Business
Subsidies benefit the rich, says IMF, promises to allow Nigeria decide
The International Monetary Fund (IMF) says it will not interfere in the Nigeria’s government handling of its fuel subsidy policies.
It however expressed disapproval of subsidy policies for certain commodities in Nigeria, Kenya and other countries in Sub-Saharan Africa, maintaining that it should be scrapped.
Director, African Department of the IMF, Abebe Selassie, gave the position at the just concluded World Bank and IMF Spring meetings in Washington DC, USA.
He spoke to journalists at the forum against the recent development in which the Federal Government secured a $800 million World Bank facility as a fuel subsidy removal palliative.
Selassie said, ‘‘The benefits of such subsidies tend to accrue to richer segments of the society, and in a world where we still have elevated levels of poverty and with levels of development challenges, I’m not sure that this is the best use of resources.
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‘‘But then we leave it up to the governments the choices of whether to sustain those subsidy policies or remove them.
“However, what we asked them to do, and what is important is that the cost of this fuel subsidy is rather than being left as off-balance sheet it should be included in the regular fiscal appropriation process, so that the trade-offs that the government is making is clear and transparent.
‘‘Now, how governments do this, the extent of the fuel subsidies, of course also varies with global international market prices.
‘‘You know that whether to subsidize or not and to what extent, obviously is a very deeply domestic and deeply political issue. If governments want to do that, that’s fine. But we think it’s sub-optimal, as I said, for reasons I explained earlier that the benefits of subsidies tend to accrue to richer households.
‘‘We know, of course, in Nigeria that fuel subsidies have eaten up tremendous, tremendous amount of resources, at the same time that the government doesn’t have resources to address the huge investment needs, from health to education, to infrastructure. But this is a choice for Nigerian government and Nigerian civil societies to make.
‘‘We’ve also heard the discussion that’s going on the debate that’s going on, on whether this is ideal. We try and inform that debate with statistics and with practices elsewhere, but I think that’s our role.
‘‘So, for a country like Nigeria also, you know, the future trajectory of its economy is going to depend on a whole host of variables, or reforms that the government pursues and how effectively it uses the resources and the oil price trajectory.’
Already, the FG has announced that petrol subsidy will be removed from May 29 this year as a major assignment by the incoming administration.
The labour has vowed to frustrate the move.
International Monetary Fund
Business
FG begins crude sales in naira to Dangote Refinery
FG begins crude sales in naira to Dangote Refinery
The Federal Government has officially begun the sale of crude oil in naira, in line with a directive from President Bola Tinubu.
This update was shared by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, through a statement on the ministry’s official X account.
The shift to naira transactions aligns with a directive from the Federal Executive Council (FEC).
According to the statement, “The sale of crude oil and refined petroleum products in Naira has officially commenced as of October 1st, 2024.”
It continued, “Following a meeting of the Implementation Committee, chaired by the Hon. Minister of Finance and Coordinating Minister of the Economy on October 3rd, 2024, to conduct a post-commencement review of the Crude Oil and Refined Products Sales in Naira initiative, the commencement of this strategic initiative was affirmed by key stakeholders.”
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The review meeting involved significant stakeholders, including the Minister of State for Petroleum (Oil), the Special Advisers to the President on Revenue and Energy, top executives from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), representatives from the Dangote Group, and leadership from the Nigerian National Petroleum Company (NNPC), including its Group Chief Executive Officer (GCEO), Chief Financial Officer (CFO), and Executive Vice President (Downstream).
Recall that back in July, President Tinubu approved the sale of crude oil in naira, with the Dangote refinery chosen as the pilot for the initiative.
The long-term impact of this move on petroleum prices remains to be seen.
FG begins crude sales in naira to Dangote Refinery
Business
90 million litres stuck as NNPCL shuts petrol purchasing portal – Marketers
90 million litres stuck as NNPCL shuts petrol purchasing portal – Marketers
Oil marketers have raised concerns about a potential fuel scarcity following the shutdown of the Nigerian National Petroleum Company Limited (NNPCL) petrol purchasing portal.
The shutdown has prevented dealers from placing new orders for fuel, leading to supply disruptions.
According to marketers, over 90 million litres of petrol, worth approximately N79 billion, are pending delivery from NNPCL.
The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, confirmed that while marketers can still load fuel, they cannot access the portal to check prices or make new purchases.
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Ukadike stated that there are currently over 2,000 pending tickets for 45,000-litre petrol trucks, which amounts to a significant volume of fuel awaiting supply. He warned that the continued closure of the portal could result in another wave of fuel shortages across the country.
Other marketers, speaking anonymously, echoed concerns that the portal’s shutdown is already causing fuel shortages.
One marketer mentioned, “Everyone is affected because we all go to the NNPC portal to place our orders, and when the portal is inaccessible, supply is disrupted.”
As of now, there has been no official response from NNPCL spokesperson Olufemi Soneye regarding the situation. However, some marketers believe the portal was shut down temporarily to resolve backlogs of pending orders.
90 million litres stuck as NNPCL shuts petrol purchasing portal – Marketers
Business
Naira appreciates to N1,685 in parallel market
Naira appreciates to N1,685 in parallel market
The Naira yesterday appreciated to N1,685 per dollar in the parallel market from N1,700 per dollar on Monday.
Similarly, the Naira appreciated to N1,659.26 per dollar in the Nigerian Autonomous Foreign Exchange Market, NAFEM.
Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,659.26 per dollar from N1,669.15 per dollar on Wednesday, indicating N9.89 appreciation for the naira.
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The volume of dollars traded (turnover) in the official market increased sharply by 155.2 percent to $450.39 million from $176.45 million traded on Wednesday.
Consequently, the margin between the parallel market and NAFEM rate narrowed to N25.74 per dollar from N30.85 per dollar on Wednesday.
Naira appreciates to N1,685 in parallel market
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