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Crude Oil: MAN Warns Of Hyper Inflation, Subsidy Hits N400, Diesel, N625

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The rising prices of crude oil since the Russia-Ukraine war began, coupled with exchange rate instability in Nigeria, among others, have pushed up the prices of refined petroleum products across the country.

Industry figures seen on Tuesday showed that the cost of Brent, the crude against which Nigeria’s oil is priced, rose above $133/barrel around 6 pm Nigerian time. The commodity had traded below $90/barrel before the war in Ukraine started.

Oil marketers told our correspondent that the rise in global crude oil prices had been pushing up the cost of Automotive Gas Oil, popularly called diesel; JetA1, otherwise called aviation fuel; as well as Premium Motor Spirit, also known as petrol.

The position of oil marketers on the impact of crude price hikes on refined petroleum products in Nigeria had also been confirmed by the Federal Government through the Minister of State for Petroleum Resources, Chief Timipre Sylva, and the Group Managing Director of the Nigerian National Petroleum Company Limited, Mele Kyari.

Findings on Tuesday showed that diesel sold for between N550 – N625/liter in the few filling stations that dispensed the commodity.

“Unlike PMS, diesel or AGO has been deregulated and the price is determined by the cost of crude oil, foreign exchange rate, and few other factors,” the President, Petroleum Products Retail Outlets owners Association of Nigeria, Billy Gillis-Harry, stated.

He added, “While diesel is a deregulated commodity, petrol is not deregulated but is rather subsidized and you can imagine the amount of subsidy being spent on a liter of petrol currently.”

Gillis-Harry explained that the actual cost of petrol without subsidy was usually a little higher than that of diesel, stressing that if not for a subsidy, PMS would be selling around N550 to N600/liter going by the rise in crude price.

The approved subsidized pump price of PMS in Nigeria is between N162 to N165/liter, but oil marketers stated that the actual cost should be a little higher or about the same price of diesel had it been PMS was deregulated.

The PETROAN president further stated that the N3tn that was projected by the government as subsidy spending in 2022 might double before the end of the year if the crude oil price continues to rise.

He said, “We’ve been saying this forever that we should deregulate and allow market forces to determine the price of PMS at the pumps. This subsidy we are paying, at the end of the day may not be the best for this country.

“Today the government is proposing N3tn for subsidy this year, but at the end of the day it might rise to N5tn or N6tn going by the rise in crude oil price.”

The GMD of NNPC had in June last year stated that there was nowhere in the world where the pump price of petrol was lower than the cost of diesel.

Notably, it was reported that Kyari has stated that the price of petrol should be more than the N280/liter price at which diesel was being sold at the time.

Kyari had said, “Today we are paying N162/liter (for petrol). I am sure many people buy AGO (diesel) in the market and it is selling at N280/liter in the market today.

“So (there is) nowhere in the world diesel sells more expensive than PMS. That means that the price of petrol anywhere in the world, assuming you are going to sell it at the market, you are going to sell it above that price you have seen.”

This implies that at the current pump price of about N600/liter for diesel and N165/liter subsidized rate for petrol, the Federal Government is spending over N400 as subsidy on every liter of petrol consumed in Nigeria.

As the price of diesel grew, airline operators stated on Tuesday that the cost of aviation fuel had also been on the increase, a development that led to flight cancellations and delays, leaving many passengers stranded at airports.

Passengers stranded as aviation price hits N580/liter
Aviation fuel which sold for N190/liter and later N360/liter in January this year, rose to between N579 and N607/liter on Tuesday.

Oil marketers as well as airport officials said the cost of aviation fuel differed in various airports.

In Lagos, Jet A1 was sold for N579 per liter on Tuesday; Abuja N599, Port-Harcourt N599; and Kano N607. Just a few weeks ago, aviation fuel marketers increased Jet A1 to about N450 per liter which forced the carriers to raise airfares by 100 percent.

The latest hike in aviation fuelled a scarcity of the product, a development that forced virtually all the carriers to reschedule flights while others who could not get Jet A1 canceled flights.

The domestic terminals of the Lagos and Abuja airports, as well other airports across the country were full as restless passengers besieged airline check-in counters. Several passengers became stranded.

The Chief Operating Officer of Ibom Air, Mr. George Uriese, decried the situation, saying the latest increase in Jet A1 price had put domestic carriers in a very tight situation.

According to him, airlines may find it difficult to raise fares because passengers have got to a limit where they may be unwilling to pay more.

He said, “Something has to give way at this time, which I don’t know”

He felt perhaps airlines might be forced to change their business models if the situation persisted.

FG needs to stop subsidy regime – Marketers
To address the continued rise in the prices of refined petroleum products as well as subsidies, oil marketers insisted that it was high time that the government stopped the petrol subsidy regime, as well as fixed the country’s refineries.

