Economy

PPPRA: Deregulation Spurs Importation of 536,000MT of Petrol in Four Months

Published

5 years ago

20/07/2020

By Adedapo Adesanya

The full deregulation of the downstream petroleum sector in Nigeria has led to the importation of 536,000 metric tonnes of petrol by oil marketing companies, the Petroleum Products Pricing Regulatory Agency (PPPRA) has said.

In a statement in Abuja, Executive Secretary of the PPPRA, Mr Saidu Abdulkadir, added that the policy has also increased investment in local refining, a development he said would bring about fair competition and bring down prices.

“Since the commencement of the new price regime which heralds full deregulation of the sector, a considerable increase in the level of oil marketing companies’ (OMC) participation in Premium Motor Spirit’s (PMS) also known as petrol, importation has been recorded.

“In recent years, OMCs withdrew from product importation, but since the Federal Government’s pronouncement on 19th March 2020, over 536,000 metric tons of PMS have been directly imported by the OMCs.

“Additional investment in local refining is gaining traction and is expected to engender more competitive pricing. The Dangote Refinery with a refining capacity of 650,000 barrels per day will certainly impact positively on the price of PMS in the market when it commences operations in 2022.

“We expect to see more investment in modular and conventional domestic refining going forward,” he said.

Mr Abdulkadir explained that under the market-based pricing regime, products prices would be determined by market forces, adding that this explained the recent downward and upward movements in the guiding pump price band of PMS, which reflected market realities.

He said: “It is important to note that applicable petroleum products cost accounts for about 80 per cent of the pump price of petroleum products. Correspondingly, if the price of crude oil is low, it stands to reason that pump prices will come down and similarly when prices increase, pump price will be expected to go up reflecting market trends.

“In the same vein, Foreign Exchange (Forex) rates also play a significant role in determining the guiding pump price of petroleum products. Forex availability to importers is very essential in enabling marketers to procure the products and sell at Expected Open Market Price (EOMP).

“To this end, the Agency is engaging with the Central Bank of Nigeria (CBN) to ensure availability of the required Forex for the importation of petroleum products and the modality for marketers to access Forex at the applicable window.”

He also assured Nigerians that the deregulation of the downstream petroleum industry would, in the next couple of months, force down the price of the PMS, while he attributed the increase in the pump price of the commodity to cost of petroleum products in the international market and the cost of acquiring foreign exchange (FOREX).

He explained that the newly-adopted market-based pricing system was in view of the need to promote the growth of the Nigerian petroleum industry and the economy in general.

He said, “The Agency is cognizant of the public outcry trailing the recent surge in petroleum products prices. However, this decision is a reflection of the new market-based pricing system, which does not seek to harm consumers but foster growth in the sector and prevent wastages resulting from the subsidy.

“The recent upward movement in pump price is becoming a bone of contention because of the fragile state of the economy. However, deregulation of the sector is in the country’s best interest because competition has a way of forcing down prices and ensuring that companies place a tight rein on production cost such that wastes that could be passed on to consumers in form of high prices are eliminated.

“The trillions of Naira that would have been spent subsidizing PMS could be injected into other key sectors such as agriculture, education, health, power and infrastructure. There will also be a focus on the provision of social safety nets for the poor who bear the brunt of the COVID-19 pandemic.”

Economy

NASD OTC Bourse Declines Further by 0.16%

Published

2 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.16 per cent decline on Tuesday, January 21, extending its loss this week to two.

This further depleted the market capitalisation of the alternative stock exchange by N1.65 billion at the close of transactions to N1.071 trillion from the N1.073 trillion it closed in the preceding session.

In the same vein, the NASD Unlisted Security Index (NSI) slid by 4.79 points to wrap the session at 3,100.33 points compared with 3,105.12 points recorded in the previous session.

The bourse ended with two price losers yesterday led by Geo Fluids Plc, which gave up 32 Kobo to trade at N4.38 per share versus Monday’s closing price of N4.70 per share and FrieslandCampina Wamco Nigeria Plc, which depreciated by 15 Kobo to close at N39.50 per unit compared with the previous day’s N39.65 per unit.

