Tag: price

  • ‘Why govt shouldn’t cap fuel price’

    It was wrong for the Federal Government to have capped the price of petrol following its deregulation, an oil magnate, Chief Bintan Famutimi has said.

    He said the price of the product should be set by market forces since government no longer subsidises and have opened up the subsector to private investors. This he noted will lead to competition in the industry and a further reduction in the price of the commodity.

    Chief Famutimi, who doubles as the Chairman of Tricontinental Oil Services Limited and President of the Nigerian-American Chamber of Commerce, spoke on phone. He  argued that  government has no business in fuel marketing, importation and distribution, adding that this has been the position of the Association of Oil Marketers for long.

    He said this is the reason why the country has ‘traditionally’ been suffering from fuel shortage, saying it is also the reason why private investors are yet to set up refineries in the country.

  • Fuel price hike not subsidy removal —Osinbajo

    Fuel price hike not subsidy removal —Osinbajo

    •Says new price regime was caused by scarcity of foreign exchange

    ice President Yemi Osinbajo yesterday alleged “many misconceptions” about the new petrol price of N145 per litre, stressing that  the new regime has nothing to do with subsidy removal.

    The new price came into effect on Wednesday from the former N86.50

    Osinbajo, is a statement titled ‘The Fuel Pricing Debate: Our Story’ and  personally signed by him, said the price was caused essentially by  foreign exchange problem in the face of dwindling earnings.

    He said: “I have read the various observations about the fuel pricing regime and the attendant issues generated. All certainly have strong points.

    “The most important issue of course is how to shield the poor from the worst effects of the policy.  I will hopefully address that in another note.

    “Permit me an explanation of the policy. First, the real issue  is not a removal of subsidy. At $40 a barrel there isn’t much of a subsidy to remove.

    “In any event, the President is probably one of the most convinced pro-subsidy advocates.

    “What happened is as follows: our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.

    “These marketers, up until three months ago, sourced their foreign exchange from the Central Bank of Nigeria at the official rate. However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough. (In April, oil earnings dipped to $550 million. The amount required for fuel importation alone is about $225million!) .

    “Meanwhile, NNPC tried to cover the 50% shortfall by dedicating more export crude for domestic consumption. Besides the short term depletion of the Federation Account, which is where the FG and States are paid from, and further cash-call debts pilling up, NNPC also lacked the capacity to distribute 100% of local consumption around the country. Previously, they were responsible for only about 50%. (Partly the reason for the lingering scarcity).”

    He said that the government realised that it was left with only one option: to allow independent marketers and any Nigerian entity to source their own foreign exchange and import fuel.

    Accordingly, government expected the marketers  to source foreign exchange at an average of about N285 to the dollar, (current interbank rate).

    “They would then be restricted to selling at a price between N135 and N145 per litre,” he said.

    “We expect that with competition, more private refineries, and NNPC refineries working at full capacity, prices will drop considerably. Our target is that by Q4 2018 we should be producing 70% of our fuel needs locally. At the moment, even if all the refineries are working optimally, they will produce just about 40% of our domestic fuel needs.

    “You will notice that I have not mentioned other details of the PPPRA cost template. I wanted to focus on the cost component largely responsible for the substantial rise, namely foreign exchange. This is therefore not a subsidy removal issue but a foreign exchange problem, in the face of dwindling earnings.”

  • New price regime will create additional 200,000 jobs – FG

    New price regime will create additional 200,000 jobs – FG

    New price regime will create additional 200,000 jobs – FG

    The Federal Government believes  the new price regime for the downstream petroleum sector will go a long way in  tackling  the hardship faced by Nigerians and create additional 200,000 jobs in the country,the News Agency of Nigeria (NAN) reported yesterday quoting  from a bulletin issued by the Ministry of Petroleum Resources.

    It said that the new price template would potentially create jobs through the envisaged new investments in refineries and retailing of crude oil products.

    It stated that the new pricing template would also prevent potential loss of nearly 400,000 jobs in existing investments in the sector.

    The bulletin explained that new framework would on the long run solve the recurrent fuel scarcity crisis by ensuring the availability of the products at all locations of the country.

