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$30b Loan: IMF, World Bank Pressure Buhari For Economic Blueprint

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$30b Loan: IMF, World Bank Pressure Buhari For Economic Blueprint

imf-world-bank-economic-blueprint

By Modupe Gbadeyanka

President Muhammadu Buhari has been told come up with an economic blueprint as he seeks to borrow money to reflate the Nigerian economy, which is still in recession.

Recently, Mr Buhari wrote the National Assembly, seeking their approval to borrow $29.96 billion from the World Bank and the International Monetary Fund (IMF).

This is presently generating mixed reactions from Nigerians, who do not understand why the Federal Government wants to embark on such when the government had claimed in the past that it has recovered huge amount of money allegedly looted by the immediate past administration of Goodluck Jonathan.

But the latest report is that both the World Bank and the IMF are pilling pressure on Mr Buhari to come up with an economic blueprint, if its drive for foreign loans was not to be stalled.

Vanguard gathered that officials of both financial institutions have questioned the Minister of Finance and her team over the absence of a blueprint for which the loans being sought would be utilised.

Sources at the Presidency said at the last IMF/World Bank Group Annual Meetings, that the Nigeria team was asked to produce an economic blueprint for which the IMF/World Bank Group will offer support.

Specifically, Vanguard learned that the US Secretary of Finance and that of the United Kingdom, told the Nigerian team that without a comprehensive economic blueprint, Nigeria would not get support from IMF and the World Bank.

The source said that usually, the IMF asks countries for what it called Policy Support Instrument (PSI), an instrument which serves as a document through which the multilateral institution monitors the economic progress of the country they support.

The source further said that during the Obasanjo administration, the NEEDS document was the Policy Support Instrument used to negotiate debt relief. The source also said the World Bank Group was interested in such a document as a means of evaluating its recently launched Sustainable Development Goals.

It was also learned that at the various road shows in London, foreign investors had asked Nigerians for an economic blueprint. Such an economic framework, they argued, aside from addressing the current challenges, would go a long way to engender confidence in both local and international investors on the way forward.

The source said this had become very imperative, given that investor-perception of Nigeria’s outlook was critical to its economic recovery.

At the moment, the Federal Government has not been able to come up with such a policy document.

buhari-thinking

But in reaction to Vanguard’s enquiry a presidential aide said the present administration was working on a comprehensive economic blueprint that would soon be ready for launching.

The source, who said the issue of economic blueprint had become very contentious in government circles, said the economic management team had produced a blue print that will be launched soon. Stressing the need for an economic blueprint last week, Dr Obadiah Mailafia, a former deputy governor of the Central Bank of Nigeria (CBN), advised the Federal Government to produce a comprehensive economic blueprint to fast track economic growth and development.

Mr Mailafia gave the advice while speaking as a guest lecturer at the Federal Radio Corporation of Nigeria, FRCN, 2016 Annual Lecture in Abuja.

In the lecture, entitled Fighting Corruption and Growing a Sustainable Nigerian Economy, Mr Mailafia appealed to President Muhammadu Buhari to listen to the right advice that would help fix the nation’s economy within a short time.

“Nigerians are getting impatient and they are complaining that this change is not translating into what they are hoping for.

“We must do what we have to do to rescue our economy and to get the great Nigerian people back to work,” Mr Mailafai said.

He also advised the government to create an entrepreneurial state by encouraging innovation and generating critical public goods that would support creativity and high level productivity.

Besides, he urged government to pursue economic policies within the framework of a coherent and credible development strategy, with a greater coordination between fiscal and monetary authorities.

He said: “Sadly, we noticed that Nigeria does not have an economic administration. The British Chancellor of the Exchequer, for example, has at his beck and call some 300 highly well-trained economists in the Treasury.

“Their job is to worry day and night about the economy, monitor key trends, analyse critical developments and proffer policy. We need to build such an administration, in addition to strengthening the National Economic Management Team that has become virtually comatose.

