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Economy

NNPC Reacts to Owning Only 7.2% Stake in Dangote Refinery

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The Nigerian National Petroleum Company (NNPC) Limited has explained why it holds only a 7.2% equity in the $19 billion Dangote Refinery, instead of the widely speculated 20%. 

A statement released on Sunday by Femi Soneye, the Chief Corporate Communications Officer of NNPCL, addressed the company’s recent decision regarding its investment in the Dangote Refinery.  

Soneye said that the decision to reduce their investment was carefully considered and communicated several months ago to Aliko Dangote. 

Dangote mentioned to newsmen on Sunday that NNPC no longer holds a 20% stake in the refinery.  

He explained that this change occurred because NNPCL failed to pay the balance of their share, which was due in June. 

Reacting, NNPC said:  

“NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals.

“The decision to cap its equity participation at the paid-up sum was made and communicated to Dangote Refinery several months ago,” NNPC said.

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Economy

FG Spends $600m on Fuel Importation Monthly, Says Finance Minister Wale Edun

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The Minister of Finance and Coordinating Minister of the Economy, Wale Edun has disclosed that the country currently spends $600m on fuel importation monthly.

The minister revealed this during an interview on AIT’s Moneyline programme on Wednesday.

He said that the high import bill is due to neighbouring countries, up to Central Africa, benefiting from the country’s fuel imports.

Edun explained that the situation was the reason President Bola Tinubu removed fuel subsidy, as the country does not know the exact amount of fuel consumed internally.

According to a report by the National Bureau of Statistics (NBS), the country’s petrol import was reduced to an average of one billion litres monthly after President Bola Tinubu removed the fuel subsidy on May 29 last year.

He said, “The fuel subsidy was removed May 29, 2023, by Mr President, and at that time, the poorest of 40 per cent was only getting four per cent of the value, and basically, they were not benefitting at all. So it was going to be just a few.

“Another point that I think is important is that nobody knows the consumption in Nigeria of petroleum. We know we spend $600m to import fuel every month but the issue here is that all the neighbouring countries are benefitting.

“So we are buying not for just for Nigeria, we are buying for countries to the east, almost as far as Central Africa. We are buying. We are buying for countries to the North and we are buying for countries to the West. And so we have to ask ourselves as Nigerians, how long do we want to do that for and that is the key issue regarding the issue of petroleum pricing.”

The minister also clarified that the N570bn fund release to state governments was implemented last year December.

He said, “This actually refers to a reimbursement that they received from December last year onwards and it was a reimbursement I think under the COVID financing protocol but the point is that the states have received more money. They have received more money. Mr President has charged to ensure food production in the states.”

According to him, the recent decision to raise the maximum borrowing percentage in the Ways and Means from five to 10 per cent does not imply that the Federal Government tends to rely on the Central Bank of Nigeria financing.

He also said the welfare of Nigerians remained a key priority for the current administration, particularly ensuring food availability and affordability.

Edun said, “There is a concerted effort to ensure that we have homegrown food available. In the short term, apart from what is being distributed from reserves, there is a window that has been opened for importation because the commitment of Mr President is to drive down those prices now and make food available now.”

He assured all that the measure would not undermine local farmers, as importation would only be permitted after exhausting local supplies.

He said, “So, one of the conditions for this importation will be that everything available locally in the markets or with the millers and so forth has been taken up. We will have auditors that will check that.”

He said these interventions seek to reduce inflation, stabilise exchange rates, and lower interest rates, thereby creating a conducive environment for investment and job creation.

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Economy

FG Dismisses Dangote Petroleum As Inferior, Says Refinery Not Yet Licenced, Completed

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By Eric Elezuo

A Federal Government of Nigeria petroleum regulatory agency, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA), has dismissed petroleum products from the Dangote Refinery as inferior, in the guise of those f4om Watersmith and Aradel, making a case for superiority of imported ones.

The revelation was made by the Chief Executive Officer of NMDPRA, Mr. Farouk Ahmed, while responding to questions from a section of the press, a video of which is trending online, adding that the refinery is only 45% completed, and yet to be licenced for operation by the Nigerian government.

