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DIESEL PRICE MAY HIT N1,500/LITRE, 75% FILLING STATIONS CLOSED – MARKETERS

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About 75 per cent of filling stations across the country are currently out of business due to their inability to purchase diesel required to power their tankers and transport Premium Motor Spirit, popularly called petrol, to their various outlets, oil marketers stated on Tuesday.

Marketers also stated that the cost of diesel would keep increasing and might hit N1,500/litre in the next two weeks if nothing drastic was done to curtail the current challenge faced by importers of the deregulated commodity.

Dealers under the aegis of the Natural Oil and Gas Suppliers Association told journalists in Abuja that this was also the reason why petrol scarcity had failed to abate in Abuja and neighbouring Nasarawa and Niger states, among others.

Speaking on behalf of the marketers, the National President, NOGASA, Bennett Korie, explained that the only solution to the current challenge was for the Federal Government to raise the pump price of petrol a little in order to reduce the huge foreign exchange used in PMS imports.

This, he said, would eventually free up some forex for diesel imports, a development that would impact positively on the rising cost of diesel, stressing that the product was currently sold at N850/litre.

He said, “If you go round now you will see that about 75 per cent of filling stations in Nigeria have gone out of business. There is no diesel to take fuel to their stations. All of them are going down.

“And it is not that the fuel is not there, but the cost of bringing it to the stations is too high. We know that the crisis between Ukraine and Russia has contributed badly, but the government has to do something fast, otherwise we are going to buy diesel in the next two weeks at N1000 to N1500/litre.”

Asked whether anything was being done to address the challenge, Korie replied, “As far as I am concerned nothing for now. The only way out, if you want to know, is that they (the government) should increase the price of fuel a little to reduce the money spent on PMS subsidy.

“I know Nigerians will not be happy to hear this, but this is the only solution. They should increase the price of fuel a little so that the savings will enable the Central Bank of Nigeria to have enough foreign exchange.

“You and I know that we import everything now in Nigeria. Diesel is an imported product and it is fully deregulated. So the importers are not getting dollars at the official CBN rate to import diesel. Everybody is going to the black market to get dollars to import their products and so you expect the price of diesel to be high.”

Korie states that if the government could bring down the rate at which it spends foreign exchange on PMS imports, this would will help other businessmen who import diesel to bring in products at low prices.

“So you need to increase fuel price a little in order to ensure that the dollars spent in importing petrol is reduced and there will be enough forex for importers of diesel and this will cut down the price of diesel.”

He also stated that this was the major reason why fuel queues had failed to clear in Abuja, as many filling stations lacked the funds to buy diesel at a high cost to run their trucks, transport petrol to the capital city and would still be made to sell PMS at N165/litre.

He explained that Lagos, Port Harcourt, Warri and other states closer to these areas had no queues because the three named cities had seaports and large depots for loading and distributing petroleum products.

Korie said, “The reason why you are having scarcity of petroleum products particularly in Abuja is as a result of the high cost of diesel. The price of diesel today in the market is N850/litre. You will also agree with me that the money being paid as bridging claims to transporters is not enough.

“The price is N850/litre and you are giving your driver 1,200 litres from Lagos to Abuja, if you do the calculation you will find out that the landing cost (for transporting the fuel) is about N40/litre.

“So if you add that to PMS, buying at the depot price and selling here, it is too high. So if your cost of bringing it in is at N40/litre and you bought it at N155/litre, when you add this you will get N195/litre. But you are to sell at N165/litre. So who will do that kind of business? It is already a loss-making business.”

Economic experts and operators in the oil sector had repeatedly called on the Federal Government to stop subsidising petrol in order to halt the humungous foreign exchange spent on its imports.

A former President, Association of National Accountants of Nigeria, Dr. Sam Nzekwe, told our correspondent that petrol subsidy was eating deep into the finances of Nigeria.

