The Nation Newspaper

Tag: revenue

  • Reps to probe NNPC over N350b revenue loss

    Reps to probe NNPC over N350b revenue loss

    The House of Representatives is  to investigate a N350billion revenue loss incurred by Nigerian National Petroleum Corporation (NNPC) within eight months last year.

    The Committee on Petroleum Resources (Upstream), has also been mandated to audit oil and gas infrastructure in Nigeria to ascertain the status of the equipment and techniques.

    This followed the adoption of a motion  by Abubakar Amuda-Kannike (APC, Kwara), who regretted that oil spillages have led to  health issues, including breathing problems and skin diseases for people in the affected areas.

    Besides,  a major reason for the spillages in Nigeria is that many of the country’s oil firms used obsolete and inadequate infrastructure to channel and distribute petroleum products in the country, he noted.

    Amuda-Kannike said it should be of great concern to Nigerians the report of the Institute for Global Energy Research that the oil exploration equipment of Shell Petroleum Development Company (SPDC) in Nigeria was over 40 years old as against the permissible life span of 25 years.

    In addition, he explained that a percentage analysis of causes of oil spills established by the same institute showed that corrosion of pipes and tankers accounted for 50 per cent of oil spills.

    While sabotage accounts for 28 per cent, oil production operations account for 21 per cent and inadequate or non functional production equipment is put as one per cent, he added.

    He said: “One is concerned that most of the government’s efforts to address these issues were curative rather than preventive, such as establishment of regulatory agencies like the National Oil Spill Detection and Response Agency (NOSDRA), the Department of Petroleum Resources (DPR) and Federal Environmental Protection Agency (FEPA), all of which have resulted in addressing the effects while doing little to be proactive enough in preventing the causes of oil spillages.

    He said: “As part of the strategy of reducing the adverse effects of the activities of the oil majors in Nigeria, old and obsolete infrastructure as well as old habits of doing things must give way to modern techniques and procedure.”

    On the investigation of the N350billion loss, the House said  87 per cent  of the loss was incurred by Pipeline Products Marketing Company (PPMC), the distribution arm of NNPC.

    Sponsor of the motion, Toby Okechukwu (PDP, Enugu), while justifying the need for the investigation said NNPC crude oil and products distribution pipeline network covers 5,120 kilometers, 21 distribution depots, 9 liquified petroleum gas (LPG) depots, pump stations/houses and other ancillary  facilities.

    He said the pipeline distribution network transports crude oil and refined products to and from the refineries, depots and jetties and as a national grid pipeline which transverses over 25 cities including Port Harcourt, Aba, Enugu, Makurdi, Warri, Benin, Auchi, Lokoja, Mosimi, Atlascove, Ejigbo, Ibadan, Ore, Abaji, Suleja, Kaduna, Kano, Gusau, Jos, Gombe, Yola, Maiduguri among others.

    He lamented that non utilisation of the distribution pipelines led to transportation of products through roads, thus resulting in countless incidence of petrol tanker explosions in various parts of the country and heavy tolls on road network.

  • Raking in more revenue through tourism

    THE global crash in world oil price has negatively affected the country. The income that the country had hitherto generated from sales of crude oil has dwindled drastically. This has affected the government’s ability to carry out projects and fund its expenditures. It is, therefore, exploring means of earning income outside oil that currently contributes more 90 percent of the country’s GDP.

    Recently, the New Telegraph newspapers in their maiden economic summit titled ‘Nigeria: Beyond the Oil Economy’ brought in experts to look at how the country can generate income through other sectors of the economy. In the light of the huge figures tourism generates every year in the world and manifest transformation it has brought to many countries, it was no surprise that tourism was among the economic sectors discussed as possible areas the nation could diversify into.

    The former governor of Delta State, Dr. Emmanuel Uduaghan, chaired the tourism session with a paper presentation by the ex-Director General of the Nigerian Tourism Development Authority (NTDC), Otunba Segun Runsewe, titled: ‘Our Heritage, Our Destination in a New Economy’.