“We cannot continue to blame previous administrations.

“We can only hope like the great Franklin Roosevelt in America of the 1930s and like Barack Obama during the height of the Great Recession.

“Our President needs a brains trust of people who love Nigeria passionately and are ready to do what it takes to take us to the path that destiny has ordained for us,” the ex-CBN deputy governor said.

Debt Management Office (DMO), which is charged with the responsibility of borrowing on behalf of government, had said in its Debt sustainability report for 2016 “There is an urgent need for the Government to formulate an Economic Blueprint or Road-Map for the medium-term.

“Aside from addressing the current challenges, it would go a long way to engender confidence in both local and international investors on the way forward. This has become very imperative, given that investor-perception of a country’s outlook is critical to its economic recovery.

“It is advisable that the Federal Government sustains the on-going reforms and initiatives in the various key sectors of the economy, including agriculture, education, housing, power, and transportation, as this would foster the needed inclusive economic growth and development.

“The passage of the Petroleum Industry Bill (PIB) by the National Assembly is long overdue and should be given speedy attention by the authorities.

“Its passage is expected to liberalise the oil and gas sector, and thus, attract more investments into the sector, which will have positive multiplier effect on the economy. Given that in the short to medium-term, oil would still remain a key revenue earner of the nation, the Federal Government is encouraged to continue on its efforts to curtail crude oil production disruptions in the oil producing areas.

“In view of the country’s huge infrastructure requirements, the Federal Government is enjoined to creatively explore other alternative and viable sources of financing critical infrastructure development outside the routine budgetary process.

“These may include the setting up of an Infrastructure Development Fund, the issuance of Infrastructure-tied Bonds, as well as encouragement for the private sector to participate in funding viable infrastructural projects through Public-Private-Partnership arrangements.

“As part of the initiatives for boosting revenue, the Federal Government is encouraged to fast-track the process of liberalising the exploration of the solid minerals deposits across the country. This is to make the sector much more attractive and competitive, and further expand the non-oil revenue base.

“As part of government’s commitment to encouraging private sector participation in the development of the economy, the demand for FGN Guarantees may likely increase. In order to instil discipline and discourage frivolous requests that may unduly expose the Federal Government, it is also recommended that the issuance of FGN Guarantees to the private sector should attract appropriate fees, and should be within an established framework.”

Former President Olusegun Obasanjo weekend also kicked against the plan by the Federal Government to obtain a $29.96 billion foreign loan.

Mr Obasanjo was said to have phoned the Minister of Finance, Mrs Kemi Adeosun, shortly after the media reported the loan bid, which the Federal Government explained would be used to finance critical infrastructure deficiency between now and 2018.

But the Finance Minister, it was learned, told an alarmed Mr Obasanjo that she would pay him a visit to explain the rationale for the plan, which had triggered mixed reactions on the necessity or otherwise of such loan.

The former president, it was gathered, spoke on the proposed foreign loan when he received members of a political association, The National Patriots’ Movement of Nigeria (NPMN), led by the national coordinator, Chief Dosu Oladipo, at his Hilltop residence in Abeokuta, the Ogun State capital, on Friday.

Mr Obasanjo, it was learned, not only opposed the loan bid, but also threatened to draw a battle line with the Federal Government should it go ahead to obtain the loan which he said could have far-reaching negative effects on the nation.

While some experts have advised the government to deploy part of the funds reportedly recovered from allegedly corrupt politicians in the last political dispensation to such purpose, others claimed the loan could be raised internally.

It will be recalled that the Mr Obasanjo led administration had successful negotiated with Western nations to write off $12.5 billion foreign debt to the Paris Club, a body of European creditors during his tenure.

However in justifying the proposal for the N29.96 billion external loan, President Muhammadu Buhari, had in a letter to the National Assembly said, “The total cost of the projects and programmes under the borrowing (plan) is $29.96 billion made up of proposed projects and programmes loan of $11.274 billion, special national infrastructure projects, $10.686 billion, Euro bonds of $4.5 billion and Federal Government budget support of $3.5 billion.”

