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NNPC records 63% FAAC remittance shortfall in five months

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The statutory payments made by the Nigerian National Petroleum Corporation (NNPC) to the Federation Account, a joint pool operated by the local, state and federal governments, declined by over 63 per cent in the first five months of 2021.

An analysis of the data presented by the national oil company to the Federation Account Allocation Committee (FAAC), in the first five months of this year showed that of the calendarised total sum of N613.834 billion, the corporation was only able to remit N225.852 billion.

The documents obtained from one of the federal ministries showed that N387.982 billion remained unpaid during the period under consideration, representing about 63.21 per cent actual budgetary forecast.

According to the NNPC/ FAAC data, while the corporation was expected to pay a net amount of N122.767 billion monthly into the federation account, it was only able to remit N90.860 billion in January, N64.161 billion in February and N41.184 billion in March.

But as it earlier announced, the national oil company was unable to make any payment into the federation account in April, while a paltry N29.647 billion was remitted in May.

As exclusively reported by THISDAY earlier in the month, the corporation said it would deduct N114.337 billion from the June federation proceeds at a meeting, which took place last week.

The documents showed that N225.852 billion was remitted as of May, while a projected N820.684 billion shortage of the net total forecast of N1.473 trillion for 2021 might be recorded by the end of the year if the current challenges continue.

While there might be other ancillary issues leading to the inability of the corporation to meet its obligation to the three tiers of government, the NNPC has had to deal with the major challenge of shouldering the government’s petrol subsidy payments in the last couple of months.

The elimination of payments for what the government now terms under-recovery has been a controversial issue for decades as attempts to alter the existing arrangement has always met with stiff resistance from the labour unions, civil society organisations as well as a cross-section of Nigerians.

Last year, specifically on March 19, at a time the international prices of crude oil took a downward spiral, the Muhammadu Buhari-led administration had announced the total deregulation of the downstream petroleum sector.

However, there has been a rollback of that policy following the gradual recovery of the price of the commodity in the international market, which has invariably affected the pump price of fuel in the country.

In all, added to the funding of its ongoing major projects, payment for under-recovery, among others, the funding performance of the corporation showed that as of May, N1.088 trillion had been disbursed by the NNPC, including N195.652 billion in January and N191.194 billion in February.

In March, also, N224.589 billion was distributed, while in April and May, N156.366 billion and N320 billion were disbursed respectively.

The Group General Manager, NNPC, Mallam Mele Kyari, in March, said the federal government was subsidising petrol with about N120 billion monthly, describing the development as unsustainable.

He said while the actual cost of importation and handling charges amounted to N234 per litre, the government had been selling at N162 per litre, therefore, bearing the cost burden.

He said the NNPC could no longer afford to bear the cost, saying Nigerians would have to pay the actual cost sooner or later. But the government has since then said it was in negotiations with organised labour on the matter.

On June 30, the NNPC boss revealed that the price of the product had further skyrocketed and that without subsidy, petrol would be selling at N256 per litre at the filling stations.

At the time Kyari spoke, crude oil was selling for $74.40 per barrel at the international market. It has since then hit a high of $77, before slumping below $70 on Monday and Tuesday.

Meanwhile, yesterday, the Brent crude sustained its upswing rising from $69.05 per barrel to close at $71.02 per barrel.

The price rally was in reaction to an industry report which showed an unexpected build-up in US oil inventories last week, which heightened worries about a resurgence in COVID-19 infections potentially dampening fuel demand.

Earlier, a deal by the Organisation of Petroleum Exporting Countries (OPEC,) and its allies, known as OPEC+ to boost supply by 400,000 bpd each month from August through December, sparked an oil price slump on Monday, exacerbated by demand fears with cases of the Delta variant of the coronavirus picking up in major markets.

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MTN Nigeria compensates subscribers for network downtime

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MTN Nigeria Communications Plc has announced compensation for its subscribers to make up for the network disruptions experienced last Saturday.

On Saturday, 9th October 2021, MTN Nigeria users witnessed hours of network disruption caused by an outage that left customers without a connection.

Olutokun Toriola, Chief Executive Officer, MTN Nigeria, apologised again to customers for the inconvenience, stating that new measures were being implemented to mitigate a repeat of such an event.

“On behalf of the entire MTN team, I want to start with a heartfelt apology. We are truly sorry for the disruption this caused for so many in our MTN family. We know that millions of people rely on us to stay connected to their loved ones, to manage their businesses, to coordinate their lives. We take that responsibility, and privilege, very seriously. That’s why we are putting new measures in place to make sure we never experience anything like last Saturday again,” said Toriola.