Earlier, the Vice President of Dangote Industries Limited, Devakumar Edwin, had alleged that most fuel products imported into Nigeria are substandard, blaming International Oil Companies (IOCs) of frustrating Dangote’s quest for production.

In the short video, which lasted a little over a minute, Mr. Ahmed debunked theories attached to the functionality of the Dangote Refinery, saying it does not have the capacity to ‘feed’ the nation of its petroleum needs, as it stands. He however, refuted arguments that some elements within the oil and gas sector were trying to scuttle the Dangote Refinery.

A transcript of the NMDPRA’s boss short response is as follows:

“It about concerns of supply of petroleum products acros the nationwide, and the claim that we are trying to scuttle Dangote. That is not so. Dangote Refinery is still in the pre-commissioning stage. It has not been licenced yet. We haven’t licenced them yet. I think they are about 45 per cent completed, or completion rather.

“We cannot rely on one refinery to feed the nation, because Dangote is requesting that we suspend or stop imports, especially of AGO and DPK, and direct all marketers to his refinery. That is not good for the nation in terms of energy security, and it is not good for the market because of the monopoly.

“Dangote Refinery, as well as some modular refineries like Watersmith Refinery and Aradel Refinery, are producing between 650 and 1,200 PPM. Therefore, in terms of quality, their products are inferior to imported ones,” he stated.

It will be recalled that only last Sunday, the President, Dangote Industries Limited, Aliko Dangote, while hosting senior journalists from across various media concerns, revealed that the Nigeria National Petroleum Company Limited (NNPCL) owns only 7.2% of stakes in the refinery, and not 20 percent as widely circulated. He also revealed that the refinery is set to begin fuel supply in August 2024.

Many stakeholders and respondents have alleged that there’s no love lost between the government of the day and the Dangote Group, and that explains the hiccup situation surrounding the takeoff the $19 billion refinery.

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Economy

IMF in Latest Forecast, Downgrades Nigeria’s Earlier Growth Projection

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The International Monetary Fund (IMF) has revised downward Nigeria’s economic growth projection by 0.2 percentage point amid weaker than expected activity in the first quarter of the year.

The Nigeria’s growth forecast was revised downward by 0.2 from the earlier projection in April.

This in turn has led to a downward revision of economic growth for sub-Saharan Africa.

The IMF announced this development in its World Economic Outlook (WEO) update released on Tuesday.

The report read: “The forecast for growth in sub-Saharan Africa is revised downward, mainly as a result of a 0.2 percentage point downward revision to the growth outlook in Nigeria amid weaker than expected activity in the first quarter of this year.”

The Bretton Wood institution raised alarm that some near-term risks have gained prominence from the previous outlook.

It added: “Overall, risks to the outlook remain balanced, as in the April 2024 WEO, but some near-term risks have gained prominence. These include upside risks to inflation that stem from a lack of progress on services disinflation and price pressures emanating from renewed trade or geopolitical tensions.

“Risks of persistent inflation in the services sector are tied to both wage and price setting, given that labor accounts for a high share of the costs in that sector. Higher nominal wage growth, which in some cases reflects the catch-up of real wages, if accompanied by weak productivity, could make it difficult for firms to moderate price increases, especially when profit margins are already squeezed.

“This could lead to further stickiness in wage and price inflation. The escalation of trade tensions could further raise near-term risks to inflation by increasing the cost of imported goods along the supply chain.

“Bumpiness along the remaining disinflation path could destabilize the return to price stability if short-term expectations spike upward as a result of disappointing inflation data.”

IMF equally held its global growth expectations for 2024.

The Fund expects the world economy to grow 3.2 percent this year, unchanged from its April forecast.

“Global activity and world trade firmed up at the turn of the year, with trade spurred by strong exports from Asia, particularly in the technology sector,” it stated.

For 2025, it expects global growth of 3.3 percent.

The Washington-based lender also warned that the prospect of interest rates staying elevated longer in the face of escalating trade tensions and increased policy uncertainty.

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