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Tag: IMF

  • IMF projects $2tr climate migration investment by 2030

    IMF projects $2tr climate migration investment by 2030

    The International Monetary Fund (IMF) has said by 2030, climate mitigation investment needs will increase to about $2 trillion yearly in emerging market and developing economies (EMDEs).

    The Fund said a substantial investment in low-emissions technologies such as renewable energy is needed to reduce global greenhouse gas emissions to net zero by 2050.

    According to the International Energy Agency,  the climate mitigation investment cash represents about 40 per cent of global investment needs.

    “Our estimates suggest that the share of private finance must increase significantly. By 2030, private finance will have to cover about 80 per cent of the climate mitigation investment needs in EMDEs. Excluding China, the private financing share is even higher—about 90 per cent,’’ it said. 

    Read Also: Nigeria to boost shrimps’ exports

    The Fund also directed that private sector will have to cover a major share of the large climate mitigation investment needs in the EMDEs. 

    It explained that EMDEs face challenges in attracting private climate finance such as their often low credit rating, which limits the potential investor base. 

    It said climate policies of major banks and insurance companies are not yet aligned with net zero emission targets. 

    “Despite the growth in sustainable investment funds, a small share of the invested money is dedicated to creating a positive climate impact,” it said. 

    The Fund explain that given the political hurdles to implementing carbon pricing and EMDE-specific challenges, a broad mix of policies is needed to create an attractive environment for private climate mitigation finance in EMDEs. 

    It said structural policies are key to lowering the cost of capital, mobilising domestic financial resources, and improving credit ratings in EMDEs. 

    “Another essential part of the policy mix is financial sector policies, which should refocus on creating climate impact and consider the specific circumstances of EMDEs. In low-income countries additional international support and policy initiative will be needed.

    “The IMF Resilience and Sustainability Facility, by supporting reforms, can help create an enabling investment environment and attract private capital,” the fund said.

  • How can avert debt crisis, by IMF

    How can avert debt crisis, by IMF

    The International Monetary Fund (IMF) has suggested key steps to be taken by Nigeria and other Sub-Saharan economies to avert debt trap.

    Data from the Debt Management Office (DMO) shows that Nigeria’s total debt stood at $113.4 billion (N87.3 trillion) as at June 30. 

    As of last December 31, the total public debt stock was N46.25 trillion (or $103.11 billion). The naira devaluation had spiked Nigeria’s debt position to current level. 

    The fund advised Nigeria and other economies within the region to establish clear debt goals that balance debt sustainability with development objectives, rather than just focusing on short-term deficits.

     “In many sub-Saharan African countries, fiscal policy often prioritises short-term goals without a clear long-term plan. This lack of planning leads to frequent breaking of fiscal rules and a growing public debt,” it stated.

    Also, African countries should undertake fiscal adjustments to bring debt back to a safer level.

    Analysis by IMF staff noted that many countries in the region must cut their budget shortfalls in the years ahead. For the average country, the amount of adjustment is about 2 to 3 per cent of GDP.

    “On the other hand, a few countries have very large adjustment needs; for them, it is unlikely that fiscal consolidation alone will be enough to ensure fiscal sustainability. It may need to be complemented by debt reprofiling or restructuring,” it said.

    The IMF also suggested that Sub-Saharan African countries should be non-reliant on expenditure cuts to reduce their fiscal deficits. Although this may be warranted in some circumstances, revenue measures, like eliminating tax exemptions or digitalising filing and payment systems, should play a greater role.

    The Britton Wood financial institution argued that mobilising domestic revenue is less detrimental to growth in countries where initial tax levels are low, whereas the cost associated with reducing expenditures is particularly high given Africa’s large development needs.

    The fourth measure is to strengthen budget institutions to improve the implementation of fiscal plans as they help countries avoid budgetary slippages, as well as decrease the risk of extra-budgetary commitments, which are widespread in the region.

    Read Also: IMF: Nigeria, others can avert debt crisis

    Lastly, the IMF emphasised that public acceptance should be a central consideration in policy design – for instance, by sequencing reforms carefully and introducing compensatory measures.

    The IMF said the average debt ratio in sub-Saharan Africa has almost doubled in just a decade—from 30 per cent of Gross Domestic Product (GDP) at the end of 2013 to nearly 60 per cent of GDP by the end of 2022.

