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Economy

RMAFC to Review Revenue Allocation Formula After 29 Years

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Revenue Allocation Formula

By Adedapo Adesanya

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) will submit a review of the revenue allocation formula to the Presidency by the end of the year.

Chairman of the commission, Mr Elias Mbam, confirmed this in Abuja, noting that President Muhammadu Buhari would have the new sharing pattern soon.

Mr Mbam said the review was one of the major responsibilities of the agency as it was last done in 1992, which was about 29 years ago.

He said that according to the constitution, the formula, which has been accepted as an act of the National Assembly, would remain in force for a period of not less than five years.

He, however, said that several attempts to review the formula had failed.

Mr Mbam said: “Proposal for new Revenue Allocation Formula for the three tiers of government (Federal, State and Local Governments) was first made by the Commission in August 2001.

“But the recommendation was withdrawn due to the compelling verdict of the Judgment of the Supreme Court on suit No. SC 28/2001 of April 5, 2002, which recognised the beneficiaries of the federation account as Federal, State and Local Governments.

“In December 2002, another proposal for a new Revenue Allocation Formula was presented to the then President, Federal Republic of Nigeria. That Formula got to the verge of being passed, but again, the bill lapsed with the expiration of the tenure of the then National Assembly in May 2003.

“Furthermore, in 2003, attempts were made by the National Assembly to reconsider the Revenue Formula bill initially submitted, but the efforts were not successful.

“However, an addendum to the original report was prepared and resubmitted to the National assembly in September 2004.

“The proposed Revenue Allocation Formula passed through several processes both in the senate and especially at the House of Representatives, where a public hearing was conducted in 2006 on the subject. Yet, the Formula could not see the light of the day.

“Similarly, the commission in 2014, made a concerted effort to review the Formula. All necessary processes required of the commission were concluded. However, the final process was inconclusive.”

The chairman said the process of sensitisation to the review of the revenue allocation formula had begun.

“The review of the revenue allocation formula will involve the following activities: a literature review of Revenue Allocation in Nigeria dating back to the pre-independent period.

“Study of fiscal matters relating to revenue allocation; invitation to memoranda from the Public sectors, individuals and private sectors across the country to allow for wider coverage.

“Visitation to the 36 states and 774 Local Government Areas to sensitise and obtain inputs from stakeholders.

“Wide range consultations with major stakeholders including leaders and elder statesmen; public hearing in all the Geo-political zones; and administering of questionnaires,” he said.

He also explained that the commission had begun sensitisation visits to states and local governments as part of the review process.

He stressed that the objective of the sensitisation was to enlighten major stakeholders to the need to fully participate, make relevant inputs and submit memoranda to the process of the review.

He said the commission had carried out the literature review on Revenue Allocation Formula in Nigeria dating back to the pre-colonial period, adding that the commission had advertised for submission of memoranda in the national dailies.

“Wide range consultation with major stakeholders is also in progress.

“I want to reiterate that the Revenue Mobilisation Allocation and Fiscal Commission is highly determined to produce within the shortest time possible, a new revenue sharing formula that will be fair, just and equitable to the three tiers of government.

“The commission has programmed to complete its review process by the end of 2021,” he said.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

Unlisted Stocks Trade Flat Friday Amid Low Investor Appetite

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unlisted stocks

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed in the flat territory on Friday as the interest of investors in unlisted stocks waned during the session.

According to data from the exchange, the level of activity declined as there was a 99.9 per cent fall in the volume of securities transacted by market participants as only 288 units exchanged hands compared with the 371,600 units traded at the previous day.

In the same vein, there was a decrease in the total value of shares transacted by traders on Friday and this depleted by 99.0 per cent as securities valued at N65,088 transacted in contrast to the N6.5 million exchanged on Thursday.

Business Post reports that the number of deals executed during the last trading session of the week waned by 50.00 per cent as only two deals were recorded as against the four deals carried out at the preceding trading day.

At the close of transactions, the major performance indicators of the exchange remained unchanged, with the NASD Unlisted Security Index (NSI) flat at 744.90 points as the market capitalisation remained intact at N615.42 billion.

The unlisted securities market was without a price gainer or a price loser as the equity price of all the stocks on the exchange remained unchanged.

Also, the most traded stock by volume on a year-to-date basis remained Food Concepts Plc as it has transacted a total of 11.4 billion units of its shares worth N14.4 billion. Lighthouse Financial Services Plc has traded 1.1 billion units worth N546.32 million to occupy the second spot, while Geo Fluids Plc, which claimed the third place, has traded 1.0 billion units worth N700.1 million.

By value, on a year-to-date basis, Food Concepts Plc was also on top of the chart with the sale of 11.4 billion units worth N14.4 billion, followed by Nigerian Exchange (NGX) Group Plc with 456.5 million units valued at N9.2 billion, and VFD Group Plc with 10.4 million units valued at N3.5 billion.

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Economy

Oil Prices Crash as New COVID Variant Sparks Fears

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Future of Oil

By Adedapo Adesanya

Oil prices crashed more than 12 per cent on Friday as a new COVID-19 strain sparked fears about a demand slowdown just as supply increases.

As a result, the Brent crude plunged by 11.6 per cent or $9.50 to settle at $72.72 per barrel, while the West Texas Intermediate (WTI) crude declined by 13.1 per cent or $10.24 to sell for $68.15 per barrel.

The discovery of a new COVID-19 variant in Southern Africa is already dampening economic growth and triggering another demand slump.

The World Health Organization (WHO) warned of the new COVID variant detected in South Africa, stating that it could be more resistant to vaccines, thanks to its mutations. But the WHO has said further investigation was needed.

The variant, called B.1.1.529, is coming at a time when COVID cases are surging around the world ahead of the holiday season, with the WHO reporting hot spots in all regions and particularly in Europe.

The B.1.1.529 variant contains multiple mutations associated with increased antibody resistance, which may reduce the effectiveness of vaccines, along with mutations that generally make it more contagious.

Market analysts noted that prices did not crash because of President Joe Biden’s announcement of the release of 50 million barrels from the Strategic Petroleum Reserves (SPR), which has not even happened yet.

On Tuesday, Mr Biden of the United States announced plans to release its reserves as part of a global effort by energy-consuming nations to calm 2021′s rapid rise in fuel prices.

India, China, Japan, South Korea and the U.K. will also release some of their reserves to cool the market, which the latest development might have done.

Following this, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) might still have a say in this, with the group’s December 2 meeting potentially resulting in a reduction in production targets for 2022.

The latest occurrence vindicates Saudi Arabia, OPEC’s largest producer which had warned that COVID-19 adds an unknown element to the market and that the alliance should not be too hasty in production ramp-ups or the market would suffer.

Amid this, oil production in the US continues to increase as drilling activity continues to pick up.

The US oil rig count rose this week to 467—a 6-rig increase and a 226 rig increase since this time last year.

The total rig count is now at 569—a figure that is 249 up from this time last year. Active rigs are still hundreds less than the 790 active rigs that were drilling in the pre-COVID world.

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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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