World Bank warns Nigeria about rising fuel subsidy – Newstrends
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World Bank warns Nigeria about rising fuel subsidy

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3 years ago

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…says it could pose debts sustainability problem

Nigeria’s increasing fuel subsidy could pose debt sustainability issue for the country, the World Bank has said.

The bank made the observation in its latest ‘Africa’s Pulse’ report, a biannual analysis of the near-term regional macroeconomic outlook.

The National Assembly on Thursday approved the request of President Muhammadu Buhari of N4 trillion for petrol subsidy.

But the World Bank noted the rising cost of subsidies could also weaken the country’s public finance.

“Risk remains high on increasing fuel subsidies, which could weigh heavily on public finance and pose debt sustainability concerns,” the report said.

“Nevertheless, public debt as a percentage of GDP is currently moderate.”

The Washington-based institution added that the country’s soaring military spending and debt servicing costs could prey on the country’s debt sustainability level.

“Persistent fuel subsidies, increasing military spending for security purposes, and rising debt servicing costs weigh heavily on public finance to keep public debt at a sustainable level in Nigeria,” the report added.

“The fiscal balance deteriorated considerably in several Sub-Saharan African countries as governments scaled-up spending to mitigate the prolonged effects of the pandemic on firms and vulnerable households.”

On sub-Saharan Africa’s recovery, the bank noted that it is multi-speed, with wide variation across countries.

“The recovery of the three largest economies in the region — Nigeria, South Africa, and Angola — will continue to be sluggish,” it said.

“High oil prices will support growth in Nigeria and Angola.

“Excluding Angola, Nigeria, and South Africa, growth is projected at 4.1 per cent in 2022—higher than the growth of the region as a whole.

“Non-resource-rich countries are projected to be adversely affected by rising commodity prices, dragging down growth in the region.

“The opposite occurs with resource-rich countries whose growth would be propelled by favourable terms of trade.”

The bank further said the war in Ukraine would further improve the economic performance of resource-rich countries (especially their extractive sector) and decelerate the economic activity of non-resource-rich countries as their import bills soar.

“Given limited trade exposure, the impacts of the Russia-Ukraine conflict are expected to be negligible,” the bank added.

It projected a 2.7 per cent growth for Nigeria in 2022.

“Of the region’s three largest economies, South Africa’s growth is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints, while Angola and Nigeria are projected to continue with the momentum of 2021, up by 2.7 and 0.2 percentage points, respectively, thanks partly to elevated oil prices and good performance of the non-oil sector,” the bank said.

According to World Bank, growth in Nigeria is forecast to increase to 3.8 per cent in 2022 and stabilise at 4 per cent from 2023 to 2024.

It stated, “Real GDP growth was revised up by 1.2 percentage points for both periods compared with the previous forecast. Nigeria’s economy is still dependent on the oil sector.

“Oil-related revenue contributes 40 to 60 per cent of fiscal revenue, while oil and gas account for 80 to 90 per cent of total exports. Weak oil production, below the OPEC quota, held back the recovery process.

“Although at a slower pace than the average 7 per cent during the boom period, growth prospects for the Nigerian economy are somewhat bright thanks to high oil prices coupled with reforms initiated by the passing of the Petroleum Industry Act and the completion of the Dangote refinery expected in 2023.”

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Lagos Rail Mass Transit part of FG free train ride – NRC

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1 day ago

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December 21, 2024

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Lagos Rail Mass Transit part of FG free train ride – NRC

The Nigerian Railway Corporation (NRC) has disclosed that the Lagos Rail Mass Transit (LRMT) trains are included in the Federal Government’s free train ride initiative for the Christmas and New Year celebrations.

The LRMT, which currently includes the Phase 1 Blue Line Rail and the Phase 1 of the Red Line Rail, operates under the Lagos Metropolitan Area Transport Authority (LAMATA).

This announcement was made by Ben Iloanusi, the Acting Managing Director of the NRC, during an interview on NTA News TV on Friday, following the launch of the initiative earlier that day.

