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Concerns As NNPC Recorded Zero Remittance To Federation Account In January

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The Nigerian National Petroleum Company (NNPC) Limited failed to return its required funding to the Federation Account, which is jointly controlled by the federal, state, and local governments, in January 2022, despite increased worldwide oil prices.

The national oil corporation (NOC) was unable to deliver a kobo to the joint account for the second time in less than a year, following the same incident in April of last year, when the firm claimed zero remittance for the month.

Furthermore, according to a paper documenting NNPC’s actions for the month under review, which was given to the Federation Account Allocation Committee (FAAC) on Thursday, the NOC spent a whopping N210.38 billion on fuel subsidy for the month.

Recall that with a deficit of approximately N2 trillion out of its projected N2.511 trillion, the NNPC was unable to remit roughly 80 percent of its projected contribution to the Federation Account in 2021.

For the entire 12 months of last year, the NNPC disbursed N542 billion as against the budgeted N2.511 trillion, despite a monthly contribution estimate of N209.3 billion. The N542 billion represented just about 21. 6 percent of the total expected contribution of the NNPC to the joint account.

The development underscored how a combination of factors, including declining oil production, rising subsidy payments, and high oil production costs, have hobbled the organization’s performance despite the increasing oil prices which overshot $105 per barrel last week.

Earlier in the year, President Muhammadu Buhari had backtracked on the planned full deregulation of the downstream sector, including the wholesale removal of petrol subsidy, citing the negative impact it would have on the poor in the country.

For decades, Nigeria’s attempt to fully free the downstream oil and gas industry has met with a brick wall. The latest effort has also been pushed forward by about 18 months, effectively exempting the current administration which will exit by May 2023 from any burden.

Analysis in January 2022, had shown that total deductions for petrol subsidy or what the government terms under-recovery was about N1.43 trillion for 2021.

The journey to zero remittance in January was envisaged by close watchers of the industry as the NNPC only delivered a paltry N14.8 billion, N10.54 billion, and N20 billion in October, November, and December respectively last year.

In December, the three tiers of government shared N675.946 billion as FAAC revenue for the month of November while in January, it shared N699.82 billion for December.

But the total funds shared in February markedly decreased to N574.66 billion, raising concerns over the capacity of sub-nationals to meet their current financial obligations.
The amount shared by the federal, state, and local governments dropped to a four-year low this month, a huge blow to states that are already struggling to survive.

But in the latest monthly presentation to FAAC held on February 24, obtained by TheCable, NNPC pointed out that the N210 billion shortfall included a December 2021 value of N176.48 billion plus the outstanding value shortfall recovery of N33.90 billion accruing from 2021.

Furthermore, the oil firm stated that it would deduct N242.5 billion, which was about N143.7 billion for January 2022 recovery and November spot arrears of N98.8 billion, during next month’s FAAC meeting. It, however, stated that the national oil company recorded N383 billion as gross revenue from crude oil sales in January, a dip from the projected N414.9 billion.

The fall would significantly negatively affect states that are presently experiencing fiscal stress and had been kicking against deductions of the shortfall from FAAC remittances.

While an ad-hoc committee of the National Economic Council (NEC) had recommended gradual deregulation of petrol prices by February 2022 to reduce the pressure on revenue accruing to states, recently Buhari asked the National Assembly to approve the N2.557 trillion budget for petrol subsidy in 2022.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) and its allies OPEC+ have revised down forecast for the 2022 oil market surplus by about 200,000 barrels per day (BPD) to 1.1 million BPD, according to a base scenario in a technical committee report seen by Reuters on Sunday.

The data which is part of a report the Joint Technical Committee (JTC) prepares for OPEC+ ministers – also showed stocks in the developed world standing at 62 million barrels below the 2015 to 2019 average by the end of the year.

In a previous forecast, it had predicted the stocks would reach 20 million barrels above the same average by that point.
Ministers from OPEC and allies led by Russia, a group known as OPEC+, will meet on March 2 to decide whether to increase output by 400,000 BPD in April.

Sources from the group told Reuters their output deal is showing no cracks so far after Russia’s invasion of Ukraine, and the group is likely to stick to a planned output rise despite crude topping $100 a barrel.

Data from a separate JTC report also showed the group produced in January 972,000 BPD less than the targets outlined by the deal, compared with 824,000 less in December.

BIG STORY

JUST IN: Again, Police Arrest Speed Darlington During Show In Imo State

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Operatives of the Nigeria Police Force have arrested Nigerian musician Darlington Okoye, popularly known as Speed Darlington, in Owerri, the capital of Imo State.

