Economy
Friction as DPR Reopens Filling Stations Shut by LASBCA
By Adedapo Adesanya
The Department of Petroleum Resources (DPR) on Thursday reopened five filling stations shut by the Lagos State Building Control Agency (LASBCA) in Ajah and Ibeju Lekki axis of the state.
The petrol stations, operated by members of the Major Oil Marketers Association of Nigeria (MOMAN), members were sealed by the state’s building control agency but the country’s petroleum regulatory agency, being the organisation legally allowed to carry out such an action, said the stations were sealed without consultation.
Speaking at the reopening of the fuel stations, Mr Ayorinde Cardoso, Zonal Operations Controller, DPR, Lagos Zone, argued that LASBCA lacked the constitutional power to shut petroleum products retail outlets because the industry was clearly under the Exclusive List.
He advised state and local government agencies to desist from arbitrary sealing of businesses in the oil and gas sector as it could lead to disruption in the supply of petroleum products.
Mr Cardoso said: “We got information yesterday that LASBCA has shut down about 10 filling stations. We also learnt that a local government council shut down another petrol station in the Magodo area.
“We were not consulted and we need to put the record straight. The oil and gas business is a regulated environment and we know from the 1999 Constitution that oil and gas are matters within the Exclusive Legislative List.
“The Federal Government of Nigeria through the National Assembly is endowed with exclusive power to execute on any item on the exclusive list.”
He explained that “arising from that constitutional powers, the National Assembly enacted the Petroleum Act of 1969.
“This act regulates all matters relating to petroleum such as importation, handling, storage, distribution of petroleum and petroleum products and other flammable oils.
“This act also provides granting of licences to import, handle, store, sell, distribute any petroleum product in Nigeria.”
He said as a result of this, all persons that engaged in the business were licensed by the Minister of Petroleum Resources through the DPR.
According to him, the DPR collaborates with other relevant federal and state government agencies for requisite permits and approvals before the issuance of the licences.
Mr Cardoso said there were prerequisite processes that must be completed before a licence to operate is issued to any operator.
He said these included certificates of incorporation, Memorandum and Articles of Association, Tax Clearance Certificate, Police Report, Fire Report, Approved Building Plan and a Letter from Lands and Survey.
The Zonal Head added that it also carries out an Environmental Impact Assessment Report, Site Layout Plan, Evidence of Land Ownership and Survey Plan.
“Once we have done this and we issue licences to operate, it becomes a federal government property for business and our licence gives the owner the permission to do business in that area.
“So, any issue arising from the licensee, you need to call on the licensor who is the federal government; then we will look at the issue and see how we can resolve it,” he said.
Mr Cardoso said the DPR was interacting with the Lagos State Ministry of Energy and Mineral Resources to ensure that agencies of the state government did not disrupt the smooth supply of petroleum products in Lagos.
On its part, Mr Gbadeyan Abdulraheem, Public Relations Officer, LASBCA, according to the News Agency of Nigeria (NAN), noted that some of the sealed facilities did not have the agency’s approval or had deviated from the approved plan.
“The DPR can give you the approval to run a filling station but the building itself has to be approved by LASBCA and there are conditions to be met which they didn’t.
“Some of them didn’t follow the radius which is a minimum of 300 meters before siting another one while others were constructed between residential buildings.
“Lagos State government is not interested in victimising or creating problems for anybody. What we are saying is that they should follow the best practices,” Mr Abdulrasheed said.
Economy
Analyst Warns of Risks Amid Intensified Zeal for Cryptocurrencies
By Dipo Olowookere
A senior market analyst at FXTM, Mr Lukman Otunuga, has warned that despite the renewed interest in cryptocurrencies, the risks associated with the ecosystem remain.
Since Mr Donald Trump won the presidential election in the United States for a second term on November 5, 2024, the digital currency market has witnessed a boom, with Bitcoin projected to hit over $100,000 before the end of this year.
As 2024 comes to a close, many investors are taking a fresh look at their portfolios and considering how to strategically enter or adjust their exposure to cryptocurrency.
“The zeal for cryptocurrencies has certainly intensified since Donald Trump won the 2024 US presidential elections.
“Still, the risk remains whether the president-elect’s campaign promises will translate into actual crypto-friendly policies that foster greater innovation and demand for this asset class.
“As long as Trump 2.0 makes good on positioning the US as the crypto capital of the world, that should create a conducive environment for cryptos to extend their recent bull run,” Mr Otunuga stated.
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Economy
New Tax Laws Will Favour Nigerian Workers, States—Oyedele
By Adedapo Adesanya
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, says the tax reform bills proposed by the administration of President Bola Tinubu will lift the tax burden on 90 per cent of Nigerian workers.
He gave this clarification while appearing before senators during the plenary to brief the lawmakers on the need to pass the bills on Wednesday.
He also explained that the bills aim to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state will get for what is consumed within their territory.
Recall that in September, President Tinubu transmitted four tax bills to the National Assembly for approval. These are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
One of the bills seeks to change the sharing formula of the Value Added Tax by reducing the federal government’s share from 15 per cent to 10 per cent. However, the bill includes a caveat that the allocation among states will factor in the derivation principle.