    It said the measure would also ensure the total elimination of hoarding, smuggling and diversion of the product while also stabilising price at the actual product price.

    It stated that government, through the new price regime, would monitor the new price to ensure that citizens got a fair value for the products they purchased.

    It said the new price would enable marketers to source their foreign exchange independent of the Central Bank of Nigeria and ensure adequate product supply in all locations of the country.

    It explained that the measure would enable government to deliver on its statutory functions of power generation, security, provision of education and health.

    The document explained that the new price regime would permanently eliminate subsidy payments and ensure the availability of funds for the full payment of monthly Federal Accounts Allocation Committee.

    It will also provide additional funds for other palliatives and help in stabilising the economy by creating access to development loans.

  • TUC to government: Revert to old pump price immediately

    TUC to government: Revert to old pump price immediately

    The Trade Union Congress of Nigeria (TUC) yesterday asked the federal government to revert to the old pump price of petrol with immediate effect, giving the government up till May 18, 2016 to invite the leadership of organised labour for discussion on the way forward.

    In a communique at the end of an emergency National Executive Council meeting of the Congress in Lagos, the TUC said it will interface with the leadership of the Nigeria Labour Congress (NLC) and the Civil Society allies to work out action plans that would be put in place to protest the insensitive fuel price hike.

    The Communique, signed by the President of Congress, Comrade Bobboi Bala Kaigama and Ag Secretary-General Comrade Simeso Amachree, reads: “The National Executive Council (NEC) of the Trade Union Congress of Nigeria (TUC) at an emergency meeting, held on Friday 13th May 2016, in Lagos, deliberated extensively on the recent increase in the price of Premium Motor Spirit (PMS) also known as petrol by the Federal Government and passed the following resolutions.

    “The NEC-in-Session rejected in its entirety the astronomical increase in the price of petrol from N86.50 per litre to N145 per litre and demanded that the Government should revert to the old price regime with immediate effect.

    “The NEC in session gave the Federal Government up till Wednesday, 18th May, 2016, to invite the leadership of labour for discussion aimed at determining the appropriate way forward.

    “The NEC-in-Session also directed the leadership of the TUC to interface with the NLC and the Civil Society Allies to work out action plans that would be put in place to protest the insensitive fuel price hike should the Government fail to meet the Wednesday, 18th May, 2016 deadline”.

    At the time of this report, the Nigeria Labour Congress was yet to take a definite stand on the fuel price increase.

    An earlier Press conference scheduled by the congress for 4.00pm to disclose the out of their emergency NEC meeting was rescheduled for 12.00 noon on Saturday.

    A text message from the NLC headquarters, signed by the General Secretary, Dr. Peter Ozo-Eson, read: “this is to inform you that the press briefing today has been shifted to tomorrow, Saturday, 14th May, 2016. Time is 12 noon.”

  • Group condemns increase in petrol price

    The recent announcement by the Federal Government of the increase in price of petrol has been described as an insensitive act that will be resisted by the Nigerian people at the appropriate time.

    This was disclosed by a non-governmental organisation, Campaign Against Impunity and Domestic Violence (CAIDOV), in a press release signed by its Executive Director, Gbenga Soloki.

    The organization said:”From the increase, the government is insensitive to the plight of suffering Nigerians who are daily being subjected to more hardship by the ruling party.

    Since this government came on board last year, there has not been appreciable impact on the lives of the people.”

    It further said: “The increment is irresponsible, callous and condemnable. How can this government be so insensitive to the plight of the people when prices of products are on the increase. Any government that does not take into cognizance the interest of the people in its policies and programmes is anti-people and such policies should be rejected.”

    The CAIDOV urged the Federal Government to speedily consider the reversal of the price in the interest of the vast majority of the downtrodden masses of the country.

  • Abuja chamber backs new price

    The Abuja Chamber of Commerce and Industry Limited (ACCIL) yesterday expressed its support for the increment in the price of petrol.

    A statement by the President, Mr Tony Ejikeonye said:  “We believe that deregulating the petroleum downstream sector is a sure step towards economic and national development; therefore, we support it.

