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Subsidy: Nigerians Indict NNPC, Accuse Successive Govts Of Complicity

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Nigerians have called on the Federal Government to be more decisive with the issue of subsidy for petroleum products in the overall interest of the masses.

Participants at a weekly discussion programme of the African Media Hangout, a platform made up of a group of diverse media professionals made the call weekend.

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Discussants at the weekly programme included Professor Tony Afejuku of the University of Benin, Benin City; Pa Patrick Omhonriawho; a Publisher, Oray Osawe, and a retired News Agency Nigeria Editor, Mr. Celsius Ohain, among others.

In his contribution, Prof Tony Afejuku of the University of Benin identified Nigeria’s major problem as that of leadership, which according to him is the cause of the “subsidy woes.”

While calling on journalists to carry out their watch dog role by doing more investigation in the mystery behind fuel subsidy in Nigeria, Prof. Afejuku urged citizens to protest against fuel problem (scarcity) which he said has become a source of trauma, pains to Nigerians.

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He said: “Nigeria has only one huge problem. What is this huge problem? The huge problem of leadership. It is the cause of our subsidy woes.

With or without subsidy Nigeria will be the progressive country we want it to be if we have the right leadership; if our political leaders are political leaders and not political rulers.”

Another contributor with the username Mr Oyo said fuel subsidy is not the problem but “issue of greed and pursuit of wanton wealth at the expense of Nigerians by the country’s petroleum company, the NNPC and its management.”

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Questioning Why the NNPC should be the sole importer of fuel since Nigeria fails to refine her crude, Mr. Oyo said: “Until Nigeria refines her crude locally, the solution lies in deregulation of the market so that importers can set up an independent monitoring body.”

On his part, ORay Osawe, Publisher, Navigator Newspapers, also accused the NNPC of defrauding the nation’s treasury with the payment of subsidy.

He added that since successful governments have failed to stop the payment of subsidy, it means the government itself is complicit in the fraud.

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He asserted: “The NNPC has feasted on the governments’ magnanimity and is defrauding the Nigerian people in the subsidy payment.

“The problem is that top government officials are colluding with the NNPC to rape the Nigerian masses in the name of subsidy.

“This explains why successive governments lack the political will to stop the subsidy by not breaking the NNPC’s monopoly. In essence governments has been complicit, especially with a President overseeing the Petroleum Ministry.”

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Also contributing to the discussion, Elder Patrick Omhonriawho popularly called PGO viewed the problem of subsidy from multiple perspectives, saying “leaders slow pace of decision making with a bicameral legislature; lack of leadership and corruption in every facets of government are a major banes.”

He added: “Our leaders slow pace of decision making with a bicameral legislature has not helped matters. This is visible in contract awards for building roads, bridges, fuel depots and rail lines.

“Lack of leadership and corruption in every facets of government is a major issue.” (Sic)

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On his part, Elder Celsius Ohain, a retired Editor of News Agency of Nigeria (NAN) posited that “Fuel subsidy has become somewhat of a mysterious phenomenon in Nigeria because of the aura of secrecy and controversy that surrounds it over the years.”

According to him, “as a nation, our ‘subsidy’ does not seem to meet that acceptable universal stand but has instead become a means to bleed the nation financially.”

While noting that many persons who condemned subsidy while seeking power do the same thing when they get to power, the media practitioner urged government to fix the nation’s refineries so as to stop the importation of fuel cum subsidy.

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He added: “Successive governments have done exactly the same thing they condemned on their journey to power, thus making ‘subsidy’ a jinx the nation has found it difficult to extricate itself from.

“Few years ago, there was a subsidy probe and cans or rather, drums of worms were exposed about people getting paid for importing ‘fuel’ with non-existent vessels on high seas.

“The critical question is: Why continue to import finished products when our refineries which remain in comatose could be fixed to enable local refining and export of finished product?

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“Why can’t the Warri, Port Harcourt and Kaduna refineries come to life? These are begging questions. Suffice it to say that successive governments have shown lack of political will to do the needful as the lure of ‘free monies’ flowing therefrom is too attractive to ignore.”

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New Naira: We Won’t Extend Feb 10 Deadline, CBN Warns Nigerians

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The Central Bank of Nigeria (CBN) has said it is not considering deadline extension for the phasing out of the old Naira notes.

Nigerians, including governors elected on the platform of the All Progressives Congress (APC), have asked the apex bank for an extension owing to the scarcity of the redesigned Naira notes.

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However, the governor of CBN, Godwin Emefiele, said the bank is not considering an extension of the deadline after the 10-day grace recently approved by President Muhammadu Buhari.