    The paper and the discussion brought to the fore the huge tourism assets the country has and how the country could tap into them to help in transforming the economy and earn income.

    In his paper, Runsewe said the country, through tourism, could generate millions of jobs since tourism is human labour intensive. This, he said, could solve the high rate of youths unemployment and create millions of jobs in the country.

    He said: “With over 350 ethnic groups, Nigeria is the most culturally plural and most culturally diverse nation in black Africa. The richness of her natural environment and her culture and diversity of her people readily makes the Nigeria a potential tourist destination of choice in Africa. “

    Runsewe said areas such as eco-tourism, cultural cum historical tourism could be developed to attract tourists.

    His words: “Nigeria is generally known to have the most fascinating and most cultural festivals in the whole world. These cultural festivals are expressed in songs, dance, drama, incantations and so on. Festivals are an integral part of Nigeria’s culture, depicting the country’s custom and tradition in a very colorful way. These offer tourists unique opportunity to sample Nigeria’s culture in its undiluted form.

    “In fact, Nigeria has comparative advantage over other African countries in cultural tourism. Many of the cultural festivals in Nigeria have gained international prominence and have continued to capture the fancy of international audience.”

    Runsewe said nations like the United Arab Emirates who also have oil, new that oil does not last forever and as such started planning for post oil economy by diversifying to other sectors to generate income. The sector they turned to was oil. He said Nigeria could equally do the same.

    He concluded: “The reality of today requires that hitherto neglected sectors like agriculture, manufacturing , mining, solid minerals, among others, must strengthen in order to evolve and consolidate the economic base of our nation.

    “Above all, specific attention must be placed on our tourism sector in the process of diversification. This sector has shown greater prospect than oil. While the oil is good, tourism is better; while oil is exhaustible and has some negative effects on our environment, tourism is sustainable and environmental friendly.”

    In his contribution, Uduaghan said it was because of period such as the one the country was in that during his administration, he was harping on the phrase Delta beyond oil. Other discussants on tourism were Otunba Wanle Akinboboye, Tourism Consultant to the Ooni of Ife and proprietor of La Campagne Tropicana, Ikegun, Lagos and Mr. Ashamu Fadipe, former Permanent Secretary, Lagos State Ministry of Tourism and Inter-governmental Relations.

    Besides the online presence, Wakanow has over 25 travel centers across Nigeria with an intention to open 100 centers by the end of 2016.  Wakanow also has offices in Dubai, UK and Ghana. New offices are planned in the US and Kenya.

    In a bid to diversify her business, Wakanow has also gone into the ground transportations business with the acquisition of Oya.com, a local bus, cargo and car hire services company.

  • Concession ‘has raised ports revenue’

    Concession ‘has raised ports revenue’

    What has changed at the ports since their concession in 2006? A lot, says a senior official of the Federal Ministry of Finance (FMoF).

    The Nigerian Ports Authority (NPA) management, the official said, has been running the ports efficiently.

    NPA, the official said, generated $140 million in 2005 before the concession and over $450 million from the Lagos Ports in 2014.

    Speaking with The Nation, the official said, the government has been earning more income since the concession.

    The government, he said, conces-sioned the ports to generate more revenue and allow for greater flexibility, efficiency and better services to importers and other port users by resolving some of the major challenges confronting ports operations.

    The turnaround time in 2005, at the Lagos Port complex and Tin-Can port, he said, was 10.0; vessel waiting time was 3.0.

    In 2014, the official pointed out that the turnaround time and vessel waiting time had reduced to 4.0 and 1.3.

    “Concession is a process whereby the concession grantor gives the right to operate a facility and/or deliver a service of public interest to a merchant concessionaire, against the commitment assumed by the concessionaire to build and manage the subject of the concession or to manage the delivery of service at the concessionaire’s own risk,” the official said.

    Before the 2006 concession, the official said, the ports demonstrated very low levels of efficiency, which resulted in long turnaround times for ships and increased container dwell time.