    “As a chamber of commerce and industry, we have always supported policies of government that are geared towards enhancing the welfare of Nigerians, especially business concerns.

    “Albeit the policy may seem to be draconian at first, nothing pays more than patience and sacrifice.

    “The policy will affect business operations but we believe that subsequent inflow or investment into the sector will crash prices.”

    Ejinkonye recalled that the same thing happened with cement and telecommunications and in the long run, it was good for the economy.

    According to him, countries like Indonesia, Ethiopia, Malaysia, where deregulation of the petroleum downstream sub-sector had gained ground never found it easy at first “but they endured, and are now enjoying’’.

    He expressed the belief that Nigerians would overcome the upheavals associated with the implementation of the policy and the gains realised from the subsidy removal, if properly managed, would aid provision of critical infrastructure.

    According to him, it will also accelerate employment opportunities for the youths.

    Ejinkonye said the Organised Private Sector in Abuja would continue to engage the government to ensure that companies licensed for building refineries delivered on their mandates.

    He said government alone could not absorb the graduates whose number increase geometrically yearly , given that investors employed domestic labour for their operations.

    He said the deregulation of the downstream sub-sector would further trim economic problems and lighten social burdens caused by government control.

  • Subsidy removal or price deregulation?

    SIR: The government of President Muhammadu Buhari appears to be confused. A couple of months ago, we were told that the government was no longer paying any subsidy on petroleum. And then lower prices were announced for the product, even when the product remained scarce.

    By late March, Minister of State for Petroleum, Dr. Ibe Kachikwu said petroleum would not be available in abundance until May. Now close to mid-May, the Buhari presidency came up with what some people term deregulation and subsidy removal at the same time.

    Are the two terms synonymous?

    The Executive Secretary of the Centre for Social Justice, Equity and Transparency (CESJET), Comrade Ikpa Isaac, is quoted as saying that the subsidy removal “will put a lasting end to the incessant fuel crisis which has put the nation and innocent citizens at the mercy of a certain cabal.” He laments, according to the report, that “Different revelations have emerged of massive fraud in the fuel subsidy process; trillions of naira are alleged to have been fraudulently stolen from the government purse in the name of fuel subsidy payments”, and that “It is heart-rending to discover that the country is being bled on the side despite its already anaemic financial status”.

    For more than six months, Nigerians have been held to ransom by the activities of the cabal on whose hands the administration has placed Nigeria’s petroleum resources. But, has the administration now deregulated petroleum sale or that it will no longer pay subsidy?

    It seems to me that what can be said with certainty is that the Buhari administration has pegged petroleum price at N145 per litre. It is not clear whether that means it has stopped subsidy or that it has deregulated the sale of petroleum. Since the administration has pegged the price, it is not simple deregulation, but regulated deregulation. That is not what happened in respect of mobile phone. Nobody pegged price until market forces crashed it.

     

    • Prof Oyeniran Abioje,

    University of Ilorin.

  • OTC 2016 attendance, exhibition dip over oil price slump

    OTC 2016 attendance, exhibition dip over oil price slump

    • As NNPC cuts turnout by over 50%

    The global oil price plunge had a negative impact on this year’s Offshore Technology Conference (OTC) attendance and exhibition.

    More than 68,000 from 120 countries attended against last year’s 94,700 attendees from 130 countries, while 2,500 companies participated in the exhibition against 2,682 in 2015.

    The Nation also learnt that due to the dwindling revenue because of fall in oil prices, representations of the Nigerian National Petroleum Corporation (NNPC) and the oil ministry, at the conference, were slashed by over 50 per cent.

    However, there were the usual exchange of ideas and presentation of papers on how to advance scientific and technical knowledge for safe, environmentally friendly operation and sustainable development of offshore oil and gas resources.

    The OTC Chairman, Mr. Joe Fowler, lamented the current industry reality, which is in its second year.  He however, stated that nearly 300 were new exhibitors, and international companies made up 51 per cent of the exhibitors. “As it has since 1969, the world came to OTC to make critical decisions, share ideas and develop business partnerships to meet global energy demands.

