Why states got N2b out of N5b palliative support – Edun

• Nigeria’s Crude Oil Production Climbs To 1.67m Barrels Per Day

Though five billion naira was earmarked for each state government to provide palliatives, only two billion have been released so far. The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, confirmed yesterday in Abuja where he unveiled his programmes, that the N185 billion package was partly a loan and grant from the Federal Government.

He explained that the whole package was not released to the state governments to prevent spiral inflation as a result of too much cash in the system.
He added: “Although the sum of five billion is earmarked, you will agree with me that to release such funds across all the states, all at once, will be self-defeating because it will lead to an inflationary spiral, it will lead to the cost of the goods being sold going up, it will lead to the exchange rate moving. This explains the two billion naira that has been released as an initial intervention.”

Edun stated that the Nigerian money outside of the country is huge while cash outside of the banking system is also substantial hence the need to urgently mobilise the money back to the system to shore up the value of the naira.

“There is a lot of cash outside the system, which, if brought into the system, will increase the money supply of dollars and increase the reserves. There are funds in domiciliary accounts, which if you give people the incentive, they will utilise for investment in Nigeria. Nigerians in Nigeria have huge holdings of foreign currency in banks abroad and financial institutions abroad.

We need to provide the environment that brings those funds home to choose to invest in the Nigerian economy rather than foreign economies, which is what they are doing now. If you place money in a bank abroad, they’re investing in a foreign economy,” he added

Meanwhile, the Nigerian crude oil and condensate production have hit a fresh height of 1.68 million barrels per day, the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation Limited (NNPCL), Mele Kyari has said.

Speaking yesterday at the programmes unveiling of the Minister of Finance and Coordinating Minister for the Economy, Wale Edun, Kyari attributed the rise to the new re-engineering of the security approach of President Bola Tinubu, saying it is bearing significant changes in the oil production environment.

His words: “May I also use this opportunity to say that I was just checking the data for Wednesday, actual data for crude oil and condensate production is at 1.67 million barrels per day. This is substantial if you look at the situation where we were almost going below a million barrels about a year and some months ago.”

Explaining why the Federal Government removed the subsidy on petrol on May 29, Kyari said the Corporation was on the verge of bankruptcy, which necessitated immediate action.

“As of May 29 when this administration came on board, we were actually at default and NNPCL was facing imminent illiquidity. This is because we keep carrying the subsidy burden, the Federation, that is all the sub-nationals and the federal government, were unable to pay their bills for the subsidy. That means NNPCL was carrying the subsidy burden for the whole Federation until it became very obvious that it was no longer possible to proceed,” he said.

The NNPCL boss also revealed that the proposed three billion dollar oil forward sale deal with Afrexim Bank has collapsed. Kyari stressed that the deal is not a loan but a forward sale, which is a very easy deal.

He said: “You are simply selling your items for tomorrow. Banks do not have a problem funding this. This is not the type of transaction that will ever collapse when it is fully clear that the volume that you are selling is already on the table.”

While decrying about 13 different taxes existing in the oil and gas sector, Kyari expressed optimism that with the tax reform in place, it may deliver a stable fiscal environment. “We are already seeing interest. People want to come and invest in our industry. Otherwise, as long as you have fiscal instability and huge security challenges, businesses typically don’t come. But we are happy today that the interventions are working both in terms of the security and also providing the fiscal stability basis for companies to invest.”

On his part, Chairman of Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, decried about six trillion naira in tax holidays granted to the business community.

“As of now, we are giving away around six trillion naira per annum. That is significant. What we have not been measuring enough is the benefits we are getting from that.”