“This situation has again shown why it is so important for us to get our refineries working and start refining our crude here in Nigeria,” Gillis-Harry stated.

Also, the Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, recently told our correspondent that petrol subsidy might hit N6tn in 2022 if the current factors causing the rise in global crude oil prices continued.

This came as the Organisation of Petroleum Exporting Countries raised concerns on Tuesday over the impact of the war in Ukraine on the global oil sector.

The Secretary-General, OPEC, Sanusi Barkindo, stated that the world was being faced with an oil supply threat due to the Ukraine/Russia war.

He disclosed this while speaking at the 2022 Cambridge Energy Research Associates Week in Houston, United State. The CERA Week is an annual event for energy leaders, experts, ministers, exhibitors, among others, where they discuss industry issues.

Barkindo said, “OPEC consumers’ perception of the war is that the threat, whether it materializes or not, is already reverberating through the markets.

“We do not influence current events since geopolitics has seized the market and is driving the market’s pace.

“The world is facing a potential supply threat from the Russian Federation.”

He stated that the crisis being faced currently on energy buttressed the fact that OPEC and non-OPEC producers should be fully aligned.

MAN warns of hyperinflation
As a result of the increase in the prices of petroleum products especially diesel, the Manufacturing Association of Nigeria on Tuesday said that Nigerians should expect higher inflation rates and a surge in the prices of goods and services as the cost of diesel rises.

Speaking on behalf of MAN, the Chairman, Infrastructure Committee, Ibrahim Usman, said the rise in inflation would be driven by a higher cost of production for manufacturers who depend largely on diesel for production.

In a telephone interview with one of our correspondents, Usman said, “the rise in the price of diesel means higher production cost for manufacturers because most of us rely on diesel to produce. So when the cost of production is high, then manufactured products will be sold at a higher price, this is to enable the manufacturer to make a profit after-sale and stay afloat.

“So basically it will increase the inflation in the country which is already high, further compounding the problems and plight of Nigerians.”

He said that the government can prevent the expected consequences by providing adequate power supply across the country and offering discounts on electricity tariffs to manufacturers.

“To avoid these things from happening, the government should make sure that it creates a situation whereby the cost of electricity is reduced for manufacturers and that power supply is accessible to producers,” Usman said.

Expect food prices to rise – Economists
An economist and CEO of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the astronomical rise in the price of diesel would lead to a concomitant increase in the cost of several items including food because food items are often transported by trucks.

Yusuf, who is a former Director-General of the Lagos Chamber of Commerce and Industry, said Nigeria was paying for failing to encourage investments in the oil sector and possess working refineries.

“It is not just the cost of finished products that will rise. There will also be a rise in the cost of food items because trucks that deliver food items run on diesel,” he said.

“High diesel cost would trigger higher transportation costs.  Most haulage vehicles are powered by diesel.  An increase in transport costs typically impacts the general price level.  A major driver of inflation is high transportation costs,” Yusuf added.

The economist said the continued rise in the price of crude oil occasioned by the Ukraine/Russia war would continue to put a strain on Nigeria’s finances due to the payment of petrol subsidies which will reduce the country’s foreign exchange earnings.

Yusuf further stated that the epileptic power supply, which forces many factories to run on diesel generators, would force firms to increase their prices or reduce their profit margins.

He added, “High and increasing cost of diesel is compounding an already difficult situation for many investors.  We would see an escalation in production and operating costs; mounting inflationary pressures, erosion of profit margin, and risk to business continuity, especially for SMEs in the real sector.  It has implications for poverty as well.

“Most firms still depend on diesel generators to power their operations in the face of epileptic electricity supply.”

Also, a development economist, Aliyu Ilias, said the increase in the price of diesel would contribute to the inflation of goods in the country.

Ilias said, “Diesel is used by industries and big vehicles, such as those that convey goods. With the price increase, there would be a multiplier effect on the cost of products in Nigeria.

“This is a similar case in the aviation sector. When the cost of aviation fuel increased, there was an increase in the cost of air tickets.”

He encouraged the government to boost the local refining of diesel.

“The government needs to refine locally. There is no alternative to diesel. Many industrial rely on diesel to power their generator,” he said.

BIG STORY

‘Obidients’ Threatening To Burn Down Afrika Shrine – Femi Kuti

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Afrobeat singer Femi Kuti has alleged that some people threatened to burn down the New Afrika Shrine in Ikeja over reports that he called supporters of Labour Party presidential candidate Peter Obi ‘zombies’.

The 60-year-old said this in a video posted on Instagram on Friday night, where he insisted he never called Mr Obi’s supporters ‘zombies’.

On Friday, reports that he described the LP candidate’s supporters as zombies emerged.

The singer immediately debunked the report, describing it as misleading.

In a performance at the Afrika Shrine on Thursday night, Mr Kuti said that at 60, he could not be obedient.

Supporters of the LP candidate refer to themselves as ‘Obidients’.