    In today’s global commerce, he said, seaports play an important role of being many nations’ major gateway for international trade and are a good instrument for measuring the economic health of a nation.

    “The ports have considerable influence on the volume and conditions of trade as well as the capacity for economic development of nations still developing.

    “In our country, greater percentage of international trade is routed through the sea, and given our huge population, it is believed that our economy accounts for over 70 per cent of all seaborne trade in the West African sub-region. Hence, the country’s ports are increasingly challenged to meet the pressure mounted from movement of ships and cargo in and out of the ports.

    “The Federal Government embarked on the concession of the ports basically to solve the protracted problems of inefficiency, corruption, mismanagement and huge debts that characterised the ports, then.

    “The rationale behind the concession includes the $34 million indebtedness of the NPA, the redundancy of 24 out of 83 managers as well as its poor management structure. Emphatically, concession of the ports refers to lease of port terminals and re-organisation of stevedoring companies. About 110 applications were received in December 2003 and out of 94 pre-qualified concessionaires, only 20 were granted to operate seaport terminals for 10 to 25 years,” the official said.

    Since the concession was done, the official said:

    • The cost of port services is competitive;
    • The turnaround time has improved;
    • The percentage of berth occupancy rate has improved;
    • The infrastructural facilities have improved significantly and
    • The security around the seaports has improved.

    The official, however, lamented the poor access roads to the Lagos ports and urged President Muhammadu Buhari and the Minister of Transport to address the perennial gridlock in Apapa.

    NPA’s General Manager Wester Ports, Chief Michael Kayode Ajayi said the current management is working to ensure that the ports become “the leading Port in Africa, to deliver efficient port service in a safe, secure and customer-friendly environment.  Our core value includes efficiency, safety, security, customer friendly and new innovations”.

    Ajayi said Nigerians have forgotten that before the concession, the “turnaround time for ships was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged; cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable, leading to shipping companies hiring these machines from private sector sources after having paid for it.

    Dwell time for goods in ports, he said, was prolonged due to poor port management. “There was congestion in the port; corruption was high among contractors and various service providers at the port; the ports were rated as one of the costliest seaports in the world, as a result of the compounded problems.

    “Many port premises and quay aprons had fallen to disuse and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow; following the seaport congestion, complaints of untraceable or missing cargoes were being regularly leveled against the NPA,” Ajayi said, adding that the security inside the ports was said to have been compromised by the activities of camp-boys,  wharf-rats  and other miscreants operating inside the ports.

    Association of Nigerian Licensed Customs Agents (ANLCA), President, Prince Olayiwola Shittu, said with the huge equipment at the ports and the introduction of standard in the type of vehicles that can enter the ports, “NPA has brought efficiency to the ports.”

  • Raking in more revenue through tourism

    Raking in more revenue through tourism

    THE global crash in world oil price has negatively affected the country. The income that the country had hitherto generated from sales of crude oil has dwindled drastically. This has affected the government’s ability to carry out projects and fund its expenditures. It is, therefore, exploring means of earning income outside oil that currently contributes more 90 percent of the country’s GDP.

    Recently, the New Telegraph newspapers in their maiden economic summit titled ‘Nigeria: Beyond the Oil Economy’ brought in experts to look at how the country can generate income through other sectors of the economy. In the light of the huge figures tourism generates every year in the world and manifest transformation it has brought to many countries, it was no surprise that tourism was among the economic sectors discussed as possible areas the nation could diversify into.

    The former governor of Delta State, Dr. Emmanuel Uduaghan, chaired the tourism session with a paper presentation by the ex-Director General of the Nigerian Tourism Development Authority (NTDC), Otunba Segun Runsewe, titled: ‘Our Heritage, Our Destination in a New Economy’.

    The paper and the discussion brought to the fore the huge tourism assets the country has and how the country could tap into them to help in transforming the economy and earn income.

