Economy
FG Must Scrap Petroleum Equalisation Fund—Oyegbami
By Modupe Gbadeyanka
Author of ‘Reversing the Rot in Nigeria,’ Mr Olusegun Oyegbami, has condemned Federal Government for shielding the fraud behind the Petroleum Equalisation Fund (PEF), saying the PEF policy should be stopped.
Mr Oyegbami, who has spent more than four decades in the Nigeria petroleum downstream sector, described former President Olusegun Obasanjo and President Muhammadu Buhari as the co-founder of Nigeria’s woes.
“The Petroleum Equalisation Fund (PEF) was put in place in early 1976 when former President Olusegun Obasanjo was Head of State and current President Muhammadu Buhari was the Petroleum Minister, and the intention might have been honest to let everybody have equal access to the petroleum product but equal access should not have been the mantra we should follow but equitable access.
“That is to say if you are in a particular place where you are close to the petrol, then you can buy it slightly cheaper but it should be available to everybody in that location at same price,” the author said.
Mr Oyegbami expressed further that the whole idea in economics is that Nigeria government operates on a comparative advantage and localization of citizens’ advantage.
“When you are in a place like Warri or Port Harcourt and when we are talking about importation, Lagos where the petrol lands should necessarily be cheaper than other places where they come to pick that petrol but where government is now paying to transport petrol to far places that is where the fraud comes into it, which make us to be running a non-economic platform, it is very wrong. Until we change this, Nigeria can never make any progress.
“Because it is looking like government is favouring those people transporting the petrol to their places at government expense, this should not happen and this is what has been happening for more than 40 to 42 years and until we change that, we cannot get it right as a country. I am very convinced about this, you run an economy on an economic template and not as a social platform,” he said.
Discussing fuel subsidy, Mr Oyegbami said the government has never subsidized fuel for its citizens for one day.
“The price at which petrol has been coming in has always been the economic price and up until the PEF scam came in, the money being collected started to be more than what has been voted out of the purse of fixing the price.
“It is like when you increase the price from N1 to N1.50k maybe before they use to allocate 5k out of that N1 for transportation but when it is now N1.50k they will add another 5k to transportation cost so that they will now have more money to pay for transportation and 10k will now be used for transportation.
“So, they have not subsidized the price of petrol as at that time, all they have subsidized is transportation of the product to distant locations. So, it was when, often time when the price began to sky rocket to N100 they now decided that because we are bringing it in at N80 we are going to be giving you additional money, but all the extras are being added to cost of transportation.
“Constantly, the cost of transportation that is the bridging element in the price builds up, that is what always goes up steadily.
“I am telling you that out of N145 as the cost of petrol today, N6.20K is still allocated for transportation.
“Why? It means that anybody using fuel down south is still paying N6.20k more than he should have paid. This is now gathered together to transport petrol to other parts of the country, especially the North.
“It is really an economic matter that the south should not continuously right from over 42 years ago be paying for transporting fuel to the North, because come to think of it whatever is coming from the North always has its own element of transportation that the South pays for. We have never eaten beef, cow, yam at the same price as the north.
“It is purely an economic matter, it is when you are looking at it from political angle that you will say this man is trying to incite one tribe against the other, No, it is purely economics. These are elements of deception that we have been having in this country. Sometime in the second republic, some people were arrested for ‘smuggling’ beans from Bida to Oyo. That is funny.
“Nigeria government should let the Nigerians trade fairly among themselves, if we are going to trade in petrol take the petrol at the available price at the depots, add your own transport cost and sell it there, we will have normalcy in this economy within a year or two but now we still have deception and manipulation going on even right now because anybody who is buying petrol in Lagos is still paying N6.20k for carrying it to the north, it is wrong. That should stop.
“It is when this manipulation stops then we know this government of Buhari is ready to fight corruption, because the same Buhari started the PEF far back then and he’s still protecting it till today, until we stop that before we know he is actually dealing with corruption honestly and he’s treating all Nigerians fairly across board. But for now, No, that is not happening,”
When asked about the inspiration behind written the book, Mr Oyegbami said the death of his mother, more than anything else, epitomizes the transience of existence because it is the departure of spaceship into the horizon.
“You feel lost and marooned leading to a compulsion and resolve to improve things in your society because the inevitability of my own imminent departure is more palpable”.
He said the feeling gave him rise to the writing of ‘Reversing The Rot In Nigeria’ a critical exposé on the nation’s Cul-de-sac.
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.
The bloc made this in its latest monthly oil market report for December 2024.
The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.
On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.
OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.
In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.
In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.
These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.
Members have made a series of deep output cuts since late 2022.
They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.
By Aduragbemi Omiyale
A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.
This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).
Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.
Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.
As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).
The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.
In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.
The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.
“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.
“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.
“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.
“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.
By Adedapo Adesanya
Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.
As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.
But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.
The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.
During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.
However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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