources earlier channelled into subsidy will now be used to develop infrastructure in the country.
“You will see colossal increase of activities in the downstream sector of industry because it will be driven by the private sector. People will be able to build refineries. When you produce locally, you are able to have lower prices of this product, not to a very large extent, but clearly there will be some decline in the cost of product even as the market moves,” he said.
“So, overall, it will lead to businesses coming back, money (fuel subsidy resources) will be used for the establishment of infrastructure, schools and all that, and ultimately, the common man will benefit.”
Reps set up 30-member panel for speedy passage of PIB
The house of representatives has set up a 30-member committee for the speedy passage of the petroleum industry bill (PIB).
The sixth, seventh and eight assemblies failed in passing the legislation for the country’s oil sector.
In the case of the seventh assembly the lower legislative chamber passed it but the senate failed to concur.
The eight assembly subsequently broke the PIB into five components and passed the petroleum industry governance bill (PIGB) but President Muhammadu Buhari failed to sign the bill, citing some constitutional reasons.
A countdown by TheCable Petrobarometer showed that it has been 857 days since the president refused to assent to PIGB.
Before the federal lawmakers embarked on their annual recess in July, Senate President Ahmad Lawan said they were waiting for the executive to send the bill so they could begin work on it.
But the lower legislative chamber said it would not wait for the executive to begin work on it.
Speaking with Vanguard, Ndudi Elumelu, house minority leader, said the national assembly does not need to be tutored by the executive on the bill.
“We don’t need the Executive to tutor us. We are going ahead with considering the bill,” Elumelu said.
“An ad hoc committee has been set up with five people per zone, plus house whip as chairman and the chairman on banking and currency (Rep. Victor Nwokolo), as his deputy.”
NNPC enters $1.5bn oil prepayment deal with traders
The Nigerian National Petroleum Corporation (NNPC) has signed a $1.5 billion prepayment deal with oil traders led by Standard Chartered Bank and backed by Vitol Group and Matrix Energy.
Reuters reports that the financing package called Project Eagle was also backed by African Export-Import Bank (Afreximbank) and United Bank for Africa.
Quoting sources close to the agreement, Reuters said Vitol and Matrix will each get 15,000 barrels per day of crude oil as repayment over a five-year period starting in August.
Matrix, a Nigerian trader, was reported to have confirmed its participation in the deal.
Crude oil accounts for a large portion of Nigeria’s revenue and this has been greatly affected by the oil price crash caused by a pandemic-induced reduced demand.
According to the report, NNPC will use a “large portion of the money to pay taxes owed by its subsidiary NPDC” and the remainder will go towards operational expenses and capital expenditure.
Prepayment agreements are often used as a secure form of lending in commodity finance and the NNPC has entered into such agreements in the past.
In October 2016, Emmanuel Ibe Kachikwu, minister of state for petroleum resources at the time, asked India to pay $15 billion for oil advance.
PPPRA: Deregulation will force down petrol price
The Petroleum Products Pricing Regulatory Agency (PPPRA) says full deregulation of the downstream oil and gas sector will help force down the price of premium motor spirit (PMS) also known as petrol.
In a statement on Sunday, Saidu Abdulkadir, PPPRA executive secretary, attributed the recent increase in the price of petrol to cost of petroleum products in the international market and the cost of acquiring foreign exchange.
He explained that the newly-adopted market-based pricing system will promote the growth of the Nigerian petroleum industry and the economy in general.
“The agency is cognizant of the public outcry trailing the recent surge in petroleum products prices,” the statement read.
“However, this decision is a reflection of the new market-based pricing system, which does not seek to harm consumers but foster growth in the sector and prevent wastages resulting from the subsidy.
“The recent upward movement in pump price is becoming a bone of contention because of the fragile state of the economy.
“However, deregulation of the sector is in the country’s best interest because competition has a way of forcing down prices and ensuring that companies place a tight rein on production cost such that wastes that could be passed on to consumers in form of high prices are eliminated.
“The trillions of naira that would have been spent subsidising PMS could be injected into other key sectors such as agriculture, education, health, power and infrastructure.”
Abdulkadir said oil marketing companies have resumed fuel importation as against the previous scenario where the Nigerian National Petroleum Corporation (NNPC) was the sole importer.
According to the executive secretary, they have imported a total of 536,000 metric tonnes of PMS into the country.
In March, the federal government announced that the price of petrol will be set against market realities rather than the fixed N145 pump price.
Ijaw leaders threaten to disrupt AKK gas project over neglect of $16bn export processing zone
The Ijaw and Itsekiri people of Gbaramatu and Ugborodo in Delta state have threatened to disrupt the federal government’s $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
Speaking at a joint press conference on Sunday, Godspower Gbenekawa and Mike Odeli, representatives of Gbaramatu and Itsekiri respectively, demanded an immediate resumption of work on the abandoned $16 billion export processing zone (EPZ) in the state.
The EPZ project was inaugurated by Former President Goodluck Jonathan in March 2015 under the component of the gas revolution industrial park (GRIP) that comprises of the gas industry city at Ogidigben and the deep seaport at Gbaramatu.
President Muhammadu Buhari recently flagged off the construction of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, which he said would revive moribund factories and the development of new ones upon completion.