    In his paper, Runsewe said the country, through tourism, could generate millions of jobs since tourism is human labour intensive. This, he said, could solve the high rate of youths unemployment and create millions of jobs in the country.

    He said: “With over 350 ethnic groups, Nigeria is the most culturally plural and most culturally diverse nation in black Africa. The richness of her natural environment and her culture and diversity of her people readily makes the Nigeria a potential tourist destination of choice in Africa. “

    Runsewe said areas such as eco-tourism, cultural cum historical tourism could be developed to attract tourists.

    His words: “Nigeria is generally known to have the most fascinating and most cultural festivals in the whole world. These cultural festivals are expressed in songs, dance, drama, incantations and so on. Festivals are an integral part of Nigeria’s culture, depicting the country’s custom and tradition in a very colorful way. These offer tourists unique opportunity to sample Nigeria’s culture in its undiluted form.

    “In fact, Nigeria has comparative advantage over other African countries in cultural tourism. Many of the cultural festivals in Nigeria have gained international prominence and have continued to capture the fancy of international audience.”

    Runsewe said nations like the United Arab Emirates who also have oil, new that oil does not last forever and as such started planning for post oil economy by diversifying to other sectors to generate income. The sector they turned to was oil. He said Nigeria could equally do the same.

    He concluded: “The reality of today requires that hitherto neglected sectors like agriculture, manufacturing , mining, solid minerals, among others, must strengthen in order to evolve and consolidate the economic base of our nation.

    “Above all, specific attention must be placed on our tourism sector in the process of diversification. This sector has shown greater prospect than oil. While the oil is good, tourism is better; while oil is exhaustible and has some negative effects on our environment, tourism is sustainable and environmental friendly.”

    In his contribution, Uduaghan said it was because of period such as the one the country was in that during his administration, he was harping on the phrase Delta beyond oil. Other discussants on tourism were Otunba Wanle Akinboboye, Tourism Consultant to the Ooni of Ife and proprietor of La Campagne Tropicana, Ikegun, Lagos and Mr. Ashamu Fadipe, former Permanent Secretary, Lagos State Ministry of Tourism and Inter-governmental Relations.

  • NEPC sees non-oil revenue rising to $25b

    NEPC sees non-oil revenue rising to $25b

    Earnings from non-oil export are expected to jump from $2.7 billion to $25 billion by 2025, the Nigeria Export Promotion Council (NEPC) has predicted.

    It said this would be achieved through its new strategy tagged: ‘Zero Oil Plan’.

    Its Executive Director/Chief Executive Officer (CEO), Mr Olusegun Awolowo, described the plan as a strategy to mobilise private and public resources to replace oil as the country’s major source of foreign exchange (forex).

    He said this became inevitable in the face of the fall in global oil prices, adding that the era of Nigeria depending on oil as its primary source of forex was gone.

    According to him, the country’s continued reliance on oil would only decrease its economic fortunes, stressing that it was high time the nation embarked on non-oil exports.

    He said the Council had taken a proactive step at increasing Nigeria’s forex earnings through non-oil exports by developing the zero oil plan.

    He said: “The Zero Oil Plan is a coherent agenda to mobilise public and private resources towards replacing oil as our number one source of forex.

    “Under the plan, Nigeria will position itself to gain at least a five per cent share of a total value of world exports in strategic sectors over the next 10 years, to ensure sufficient scale of production and prevent sudden market distortions.

    “At the end of ten years, it is hoped that our non-oil export revenue would increase from $2.7billion in 2014 to $25billion in 2025.”

    He further said the Council, in collaboration with an indigenous export consulting firm, is undertaking a practical and detail training series that would build a crop of knowledgeable exporters to raise the contribution of the non-oil export sector to the Gross Domestic Product (GDP) of the country.

    According to him, the training tagged: ‘The making of new exporters’, aims at training would-be exporters through the entire process of export business from conception to execution and after care services by experts from the sector who will play the role of mentors.

