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Economy

Dollar “kasala”: CBN to raise BDC’s share capital to N2bn

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By Kayode Sanni-Arewa

The Central Bank of Nigeria is considering increasing the share capital of Bureau De Change operators to N2bn and N500m for Tier 1 and Tier 2 licences.

The currency operators were previously charged N35m for a general licence.

This was contained in the draft paper of a “Revised Regulatory And Supervisory Guidelines For Bureau De Change Operations In Nigeria” published by the apex bank on Friday.

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The new guidelines contain several new changes to the guidelines for BDC operations in the country and if endorsed will be effective at a date decided by the CBN.

Recently, operations of the currency operators have suffered heavy backlash following the free fall of the naira against the dollar.

Government officials have severely blamed the black market operators for this fall though liquidity remains a huge challenge.

This week, operatives of the Economic and Financial Crimes Commision arrested over 250 BDC operators in Abuja and many more in other states of the federation.

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Under the minimum capital requirements, the central bank is introducing a two-tier license for BDC operators in the country.

The guidelines read, “A Tier 1 BDC is authorised to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.

“A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements.

“Also, a Tier 2 BDC is authorised to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

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“Under Tier 1, operators are expected to have N2bn as minimum share capital while also depositing a Mandatory Caution Deposit of N200m.

The application and licence fee is also N1 million and N5 million respectively.

“Under Tier 2, operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million. The application and licence fee are also N250,000 and N2 million respectively.”

The apex bank also stated that the prescribed minimum capital of BDCs and any subsequent capital injection shall be subject to verification by the CBN.

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Economy

Hardship: Nigeria’s inflation increases to 34.19% in June

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By Francesca Hangeior.

 

The latest report of the National Bureau of Statistics (NBS) has said that inflation rate increased from 33.95% in May 2024 to 34.19% in June 2024.

This was contained in its document titled: “CPI and Inflation Report June 2024.”

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The report said: “In June 2024, the headline inflation rate increased to 34.19% relative to the May 2024 head line inflation rate which was 33.95%.”

NBS said looking at the movement, the June 2024 headline inflation rate showed an increase of 0.24% points when compared to the May 2024 headline inflation rate.

On a year-on-year basis, said the Bureau, the headline inflation rate was 11.40% points higher compared to the rate recorded in June 2023, which was 22.79%.

The document said this shows that the headline inflation rate (year-on-year basis) increased in the month of June 2024 when compared to the same month in the preceding year (i.e. June 2023).

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NBS further noted that on a month-on-month basis, the headline inflation rate in June 2024 was 2.31%, which was 0.17% higher than the rate recorded in May 2024 (2.14%).

The report said this means that in the month of June 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in May 2024.

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Economy

NNPC Stake In Dangote Refinery Now 7.2% – Dangote

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Africa’s richest man Aliko Dangote says the Nigerian National Petroleum Company (NNPC) Limited now owns a 7.2% stake in the Dangote Petroleum Refinery, and not a 20% stake as initially announced before the inauguration of the facility at the Lekki Free Trade Zone.

Dangote, who made this known at a press briefing on Sunday, said NNPC’s stake dropped to 7.2% over the company’s failure to pay the balance of their share, which was due in June. The NNPC had acquired a 20 per cent interest in the $20bn Dangote refinery for $2.76 billion.

“NNPC no longer owns a 20 per cent stake in the Dangote refinery. They were met to pay their balance in June, but have yet to fulfil the obligations. Now, they only own a 7.2% stake in the refinery,” Dangote said.

The NNPC confirmed the development in a statement late Sunday. “NNPC Limited periodically assesses its investment portfolio to ensure alignment with the company’s strategic goals,” said a spokesman for the company.

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

Nigeria, Africa’s most populous nation, faces energy challenges, with all its state-owned refineries non-operational. The country is heavily reliant on imported refined petroleum products, with the state-run NNPC being the major importer of the essential commodities.

Fuel queues are a commonplace in the country. Prices of petrol tripled since the removal of subsidy in May 2023, compounding the woes of the citizens who power their vehicles, and generating sets with petrol, no thanks to decades-long epileptic electricity supply.

Last December, Dangote, one of Africa’s leading industrialists, commenced operations at his $20bn facility sited in Lagos with 350,000 barrels a day. The refinery hopes to achieve its full capacity of 650,000 barrels per day by the end of the year. The refinery has begun the supply of diesel and aviation fuel to marketers in the country while petrol supply is expected to commence in August.

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Dangote had expressed frustration about getting Nigerian crude for his facility. A Bloomberg report had it that the Lagos-based refinery bought about 24 million barrels of crude from the United States.

The NNPC had reportedly pledged Nigerian crude in a $3.3 billion oil-for-loan Afreximbank deal, hampering its local crude supply. Nigeria’s crude oil production rose to 1.276 million barrels per day (bpd) in June, way lesser than the 1.7 million bpd benchmark in the 2024 Budget.

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, had in May said the decision by the Lagos-based refinery to import US crude could be based on its business model.

But Dangote disclosed on Sunday that his refinery would roll out petrol from August 2024, having resolved its crude oil supply issues with the NNPC and the Federal Government.

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FG Releases Locations Nigerians Can Buy Fuel At Cheaper Price (Full list)

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In an effort to provide an affordable alternative and reduce the cost of transportation, the federal government has released a list of locations across the country where motorists can convert their petrol and diesel-powered vehicles to run on Compressed Natural Gas (CNG).

The conversion will be at no cost for commercial transporters across different unions, including the Road Transport Employers Association of Nigeria (RTEAN), the National Union of Road Transport Workers (NURTW), and the Nigerian Association of Road Transport Owners (NARTO), among others. Ride-share operators have also been included in the scheme, with a target of free one million conversions by 2027.

According to the program director and chief executive of the Presidential Compressed Natural Gas Initiative (P-CNGi), Michael Oluwagbemi, the cost of converting a petrol-powered vehicle to CNG ranges between N300,000 to about N600,000, depending on the type of car and components.

As part of the government’s response to the increase in fuel prices, NNPCL and NIPCO Gas have entered a strategic partnership to expand CNG stations across Nigeria. The collaboration is set to establish 35 CNG stations nationwide, of which 12 were commissioned in Lagos and Abuja in the past week.

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Under the Presidential CNG Initiative, CNG is priced at around N200 per standard cubic foot for cars, taxis, and tricycles, while CNG for heavy commercial vehicles is sold at N260 per standard cubic meter (SCM).

The list of CNG conversion centres provided includes locations along the Lagos-Ibadan Expressway, Ibadan, Benin City, Warri, Ajaokuta, Abuja, Oron, and several other cities across the country.

This initiative aims to provide a more affordable alternative to traditional fuel, thereby reducing the burden on transportation costs for Nigerians.

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