Elumelu Laments 95% Oil Production Lost to Theft

*Seeks strong leaders in 2023

*Says sufferings despite natural endowments inexplicable

*MAN demands removal of VAT from diesel prices, threatens retrenchment
Emmanuel Addeh in Abuja and Dike Onwuamaeze in Lagos

Businessman and Chairman Heirs Holdings, Mr Tony Elumelu, yesterday bemoaned the fact that Nigeria was losing over 95 per cent of its oil production to thieves.

This is just as the Manufacturers Association of Nigeria (MAN) has described the rising price of Automotive Gas Fuel (AGO) otherwise known as diesel as a very worrisome development that has been impacting businesses negatively, especially the manufacturing sector of the economy.

Elumelu, who narrated the ordeal of some of his colleagues at work on his official Twitter handle, noted that apart from the economy, Nigerians are now afraid as a result of the bad security situation.

Elumelu, who is the founder of the Tony Elumelu Foundation, a platform which promotes entrepreneurship in Africa, urged Nigerians to be “vocal” about the way they are governed and hold their leaders more accountable.
He added: “How can we be losing over 95 per cent of oil production to thieves? Look at the Bonny Terminal that should be receiving over 200,000bpd barrels of crude oil daily, instead it receives less than 3,000 barrels, leading the operator , Shell to declare force majeure.

“Why are we paying taxes if our security agencies can’t stop this? It is clear that the reason Nigeria is unable to meet its OPEC production quota is not because of low investment but because of theft, pure and simple!”
Elumelu pointed out that while oil producing countries were happy that prices had been rising and their foreign reserves continue to grow, Nigeria is in a state of gloom.
“Meanwhile, oil producing countries are smiling as their foreign reserves rising. What is Nigeria’s problem? We need to hold our leaders more accountable,” he added.

He decried the worsening state of insecurity, public infrastructure and rising inflation in Nigeria.
The usually reticent businessman, who chairs the Board of the United Bank for Africa (UBA), argued that being endowed with huge natural resources, the country should not be in its current decrepit state.

In the last couple of weeks, the state of basic supplies, like electricity and petrol, have worsened, as Nigerians spend time in queues to buy petrol and businesses and homes suffer due to prolonged blackouts. Diesel price has also risen astronomically.

The already bad state of power supply worsened in the last few weeks, with the authorities blaming shortage of gas and dipping water levels at the country’s hydropower stations for the development.
In addition, the prices of goods and services have recently skyrocketed, with diesel increasing by about 300 per cent and airline operators threatening to stop their services due to galloping aviation fuel prices.
Elumelu, who narrated the ordeal of some of his colleagues at work on his offical Twitter handle, noted that apart from the economy, Nigerians now lived in fear due to the security situation.

He tweeted, “This morning, I am listening to my colleagues at the office bemoan the very pressing issues that they face everyday in this country, and how things have been getting worse and worse – no electricity for five days, hikes in the price of diesel, frightening food inflation, etc.

“How can a country so rich in natural resources have 90 per cent of its citizens living in hardship and poverty? I have often said that access to electricity is critical for our development, alleviation of poverty and hardship. And speaking of security, our people are afraid! Businesses are suffering.”

The businessman, who holds a controlling interest in Transnational Corporation (Transcorp), also wrote about the country’s energy sector, stressing that oil theft, not lack of investment in the upstream, was generally responsible for Nigeria’s inability to meet its Organisation of Petroleum Exporting Countries (OPEC) quota.

He added, “How can we be losing over 95 per cent of oil production to thieves? Look at the Bonny Terminal that should be receiving over 200, 000bpd of crude oil, instead it receives less than 3,000 barrels, leading the operator, Shell, to declare force majeure.

“Meanwhile, oil producing countries are smiling as their foreign reserves are rising. What is Nigeria’s problem? We need to hold our leaders more accountable,” he added.
In the forthcoming election, Elumelu urged Nigerians to be intentional about what they want and support leaders that will deliver.

He said, “Elections are coming – security and resources need to be everyone’s agenda – let’s be vocal for our nation’s priority.
“Evil prevails when good people are silent. We need to be vocal about 2023. Let’s focus on Nigeria. Demand and advocate for leaders that deliver. In 2023, Nigeria must be on a strong trajectory for progress and development.”

MAN Demands Removal of VAT from Diesel Prices, Laments High Price

MAN decried the rising price of diesel. The association also requested that the government should remove Value Added Tax (VAT) on diesel in order to ameliorate the pain from the rising cost of energy, which it said constituted more than 40 per cent of the operating cost of Nigerian manufacturers.

In a statement yesterday, Director General of MAN, Mr. Segun Ajayi-Kadir, attributed the current scarcity of petroleum products to the war between Russia and Ukraine, which has pushed the price of crude oil in the international market above $110 per barrel.
Ajayi-Kadri lamented that manufacturers were left at the mercy of the vagaries of international price and the accompanying geopolitics.