“It will interest you to note that the just concluded groundbreaking of the 614km long Ajaokuta-Kaduna-Kano (AKK) natural gas pipeline meant to convey gas to the northern part of the country, Morocco, the United Kingdom, etc. a 40-inches diameter pipeline expected to transport 3,500 million metric standard cubic feet (MMSCF/D) per day of dehydrated wet gas, which is the same amount of wet gas intended for the GRIP, in Warri south-west LGA but stalled for the former,” the leaders said.
“This is what we termed sheer insensitivity by a government that displays ill-attitude towards developing other regions, especially the ones that lay the golden eggs like ours.
“It beats our imagination as to how a government that claimed to practice and encourage local production suddenly deviate from its agenda rather than encourage local industrialization through projects such as the GRIP, instead opted to sustain the continued exportation of our natural gas without adding value to them.
“On this, while we are in total support of the AKK, we say the GRIP-EPZ must be continued or we will be constrained disrupt any attempt to continue with the AKK.”
Odeli also urged the Department of Petroleum Resources (DPR) to consider competent companies owned by indigenes of Itsekiri and Gbaramatu oil/gas communities.
The DPR has opened bidding rounds for 57 marginal oil fields in the country.
Sylva: We didn’t promise to keep petrol prices low permanently
Timipre Sylva, minister of state for petroleum resources, says the federal government did not promise to permanently reduce petrol price.
The pump price of petrol was fixed at N125 per litre in March and was reviewed downwards in April to N123.50.
In May, only the ex-depot price was reviewed downwards to N108 and the retail price was adjusted to N121.50 in June.
However, the price rose to N143.80 in July following a recommendation of the Petroleum Product Pricing Regulatory Agency (PPPRA).
The increase in petrol price led to public outcry, as Nigerians decried the government’s action amid the coronavirus pandemic.
In a statement on Wednesday, the minister said the price hike was not imposed on Nigerians but was necessitated by market forces.
Sylva said the deregulation of petroleum products was done after examining the effects of petrol subsidy.
He said the deregulation process eliminated the government’s monopoly and led to an open market for private investors, under the regulation of the government.
“After a thorough examination of the economics of subsidising PMS for domestic consumption, the FG concluded that it was unrealistic to continue with the burden of subsidizing PMS to the tune of trillions of naira every year. More so when this subsidy was benefiting in large part the rich rather than the poor and ordinary Nigerians,” the statement read.
“Deregulation means that the government will no longer continue to be the main supplier of petroleum products. But will encourage the private sector to take over the role of supplier of petroleum products.
“This means also that market forces will henceforth determine the prices at the pump. In line with global best practices, the government will continue to play its traditional role of regulation; to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers; a regulatory function not unlike the role played by the Central Bank of Nigeria in the banking sector; ensuring that commercial banks do not charge arbitrary interest rates.
“There was no time government promised to reduce pump price and keep it permanently low.”
— Ministry of Petroleum Resources, Nigeria (@FMPRng) July 9, 2020
Sylva said the government ensured that Nigerians benefited when the prices of crude oil reduced globally.
He said an increase in crude oil prices caused by market forces will also translate to an increase in retail pump price across the country.
“Petroleum products are refined from crude oil. Therefore the price of crude (the feedstock) for the refining process will affect the price of the refined product,” he explained.
“When crude oil prices were down, government, through its regulatory functions ensured that the benefits of lower crude oil prices were enjoyed by Nigerians by ensuring that PMS was lowered.
“At that time, we indicated that an increase in crude oil prices will also reflect at the pump.”
Sylva said there is a need to free up investment space in the midstream and downstream segment of the petroleum sector adding that Nigerians can “no longer avoid the inevitable and expect the impossible to continue”.
Reps probe NNPC over ‘$1bn illegal withdrawal’ from NLNG account
The house of representatives has resolved to investigate the Nigerian National Petroleum Corporation (NNPC) for “illegal withdrawals” from the Nigerian Liquefied Natural Gas Limited (NLNG) account.
At Tuesday’s plenary session, the green chamber accused the NNPC management of illegally withdrawing up to $1 billion from NLNG funds without due process.
The resolution followed a motion from Ndudi Elumelu, minority leader, who said the NNPC management tampered with the funds without first getting approval from states and the national assembly.
Elumelu said the NLNG, which was incorporated as a limited liability company in 1989, is jointly owned by the federal government — represented by the NNPC with a shareholding of 49 per cent — and other international oil companies.
He said the law provides that the NLNG dividends are to be paid into the consolidated revenue funds account and shared among the three tiers of government.
But the lawmaker said the NNPC had “without the required consultations with states and the mandatory appropriation from the national assembly, illegally tampered with the funds at the NLNG dividends account to the tune of $1.05bn, thereby violating the nation’s appropriation law.”
“The house is disturbed that there was no transparency in this extra-budgetary spending, as only the group managing director and the corporation’s chief financial officer had the knowledge of how the $1.05bn was spent,” he added.
“The house is concerned that there are no records showing the audit and recovery of accrued funds from the NLNG by the office of the auditor-general of the federation, hence the need for a thorough investigation of the activities on the NLNG dividends account.”
Thereafter, the house mandated the committee on public accounts to invite the managements of NNPC and NLNG “to conduct a thorough investigation on activities that have taken place on the dividends account and report back to the house in four weeks.”