    “The commitment from OTC’s volunteers and staff ensured, regardless of the price of oil per barrel, that OTC upheld its unwavering commitment to delivering attendees unparalleled information on new technologies and global developments. Also, revenue from OTC directly benefits the member programmes of its 13 nonprofit sponsoring organizations.”

    OTC 2016 featured 11 panel sessions,24 executive keynote presentations at luncheons and breakfasts, and more than 325 technical paper presentations. Speakers including international and national oil companies; federal and regional government officials; and academic, presented their views on a wide variety of topics, including future industry directions, operational integrity and risk management.

    The industry downturn also affected Nigerian companies that had set up exhibition stands to attract Foreign Direct Investment (FDI) into the country. Besides, unlike last year, the Nigerian pavilion had few exhibitors.

    Kachikwu who was represented by NNPC’s Group Executive Director, Gas and Power, Mr. Saidu Muhammad while opening the Nigerian pavilion said: “There is need for us to look inwards and see how we can optimise cost to reduce the cost of production per barrel so that we can remain afloat.

    “You cannot reduce cost of production if you do not have Nigerian expertise in development of procurement materials.”

    The Chairman of the Petroleum Technology Association of Nigeria (PETAN), Bank Anthony Okoroafor stated that the association in partnership with the NNPC was considering measures to certify the competencies of companies that execute projects in the country’s petroleum industry. He also called for the deployment of about $600 million that has accrued to the Nigerian Content Fund (NCF) for upgrade of the industry’s in-country capacity.

  • Prayer has a price

    There is always a price tag, even when the service is prayer, which ought to be priceless and not pricey. The cost of prayers revealed by a former Executive Director of the Nigerian National Petroleum Corporation (NNPC), Aminu Baba-Kusa, is indeed costly. But it is necessary to distinguish between the cost of prayers and the costliness of those hired to pray.  At the end of the day, the cost of prayers is actually the cost of praying.

    Baba-Kusa who is facing trial with a former National Security Adviser (NSA), Col. Sambo Dasuki (retd.), and three others, said in his statement of witness filed in the High Court of the Federal Capital Territory (FCT):  “I approached the former NSA and discussed Boko Haram problems and I suggested there is need for prayers and he considered and accepted in 2013 when he first came to office. I personally sponsored many people locally and some few to Saudi Arabia. Some monies were later paid into our companies, which we paid to some of the mallams.” Baba-Kusa said he “used some of the mallams to organise prayers in Abuja, Zaria, Kano, Sokoto, Maiduguri, Kaduna and Saudi Arabia covering 2013 to 2015.”

    The prayer funder continued: “I give them funds as required from time to time, ranging from N500,000 to N30million, depending on their needs, traveling, sadaqat and others for local expenses and travels to Saudi Arabia for Umrah and Hajj…Most of the payments in cash were meant to give out cash to people that have been organising prayers.” Baba-Kusa added: “The proposal made to the former NSA was not documented by him or myself. The verbal proposal to him was for prayers to overcome Boko Haram within the shortest possible time. The engagement for prayers by organising some people to be praying was not formally written down. There was no amount of money agreed on. I said to him, I will start organising, which he agreed and said he will see what he would give at a later time.”

    In the end, the cost of organising these prayers came to N2.2 billion, according to Baba-Kusa.  But he reportedly kept no records of the expenditure. He was quoted as saying:  “I requested for no acknowledgement from them when I gave money to them.” Baba-Kusa said he had spent over N700 million of his own money on the prayer contractors before he started to ask Dasuki for money that was disbursed through the Office of the National Security Adviser (ONSA).

    Alfred Lord Tennyson says “More things are wrought by prayers than this world dreams of.” In the context of the sensational revelations by Baba-Kusa, it would appear that more money is gained by organising prayers than this country dreams of.

    Without suggesting the probability of fraud, although that may well be the case, Baba-Kusa’s tale is not only suspicious but also ludicrous. The global village now knows for sure that public funds meant for fighting and winning the terror war, running into billions, were rerouted by powerful individuals in the discredited Goodluck Jonathan presidency. The corruption-spiced narrative is still unfolding, with Dasuki right in the middle of the mess.