    It explained that while the debts were rising, repayment costs have also spiked.

    The IMF  revealed that the region’s ratio of interest payments to revenue, a key metric to assess debt servicing capacity and predict the risk of a fiscal crisis, has more than doubled since the early 2010s and is now close to four times the ratio in advanced economies.

    As of 2022, over 50 per cent of the low-income countries in sub-Saharan Africa were assessed by the IMF to be at high risk or already in debt distress.

    To avoid a looming debt crisis in the region the IMF identified five policy actions African governments can take to preserve public finances’ sustainability while also achieving the region’s development goals.

  • IMF: Nigeria, others can avert debt crisis

    IMF: Nigeria, others can avert debt crisis

    The International Monetary Fund (IMF) has suggested key steps to be taken by Nigeria and other Sub-Saharan African (SSA) economies to avert debt trap.

    Data from the Debt Management Office (DMO) shows that Nigeria total debt stood at $113.4 billion or N87.3 trillion as at June 30, 2023. 

    As of December 31, 2022, the total public debt stock was N46.25 trillion or $103.11 billion. The naira devaluation had spiked Nigeria’s debt position to current level. 

    IMF advised Nigeria and other economies within the region to establish clear debt goals that balance debt sustainability with development objectives, rather than just focusing on short-term deficits.

    “In many sub-Saharan African countries, fiscal policy often prioritises short-term goals without a clear long-term plan. This lack of planning leads to frequent breaking of fiscal rules and a growing public debt,” it stated.

    Also, African countries should undertake fiscal adjustments to bring debt back to a safer level.

    Analysis by IMF staff noted that many countries in the region must cut their budget shortfalls in the years ahead. For the average country, the amount of adjustment is about two to three per cent of GDP.

    “On the other hand, a few countries have very large adjustment needs; for them, it is unlikely that fiscal consolidation alone will be enough to ensure fiscal sustainability. It may need to be complemented by debt reprofiling or restructuring,” it said.

    The IMF also suggested that Sub-Saharan African countries should be non-reliant on expenditure cuts to reduce their fiscal deficits. Although this may be warranted in some circumstances, revenue measures, like eliminating tax exemptions or digitalising filing and payment systems, should play a greater role.

    Read Also: Repositioning Nigeria Customs through multi-stakeholders collaboration

    The Britton Wood financial institution argued that mobilising domestic revenue is less detrimental to growth in countries where initial tax levels are low, whereas the cost associated with reducing expenditures is particularly high given Africa’s large development needs.

    The fourth measure is to strengthen budget institutions to improve the implementation of fiscal plans as they help countries avoid budgetary slippages, as well as decrease the risk of extra-budgetary commitments, which are widespread in the region.

    Lastly, the IMF emphasised that public acceptance should be a central consideration in policy design – for instance, by sequencing reforms carefully and introducing compensatory measures.

    The IMF said the average debt ratio in sub-Saharan Africa has almost doubled in just a decade—from 30 per cent of Gross Domestic Product (GDP) at the end of 2013 to nearly 60 per cent of GDP by the end of 2022.

    It explained that while the debts were rising, repayment costs have also spiked.

    The IMF revealed that the region’s ratio of interest payments to revenue, a key metric to assess debt servicing capacity and predict the risk of a fiscal crisis, has more than doubled since the early 2010s and is now close to four times the ratio in advanced economies.

    As of 2022, over 50 per cent of the low-income countries in sub-Saharan Africa were assessed by the IMF to be at high risk or already in debt distress.

    To avoid a looming debt crisis in the region the IMF identified five policy actions African governments can take to preserve public finances’ sustainability while also achieving the region’s development goals.

  • Sunmonu to Buhari: don’t succumb to IMF pressure on fuel subsidy

    The founding President of the Nigeria Labour Congress (NLC), Alhaji Hassan Sunmonu, has advised President Muhammadu Buhari not to adhere to the recent call by the International Monetary (IMF) to remove subsidy on petrol if he does not want to lose the support of the people.

    Sunmonu spoke yesterday in Lagos during the public presentation of the Minority Report & Draft Constitution of the 1976 Constitution Drafting Committee, a document authored by Dr. Olusegun Osoba (not the politician) and the late Yusufu Bala Usman.

    The trade unionist, who chaired the event,  said Nigeria should not go back to the 1980s when the country became a debtor nation and the IMF influenced the cut in subsidy on education, health, transportation, as well as the stopping of the rail system that was being built then.

