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World Bank Says Nigeria Could Spend N360bn Monthly On Subsidy, Predicts More Loan



The Country Director, World Bank, Shubham Chaudhuri, says Nigeria’s decision to postpone the full deregulation of the downstream sector of the petroleum industry by 18 months may cost the country over N4tn in subsidy payments on petrol in 2022.

The World Bank country director, however, noted that while the World Bank could come up with advice on subsidy removal, its role was certainly not to dictate as it could not do such.

Chaudhuri said, “With economics, you are not meant to make a political decision. What you are meant to do is to lay out what are the cons and consequences of different decisions.

“So that is what we are doing, we are just being very clear that this would come with a financial cost and the fiscal cost is the number, perhaps N4tn this year.”

He said even though the price of oil had gone up, the rise in global crude oil prices was not helping Nigeria that much.

Industry figures seen on Sunday showed that the price of Brent, the crude against which Nigeria’s oil is priced, was $118.11 per barrel at 5.06 pm Nigerian time, as it traded at the same rate the preceding day.

On why the rising oil price was not helping Nigeria as anticipated, Chaudhuri said, “The reason is that the cost of the PMS subsidy is going up. So at $85 per barrel, the NNPC was projecting that the cost of the PMS subsidy will be around N180bn to N200bn per month. In January when crude oil prices had already gone up to $90, $93, it (subsidy) still went up to N250bn per month.

“Now you just mentioned it is $100 per barrel, our guess right now is that we are looking at N4tn or even more in the year 2022 as the cost of PMS subsidy.”

While making a calculation, he said, “You take 60 million liters a day, which the NNPC said is being evacuated from its depots, you take what is happening to the cost of imported world gas, price of gasoline, which is going up because the crude oil price is going up.

“Right now, the differential I believe is about N200 per liter. So 60 million times N200 every day is N12bn per day. Multiply that by 30, that is N360bn per month. Multiply that by 12, it will be somewhere about N4tn per year.

“And the N200bn, I think was when the oil price was around $93. So with oil prices at $100, the gap between N165 per liter and the (actual) cost of PMS is going to be more than N200 per liter.

“And that is the main reason we feel it is going to be a bit negative for Nigeria’s fiscal situation because oil production is not going up or may even continue to stall.”

Chaudhuri noted that the issue of subsidy removal was Nigeria’s choice, adding that there should be a consensus among the political elites that should be communicated and accepted by the public.

He explained that if there was no consensus earlier, it could be a time for an eclipse of discussion around what should be the choice for Nigeria, adding that it had to be a consensus.

He further noted that despite the rise in global oil prices due to the Russia/Ukraine war, this might not have a significant effect on the country’s oil earnings.

Chaudhuri said, “On the oil price, historically, in the last five decades, you will see that anytime crude oil price goes up, it helps economic activities in Nigeria, just because it becomes a source of free cash flow that people spend on a lot of things.

“Because the oil sector by itself is part of a relatively small part of the economy but the spillover is large. What was also the case in the last five decades was that high oil prices were good or the federation budget, finances, that is no longer true.

“In 2021, it was not true, and in 2022 it is not likely. We could be wrong, and we will be very happy to be wrong.”

The concerns raised by Chaudhuri were shared by stakeholders in the oil sector, for instance.

The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, said subsidy on petrol might double this year due to the rise in crude oil prices.

It was also reported that the projected oil estimate of the Federal Government of $62/barrel as contained in the 2022 Appropriation Bill had almost doubled going by the current global oil prices, which had been on the increase since the invasion of Ukraine by Russia.

In December 2021, the House of Representatives passed the 2022 budget of N17.126tn, as it also increased the oil benchmark to $62, against the 52 dollars that were proposed by the executive.

The House had explained at the time that the increase in oil price was to reflect the current market values of the price of an oil barrel in the international market.

However, the current oil price of $118.11/barrel is almost double the $62/barrel benchmark that was set by the lawmakers.

“Of course, fuel subsidy could rise by 100 percent when the current price of crude is benchmarked against the projection in the 2022 budget,” Ukadike had stated on Saturday.

He added, “This is because oil prices have been climbing higher almost daily since Russia invaded Ukraine and caused some level of instability in the global oil business.”