    Under Jonathan, the country witnessed the absurdity of an ill-equipped national army struggling to overcome a mere militia. A panel probing past arms deals found out that the Jonathan administration purchased substandard weapons to fight Boko Haram extremists. The corruption-related finding further exposed the Jonathan administration’s scandalously counter-productive approach to the anti-terror war. There is an unmistakable connection between the mess of corruption and the messiness of poorly armed soldiers facing reportedly better armed terrorists. It is no longer debatable that the previous government didn’t do enough to checkmate the terrorists. Or, put more pointedly, the Jonathan government ironically did enough to ensure the prolongation of the war.

    The point is that the prayer financiers and the prayer service providers were disadvantaged by design. In other words, even while prayers were being organised at a colossal cost, there was a colossal lack of capacity on the battlefield as a result of a colossal diversion of funds meant to equip the country’s fighters for victory.

    Prayer may have a role in governance, but it requires the role of government to achieve the desired goal. The tragedy of Baba-Kusa’s confession is that it tends to give prayer providers a bad name. In the circumstances, prayer could not have reinforced what was non-existent. Since there was no anti-terror war as such, what was prayer meant to do? The situation defied the wise saying “Work and pray”. Even if there were prayers for Boko Haram’s defeat, the war effort was inadequate to realise the objective.

    On the question of work and prayer, Jonathan, a Christian, played the pilgrim and visited Israel twice during his four-year term, specifically in 2013 and 2014. It was not difficult to guess that Jonathan’s repeat pilgrimage was probably connected with his 2015 re-election dream. Jonathan’s 2014 itinerary in the sacred land included a visit to the Wailing Wall, where he reportedly prayed privately before going to Mount Tabor and Mount Carmel, and other spiritually significant sites. Interestingly, the highlight of the pilgrimage was a prayer for Nigeria at an interdenominational church service with the theme, “A day with Jesus for Nigeria in Israel”.  Whether Jonathan had a day with Jesus, or whether Jesus had a day with Jonathan, his defeat in the presidential election that crowned President Muhammadu Buhari was an eye-opening lesson that the power of prayer can be limited by the poor performance of power.

    This lesson should not be lost on President Buhari who interestingly visited Saudi Arabia recently for prayers, apart from the business of leadership.  Buhari visited Medina and the Grand Mosque in Makkah, where he reportedly prayed for the peace and unity of Nigeria. Buhari may pray for the country because the country may need prayers to escape its hellish situation.  But he should also remember that prayers may not be enough without work. Nigerians want him to work and make the country work.

    It could be useful to engage in prayers or engage prayer providers, but the ultimate approach is to work so that prayers may work for the achievement of purpose.

  • ‘Local oil firms worst hit by price crash’

    The global oil price crash affected Nigerian independent oil companies most, the Managing Director of Seplat Petroleum Development Company Plc, Mr. Austin Avuru has said.

    Avuru spoke yesterday at the 13th Aret Adams Annual Lecture Series held in Lagos. Speaking on this year’s lecture themed: ‘Low Oil Prices: Challenges and Opportunities,’ he said  independent oil companies in the country were heavily impacted as they all borrowed to fund acquisitions and capital expenditure (capex) growth.

    He said many independents are now cash negative and yet need more investments for production increase in order to survive, adding that the average price of $60 per barrel was required for most companies to survive this year.

    “We need to embrace effective domestic utilisation of fossil fuels to survive, and because Nigeria is heavily dependent on oil to balance the economy, the drop in oil price was a huge blow to the country’s revenue,” Avuru said.

    The Managing Director, Chevron Nigeria Limited, Mr. Clay Neff said Nigeria had the opportunity to improve its competitive position in the global oil and gas industry.

    He noted that in this current situation, the country should restore investors confidence by providing competition in the oil market, adding that the security of lives and properties, and control stability and speedy approval processes should also be institutionalised.

    The Chevron chief said the country should address its Joint Venture (JV) funding challenges and pay the arrears, adding that Nigeria had an attractive resource base.