The threat
Despite clearing the air, the singer said he woke up to a barrage of insults and abuses by people whom he described as Mr Obi’s supporters.

He said, “I woke up today to insults abusing me, my family and my children, threatening that they will burn the shrine because they said I said Peter Obi’s supporters are zombies.”

Clearing the air, Mr Kuti said that he was too angry, too sad, and depressed to be obedient.

“How can anybody come up with that term? I cannot be ‘Obedient’ in this country with END SARS killings, my grandmother was killed, my father’s house burnt, and I’m supposed to be obedient.

“Did I call Peter Obi supporters zombies? Did I say that? No. What does ‘obedient’ mean? I wouldn’t say I like that terminology for myself and will never use it.

“Nothing can make me obedient. I’m too angry, too sad, too depressed to be. Stop threatening to burn the shrine, stop threatening my children, stop that rubbish,” he said.

He went on to express his reservations about Mr Obi’s candidacy.

He said, “Obi went to greet Obasanjo. That makes me sceptical. Obi went to meet Babangida. Who? Me? My family believes these people are a part of the problem in this country.

“Well, some people will say no. That is your business; you have the right to think like that if that is what you believe is good for you. But you, too, cannot tell me how to think.

“I have my reservations. I do. You cannot tell me not to have reservations.”

What transpired
An online publication reported his speech at the Afrika Shrine with the headline, ‘Femi Kuti says Obidients are zombies’.

In its report, the publication likened the Grammy nominee’s speech to his Father’s 1976 acclaimed song, ‘Zombie’.

The publication quoted the ‘Sorry Sorry’ crooner said, “You know what obedience means? Stand up, sit down, sit there — zombie.”

In his response, Mr Kuti said that the publication took his words out of context.

“You are such liars. What benefit is it to the people when you take my words out of context like this?”

He further added that he also gave his reasons for not trusting anyone else too in the present Nigerian political arena.

What actually happened
From the clip posted by People’s Gazette on YouTube, it appeared that Mr Kuti had paused a performance to talk about the 2023 presidential election.

He said, “At 60, why am I obedient? All my life, I don’t even remember a good time.

“I fear for my children; you say I should be obedient. Sit down. Be peaceful. That’s the meaning of obedience. ‘Obedient’, that was the Vice President of Atiku?

“Are you all ok in this country? Be obedient to who? Dem don suffer my life, make I come still dey stand up, obedient.”

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Akwa Ibom Monarch To Die By Hanging For Murder

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Akwa Ibom State High Court presided by Justice Edem Akpan, has sentenced 82-year-old Village Head of Efen Ibom in Ika Local Government Area of the State, Chief Essien Matthew Odiong, to death by hanging for murder.

The monarch, married to 12 wives and has 60 children, was standing trial on four counts of conspiracy, directing unlawful trial by ordeal, stealing of the motorcycle, and murder of the owner, one Udoma Udo Ubom.

Delivering judgment on Friday, Justice Akpan said the court found the accused guilty of the murder of the deceased by injecting some chemical substance on him, leading to his death on 26th April 2017.

According to the judgment, the late Ubom was accused by his brothers of being a wizard and was reported to the Village Head, who brought him before the Council, where the deceased was administered an oath to swear and prove his innocence.

The court held, “Having sensed the consequences of his criminal activity, the monarch escaped from the Village since 2017 and returned in 2019 when he was arrested by the Police.”

Justice Akpan stated, “The accused had voluntarily admitted that he sat at Efen Clan Council with five other village heads and members of the Clan Council to try the deceased on the allegation of witchcraft, and the law has relieved the prosecution of the burden to prove the offense of conspiracy.”

The court further held, “The admission of the process of trial and the decision of Efen Clan Council to administer oath on the deceased, has logically brought to the conclusion that a plastic bath on the head of the late Udoma Akpan Udo Ubom and injecting some chemical substance through a syringe into his buttocks by the village head, caused the death of the deceased.”

Justice Edem Akpan sentenced the Village Head to death by hanging for murder, seven years imprisonment with hard labor for directing unlawful trial by ordeal, and three years imprisonment for conspiracy with others now at large.

However, before the sentence was announced, the convicted Village Head, popularly known as ‘Kill and Bury’ pleaded for leniency, asking the Court to temper justice with mercy.

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”It’s Totally False And Malicious”, 2Face Debunks Rumour He Got A Banker Pregnant

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Nigerian singer, 2face Idibia has debunked reports he got a banker pregnant.

His manager, Efe Omorogbe released a statement debunking the rumor this afternoon, August 13.

Recall that few days ago, 2face came on social media to apologize to his wife, Annie Idibia, for being a “Shitty husband”.

Shortly after he shared his apology post, some social media users claimed he apologized publicly because he got a banker pregnant.

The singer has now debunked the report.

Read the statement below…

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