“Petrol subsidy is eating deep into our national treasury. It is affecting almost every aspect of the economy, because so much forex is used for its imports. It has to be stopped, but we must get our refineries working,” Nzekwe said.

Also, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, has also told our correspondent that subsidy in petrol should be cautiously and gradually removed based on its depleting effects on both federal and state governments’ revenues.

PUNCH

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WHY DANA AIR REMAINS GROUNDED, BY NCAA

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Dana Air.
PHOTO: Nigerian Flight Deck

The Nigerian Civil Aviation Authority (NCAA), yesterday, reaffirmed its commitment to a safe and secure air transport sector despite the operating challenges.

The apex regulatory body said notwithstanding the backlash it received for shutting down one of the domestic carriers, it remains focused on its statutory safety responsibility to the flying public and the industry.

Director-General of the NCAA, Capt. Musa Nuhu, told journalists that investigations were still ongoing into the operations of the suspended Dana Air and the airline would remain grounded until all the identified issues are resolved in compliance with Nigerian Civil Aviation Regulations (Nig.CARs).

Nuhu explained that the NCAA had carried out a Financial and Economic Health Audit in addition to the Technical Safety Audit of the airline.

The outcome of the two audits revealed a weak financial position and grave violations of Nig.CARs, which prompted the immediate suspension of the airline’s Air Transport License (ATL) and Air Operators Certificate (AOC).

He expressed dismay at some negative comments in some social media platforms against the regulatory body, based on an interview he granted on a television network.

He said almost all the comments during the interview were direct quotes from the NCAA’s findings from the two audits.

“The details of these investigations and proactive action showed the professionalism of the apex regulatory agency,” he said.

The DG urged industry experts to seek clarification from the Authority in order to make informed and balanced comments, adding that the NCAA was open to informed criticisms geared towards improving the industry.

The NCAA had in July suspended the operations of Dana Air’s Transport License (ATL) and Air Operator Certificate (AOC) indefinitely because of the outcome of a Financial and Economic Health Audit and a Technical Safety Audit carried out on the airline’s flight operations.

According to NCAA, the airline was no longer in a position to meet its financial obligations and to conduct safe flight operations, adding that its action was made pursuant to Section 35(2), 3(b) and (4) of the Civil Aviation Act, 2006 and Part 1.3.3.3(a)(1) of the Nigeria Civil Aviation Regulations (Nig.CARs), 2015.

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NIGERIA LOSES N101BN WORTH OF OIL, SAYS OPEC

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Organisation of Petroleum Exporting Countries

Nigeria’s crude oil production plunged by 2.3 million barrels in July 2022 when compared to what the country produced in the preceding month of June, data from the Organisation of Petroleum Exporting Countries showed on Thursday.

In its latest Monthly Oil Market Report for August 2022, OPEC stated that crude oil production figures based on direct communication indicated that Nigeria’s output dropped by an average of 74,000 barrels per day in July.

This implies that for the 31 days in July, the country lost about 2.3 million barrels of crude oil. The organisation further stated that the average cost of Brent crude, the global benchmark for oil, during the month under review was $105.12/barrel.

By losing 2.3 million barrels in July this year, it means Nigeria’s oil earnings fell by about $241.1m or N101.13bn (at the official exchange rate of N419.37/$) in the month under review.

Data from OPEC showed that Nigeria’s oil production in June 2022 was 1.158 million barrels per day, but this dropped to 1.084 million barrels per day in July.

The country had produced 1.024 million barrels per day in May this year, according to figures released by OPEC on Thursday.

The Federal Government, operators and experts have consistently fingered crude oil theft in the Niger Delta as the major reason for Nigeria’s poor output and its continued failure to meet the monthly oil production quota approved by OPEC.

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, blamed the challenges in the oil sector on the high level of insecurity across the country.

This, he said, had continued to discourage investors in the sector, leading to lower production of crude oil and lower earnings for Nigeria despite the increased cost of crude.

He said, “Investors in the oil and gas sector continue to lament the challenges posed by insecurity, oil theft, unstable policies and inappropriate fiscal regimes.