Ukadike stated that the gains that Nigeria would have made from the rising crude oil prices were being eroded by the increasing amount being spent on petrol subsidies.

This, he said, was why oil marketers had been urging the government to fix Nigeria’s refineries to effectively halt petrol subsidy and channel subsidy spending to other sectors such as education, health, etc.

Last month, the President, Muhammadu Buhari, wrote to the Senate, seeking the approval of a supplementary budget of N2.56tn.

Buhari had explained in his letter that the money was meant for subsidy on petroleum products from June to December 2022, as he requested the National Assembly to appropriate an additional N2.56tn in the 2022 budget that was passed in December 2021.

Buhari had in August 2021 given his assent to the Petroleum Industry Act, a law that was meant to put an end to petrol subsidy in February this year.

But the Federal Government had to suspend plans to remove subsidy on petrol after labor unions threatened to ground the country if petrol subsidy was removed.

The Minister of Finance, Budget, and National Planning, Zainab Ahmed, had stated that N443bn was the amount available to fund subsidy in 2022.

Ahmed, however, stated that the Nigerian National Petroleum Company Limited requested a total of N3tn from the Federal Government to fund fuel subsidy in 2022.

NNPC is the sole importer of petrol into Nigeria for more than four years and has been shouldering petrol subsidy costs on behalf of the Federal Government.

The government’s supplementary budget of N2.56tn for subsidy payment and the N443bn in the 2022 budget as approved in December, indicated that Nigeria would spend about N3tn on subsidy this year.

Aside from the huge fuel subsidy payments, another reason why Nigeria would not be making much from the rise in global oil prices, according to the Minister of State for Petroleum Resources, Chief Timipre Sylva, was because the country’s oil production was lower than the quota assigned it by OPEC

Data released on Wednesday by OPEC indicated that it raised Nigeria’s oil production quota from the 1.718 million barrels per day target in March to 1.735 million BPD in April 2022.

The organization raised the country’s crude oil production quota following the conclusion of the 26th OPEC and non-OPEC Ministerial Meeting, held via videoconference on March 2, 2022.

But Nigeria has been missing its oil production quota lately. Early last month, OPEC increased Nigeria’s crude oil production target for March even though the country had been missing its approved monthly output targets.

It was reported that Nigeria missed its crude oil output target for January 2022, pumping 1.46 million barrels per day against a target of 1.683 million BPD as approved by OPEC.

But Sylva recently explained that Nigeria’s low oil production would not make the country take advantage of the rising crude oil prices.

He said, “In Nigeria right now, we are a net importer of petroleum products and when the prices of crude oil go up it also affects the prices of petroleum products.

“So for us who are the net importers, it is also not very good for us. What we are saying is that if you are going to produce more and you get more dollars from your production, then it gives you more money for your imports.”

The minister, however, stated that efforts were ongoing to grow the country’s oil production.

When contacted, NNPC spokesperson, Garba-Deen Muhammad, requested that the subsidy information be sent to him via WhatsApp. It was sent and he promised to revert but had yet to do so till this report was filed.

Fuel subsidy may hit N6tn this year, says MOMAN
However, when asked to react to the projection of the World Bank that subsidy might rise to N4tn this year, the Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, stated that subsidy might hit N6tn in 2022 if the current factors causing the rise in global crude oil prices to persist.

He said, “It (the projected N4tn) might be even higher. It is a function of how our exchange rate goes. It is a function of how the price of oil goes. We don’t anticipate that what is happening between Russia and Ukraine will last for too long.

“Hopefully it does not, the international prices of crude oil will come down and the availability of the product will go up, that is supply will improve. So hopefully the price of the finished product will come down.”

Isong added, “If we are lucky and if things are on our site, then it (subsidy) might be less. But if things are not on our side, if you do the current calculation as of today, based on all the numbers today, if things do not improve, it can easily reach N6tn.

“So it can easily reach N6tn. It is a function of the exchange rate and the international cost of refining products, among others. So the truth is that we simply need to wean the country of the subsidy. This again is because, in all the countries around us in West Africa, there is no subsidy.”

FG may borrow more as cost of fuel subsidy increases – Experts
However, economic analysts and experts have said that the Federal Government may have to borrow more to cover the increasing cost of fuel subsidy.