But Nigeria’s foreign reserves have dipped lately, ostensibly owing to economic recession and intense pressure on Nigeria’s naira as a result of the scarcity of United States dollars.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Sanwo-Olu Slams FG for High Cost of Cooking Gas

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Sanwo-Olu Cost of Cooking Gas

By Modupe Gbadeyanka

**Moves to Ramp up Supply, Crash Price

Governor Babajide Sanwo-Olu of Lagos State has slammed the federal government for being behind the high cost of cooking gas in the country.

Speaking on Thursday at the commissioning of a 40 metric tons Liquefied Petroleum Gas (LPG) refill plant in the Ikorodu area of the state, he attributed the rising price of gas to the introduction of 7.5 per cent VAT and foreign exchange (FX) crisis, a statement posted on the Facebook page of the state government disclosed.

According to him, these issues caused the spike in the price of the product, saying this was “unacceptable” in the face of the high cost of living.

However, he assured that this may soon be a thing of the past as his administration has taken a huge step to ramp up supply and make the product available to residents at cheaper rates.

The new plant in Ikorodu is operated by the state-owned energy firm, Ibile Oil and Gas Corporation (IOGC), and it is the fourth delivered by the corporation. Three other refill plants of varying capacities were built in the Amuwo Odofin, Alimosho and Iponri areas of the state.

The Governor disclosed that his administration decided to establish the plants to cut down the use of dirty fuels responsible for carbon emission and air pollution.

According to him, the energy project was initiated to key into the nation’s ambitious goal to develop the natural gas industry and encourage domestic use of safe cooking gas.

In Lagos, less than 30 per cent of households use gas for cooking. As an alternative to kerosene and charcoal, LPG is a clean-burning fuel that supports smoke-free indoor and outdoor cooking.

Mr Sanwo-Olu said the inclusion of gas into the state’s energy mix was critical to the continuous prosperity of Lagos, stressing that the project would not only transform the State into a gas economy and stimulate commercial growth but also enhance the quality of life by reducing carbon footprint in the environment.

The target, the Governor said, is to increase the supply of cooking gas in local communities, thereby raising domestic LPG usage from the current 25 per cent to about 80 per cent before the end of 2023.

He said: “The gas plant being commissioned today reflects the desire of our administration to align with the global action to reduce carbon emission and address the climate change challenge. One of the measures, which this gas plant will support, is promoting increased adoption of LGP for domestic use in Lagos.

“Our vision is to transit the State into a gas economy and ensure an energy mix that provides different fuelling options for residents with the introduction of Gas-for-Transport and Gas-to-Power projects. Expanding the domestic usage of LPG is critical to the continuous prosperity of Lagos and the attainment of our administration’s desire to transform the State into a 21st-century economy.”

Mr Sanwo-Olu said the increment in LPG price puts the nation at the risk of reversing all gains achieved from awareness of the advantages of using LPG for domestic cooking.

The Governor urged the federal government to reverse the trend in order to make the commodity affordable, while also increasing the availability of safe cooking gas in the country.

He said: “Not only are we excited with our modest intervention by Lagos in the LPG market, but it is also only when we reduce the cost of basic commodities such as cooking gas that the true dividends of democracy can be felt by the people.

“We have done a lot of advocacy for people to appreciate the benefit that comes with the use of gas for domestic cooking, such as reduction in carbon footprint, and improved quality of life. If we have made this great effort, the least the government can do is not to make the commodity unaffordable for the populace.”

The Commissioner for Energy and Mineral Resources, Mr Olalere Odusote, said the plant was built with the highest safety standards, noting that the siting of the facility was deliberate to serve a large number of the populace.

He said the state had the plan to expand the gas facility to 20 units which would be spread across all divisions.