“The downstream sector has continued to be weighed down by the pricing regimes and the regulatory environments which have continued to dim the growth prospects in the sector.”

Meanwhile OPEC stated that crude oil prices dipped in July, as against their costs in June, adding that crude in OPEC Reference Basket fell by $9.17 or 7.8 per cent month-on-month in July to average $108.55/barrel.

“Oil futures prices remained highly volatile in July, amid a sharp drop in liquidity. The ICE Brent front month declined $12.38 or 10.5 per cent in July to average $105.12/barrel and NYMEX WTI declined by $14.96 or 13.1 per cent to average $99.38/barrel,” the global oil cartel stated.

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IMF STUDY SEES CHANGING FERTILITY PATTERNS AMID CONCERN OVER NIGERIA’S RISING POPULATION

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Overpopulation Scene in Lagos, Nigeria

Coming on the heels of a growing concern about Nigeria’s rising population, a new study by the International Monetary Fund (IMF) highlights “new fertility facts” that are challenging old theories on the relationship between childbearing, years of education and income level.

It points out low-income countries, such as Nigeria and other African countries, as the only places where the negative relationship between income and fertility rate still holds sway.

The Population Division of the United Nations Department of Economics and Social Affairs said Nigeria would become the world’s fourth most populous country in the next 28 years with a population of 375 million.

The projection comes with a foreboding of escalation of the social ills of overpopulation including unemployment, food crisis and crime rates.

Nigeria’s growth had buckled under a fast-growing population in recent times until last year when the gross domestic product (GDP) got an upper hand at 3.6 per cent compared with the average population growth of 2.6 per cent in the past decade. Except the country acts fast, experts are worried about the dire consequence of overpopulation even as the country is estimated to have hit 216 million.

While Nigeria is worried about bloated size, the IMF study entitled, ‘The New Economics of Fertility’ raises concern about emerging ultralow fertility in high-income countries like Germany, Italy, Japan and Spain where the fertility rate is about 1.5 in the past two decades.

The rate, the researchers are worried, is below the average of “just over two children per woman needed to maintain a stable population size.”

The study published as an analytical series, yesterday, reviews established labour economics theories such as the quantity-quality trade-off, which suggests that as parents get richer, they incur costly investments in their children.

“This investment is costly, so parents choose to have fewer children as incomes rise. Historically, fertility and GDP per capita are strongly negatively related, both across countries and over time,” it observes.

It also recalls another theoretical explanation for low fertility among high-income individuals, saying: “As wages increase, devoting time to childcare – time that could otherwise be spent working – becomes more costly for parents, and especially for mothers. The result is a decline in fertility and greater female labour force participation. There is historically a strong negative association between female labour force participation and fertility over time and across countries.”

The report, however, argues that new data have proved that the theories are losing universal appeal. It contends, notwithstanding, that the negative income-fertility relationship is still predominantly true in low-income countries such as sub-Saharan Africa (SSA).

“It has largely disappeared both within and across high-income countries. The same is true for the relationship between fertility and female labor force participation. In a recent survey, we outline these new empirical regularities and discuss the key factors that explain fertility outcomes in recent decades.

“For a long time, high per capita income in a country reliably indicated low fertility. In 1980, fertility was still well above two children per woman in poorer countries, such as Portugal and Spain, but just 20 years later, fertility in the same set of countries had changed substantially. In fact, in 2000 the United States, the second-richest country in the sample, exhibited the highest fertility rate,” the research discloses.

It also reports changing fertility patterns across families in high-income countries (such as France, Germany and the United States). In those countries, it states, the negative relationship between female education and fertility, which is consistent with higher wages increasing the opportunity cost of raising children, is becoming weaker.

“This negative relationship is weaker for US women of recent birth cohorts. Although highly educated women with more than 16 years of schooling had the lowest fertility rate in 1980, this no longer holds true in 2019,” it reveals.

THE GUARDIAN

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