Business

FG has been borrowing to fund petrol subsidy, says finance minister

Published

2 years ago

January 5, 2023

As FG ends petrol subsidy in June, allocates only N3.36bn

The Federal Government has been borrowing to fund petrol subsidies and this is totally unsustainable, Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has said.

She said only N3.36 trillion had been allocated for subsidy in this year’s budget in preparation of the government’s termination of the subsidy regime in June.

She disclosed this on Wednesday at the public presentation of details of the 2023 budget in Abuja.

“Fuel subsidy cost was a very high one; We have been funding it from borrowing,” the minister said.

She added that petrol subsidy would “remain up to mid-2023 based on the 18-month extension announced early 2022. In this regard, only N3.36 trillion has been provided for the PMS subsidy.”

The FG had announced plans to end subsidy from July 2022 but changed its position when faced with threats of nationwide protests by labour and pushed it to July 2023.

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The minister also said the reconciliation between the ministry and the Nigerian National Petroleum Company Limited, NNPCL, was ongoing to determine crude oil revenues and what should accrue to the federation account.

On the controversial securitisation of the N22.7 trillion borrowing from the Central Bank of Nigeria by Ways & Means, she said her team would engage the National Assembly on the lingering disagreement between the two arms of government.

Debt securitization is the process of packaging debt(s) from a source or number of sources into a single security to be sold to investors.

The minister said the decision to securitise the debt was to reduce the burden on the Federal Government, as interest on the Ways & Means could hit N2 trillion this year, from N1.2 trillion, if nothing was done.

“If successfully securitized, rather than the current interest rate of MPR+3per cent (19.5%), interest on the Ways & Means, it would reduce to about nine per cent,” she said.

On the macro-economy, she said the economy had been fully diversified, with oil revenue projected to contribute only N2.29 trillion (22 per cent of revenue) to the budget in the current fiscal year.

She said, “In aggregate, 22% of projected revenues is expected from oil-related sources, while 78% is to be earned from non-oil sources. This shows that we have achieved a fully diversified economy in this country.”

Non-oil taxes are estimated at N2.43 trillion; Federal Government independent revenues are projected to be N2.62 trillion; while other revenues total N762 billion.

FG awaits stamp duty fund probe

The minister disclosed that the Federal Government was awaiting the outcome of investigations into claims that the CBN had large stamp duty funds in its account.

Ahmed said that investigations had been instituted into the matter but did not give details.

She said, “There is an investigation that is being carried out by a committee. There are also some investigations that are being carried out by some security agencies.

“We are anxiously waiting for the outcomes of these investigations. If funds are realized from these investigations, it will help us fund the deficit in the 2023 budget.”

The presidency had dismissed the allegations of misappropriation of the stamp duty funds levelled against the apex bank.

Budget deficit put at N 11.34tn

This year’s deficit has been estimated at N11. 34 trillion, representing 5. 03 per cent of the Gross Domestic Product (GDP).

Ahmed said that the deficit would be financed mainly by domestic borrowing of N7 04 trillion; foreign sources of N1.76 trillion; N1. 77 billion from multilateral and bilateral loan drawdowns; and privatization proceeds of N206.18 billion.

She said the deficit level had exceeded the three per cent of the GDP provided in the Fiscal Responsibility Act and it might be necessary for the law to be amended to accommodate the new realities.

She said there was no plan to restructure the nation’s debt, adding that the administration had consistently met debt obligations.

Rather, she said that the country would continue to spread debt maturities through debt refinancing.

The fiscal deficit for 2022 was estimated at N8.17 trillion, inclusive of the Supplementary budget. As at November 30, 2022, the deficit was N6.37 trillion, which the minister said was totally financed by borrowings, mostly from domestic sources.

Related Topics:Featured fuel subsidy Zainab Ahmed

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Railway

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

Published

1 day ago

December 21, 2024

Trends Admin

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

Business

NNPC denies claim of Port Harcourt refinery shutdown

Published

1 day ago

December 21, 2024

Trends Admin

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

Business

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

Published

2 days ago

December 20, 2024

Trends Admin

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).

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.