On the cause of the outage, the CEO stated that it was due to an error that shifted all 4G customers onto the 3G band and impacted the whole network, adding that the technical teams were able to rectify the problem.

“Our technical teams have traced the cause of the problem to an error that shifted all our 4G customers onto the 3G band. This overloaded the 3G band, causing a domino effect that impacted the whole network.

“Our engineers were able to resolve the problem. I know that recently other technology companies have suffered outages. I want to reassure you that last Saturday’s event is in no way connected to those. This wasn’t sabotaged, it was a regrettable error.’’

Beyond extending time-bound subscriptions for its customers and as a way to further compensate its customers, the telecom giant said that customers on the MTN network have received a refund for the data and airtime that they used between 12noon and 7pm on Saturday, 16th October 2021.

“While we can’t give you back the time you lost last Saturday, we can give you back what you spent yesterday. Every customer on the MTN network has received a refund for the data and airtime that they used between 10 am and 3 pm yesterday. We hope it shows how much we value our customers.

“You truly are our most important focus. We all have challenges, each and every one of us – young or old, personally or professionally. What matters is how we respond. With you by our side, we will continue to improve and grow. Thank you for all your support. Thank you for walking with us over the last 20 years. We look forward to the next 20 and more with you,” Toriola stated.

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IMF cautions as crypto market value surpasses N820trn

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Financial experts with the International Monetary Fund (IMF) have called for caution and regulation as the total market value of all the crypto assets surpassed $2 trillion (N820 trillion) – a 10-fold increase since early 2020.

The experts, Dimitris Drakopoulos, Fabio Natalucci and Evan Papageorgiou, in an article on the IMF’s blog, warned that many of these entities lacked strong operational, governance and risk practices.

They noted that crypto assets offered a new world of opportunities but warned that along with the opportunities come challenges and risks.

The trio explained that crypto exchanges, for instance, have faced significant disruptions during periods of market turbulence, adding that there are also several high-profile cases of hacking-related thefts of customer funds.

The financial experts argued that consumer protection risks remain substantial given limited or inadequate disclosure and oversight.

“For example, more than 16,000 tokens have been listed in various exchanges and around 9,000 exist today, while the rest have disappeared in some form.

The extent of the adoption of crypto assets is difficult to measure, however, surveys and other measures suggest that emerging markets and developing economies like Nigeria may be leading the way. 

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US may sanction IOCs in Nigeria, others for Hydrocarbon production

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International Oil Companies (IOCs), which insist on ramping up production of fossil fuels in Africa may face the risk of regulatory action from the United States.

This was disclosed by the country’s Deputy Special Presidential Envoy for Climate, Jonathan Pershing.

If the US makes good its threat, it will be a major blow to Nigeria, Angola, Congo and other oil-producing countries in Africa, which have intensified efforts to attract foreign investors to fund major hydrocarbons projects on the continent.

In August, President Muhammadu Buhari finally signed the Petroleum Industry Act (PIA) to spur competition in the sector as well as attract foreign investments.

But with the position of the US, many of the expected funding for Nigeria’s fossil fuels may be stranded since oil companies would be circumspect about putting their dollars in the upcoming projects.

Western fossil fuel companies planning to develop new projects in Africa would then need to consider the significant risk of regulatory action vis-à-vis the returns on investment in Africa.
Speaking from South Africa, the US envoy urged western investors to consider whether fossil fuels were a good commercial opportunity anymore in Africa or anywhere else.

“There’s a risk of regulatory … and financial activities, and I believe that’s getting more and more explicit. If you are a company looking to invest in oil and gas, you have to ask yourself…‘am I going to be left with a stranded asset?’ I would not bet very strongly on a fossil fuel future,” he said.

Pershing, who was speaking at a virtual media briefing, after being asked about the current rush by western oil and gas companies to develop deposits in Africa, noted that even China had committed to stop building overseas coal plants.

Africa accounts for just 3.8 per cent of greenhouse gas emissions, according to the non-profit Carbon Disclosure Project, but Pershing noted it was the fastest-growing continent.
It could, he said: “leapfrog” older carbon-based technologies and embrace renewables, just as it skipped wired telecoms in many places and went straight for wireless.
“Africa doesn’t need to move in the direction of the West’s high-carbon intensity. It can move directly beyond that,” he said.

His comments came despite the United States itself being a major producer and exporter of oil and gas, with recent growth driven by output from shale fields, a Reuters report said.
The US envoy is visiting several African countries as part of efforts to raise global climate ambition ahead of the United Nations COP26 Climate Summit in Glasgow, Scotland next month.

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