    “The programme, which was slated to run for nine months, was targeted at creating market opportunities for Nigerian exporters as well as providing a veritable platform for training new crops of exporters that would help enhance the quality of Nigeria’s exportable goods,” Awolowo added.

  • Debt service to revenue ratios: matters arising

    Debt service to revenue ratios: matters arising

    The federal and state governments spent 28.1 per cent of their combined N6.32 trillion revenue for 2015 on debt service. The figure, expected to rise marginally to 35.32 per cent this year, is far below the 80 per cent statistics given by the Islamic Development Bank. COLLINS NWEZE writes on the need to sustain healthy debt service to revenue ratios across all tiers of government.

    Nigeria expects to spend 35.32 per cent of its revenues servicing debt this year, up from 28.1 per cent for both federal and state governments in 2015, the Debt Management Office (DMO) has said.

    The two-year debt service ratios released by the debt office showed that of the N6.32 trillion combined revenues for state and federal governments in 2015, only 28.1 per cent went to debt service in 2015. However, the figure will rise marginally to 35.32 per cent of the N3.85 trillion revenue for the Federal Government alone, this year.

    These figures by the debt office have put to rest claims by the Islamic Development Bank (IDB) that the country spends about 80 per cent of its revenue to service debt.

    The IDB Country Representative in Nigeria, Mumammed Kiliaki, ranked Nigeria among the countries using the largest percentage of its revenue to service foreign debts. He declared that Nigeria spent 80 per cent of her revenue on debt servicing.

    Kiliaki, who spoke during an interaction with Senate Committee on Local and Foreign Debts, headed by Senator Shehu Sani, said the development was responsible for the bleeding of the economy.

    He said though Nigeria’s debts to Gross Domestic Product (GDP) ratio is low at 17 per cent, adding that the resources being used to pay the debts were enormous. He said for Nigeria not to get itself suffocated by such huge debt servicing profile, there was the urgent need for the country to expand the scope of its resources through diversification of the economy.

     

    Debt profile

    Nigeria’s total debt increased to N12.60 trillion ($65.42 billion) as of December 2015, up from N11.2 trillion in 2014, the DMO announced. In  a statement on its website, the DMO said foreign bonds and loans stood at $10.7 billion or N2.1 trillion at the end of December, equivalent to about 16 per cent of total debt and up from $9.71 billion at the end of 2014.

    It also disclosed that domestic debt rose to N8.83 trillion last year, up from N7.9 trillion in 2014. DMO added that domestic debt of states stood at N1.65 trillion or $9.85 billion. The DMO’s statement comes on the heels of announcement by the African Development Bank (AfDB) that Nigeria had requested for a loan of $1 billion to help fund its budget deficit for 2016 fiscal year.

    The Federal Government has said it is planning to borrow as much as $5 billion to help fund the expected deficit of N3 trillion in 2016, which is up from an initial N2.2 trillion estimate.

    Minister of Finance, Mrs. Kemi Adeosun, disclosed that  Nigeria held talks with the World Bank and was considering options to borrow from the AfDB and China Exim Bank.

    Adeosun said about $4 billion might come from international institutions and the balance from Eurobonds.

    In December, President Muhammadu Buhari presented a N6.08 trillion budget for  the year to the National Assembly, an increase from N4.4 trillion for 2015, which the government hopes will help tackle an economic crisis triggered by the plunge in oil prices.

    However, the DMO Director-General, Dr. Abraham Nwankwo, insisted that the country’s public debt-to-GDP remained sustainable despite the slump in crude oil prices. According to him, while other countries base their borrowing on debt- GDP ratio of 56 per cent, Nigeria will not exceed 19.39 per cent until 2017.

    He said: “Our debt continues to be sustainable, despite all these volatilities in the international capital market and the collapse of oil prices. However, it does not mean that Nigeria should go and sleep, and hope that providence will continue to provide for them.”

    He noted that the country has abundant resources in agriculture, solid minerals, Information Communications Technology (ICT), among others, that offer ample opportunity for diversification of the economy to boost revenue.