    He said: “Now, the Buhari administration is bringing back the railways – not even the narrow gauge, but the standard that you can have trains that can run at 200 kilometres per hour or more. This is what the IMF influenced our government under Babangida to stop. After it destroyed our education, it now came up with what it called IMF support for education.

    “So, we want President Buhari to be very, very careful of the neo-liberalists that surround him and who are intent on taking Nigeria back to those dark days; Nigerians would no longer accept such. I also like to advise that this book which has been launched today should be the basis for a new constitution that we hope will be done within the next to one year, to supplant the one that is currently taking Nigeria backwards.”

    Speaker after speaker at the event emphasized the fact that the problems bedevilling the country today would have been nipped in the bud if the authorities then had accepted the report and made it part of the constitution.

    The co-author of the book, Dr Osoba, 83, said restructuring is a recurring lie in the lexicon of the ruling class because it is presented as a one-stop solution that can solve all the economic and social ills in the country. He said restructuring as being presented by its proponents is all about creating more states and introduction of resource control, to give more opportunities and access to the ruling class to continue to loot the treasury.

    Osoba said: “They’re only talking about sharing power and wealth horizontally, among states, ethnicity and religion; not vertically from top to bottom and that’s the most important form of restructuring. The continuous struggle is the only solution to our problem; not restructuring.

    Read also: Is fuel subsidy ideologically inevitable?

    “We stand to present this book, which we hope will correct the problems facing the nation – through a democratic constitution.”

    He said change cannot come easily to Nigerians and that they have to struggle for it because the people at the helm of affairs would not allow it because the status quo favours them. He said change can only be brought about by overthrowing the existing order. He said all the developed nations of the world had, at one point or the other, overthrew the old order to make progress.

    Attahiru Bala Usman, son of the co-author, the late Yusufu Bala Usman, also said the “Minority Report” would add value because there were many things that were thrown out by the soldiers that foisted the current flawed constitution on Nigerians. He said the report is now published with a new introduction to bring it to the knowledge of the public and to make it available to members of the National Assembly; so that Nigerians can talk about it.

    Usman said: “We are going to give this to all members of the National Assembly, civil society groups. The same way people struggled for Nigeria’s independence, the same way people struggled to abolish slavery, the same way other people are going to struggle to improve this democracy.”

    Centre for Democratic Development Research and Training Director Dr Abubakar Siddique Mohammed said the book could not be launched 42 years ago, because they were attacked by the police when they attempted to do so.

    He said: “At that time, the government did not want the public to know what was in the document, they didn’t want it. So, a majority of the members of the Constituent Assembly also didn’t want it released. But we decided that given the magnitude, the weight of the document and what the document was trying to deal with, the Nigerian public should know so that there will be public debate as to what should be the content of our constitution. So, we shouldn’t allow the government to bury it. So we organised the rally.

    “Since then so many things have happened in Nigeria. We decided to revisit this report because of major developments in this country in which the report actually raised 42 years ago. For example, 42 years ago, they said anybody who has attained the age of 30 can contest elections in Nigeria. The issue of social justice – the right to education, the right to health, security and so on and so forth – they (the report) mentioned that it should be made justiciable, but they were ignored. If you look at certain sections of the 1999 Constitution, they are there, but all these things are not justiciable. You can’t take your governor to court because he has denied you education, he stole the money and did not build schools; you can’t take anybody to court because he failed to build hospitals or hospitals have been built but he has failed to equip them; you can’t take anybody to court because he has failed to protect your life. Yet, we vote money every year for security.

    “Look at what is happening all over the country; the things these people (the two authors) talked about, wrote about and warned us about 42 years ago, we are now facing. Take the issue of citizenship. The simple definition of citizenship; we have a simple definition of citizenship (in the report). Now we have two: citizenship of Nigeria and citizenship of a particular state and this clash has led to a series of conflicts in this country.”

    The director said thousands of people have died because of this indigene/settler issue. He added: “They (the authors) predicted that there would be problems if it wasn’t solved 42 years ago. We are now facing the problem. Even those who rejected the report at that time are now talking about them.”

    Book reviewer Femi Falana explained what led to the writing of the “Minority Report”. He said the report came up because the two members of the Constitution Drafting Committee disagreed with the report authored by the remaining 47 members, led by the late Rotimi Williams (SAN).