Emefiele, who disclosed this at a briefing in Lagos, appealed to Nigerians to exercise patience noting that the gains of the policy outweigh the initial challenges.

“I want to say unfortunately again, this time, we will not be looking at extension of deadline because we are the central bank and the deposit money banks are doing everything to address the challenges,” he said.

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He also said the redesigned naira policy was not targeted at anyone, reemphasising that the policy is aimed at economic benefits.

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External reserves fell by $64m in January

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External reserves fell by $63.62m in January, figures obtained from the Central Bank of Nigeria have revealed.

The CBN revealed in its data on movement of foreign reserves that the external reserves which ended December 30, 2022 at $37.08bn fell to $37.01bn at the end of January 30, 2023.

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Nigeria’s external reserves fell by $3.43bn in 2022 after dropping from $40.52bn as of the end of December 31, 2021.

Cordros Securities stated in its January report on ‘MPC to favour smaller rate hikes in the short term’ noted that local currency weakness remained intact.

It stated that, “Foreign investors remain on the sidelines given the lack of FX reforms, higher global interest rates and weak macroeconomic narrative.

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“In addition, CBN’s FX supply to the different FX market segments remains significantly below pre-pandemic levels. Meanwhile, the demand for the greenback remains high as market players continue to source for FX to fulfil and clear their outstanding obligations.

Consequently, since the last policy meeting, the local currency depreciated by 3.4 per cent to N461.25/$ at the official market as of 18 January 2023.

“However, given that the FX reserves remain within the CBN’s comfort level, we expect the Committee to highlight the need for the apex bank to maintain its periodic FX interventions and intensify its call to the fiscal authorities to amplify their efforts in ensuring higher crude oil production over the short-to-medium term.

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“Accordingly, the Committee will likely reiterate that the CBN should address the pressures on the local currency by boosting the FX supply for productive activities.”

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Naira under serious pressure, Fitch Ratings warns

Fitch, Withdrawals, Governors, CBN, notes, new naira, Banks
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Global credit rating firm, Fitch Ratings has warned that Nigeria’s currency, the Naira is under serious pressure

Fitch in a report said this may further raise the possibility of a material devaluation following the presidential election in February 2023.

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The exchange rate between the naira and the US dollar traded for an average of N745/$1 on Wednesday, 1st February 2023, representing a 0.80 percent appreciation when compared to N751/$1 recorded in the previous trading session.

Similarly, the exchange rate at the cryptocurrency P2P exchange appreciated on Wednesday, 1st February 2023 to a minimum of N745.5/$1, from N752/$1 recorded on Tuesday’s trading session.

Meanwhile, the exchange rate at the investors and exporters (I&E) window closed at N461.5/$1, the same rate as recorded in the previous trading session.

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Fitch Ratings in a report, explained that the inability to reliably source United States (US) dollars on the official FX market has itself contributed to lower foreign portfolio investor (FPI) inflows, which will continue to put further pressure on US dollar availability.

Nigeria’s already-high structural inflation has been aggravated by global commodity price spikes, supply constraints and a weak naira, according to a Fitch Ratings note.

Nigeria’s headline inflation rate printed at 21.34 per cent in December 2022 after a 13 basis points slowdown from the previous month, causing inflation to reach a 17-year high.

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Analysts noted that Nigeria’s falling external reserves levels have contributed to US dollar shortages in the official FX market, as evidenced by the rapid depreciation of the Nigeria naira in the parallel market to NGN738/USD on 31 December.

Since then, the exchange rate at the open market has worsened to N750 per United States dollar in the open market where it is freely traded to users, while it traded at N462 at Investors, Exporters FX Window.

According to Fitch, the parallel market rate is therefore trading at a large discount to the official exchange rate, raising the possibility of a devaluation following the change in administration that will follow the presidential election in February 2023.

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Monetary policymakers, particularly in emerging markets, are challenged with marked pressure on their respective local currencies due to rising global interest rates and risk-off sentiments. Global investors rank the FX convergence of the naira in 2023 as a major policy shift that could incentivize investment flows.

Fitch expects US dollar scarcity to continue weighing on economic activity in 2023, compounding the effect of high inflation and rising interest rates on borrowers’ repayment capacity, while negatively affecting banks’ trade finance business and FC liquidity.

According to market participants, the CBN has accumulated a backlog of foreign currency demand from importers, estimated at about USD3 billion.

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In addition, the International Monetary Fund, IMF, hinted that there is an additional USD1.7 billion outstanding to foreign portfolio investors (FPIs), bringing the total backlog to almost USD5 billion.

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