    It will be recalled that during her visit to the country last month, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, said given the determination and resilience so far displayed by Buhari and his team, Nigeria does not need any loan from the Fund.

    She stated that though Nigeria did not need IMF loan, fiscal discipline was needed for the country to be sustainable.

     

    Debt servicing

    Data from the DMO showed that the total external debt service payment for the year 2004 was $1.75 billion compared to $1.81 billion in 2003, reflecting a decrease of $0.054 billion or 3.01 per cent. The external debt service payments of $1.75 billion comprised of principal repayments of $1.17 billion, and interest payments and commitment charges of $0.589 billion.

    Payments to the Paris Club creditors took the lion’s share amounting to $0.994 billion or 56.67 per cent. $0.487 billion or 27.77 per cent was paid to multilateral institutions, $0.090 billion or 5.14 per cent to London Club, $0.171 billion or 9.76 per cent to the Promissory Note holders and $0.012 billion or 0.66 per cent to non-Paris Club Bilateral creditors.

    “The $1.75 billion debt service paid in 2004 is actually well below the debt service due for the year of $2.99 billion. This arises from the fact that Nigeria has not fully serviced its Paris Club debts, as an amount of $2.23 billion was due while only $0.99 billion was paid. The shortfall transforms into arrears and attracts severe penalty interest. This very process has contributed to the explosion in Nigeria’s external debt stock over the years,” the debt office said.

     

    DMO’s monthly auction

    A report by FBN Quest, an investment and research firm, said the DMO’s monthly auction of FGN bonds last Wednesday raised its target of N100 billion from the sale of three issues including a new 20-year benchmark. The total bid of N262 billion was highest since July 2014 when the DMO launched a new long bond.

    The firm explained that the figure was no coincidence since the Pension Fund Administrators (PFAs) have a healthy appetite for long-term assets to match their liabilities. The prevailing abundance of liquidity, it said, would equally have fuelled demand. The DMO can also be pleased with the downward monthly trend in marginal rates.

    The cut-off point of 12.40 per cent for the new March 2036 compares with that of 12.15 per cent for the previous benchmark (the July 2034).

    The FBN Quest explained that since inflation has picked up by three percentage points in the intervening period and since offshore interest has evaporated, the DMO should be pleased with the new effective coupon on the instrument.

    It demanded that the 2016 budget should be approved well before the next auction, which would give the DMO a better platform for its issuance calendar for June, this year.  The Federal Government’s budget proposals project net domestic issuance this year of N950 billion. The onus falls upon the DMO since the CBN’s sale of treasury bills is likely to remain flat.

    In 2004, the DMO made plans to build on the success of the first FGN Bonds floatation that were first issued in 2003. The DMO embarked on the arrangements to commence the issuance of bonds on a regular basis in small tranches that the market could accommodate.

    The DMO commenced the smoothening and restructuring of the Treasury Bills in 2004. The restructuring entailed extending the maturities of the existing Treasury Bills by issuing tenors of six, 12, 24, and 36 months, to refinance part of the existing 91-day Treasury Bills.

    The Nigerian Bond market remained undeveloped, particularly the secondary market for government securities and the DMO put in place a framework for the development of a vibrant secondary market.

    The DMO was established on October 4, 2000 to centrally co-ordinate the management of Nigeria’s debt, which was hitherto being done by a myriad of establishments in an unco-ordinated fashion. This diffused debt management strategy led to inefficiencies.

    It was expected that the coming of DMO would lead to good debt management practices that make positive impact on economic growth and national development, particularly in reducing debt stock and cost of public debt servicing in a manner that saves resources for investment in poverty reduction programmes.

    The body is also expected to prudently raise financing to fund government deficits at affordable costs and manageable risks in the medium and long term; achieve positive impact on overall macro-economic management, including monetary and fiscal policies; avoid debt crisis and achieving an orderly growth and development of the national economy.