An economist and a senior lecturer of Economics at the Pan Atlantic University, Dr. Olalekan Aworinde, said that the cost of fuel subsidy might exceed N4tn in 2021, which would further have economic implications on the country.

He said, “I think it would likely be above N4tn because of the increase in the crude oil prices due to the invasion of Ukraine by Russia and the possibility that the supply of crude oil will be lower than its demand. It is going to have some economic implications.”

On the economic implications, he said that state governments may not be able to pay salaries and the Federal Government may have to borrow more to cover fuel subsidy costs.

Aworinde said, “For instance, if the allocation to a state government is affected, the state government will not be able to pay salaries. This would further affect the economic ability of Nigerians, and even the output of goods and services in the country.

“Also, Federal Government may have to look elsewhere to be able to finance the subsidy. This implies that they will still have to go into debt. If they go into debt, the future generation will have to bear the burden of this debt. If you are borrowing for consumption, there will be no returns. If it’s not generating any returns for the government, we are going to have a situation of debt overhang, with the country having to struggle to pay back the debts.”

Also, an economist and CEO of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said that there would be a surge in the costs of petrol import and subsidy bills.

He said, “We will see an upsurge in petrol import and subsidy bill in coming months as the landing cost of petrol increases on the back of the rise in crude oil price.

“Regrettably, we remain a major importer of petroleum products, and typically when oil prices increase, petrol import bill and subsidy payments also increase. Only recently the NNPC made a request of N3trillion for petrol subsidy.  With the current turn of events, the subsidy bill would even be higher, creating serious financial challenges for the government at all levels. These of course have serious implications for the budget and government finances.”

He added that there would be a higher fiscal deficit, increased debt profile, and higher debt service.

Yusuf said, “Ideally, a high oil price increase should be good news for oil-producing countries.  It typically impacts positively on foreign exchange earnings, foreign reserves, and government revenue.   But Nigeria is a peculiar case because of the dysfunctional policies and regulations in the oil and gas sector.

“It is an irony that crude oil price increase emasculates the Nigeria economy, rather than benefit it.  This is because of the escalating petroleum products and subsidy bill.  Consequently, the fiscal deficit will be higher than projected, the debt profile will increase, debt service commitment will rise and government borrowing will intensify. This may worsen an already weak fiscal space.

“With this scenario, we are likely to see an increased credit to government by the Central Bank of Nigeria, which will further increase money supply leading to higher inflation and further depreciation in the exchange rate. These are the regrettable fiscal trajectories of the current developments.  We are likely to see much more fiscal pressure on all levels of government.”


[VIDEO] Herdsmen Kill Bus Conductor In Lagos Over Cow’s Death



Persons identified as herdsmen have stabbed a bus conductor to death for killing a cow in Lagos.

This happened in the early hours of Monday and became public in a viral video from the scene of the accident.

According to one of the videos making rounds on social media platforms, the incident occurred at Mowo on the Lagos-Badagry Expressway, close to President Muhammadu Buhari Estate.

The commentator in the video said the bus conductor, who fled after the accident that led to the death of the cow, was killed close to a police checkpoint.

The driver, who was said to be heading to Badagry from Mile 12, was said to have fled as soon as he sensed danger.

This made the herdsmen go after the conductor of the bus with registration number: FKJ 756 XH.

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JUST IN: Olukayode Ariwoola To Be To Sworn In As Acting CJN



Report has it that plans are underway to swear in Olukayode Ariwoola as a tentative replacement for the former CJN, Tanko Muhammad so as to leave no vacuum.

Ariwoola is the next highest-ranking justice of the supreme court and he is expected to take over in an acting capacity from Monday.

According to the procedure for the appointment of the CJN, the Federal Judicial Service Commission (FJSC) shortlists two or three most senior judges among the supreme court justices and sends their names to the National Judicial Council (NJC) which then selects one candidate and forwards it to the president before it goes to the Senate confirmation.

But to leave no vacuum, an acting CJN must be appointed.


Ariwoola was born in Iseyin, Oyo State, on August 22, 1958. He had his primary education at the Local Authority Demonstration School, Oluwole, in his hometown between 1959 and 1967. He then moved to Muslim Modern School in the same town from 1968 to 1969 before graduating to Ansar-Ud-Deen high school, Saki area of Oyo, for secondary education.