While Iloanusi stated that Phase 1 of both the Blue Line and Red Line Rail projects are part of the program, LAMATA has yet to confirm this inclusion.

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Iloanusi outlined the other routes benefiting from the scheme, which include the Lagos-Ibadan Train Service, Kaduna-Abuja Train Service, Warri-Itakpe Train Service, Port Harcourt-Aba Train Service, and the Bola Ahmed Tinubu Mass Transit in Lagos. Notably, little was previously known about the Bola Ahmed Tinubu Mass Transit service until this disclosure.

“Let me mention the routes where this free train service is happening. We have the Lagos-Ibadan Train Service, we have the Kaduna-Abuja Train Service, we have the Warri-Itakpe Train Service, we have the Lagos Rail Mass Transit trains, we have the Port Harcourt-Aba Train Service, and we have what we call the Bola Ahmed Tinubu Mass Transit, which is also in Lagos,” he stated.

Iloanusi provided operational updates, stating that passengers nationwide can access free tickets online or, for those unable to do so, at train stations where they will be profiled and validated.

He noted that passengers using NRC-managed services (excluding the Lagos Rail Mass Transit) should reserve tickets via the official website, www.nrc.gov.ng, with a valid ID required. He also advised travelers to plan, arrive on time, and bring valid identification.

Lagos Rail Mass Transit part of FG free train ride – NRC

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NNPC denies claim of Port Harcourt refinery shutdown

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1 day ago

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December 21, 2024

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Port Harcourt refinery

NNPC denies claim of Port Harcourt refinery shutdown

The Nigerian National Petroleum Company Limited (NNPCL) has denied claims in media reports that the newly refurbished Port Harcourt refinery has shut down.

The national oil company denied the claim in a press release issued by its Chief Corporate Communications Officer, Olufemi Soneye, on Saturday.

Soneye said the claim was false and urged Nigerians to disregard it. He stressed that the Port-Harcourt Refinery is fully operational.

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The statement read, “The attention of the Nigerian National Petroleum Company Limited (NNPC Ltd.) has been drawn to reports in a section of the media alleging that the Old Port Harcourt Refinery which was re-streamed two months ago has been shut down. 

“We wish to clarify that such reports are totally false as the refinery is fully operational as verified a few days ago by former Group Managing Directors of NNPC.”

He noted that preparation for the day’s loading operation is currently ongoing, and added that claims of the shutdown are “figments of the imagination of those who want to create artificial scarcity and rip-off Nigerians.”

NNPC denies claim of Port Harcourt refinery shutdown

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CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

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2 days ago

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December 20, 2024

By

CBN Governor, Olayemi Cardoso

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM). 

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM). 

This move, detailed in a circular dated December 19, 2024, is designed to meet seasonal retail demand for FX during the holiday period. 

The circular was signed by T.G. Allu, on behalf of the Acting Director of the Trade and Exchange Department. 

The arrangement will be in effect from December 19, 2024, to January 30, 2025. 

Under the directive, BDCs may purchase FX from a single Authorized Dealer of their choice, provided they fully fund their accounts before accessing the market.  

Transactions to occur at the prevailing NFEM rate 

The transactions will occur at the prevailing NFEM rate, and BDCs are required to adhere to a maximum 1% spread when pricing FX for retail end-users.

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All transactions conducted under this scheme must be reported to the CBN’s Trade and Exchange Department. 

The circular read in part:

“In order to meet expected seasonal demand for foreign exchange, the CBN is allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00 (Twenty-five thousand dollars only).

This window will be open between December 19, 2024 to January 30, 2025. 

“BDC operators can purchase FX under this arrangement from only one Authorized Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users.” 

The CBN assured the general public that PTA (Personal Travel Allowance) and BTA (Business Travel Allowance) remain available through banks for legitimate travel and business needs.”

These transactions are to be conducted at “market-determined exchange rates” within the NFEM framework.

This initiative reflects the CBN’s strategy to stabilize the FX market and manage seasonal surges in demand.

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

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