    Falana said if Osoba’s and Usman’s input had been accommodated, it would have helped to solve some of the problems currently facing the country.

     

  • Sunmonu to Buhari: ignore IMF pressure on subsidy

    Founding President of the Nigeria Labour Congress (NLC), Alhaji Hassan Sunmonu, has advised President Muhammadu Buhari not to adhere to recent call by the International Monetary (IMF) to remove subsidy on Premium Motor Spirit (PMS) otherwise known as petrol.

    He warned the President lose public goodwill should he heed the call.

    Sunmonu gave the advice on Tuesday in Lagos during the public presentation of the Minority Report & Draft Constitution of the 1976 Constitution Drafting Committee, a document authored by Dr. Olusegun Osoba and the late Yusufu Bala Usman that was not allowed to see the light of day by the military administration of Gen. Olusegun Obasanjo.

    The trade unionist said Nigeria should not go back to the 1980s when the country became a debtor nation and the IMF influenced the cut in subsidy on education, health, transportation, as well as the stopping of the rail system that was being built then.

    He said: “Now, the Buhari administration is bringing back the railways – not even the narrow gauge but the standard that you can have trains that can run at 200 kilometers per hour or more. This is what IMF influenced our government under Babangida to stop. After it destroyed our education, it now came up with what it called IMF support for education.

    “So, we want President Buhari to be very, very careful of the neo-liberalists that surround him and who are intent on taking Nigeria back to those dark days.”

    Speaker after speaker at the event emphasised the fact that the problems bedeviling the country today would have been nipped in the bud, if the authorities then had accepted the report and made it part of the constitution.

    The co-author of the book, Dr. Osoba, 83, said restructuring is a recurring lie in the lexicon of the ruling class because it is presented as a one-stop solution that can solve all the economic and social ills in the country.

    He said restructuring as being presented by its proponents is all about creating more states and introduction of resource control, to give more opportunities and access to the ruling class to continue to loot the treasury.

    Osoba said: “They’re only talking about sharing power and wealth horizontally, among states, ethnicity and religion; not vertically from top to bottom and that’s the most important form of restructuring. Continuous struggle is the only solution to our problem; not restructuring.”

    Attahiru Bala Usman, son of the co-author, the late Yusufu Bala Usman, also said the “Minority Report” will add value because there were many things that were thrown out by the soldiers that foisted the current flawed constitution on Nigerians.

    He said the report is now published with a new introduction to bring it to the knowledge of the public and to make it available to members of the National Assembly so that Nigerians can talk about it.

  • Rising Debt: We are mindful of our borrowings, says FG

    The Minister of Finance, Mrs Zainab Ahmed says while government borrows to deliver on its promises, it was also mindful of rising debt burden, which eats up about 25 per cent of the country’s annual earnings.

    Ahmed said this in an interview with the News Agency of Nigeria (NAN) on the side-line of the just concluded IMF/World Bank meetings, which took place in Washington DC from April 9 to 14.

    Nigeria currently has an external debt stock of about 24.27 billion dollars as at December 31, 2018.

    Euro bonds, loans from World Bank Group, China and Africa Development Bank Group make up over 80 per cent of the country’s debt stock.

    Ahmed insisted that in spite of warnings by the IMF and World Bank, the country was not in any way near a debt crisis.

    “The World Bank and IMF are cautioning us on the rate at which we are borrowing.

    “They are also cautioning us on the need to build fiscal buffers because the global economy is going to be facing some risks and we agree with that.

    “We are very mindful of the level of our borrowings. Our borrowing is very much within fiscal limits right now.

    “What we are doing is to increase our revenue generating capacity to make it easier for us to meet our debt obligations and our routine as well as capital expenditure,’’ she said.

    NAN Correspondent raised concerns about whether the Chinese loans to finance the Idu-Kaduna, Lagos-Ibadan and Abuja light rail projects, the expansion of four airport terminals and some hydroelectric projects across the country were healthy for the nation’s economy.

    The Correspondent also raised concerns about whether the conditions for the loans were favourable to the overall interest of Nigeria.

    Ahmed responded saying: “To borrow, we go through several processes of assessments as well as negotiations.

    “We make sure we get the best possible terms and whether we are borrowing from financial institutions or in Europe or China or anywhere else, we try to get the best rates of borrowing.