Managing Director of IOGC, Ms Doyin Akinyanju, said the gas plants developed by the corporation had the capacity to supply 20,000 homes within the radius of operation, adding that jobs were created for young people in the supply chain through the use of purpose-built vehicles for door-to-door delivery in neighbourhoods.

She said: “Nigeria has an abundant gas deposit that needs to be rapidly developed. Lagos also is blessed with two known offshore fields – Aje and Ogo – in Badagry with large gas deposits. IOGC is taking steps to develop a bulk offtake facility that will ensure gas security in Lagos, as well as provide a competitive pricing advantage.

“We will continue our sensitisation and awareness campaign in the neighbourhoods where we are located to take Lagosians away from the use of dirty fuels like firewood, charcoal, kerosene to Gas for cooking. Today, we start a new journey with cooking gas by creating a market that will make it safely accessible.”

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Economy

Our Post-paid Customers Owe N115bn—JED Cries Out

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Jos Electricity Distribution Company JED

By Adedapo Adesanya

The Jos Electricity Distribution Company (JED) has said that post-paid customers across its franchise states are indebted to the company to the tune of N115 billion.

This was disclosed by the Managing Director of the company, Mr Hashim Bakori, who explained that the debt owed was different from the cost of energy losses as a result of energy theft.

He said this was discovered after 16 months of hard work after resuming office with his team as the new management of JED.

Mr Bakori disclosed this in Jos during the launch of the company’s 5-years Corporate Strategic Plan to kick start a new goal to be achieved by the organisation.

‘If nothing is done to bridge the gap, a lot will go wrong and that is why we are launching the Corporate Strategic Plan and by the time we are done, people will start seeing the improvement of energy supply across our franchise states.

“We have consulted reputable companies in the world to come and partner with us in moving the company forward.

“From today, you will see a very new Jos DisCo,” he said.

Mr Bakori, however, pointed out that despite the several efforts put in by the new management of JED, vandals and energy thieves still remain a challenge to the company.

“Despite these efforts, the company is currently bedevilled by some man-made challenges. These challenges range from vandalism and theft of our installations, energy theft to customers huge indebtedness to the company.

“In 2021 alone, vandals and thieves have torched about 200 distribution transformers, armoured cables, copper earth wires, transformer oil, feeder pillar copper bars, several spans of aluminium conductors, line insulators etc,” he said.

Headquartered in Jos, Plateau State, the company operates one of the longest distribution networks in the country. It caters to over 400,000 customers in the franchise regions of Plateau, Gombe, Bauchi and Benue States.

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Economy

NUPENG Extends Planned Nationwide Strike by One Week

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NUPENG strike

By Adedapo Adesanya

The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has extended the 14-day ultimatum earlier given to the federal government by one week.

This was disclosed in a statement issued by the union’s General Secretary, Mr Afolabi Olawale, in Lagos.

He said that in spite of the various interventions and engagements with government agencies and institutions, issues concerning the welfare of members and unfair labour practices by some oil majors had yet to be fully resolved.

Business Post had reported that NUPENG issued the 14-day ultimatum on November 15, threatening to embark on a nationwide strike due to what it called non-implementation of an agreement earlier reached with the government.

The issues at stake include non-payment of workers’ salaries and title benefits, among others.

In the latest statement, Mr Olawale said, “Leadership of the union is still exercising further patience and restraint to give the ongoing discussions the chances of resolving these issues once and for all.”

“The decision of the union to give another seven-day ultimatum should not be misconstrued as a sign of capitulation or weakness.

“Rather, it is a demonstration of our resolve not to inflict unnecessary pains on Nigerians or create any form of artificial scarcity of petroleum products,” he said.

The NUPENG general secretary urged the government and all other concerned entities to take advantage of the extension to do the needful.

“It is our hope that government does the needful and save the nation the pains and losses our industrial action will bring,” he said.

Oil majors had recently come under renewed scrutiny from many groups for their role in the country with issues ranging from employees welfare to oil spills to taxation.

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