He earned his law degree at the University of Ife (now Obafemi Awolowo University) in 1980 and a year later he was called to the Nigeria bar and got enrolled as a solicitor and advocate of the supreme court.

He kicked off his career as a legal officer in the Oyo state ministry of justice and stayed in the role until he moved into private practice in 1988.

Ariwoola spent less than four years in private practice before he was whisked back into public service.

Between 1988 and July 1989, he was a counsel in-chambers of Ladosu Ladapo before moving to establish his own legal firm named “Olukayode Ariwoola & Co”. Three years later, he was called to the bench.

Ariwoola was back in public service by 1992 when he was appointed a judge of the superior court of record in Oyo.

He was named the chairman of the Oyo state armed robbery tribunal between May 1993 and September 1996.

In 2005, he then rose to the position of a justice of the court of appeal and he held the position before he was appointed a justice of the supreme court of Nigeria in 2011.

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Ekweremadu: Immigration Dismisses Organ Donor’s Underage Claim



The Nigeria Immigration Service has stated that it followed due process in issuing a Nigerian passport to Mr. David Nwamini, who was allegedly trafficked to the United Kingdom for organ harvesting by former Deputy Senate President, Ike Ekweremadu.

David had allegedly claimed to be a minor after he arrived in the UK where he was to donate his kidney to Ekweremadu’s daughter.

However, photos of his Nigerian passport, making rounds on social media, showed his date of birth to be October 12, 2000, placing him at 21 years old.

Making comment on the controversy surrounding David’s age, Mr. Idris Jere, the Comptroller General of the NIS, at a press conference on Sunday, said Nwamini is indeed 21 according to his record in the possession of the NIS, discarding claims that the Service didn’t thoroughly vet the documents provided by the applicant.

Jere said, “The fact of the matter concerning the case above, therefore, is that Mr. David Ukpo Nwamini applied and paid for the e-passport using the NIS portal after which he approached the passport office in Gwagwalada, FCT Abuja, on November 2, 2021, for his interview.

“To support his application, Mr. Nwamini presented all necessary documents required including his birth certificate issued by the National Population Commission, showing October 12, 2000, as his date of birth; his National Identification Number, issued by NIMC corroborating the date of birth; a Certificate of Origin issued by Ebonyi State Government Liaison office in Abuja, and a guarantor’s form duly signed.

“NIS relies on documentation supplied by other agencies and we are not under any obligation to go to those agencies to verify those documents. What we do is that we look at the documents and applicants physically. Once that is done, we go ahead to process.”

Meanwhile, the Senator representing Bayelsa West, Mr. Seriake Dickson, has told Nigerians not to hastily pass judgment against Ekweremadu and his wife, Beatrice.

Dickson said this in a statement he issued on Sunday titled, ‘The Ekweremadu I know will not traffic an underage boy for organ harvesting.’

Dickson said, “I am sure from the beginning when this story broke that the Ekweremadu I know could not have taken an underage and underprivileged young man, smuggle him out to harvest organs for whatever purpose.

“The circumstances surrounding this will fully come to light in the cause of investigation.

Also reacting, the Ebonyi State Government, in a statement signed by the Commissioner for Information, Uchenna Orji, in Abakaliki, on Sunday urged the UK authorities to exercise caution in the investigation of circumstances leading to the arrest and eventual trial of the senator and his wife.

The statement read, “Ebonyi State Government is following up the turn of events and twists that followed the medical intention of the former Deputy Senate President’s family.

“While we urge the UK Government to act progressively and meticulously and critically look at the intention (Mens rea) and the minds of the detained family and please give them the benefit of the doubt, we enjoin the public, especially those with shades of opinions and surge of anxieties to remain calm as we hope to see light at the end of the tunnel.

“The state government is reaching out to the family of David Okemini Ukpo from Ebonyi State, whose information to the Metropolitan Authority of UK orchestrated the criminal charge against the senator and his wife. The state government stands with Senator Ike Ekweremadu at this trial moment and hopes that the truth and nothing but the truth shall guide the outcome of the matter.”

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