Economy
Regulated Pump Prices, Others Hinder Nigeria’s Oil/Gas Sector—Agusto
By Modupe Gbadeyanka
Lack of substantial investments, import constraints and regulated pump prices have been identified as some of the issues affecting the growth of the Nigerian oil and gas downstream sector.
In its 2020 Oil & Gas Downstream Report, Agusto & Co. said the huge involvement of the government in the industry was the major reason for these issues, particularly in relation to the importation of refined petroleum products.
Over the years, the industry has enjoyed stable demand of petroleum products as a result of the subsidies provided by the government. This contributed to the gradual the crippling of government finances.
Recently, when the price of crude oil plunged at the international market to around $20 per barrel, the federal government of Nigeria took positive steps to fully deregulate the sector and it announced the pump price cap of PMS to N123 per litre.
However, a recovery of crude oil prices in June 2020 led to the revised price of N143.8 per litre for PMS, leaving many observers to ask if the sector is truly deregulated.
The consensus medium-term outlook for the crude oil market is positive, which implies that the price of petrol will be higher than the old regulated pump price in the near future.
The pricing of PMS will continue to be overseen by the Petroleum Products Pricing Regulatory Agency (PPPRA) through a pricing template, the government said when it defended its stance.
The new pricing template takes several factors such as the petroleum product cost and the foreign currency conversion rate into consideration, according to Agusto & Co, which expects the recent adjustment of the official exchange rate from N306 to N380/$1 to test the sustainability of the pricing template before the end of 2020.
It said notwithstanding, the new pricing regime is expected to emplace a more transparent operating model, stimulating investment growth and encouraging the importation of products by Oil Marketing Companies.
The firm said it also believes that the continuous efforts of the government to deepen the utilisation of LPG in Nigeria will continue to bear fruit in the medium to long term.
“Substantial local supply of refined petroleum products is imminent with the 650,000bpd Dangote Refinery which is currently under construction.
“The expansion of the Waltersmith refinery by 25,000 bpd to 30,000 bpd and other smaller modular refineries are also expected to drive increased local refining capacity in the near to medium term.
“Nevertheless, a significant structural change in the industry is hinged on the approval of the Petroleum Industry Bill (PIGB), which aims to create efficient and effective governing institutions with clear and separate roles.
“The delay in the approval of the bill has brought about uncertainty for potential investors. However, given Nigeria’s track record of weak policy implementation and the negative impact of the COVID-19 pandemic on economic activities,” Agusto & Co said, noting that it “does not expect the PIGB to be approved before the end of 2020.”
According to Agusto & Co.’s estimates, total consumption of white fuels in Nigeria in 2019 stood at 28.1 billion litres, translating to total revenue of N4.7 trillion.
Its research shows that 99 per cent of petroleum products consumed were imported as the country’s refineries operated below the installed capacities, sometimes down for months.
It said for instance, no white fuels were produced at NNPC refineries for the seven months from June to December 2019 due to ongoing rehabilitation works.
The impact of the COVID-19 pandemic on economic activities in Nigeria has resulted in a decline in the consumption of petroleum products.
The lockdown restrictions which were implemented by the government as part of an effort to curtail the spread of the coronavirus disease affected the consumption of PMS significantly.
In view of these, Agusto & Co. said it expects the consumption of petroleum products particularly PMS and ATK to decline to 27.2 billion litres in 2020 given the severely restricted travel and transportation activities during second and third quarters of the year. This is expected to translate to a decline in revenue to N4.3 trillion in 2020.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
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