    “So far, the conditions we’ve got are very good ones,’’ she said.

    Ahmed restated the commitment of the President Muhammadu Buhari-led administration to ensure that the country grows in a manner that would bring many people out of poverty.

    According to her, it is for this reason that the government takes its social investment programmes like the school feeding, Conditional Cash Transfers to the poor and vulnerable and trader moni programme, very seriously. (NAN)

  • IMF: between sour grape and candour

    The International Monetary Fund (IMF) is sure in prime “advisory” mood, the way it shells out advice, literarily by the dollar!

    First, IMF’s loving lament, like some hot lover in scalding tryst, on Nigeria’s account.  Now, IMF is the hot lover.  Nigeria is the coy partner.

    The language of love — now, not those guttural sweet nothings lovers trade in the “other room” but the hot exchange of the international economy — is Nigeria’s rising loan activity with China.

    IMF is asking Nigeria to slow down on the China loan track.  Too many booby traps, it claims without exactly using those words, are there to snap you into international peonage, with China, which takes no prisoners, as the new international slave driver!

    What is unclear though, is IMF’s angst.  Does it want to repudiate international capitalist peonage?

    Or it simply resents the rude reality that China is emerging a hot rival to the monstrous metropolitan powers IMF represents, and on behalf of whose economies it spreads African and Third World under-development, wrapped in sweetened “reforms”, to further consolidate the Western economic hegemony on the globe?

    Whichever way, it’s good lesson for Nigeria, even as the Buhari Presidency continues to ramp up infrastructure, under an alternative economic paradigm — infrastructure that decayed, no thanks to high corruption, during the supreme reign of Breton Woods orthodoxy, in the Nigerian economy, with disastrous consequences.

    For Nigeria, it would be tragic indeed, to exit Western peonage but be snared in China’s.  There is no comfort in any slave chamber, no matter how gilded its chains.

    But it all boils down to fighting corruption with rigorous accountability.  Those loans must be used for the infrastructure they are meant; and everything must be done to ensure steady cash flow, from the new modernized rails, as booming mass transit business.

    That way, you pay back your loans without much stress, and move on to other mutually beneficial partnerships.  So, throwing the scarecrow, on the Nigeria-China loan issue, cannot be enough reason to clamber back to IMF and co., and their cruel conditionalities.

    Truth be told: Nigeria’s infrastructure, though still on the mend, is clearly far better served, with less than four years of Chino-Nigeria collaboration, than under Western capitulation, from 1986 under IBB-era SAP; and its various policy mutations, since 1999, under the Obasanjo era, that terminated in 2015.

    IMF has also been singing some not-so-new love songs on the fuel subsidy question — and Zainab Ahmed, Nigeria’s Finance minister, appears already getting charmed!

    The IMF song isn’t new — remove petroleum subsidy, and divert the gains to social services, blah, blah, blah!  That sick deja vu is rattling, for we had heard such humbug, that amounted to nothing, in the past.

    Let PMB and his government be told: petroleum subsidy is a wrong policy price the government has to pay.  However it pays it is its own business.  So, if the minister sings a tune that Breton Woods makes sense, Hardball hopes she remembers the import-processed-petroleum-journey-to-nowhere, was integral to IMF’s orthodoxy, which the Obasanjo-era again embraced like merry serfs. That dumb policy has greatly contributed to the present-day economic cripple.

    So, the minister should not delude herself the government would pass the so-called subsidy to the people and not face bitter resistance.  Instead, let the government  ramp up the processes of local refining.  That way, subsidy dies a natural death — and everyone lives happily ever after!

    Besides, this republic should have strong voices that speak for the poor and the vulnerable.  Enough of this elite selfish agenda, that pass the huge cost of avoidable policy mistakes on to the mass of the people — in form of the so-called “subsidy removal”.

     

  • The dragon lives!

    Had Nigerians not lived for so long with the pathology of denial to the point where it is now second nature, one would be sympathetic to the feigned outrage over the latest reminder by the IMF about the rumblings of the ghost we thought we had long committed to mother earth. Having enjoyed the breather all these while, it took last week’s reminder by an institution that could, in the eyes of most Nigerians,  pass  for the veritable messenger of Satan – the International Monetary Fund (IMF) to again draw attention to the under-recovery element in the fuel-pricing template. As far as Christine Lagarde, IMF Managing Director is concerned, that  element and the consequences thereof, which she says has claimed about $5.2 trillion, needs to be hived off – perhaps with automatic alacrity – so Nigeria can live!