     

    Lagos IGR example

    CBN data for 2014 revealed that internally generated revenue (IGR) provided 21.8 per cent of the total revenue of the 36 states and the Federal Capital Territory, compared with 15.3 per cent the previous year.

    Aggregate IGR grew by 37 per cent to N801 billion from N586 billion in 2013. Again, Lagos emerged as the leading state achieving an IGR/total revenue ratio of 67 per cent while Ogun, Rivers and Anambra managed 40 per cent, 32 per cent and 31 per cent respectively.

    The report said given that the oil price has been on the slide since mid-2014, states have no choice but to reduce their dependence on the oil-driven monthly distributions from the Federation Account Allocation Committee (FAAC) by bolstering their IGR.

  • Buhari ‘ll get new revenue formula, says RMAFC

    Buhari ‘ll get new revenue formula, says RMAFC

    The draft reports of the revenue allocation formula as well as the remuneration packages for political, public and judicial office holders are being fine tuned for submission to President Muhammadu Buhari for onward transmission to the National Assembly.

    The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) in a statement endorsed by its Head, Public Relations, Ibrahim Mohammed,  yesterday explained that it concluded its own side of the bargain since 2014.

    “As the Commission was in the process of sending the draft report to former President, Dr. Goodluck Jonathan, certain intervening variables crept in to truncate the process. These included the proceedings of the Justice Kutigi-led National Conference and the Senator Ikweremadu-led Constitutional Amendments respectively which also deliberated extensively on the issue of revenue allocation formula review and lastly the 2015 general elections which saw to the emergence of the Buhari administration,” the statement added.

    Mohammed dismissed reports suggesting that the commission was about to withdraw the two sensitive reports stressing that the “RMAFC was yet to make submission of either of the said reports to Mr. President.”

  • Govt advised to tap ethanol, others for more revenue

    The Federal Government has been advised to improve its revenue base by utilising other products from oil and gas, such as ethanol and gas automotives, among others.

    A Professor of Petroleum Resources and Policy Research  at the University of Port Harcourt, (UNIPORT) Wunmi Iledare, who gave said the United States (US), Germany, Britain and other developed nations were using such fuels.

    He urged Nigeria to take a cue from those countries by turning oil and gas into some finished products that are not commonly used in Nigeria, for economic growth.

    He said as the fall in price of crude and its attendant impact on national revenue persist, Nigeria has no choice than to rev up its revenue, by converting oil and gas into more finished and highly sophisticated products such as ethanol.

    Iledare said the US and Germany have been converting ethanol to a source of energy to drive engines. He noted that oil price has crashed from its towering  $140 per barrel in 2008 to $34 per barrel, arguing that the development suggests that Nigeria should adopt a more proactive method of generating revenues.

    According to him, the crash will continue in view of the face-off between Saudi and Iran, entry into the US market and other non-Organisation of Petroleum Exporting Countries ( OPEC) members, among other problems.

    He said: “There are likelihoods that oil price would rebound in the near future. Once OPEC is able to control oil supply from the Middle East, among other initiatives that are being implemented to increase the international prices of crude oil, oil producing would be better for it. However, Nigeria will do herself good, by exploring new frontiers in the sector.  One way of doing this is to convert oil and gas into finished products such as ethanol and others. Through this, the country would make money that would help in financing critical infrastructural projects. When this happens, the fiscal gaps would be filled.’’

    He said the government should be thinking of how to diversify its revenue base if it wants fiscal programme vis-a-vis budget to be sustainable. “In the milieu, the government should be thinking of another means of funding its budget in the years ahead.  Price volatilities and instability in crude oil production are some of the major features of the market, and these directly or indirectly are affecting Nigeria, being an oil dependent nation.

    “What Nigeria has got to do is to look at ways of diversifying products from oil and gas to up its revenue, and consider other measures that would have positive impacts on the economy,” he added.

