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Nigeria: Fresh concern over petrol price hike as Naira falls to ₦945/$1

Published

1 year ago

August 25, 2023

A likely rise in the price of Premium Motor Spirit, popularly called petrol in Nigeria, has surfaced again following a recent plunge of the Nigerian currency, Naira, which now exchanges at over 900 to the United States dollar.

Concerns about whether the pump price could remain the same after the Naira declined against the dollar on the black market from 900 to 920 on Thursday. The naira reached 945 to the dollar in the black market two weeks ago but it recovered.

Recently, the marketers claimed that the CBN’s Importers and Exporters (I&E) official window for foreign exchange, which had a lower exchange rate of approximately N740/dollar, had remained illiquid and was unable to offer the $25 million to $30 million needed for dealers to import PMS.

But state oil firm, Nigerian National Petroleum Company Limited (NNPCL), played down fears of an imminent rise in petrol, insisting that there are no intentions for a price raise. Experts have said NNPCL price assurance should pose concern of another possible price-control regime which will eventually birth payments of subsidy on petrol.

On Thursday, the marketers raised the concern of a possible price hike again following the latest exchange rate. The price is now projected to be between N680/litre to N700/litre for PMS, stressing that the forex rate was about N750/$ to N800/$ at the time the cost of petrol was pegged at N590/litre to N617/litre.

Nigeria, a West African nation, is one of the world’s top oil producers, yet it does not refine crude oil domestically. The state-owned Nigerian National Petroleum Corporation (NNPC) operates four refineries: two in Port Harcourt (PHRC), one each in Kaduna (KRPC), and one in Warri (WRPC). Despite several efforts to restart the refineries, none of them has been operating at full capacity for years.

The need to export petroleum products for refining is a major cost factor that affects the price of the end products. In May, the country launched a 650,000 barrels per day (BPD) integrated, private refinery which according to the central bank governor at the time, Godwin Emefiele, said is expected to generate 12,000 megawatts of electricity and over 135,000 permanent jobs, help the country save $25b, and $30b forex annually.

But the hope has not materialised as the refinery is yet to begin full operation, despite its elaborate commissioning, and projection to get to work by July.

Related Topics:Featured Fuel Subdidy Nigeria

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IMF mission concludes 4th loan program assessment in Egypt

Published

14 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.