Mr Oyedele said if the bills are passed and assented to by the president, 30 per cent of Nigerians who earn between N50,000 to N70,000 monthly will be exempted from paying tax to the government because they are classified as poor people.
“These proposals, if approved by the Senate, will reduce the tax on 90 per cent of our workers, both in the private and the public sector, and it will exempt more than 30 per cent of our citizens who earn about minimum wage, around 50,000, 60,000, 70,000 Naira,” he said.
Mr Oyedele noted that Nigerian workers who earn above N70,000 monthly will commit to payment of taxes.
He explained that those earning N100 million monthly will pay 25 per cent of their income as tax.
“Then the remaining 10 per cent who are not so poor will now pay a little bit more. The top rate today is 24 per cent in the long, and we are proposing it goes to 25 per cent. We are doing some other reforms around allowances and relief.
“So effectively, if somebody earns 100 million Naira a month, the maximum they will pay even on that approval side is only 25 per cent. If they were in South Africa, they would be paying 41 per cent. If they were in Kenya, they would be paying 35 per cent. Of course, if they were in the UK or the US, they would be close to 40 per cent, but we are doing only 25 per cent.”
He also noted there will be changes to VAT sharing formula, adding the tax reform bills prescribed that every state will receive credit for consumption within their territory and that the state government will only have power to collect sales tax, leaving the tax on import and international services for the federal government.
“Our proposal before you is that going forward, if we have your approval for the bills, every state will receive credit for the consumption within their territory.
“Number one, every state will collect less than half of what they are getting now. Number two, businesses will struggle because you bought something in Kaduna and you are selling it in FCT. They will not allow you for the input, and the more the cost piles up, the more businesses will struggle,” he added.
He further explained that, “If states should begin to collect VAT today, they will not be able to collect import VAT. Import VAT and international VAT is about half the VAT we collect in Nigeria today. If anybody could benefit at all, it would be the federal government,” he added.
Mr Oyedele emphasised that each state will get credit for economic activities within their jurisdiction.
Mr Oyedele also said the tax reform bills will review the percentage formula for sharing VAT by the federal, state and local governments.
The current formula for sharing VAT prescribes that the federal government should take 15 per cent, the states 50 per cent and the local government 35 per cent.
The tax man noted that the reform bills will review the VAT sharing formula and make states the largest receivers among the three tier of government, as it will take 5 per cent from the FG.
“10 per cent (will go to the) federal government, 55 per cent state government and 35 per cent local government,” he said, “Provided that 60 per cent of the amount standing to the credit of states and local governments shall be distributed among them on the basis of derivation.”
Economy
Why It’s Impossible to Sell Petrol Below N800 per Litre—NNPC
By Dipo Olowookere
The hope of Nigerians getting premium motor spirit (PMS), commonly known as petrol, below N800 per litre, at least for now when the price of crude oil is less than $80 per barrel and the official exchange rate of the Naira to the Dollar is above N1,600/$1 at the currency market, may have been dashed.
This is because the Chief Financial Officer (CFO) of the Nigerian National Petroleum Company (NNPC) Limited, Mr Adedapo Segun, has said the price of the commodity from unrefined crude oil is about N800 per litre.
He made this revelation while speaking on Channels Television’s Sunrise Daily on Wednesday, monitored by Business Post.
According to him, this reality might make it impossible for the company to sell PMS to Nigerians at that price because the cost of getting the final product must be added to arrive at the actual price of petrol.
“This pricing conversation is an interesting one. What are the components of the price? I just told you that the crude [oil] unrefined is N800 per litre, a barrel of crude is about $80 (actually at $72 per barrel as of Wednesday), give or take, you have about 159 litres [of PMS) in a barrel of crude, let’s approximate it to 160 litres, that gives you 50 cents per litre [and] at N1,600 per Dollar, that’s N800 per litre.
“So, the crude itself, unrefined, is N800 per litre. Then you talk about the refiner’s margin, he has to make some money and has costs like operating the plant and other overhead costs. When you are done with these costs, you move to the wholesalers.
“[The product] is transported either by vessel or trucks. The transporter also has his margin as well as the retailer. There are also costs for the regulators and other statutory fees to be paid.
“When you look at all of these costs, what will the Port Harcourt refinery do differently than what Dangote Refinery for example is doing today?
“The only difference would be that it is closer to the people of Port Harcourt and reduces the cost of transporting things like PMS from Dangote Refinery in Lagos to Port Harcourt. That is where the savings would come, but that is very marginal. The cost of transportation is very marginal in the cost-build-up for PMS,” he said.
However, he noted that what the refineries will do to Nigeria is to create competition based on market conditions.
At the moment, the price of PMS at NNPC retail stations is N1,025 per litre in Lagos, while independent marketers sell between N1,040 per litre and N1,060 per litre.
Last week, Dangote Refinery announced a slash in its ex-depot price to N970 per litre from N990 per litre.
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