    Soon after, the fuel marketers switched to the panic mode. The oil sector unions – theNigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) later picked up the gauntlet. In their joint response to the IMF, they blamed the body for creating panic the result of which was the hoarding of petroleum products, panic buying observed in some parts of the country last  week.

    Not only that, the two unions considered it “bewildering and baffling that the IMF is not considering the pains and agonies Nigerians went through even to achieve the acknowledged gains of 2018, with almost two-thirds of the world’s hungriest people among Nigerians”.

    “One wonders why the IMF is still callously and wickedly advising the government to inflict more pains and harm on the people”.

    The Nigerian Labour Congress (NLC) on its part says that the continued devaluation of the Nigerian currency is what has created the impression of the existence of subsidy. According to its president, Ayuba Wabba, as long as the value of the naira was left to market forces, the issue of subsidy would continue in the country.

    The arguments though familiar, are certainly as old as the subsidy itself.  I  understandthe current anger in the context of the existential realities that have defined the daily struggles of the ordinary citizen, particularly the stats which show how further down Nigerians have plumbed on vital socio-economic indices. Part of that reality is the finding in the report by The World Poverty Clock that Nigeria has overtaken India as the country with the most extreme poor people (some 86.9 million, representing nearly 50% of the population) in the world despite having its population seven times larger than Nigeria’s. Then of course is the latest Misery Index 2018, which ranks Nigeria as the 6th most miserable nation in the world.

    To those familiar with  the position of this columnist, the point of divergence has always been the denial of the basic economics which underlay the subsidy debate right up to the ensuing policy stasis that it bred. As it is, the only progress that the country could claim to have made is the agreement that the under-recovery element does in fact exist. If that is progress, the issue of how to address it in a way that does not further injure the economy or take more citizens down the poverty route has not only remained a tough call for successive governments, the rentier economy spawned by the subsidy and its associated culture of opacity has  made it a no-no to Nigerians.

    Let’s for once forget the IMF; does anyone know how much the subsidy currently cost the treasury? How many litres of petrol does the country consume daily? Doubtful if anyone knows for certainty. However, we know for a fact that the subsidy bill grew from roughly N300 billion during the administration of late President Umaru Yar’Adua to N1.9 trillion under President Goodluck Jonathan. Today, no-one knows how much the NNPC spends to bridge the price differential; the only thing Nigerians know is that their state oil corporation does little else than import fuel since importers, according to the government,  have long abandoned the business due to reason of under-recovery. Trust me, the busines is thriving with some estimates putting the annual spend on the subsidy alone in excess of N1 trillion – close to the 50 percent of the N2.03 trillion earmarked for capital expenditure in the 2019 budget.

    That is bad public finance and economics – if you ask me. The only thing that could be worse – or if you like more toxic – is the failure by IMF and cohorts to recognise the subsidy as something of a constantly moving target not only subject to the vagaries of oil prices but exchange rate fluctuations. For an import-dependent country like Nigeria with a relatively unstable currency, the IMF prescription is the surest route to disaster; as for the other  alternative, which requires the country to continue to shell out a trillion naira annually to subsidise petrol consumption, it is akin to swallowing poison in small doses.

    This is where the NLC and the IMF are both right and wrong.

    First,  had the NLC shunned its traditional brashness which tended to foreclose contrary opinions, the nation most probably would have long before now, made a headway in putting appropriate policies in place to address the problem. By the way,  what happened to the billions of naira loan given to NLC for its mass transit services to cushion the effects of the Jonathan-era subsidy removal?

    As for the IMF, apart from the fact the officials do not live here and so could be excused for assumptions that are at variance with the Nigerian reality;  theirs is at best advisory. What the Nigerian government makes of it is entirely its business.

    However, the issue at this time is hardly one of right or wrong but what is best for the country.

    Clearly, the easiest solution is to have the government build more refineries. I say the easiest but not necessarily the best solution as the option comes with the requirement that we trust a government that could not fix its ailing refineries to launch new ventures – a most unrealistic proposition at this time.