  • Why oil revenue is poor, by Kachikwu

    Why oil revenue is poor, by Kachikwu

    Minister of State Petroleum Resources, Dr. Ibe Kachikwu said yesterday that poor governance and weakness in the fiscal administration of the oil sector led to inadequate allocation, mismanagement, ”Dutch disease” and collection of oil and gas revenues for the government.

    He spoke at the Universiy of Nigeria, Nsukka (UNN) while delivering the 45th convocation lecture of the university titled: Oil Resource Management and Implications for National Security and Economic Survival.

    He said continuous rise in expenditure when oil revenue was high led to  accumulation of large public sector debt. He noted that in previous years, little attempt was made to diversify oil and gas resource income.

    Kachikwu said: “For so long, this country has made so much and lost so much to the extent that everybody is uncertain whether oil is a blessing or a curse.”

    He gave  assurance of his commitment to move the petroleum industry forward saying  that with the recent development and technological  innovation in United Stataes,  Nigeria’s reserve will last for between 20 and 25 years.

  • Ibadan DisCo records N3.2b revenue shortfall, says MD

    Ibadan DisCo records N3.2b revenue shortfall, says MD

    The Ibadan Electricity Distribution Company (IBEDC) recorded a shortfall of N3.2 billion in revenue collection last year even as the company is owed N5.9 billion by customers, especially the military and government’s ministries, departments and agencies (MDAs).

    The Managing Director, IBEDC, John Donnachie, told reporters at a briefing in Ibadan that they are operating in a tough economic environment but still try to be open and transparent in their operation and customer service.

    He said since inception in November 2013, the company has not been able to collect bills enough to pay for the energy it bought. In other words, the company has been recording shortfalls in expected revenue since it started, adding that even with the new tariff planned for take-off next month, the company will not break even until 2017.

    Donnachie noted that the cause of the shortfall in revenue is caused by the industry’s woes such as energy theft. According to him, 50 per cent of bills generated are not collected owing to energy theft including bypassing of meters.

    He stated that the company will continue to ensure customer satisfaction, adding that 100,000 new meters have been installed apart from the ones used to replace obsolete and dysfunctional meters. He said the company plans to install 200,000 new meters this year, out of which 90,000 have been received. He said about 65 per cent of the company’s customers are still unmetered.

    “We require N7.5 billion annually for metering and N3 billion annually for network expansion, but we need fund to do that and we are pleading with the government MDAs and the military to help us settle their debt for us to serve them better,” he added.

    He appealed to all the customers to pay for the electricity they consumed pledging that the new tariff has been spread over 10 years so that it wouldn’t be burdensome to them.

    On the debt profile, Donnachie stated that the company is owed N5.9 billion. This is verified debt, he added. He said 97 per cent of the debt is owed by government ministries, departments and agencies (MDAS). Out the debt owed by the government debtors, the military alone owes N4 billion as at end of July last year. This huge debt is affecting our operations, he added.

    He noted that the distribution companies are collecting agents for the entire value chain, adding that out of the entire collections, only 25 per cent is due to them, while the remaining 75 per cent go to other stakeholders including the generating companies (Gencos), Transmission Company of Nigeria (TCN), the regulators and the gas suppliers.

    He said: “We need to invest fund in the sector to improve our distribution networks and provide for adequate metering system. The liquidity issues make it difficult to resolve the problems of inadequate generation and transmission constraints. More importantly is the fact that distribution companies are unable to meet the operational costs of distributing power to their numerous customers, payment to generating and transmission companies, let alone their capital investments,” he said.

    The Deputy Managing Director, IBEDC, John Ayodele said the capital expenditure allowed for IBEDC is inadequate for its operations, especially given the size of its metering and network improvements and upgrade requirement as well as reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses.

    “The reviewed tariff will assist us to quickly address the problem of estimated billing which today represents over 70 per cent of customers’ complaints and has been one of the reasons for various protests experienced since we took over two years ago.

    “In view of the above, we have to provide funds upfront to pay for investment made each year and expects to recover the same plus any interest over the life of the assets,” he said.