The singer’s counsel and human rights lawyer, Deji Adeyanju, confirmed the arrest in a post on his official X page on Wednesday.

Adeyanju revealed that his client was detained while performing at a show in Owerri, just days after returning to Nigeria earlier in the week.

He wrote, “Our client, Speed Darlington, a.k.a AKPI, has been arrested by the Nigeria Police in Owerri at his show upon return to Nigeria.”

However, the exact reason for the singer’s arrest remains unclear at the time of filing this report.

It is worth noting that the Nigeria Police had previously arrested Darlington over allegations of cyberstalking fellow musician Damini Ogulu, better known as Burna Boy.

Darlington was initially arrested in Lagos, then transferred to Abuja, where he was detained by the IGP’s Intelligence Response Team in the Guzape area of the city.

The musician, who faced accusations of cyberstalking Burna Boy, was later released on bail days after his arrest.

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BIG STORY

President Tinubu Asks NNPC To Fast-Track Reactivation Of Warri, Kaduna Refineries

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President Bola Tinubu has praised the Nigeria National Petroleum Company (NNPC) Limited for the revitalization of the Port Harcourt refinery.

On Tuesday, NNPCL announced the official commencement of crude oil processing at the refinery—a milestone achieved after three years of rehabilitation work.

In a statement on Tuesday from Bayo Onanuga, the president’s special adviser on information and strategy, Tinubu urged the NNPC to expedite the reactivation of the Warri and Kaduna refineries.

Tinubu, while acknowledging the efforts of former President Muhammadu Buhari in making this achievement possible, reaffirmed his administration’s commitment to advancing energy sufficiency in Nigeria.

“The President acknowledges the pivotal role of former President Muhammadu Buhari in initiating the comprehensive rehabilitation of all our refineries and expresses gratitude to the African Export-Import Bank for its confidence in financing this critical project,” the statement reads.

“Furthermore, President Tinubu commends the leadership of NNPC Limited’s Group Chief Executive Officer, Mr. Mele Kyari, whose unwavering dedication and commitment were instrumental in overcoming challenges to achieve this milestone.

“With the successful revival of the Port Harcourt refinery, President Tinubu urges NNPC Limited to expedite the scheduled reactivation of both the second Port Harcourt refinery and the Warri and Kaduna refineries.”

Tinubu emphasized that the commencement of petrol production at the refinery would bolster the country’s domestic production and position Nigeria as a major energy hub.

He called on individuals, institutions, and citizens entrusted with public infrastructure to uphold trust in their service to the nation.

“These efforts will significantly enhance domestic production capacity alongside the contributions of privately-owned refineries and make our country a major energy hub, with the gas sector also enjoying unprecedented attention by the administration,” Onanuga said.

“In alignment with the Renewed Hope Agenda focused on shared economic prosperity for all, the President reaffirms his administration’s commitment to achieving energy sufficiency, enhancing energy security, and boosting export capacity for Nigeria.”

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BIG STORY

FG Considering US Diaspora Bond, Targets $1bn Monthly Remittances — CBN Governor Cardoso

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Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), announced that the country’s foreign reserves increased to $40.88 billion as of November 21.

Cardoso made the statement on Tuesday during a press conference following the monetary policy committee’s 298th meeting in Abuja.

He reported that the external reserves grew from $40.06 billion at the end of October to $40.88 billion in November.

This marks an increase of $82 million, or 2.05 percent, in just 21 days.

“The external reserves rose marginally to 40.88 billion as of 21 November 2024, from 40.06 billion at the end of October 2024, available to finance 17 months of imports,” he explained.

However, a check on the apex bank’s website revealed that Nigeria’s foreign reserves were listed at $40.27 billion on November 22, which is lower than the figure presented by Cardoso.

Further commenting on the matter, Cardoso stated, “the process of getting us where we are in terms of reserves has been a long one.”

“It is a clear indication that the policies we have put in place are certainly yielding fruits,” he added.

He emphasized that “reserves are there for a multiplicity of different purposes, not least of which is to create buffers in the event of unanticipated shocks.”

“They are not there to simply whittle away. They are there to be used to more or less defend yourself where that becomes necessary,” he clarified.

“And when we talk about shocks that are not anticipated, I think we can see how the global economies are,” Cardoso continued.

The governor also affirmed that the bank will persist in efforts to stabilize the currency and prices.

“The currency has been stable compared to what it was in June,” he noted.

However, he pointed out that for the country’s currency to maintain stability, there must be increased exports and greater diversification of the economy.

Cardoso also highlighted that diaspora remittances have risen due to policies that have been implemented.

He commended Nigerians in the diaspora for helping the country achieve over $600 million in remittances.

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