    The other option which is already bearing fruits, is to get more private sector players like Dangote Refineries on board to address not just the domestic supply gap but to address permanently the other macro-economic issues associated with the fuel import trade. Understandably, Nigerians claim to love the idea; the issue is whether they are prepared for the removal of any form of price ceilings by whatever name which will inevitably come with true liberalisation. With the commencement of operations of the largest single train refinery in the world slated for April 2020 – less than a year from now, only when that singular issue is firmly settled can we begin the talk of interring that Nigerian dragon. 

  • Long fuel queues amid IMF’s call for subsidy removal

    Long queues have resurfaced at filling stations raising fears of fuel scarcity. The Nigerian National Petroleum Corporation (NNPC) has since allayed such fears. Although there was improvement in supply yesterday, many outlets remain shut in anticipation of shortage. Assistant Editor EMEKA UGWUANYI examines the cause of this development.

    It all started with the speculation that there was shortage of fuel imports. Eventually, three days ago, many retail outlets were shut. The few that were selling had very long queues as motorists waited patiently to fill their vehicles tanks and buy some in kegs to keep as reserves and for domestic use, in expectation, the fuel scarcity will escalate.  Many of the filling stations that claimed not to have the product, it was later discovered, were only hoarding to sell at a higher price or to those that hawk fuel in gallons by the roadside, should the scarcity worsens. However, the stakeholders in the downstream especially the fuel marketing firms under the aegis of Major Oil Marketers Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) in collaboration with the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR) were able to bring the situation under control.

    Cause of the current scarcity

    The NNPC has been the sole importer of premium motor spirit (PMS) or petrol in the past few years as players in the downstream couldn’t import and sell at the regulated price pump price of N145 per litre. The NNPC as a state-owned organisation pays the shortfall that arises from subsidizing the product from the Federal Government coffers under the term “under-recovery cost.” Under-recovery, according to the NNPC, is the amount of subsidy the Corporation gains on behalf of the government for the importation and supply of petroleum products at a landing cost above the official retail pump price of N145 per litre of petrol. To industry analysts, there is no difference between under-recovery and subsidy. But because the Federal Government had said it has stopped payment of fuel subsidy but refused to deregulate the price of petrol, the NNPC adopted the under-recovery approach to be able to access public fund, which the private sector oil marketers cannot. Therefore, whenever there is a slight delay in NNPC’s fuel imports, it reverberates and the impact is fuel scarcity and that is what happened in this scenario.

    Read also: Disregard rumour of fuel scarcity, NNPC tells Nigerians

    As Nigeria is almost 100 per cent dependent on imported petrol for national consumption, issues arising from delays in the arrival of ships carrying fuel to some cargoes being off-specification. In the case of the consignment being off-spec, it is either the industry regulator, turns the vessel back to the place of import or the product would be blended to specification before being pushed out to the public for consumption. These issues occur often but because they are promptly resolved, the consuming public doesn’t get to know or feel it.

    According to the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN) Mr Clement Isong, who told The Nation early enough on Friday that the scarcity that existed wouldn’t last beyond the weekend, said their members had enough stock. He said there was no scarcity and advised fuel consumers not to engage in panic-buying as what led to the gap in fuel supply and distribution, which resulted in the queues at fuel stations, was a minor operational problem. The problem, according to him, has been addressed and depots are loading 24 hours and whatever supply gap will be closed within the weekend. Companies that makeup MOMAN include Total Nigeria Plc, Conoil Plc, Oando Plc, 11Plc (formerly Mobil Oil Nigeria Plc), MRS Oil Nigeria Plc and Forte Oil Plc.

    Isong said: “All MOMAN members’ tanks have the product (petrol). There is no supply shortage. What caused the queue is a minor operational hitch. Whenever there is such technical issue and it takes up to 12 hours to resolve, it upsets supply and distribution chains and that is what happened in this scenario because it created backlogs of loadings that could have been done much earlier. However, the problem has been resolved. I advise the public not to embark on panic-buying as there is enough fuel. The gap in supply created by the technical problem will be closed within the weekend as our members are loading 24 hours through the weekend.”