On the second trading day of the week, the number of deal carried out slightly went up by 8.3 per cent to 13 deals from the 12 deals executed at the previous trading session.

Also, the value of transactions increased by 97.2 per cent to N4.5 million from the N2.5 million recorded a day earlier, while the volume of securities traded in the session declined by 71.6 per cent to 183,780 units from the 767,610 units recorded on Monday.

FrieslandCampina Wamco Nigeria Plc remained the most traded equity by value (year-to-date) with 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with 9.1 million units valued at N44.0 million, and 11 Plc with 55,358 sold for N14.5 million.

Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume (year-to-date) with 25.3 million units worth N5.9 million, trailed by Geo-Fluids Plc with 9.1 million units sold for N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units valued at N162.9 million.

Economy

Naira Crashes to N1,552/$1 at NAFEM, N1,670/$1 at Black Market

Published

3 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

Pressure further mounted on the Nigerian Naira in the different segments of the foreign exchange market on Tuesday, making its value to shrink against the United States Dollar at the close of business.

In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency crashed against its American counterpart during the session by 0.18 per cent or N2.73 to settle at N1,552.78/$1, in contrast to Monday’s closing price of N1,550.05/1.

But against the Pound Sterling and the Euro, the local currency traded flat in the official market yesterday at N1,906.98/£1 and N1,613.48/€1, respectively.

As for the black market segment, the Naira weakened against the Dollar on Tuesday by N5 to sell for N1,670/$1 compared with the preceding day’s value of N1,665/$1.

Meanwhile, the cryptocurrency market heaved a sigh of relief during the session as President Donald Trump created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.”

The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. This is after Mr Gary Gensler, an opponent of crypto, officially stepped down as chairman of the US Securities and Exchange Commission (SEC) after Mr Trump’s term started.

The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations.

Solana (SOL) recorded a 9.2 per cent growth to sell at $257.09, Dogecoin (DOGE) rose by 7.6 per cent to $0.36789, Ripple (XRP) added 4.0 per cent to finish at $3.18, and Bitcoin (BTC) increased by 3.7 per cent to $105,515.03.

Further, Binance Coin (BNB) appreciated by 2.8 per cent to close at $699.01, Cardano jumped by 2.1 per cent to trade at $0.9972, Ethereum (ETH) soared by 2.0 per cent to settle at $3,308.21, and Litecoin (LTC) went up by 1.5 per cent to end at $116.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.

Economy

Brent Falls Below $80 as US Signals Boost to Oil Output

Published

3 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The price of the Brent crude oil grade went below the $80 mark on Tuesday after it shed 86 cents or 1.1 per cent to trade at $79.29 per barrel after the US President, Mr Donald Trump, signaled the possibility of his country boosting its oil production.

This move raised concerns of higher US output in a market widely expected to be oversupplied this year, with the US West Texas Intermediate (WTI) crude futures falling by $1.99 or 2.6 per cent during the session to $75.89 per barrel.

On his first day in office, the US President signed an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by former President Joe Biden.

As pledged in the campaign, the executive order follows the declaration of a national energy emergency.

The declaration includes measures to expedite energy infrastructure delivery, and emergency approvals by agencies “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources, including, but not limited to, on Federal lands.”

This will likely confirm expectations that the oil market will be oversupplied this year after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the US and China.

President Trump also said he was considering imposing 25 per cent tariffs on imports from Canada and Mexico from February 1, rather than on his first day in office as promised.

The delay helped ease concerns of an immediate tightening of the market among US refiners, many of which are geared to process the type of crude oil supplied by these countries.

The US Energy Information Administration (EIA) reiterated on Tuesday its expectations for oil prices to decline both this year and next.

On its part, the Organisation of the Petroleum Exporting Countries (OPEC) projects robust demand growth in the world both this year and next.

In 2025, OPEC says demand is set to grow by 1.4 million barrels per day leaving its projection unchanged from the December report.

However, losses were also limited after the US president said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.

Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea.

Yemen’s Houthis said on Monday they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.