    An official of one of the depots owned by the Independent Petroleum Marketers Association of Nigeria (IPMAN) who didn’t want his identity disclosed said the problem was a slight scarcity. According to him, during the election period, the Nigerian National Petroleum Corporation (NNPC) didn’t make enough fuel imports. As a result of that shortage in import, there wasn’t enough fuel to go round and the NNPC has ever since been rationing what it has in stock. He said for instance, “If 10 depots supposed to get supply from NNPC and only five depots were able to get at the end of the day, certainly there must be a gap and that is the reason you see queues at the filling stations. We have marketers that have paid for fuel in our depot in the past two to three weeks and they are yet to be loaded because of inadequate fuel but I believe that supply shortfall will be addressed soon. It is not something so serious, I assume it was a costly responsibility oversight on the part of the NNPC.”

    The National President of IPMAN, Chief Chinedu Okoronkwo, also confirmed the fuel scarcity was created by rumours. He said: “There was no need for panicking over fuel scarcity as virtually all the NNPC depots across the federation had fuel and were loading product to marketers. Marketers are currently loading petrol in Makurdi, Kano, Enugu, Aba, Yola, Suleja, Kaduna, Ejigbo, Mosinmi, Ibadan and other depots across the country. The shortfall in distribution was due to the slow pace of product importation and hitches at the jetty, which had been addressed. But the Federal Government is on top of the situation, there is enough petrol to go round. I have also instructed all our members to ensure adequate distribution of the product across the country.

    “I have also directed them to ensure the product is sold at the official price of N145 per litre. If there are any issues on distribution and pricing differentials, members should call the secretariat for further action. The Petroleum Products Pricing Regulatory Agency’s (PPPRA) template has not changed, so no marketer should influence hike or sell above official price.”

    Okoronkwo restated IPMAN’s commitment to supporting the Federal Government’s efforts on effective and efficient distribution of petroleum products across the country, adding that the Association had reached an agreement with other marketers for better synergy in making the product available in the country. “IPMAN which controls 80 per cent outlets has more advantage in distributing and dispensing in both urban and hinterlands in the country. In line with the Federal Government’s efforts at ensuring efficient petroleum products distributed across the country, IPMAN members have opted for seamless distribution of petroleum products,” he said.

    The Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN,) said that NNPC distribution pricing had been a major issue for depot owners, adding that for now, no members had product in his facilities. Adewole said the price at which NNPC gives their members product and other charges make it extremely difficult for them to sell at regulated depot price. “It’s not profitable because we are getting it between N139 and N140 per litre with other additional charges, therefore, at what price do we sell it?

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  • NLC to FG: Don’t accept IMF recommendation

    The Nigeria Labour Congress (NLC) has warned the government against implementing the recommendations of the International Monetary Fund (IMF) on the removal of subsidy on petroleum product. President of Congress, Comrade Ayuba Wabba, who spoke in Abuja, insisted that if the country can refine what it consumes locally, the issue of subsidy will not arise.

    Wabba also said that the continued devaluation of the Nigerian currency has created the impression of the existence of subsidy, adding that as long as the value of naira is left to market forces, the issue of subsidy will continue in the country, adding that efforts should be made by government to upgrade the nation’s refineries. He disclosed that as President of the International Trade Union Confederation (ITUC), he recently led organised labour across the world to a meeting with the IMF and the World Bank and told them point blank that their one stop recommendation on subsidy removal and other sundry policy recommendation to the third world are not working and will not work.

    He said: “let me tell our country and our government that certainly they should be wary of IMF and their advices. I saw that many media houses are trying to amplify that the IMF has recommended that subsidy should be removed. In the first instance, is there subsidy? This is a question we have not been able to answer. “I want to collaborate what President Buhari said years back that subsidy is actually corruption and that whoever is subsidizing is aiding corruption and we stand by that position. In fact, that has remained a consistent position of the NLC. We can kill that issue of subsidy if we refine our products locally for our domestic use.

    “Refineries can be upgraded from one capacity to another. The four refineries we have, if serviced and upgraded, can service our population and the entire West Africa sub region. But because it pays more for corrupt tendencies to thrive, we prefer importation than refining our product for domestic use. Whereas we celebrate countries like Venezuela that have stood their ground to say no; the policies must work for the people and not for the capitalist, our own case is a sorry one.

    “You own crude oil, you pay for it to be extracted from the ground, you pay for it to be taken outside to be refined, you pay for tax to where you took it to and you also pay to bring it back to your country for consumption. If we are not able to refine for local consumption, there will be no end because the devaulation of our currency will continue except we are able to address some fundamental issues associated with that. This is an issue that we should be able to address once and for all.”