He said, “As long as the price of crude oil continues to go up, price of AGO will equally skyrocket. It is now said to be selling at N750 per litre, up from about N300 per litre in the past two months.
“Unfortunately, manufacturers, who largely rely on diesel to run their factories, due to unreliable nature of the grid power supply, are contending with huge cost to sustain their production line. The information from MAN members equally indicates that the production capacity utilisation has been going down because of the unsustainable cost for running daily production on diesel.”

Ajayi-Kadri noted, “The direct implication of this trend, as many Nigerians are already feeling the heat, is the reflective high cost of goods in the market owing to the high cost of production.
“Making the matter worse is the inadequate energy supply for the manufacturing sector from the national grid. It is on record that more than N100billion is expended per year by our members on alternative energy source, which constitutes between 30 per cent and 40 per cent of their cost structure.

“The implication is that our cost structure is thrown overboard; our working capital will be depleted by this one cost item, our capacity utilisation will nose-dive since we cannot run as many shifts as we normally do, we may have to right size to fit our production profile.

“The solution is rather complex. We are dealing with a deregulated industry, as I earlier mentioned. In the short term, we can only look at how to get more favourable prices from the marketers; seek to remove other costs that are in-country, like VAT on the AGO, and work with government to reduce the pressure in other pain points for the manufacturers.

“Governments should deliberately prioritise supply to the sector in view of the multiplier effect it has on the economy and government revenue. The eligible customer scheme should be allowed to work without any hindrance, including the requirement of no-objection from the DisCos. The tariff structure that makes the maximum demand customer to pay more should be re-examined.”

Meanwhile, some financial experts have expressed surprise over the marginal increase of 0.1 per cent of the headline inflation reported by the National Bureau of Statistics (NBS), from 15.60 per cent in January to 15 .70 per cent in February 2022.

NBS also reported that food inflation declined from 17.13 per cent in January to 17.11 per cent in February 2022 while core inflation sub-index accelerated from 13.87 per cent in January to 14.01 per cent in February 2022.

The experts argued that the NBS’ figures were far from the reality experienced by Nigerian households and businesses during the period under review. They added that marginal growth in the inflation rate reported in the preceding month might put the reputation of the NBS at risk.

Chief Executive Officer of BIC Consultancy Services Limited, Dr. Boniface Chizea, said the NBS release, which indicated that the rate of “inflation rose marginally from 15.6 to 15.7 per cent for last month is a bit surprising, to say the least.”

Chizea said even though, “One will not want to impugn the integrity of the NBS, as we believe it has burnished its credentials as a thoroughly professional body in the past. But what is not incontrovertible is that the price system in the economy seems to have fallen apart. There is no aspect of life that has not today witnessed ravaging run away price rise!”

He added, “It is very difficult to reconcile the marginal increase in rate of inflation month on month that has just been reported.

“So, what we are trying to do now is to serve notice, to put everyone on the alert! The NBS must struggle not to take Nigerians for granted, otherwise, its continued relevance, which had so far been taken for granted, will be discounted.

“And that would be a serious development, as it has the potential to undermine its future amongst a generality of Nigerians, even also amongst international stakeholders, which will be too bad.”

Similarly, an economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, found it rather curious that food price inflation recorded a decline of .02 per cent during the period under review as, “the reality and severity of the impact of the intense inflationary pressures over the past one year is at variance with the official inflation data.”

Yusuf, in a statement titled, “CPPE Comments on February Inflation Figures,” stated, “The technical computation of the inflation figures by the NBS is not in dispute. However, the reality and severity of the impact of the intense inflationary pressures over the past one year is at variance with the official inflation data.”

He stated further, “For the basket of goods consumed by most households, prices have jumped by between 30 and 100 per cent over the past one year. The same is true of businesses.

“The pressure of spiking inflation on household budgets has been excruciating and unbearable. Purchasing power has been massively eroded, real incomes have depressed, and the poverty situation has consequently worsened.

“Businesses have been similarly impacted, as they have been experiencing a slump in sales, turnover and profits margins. The impact on small businesses is even more severe because of their limited capacity to absorb economic shocks.”

Yusuf added, “The spiralling inflation dynamics should be elevated to the level of an economic emergency, deserving an urgent policy response at the highest level of government. The impact on citizens’ welfare is inestimable. The effect on SMEs is troubling. There is elevated social discontent, driven by increasing joblessness and hunger.”

The CPPE stated that the key drivers of inflation included high and increasing energy cost, worsening currency depreciation, escalating transportation cost, high import duty on manufacturing inputs, illiquidity in the foreign exchange market, bottlenecks in the logistics chain, security concerns and low productivity resulting from structural challenges and weak application of technology, as well as the central bank’s financing of fiscal deficit.

Yusuf said, “To tackle inflation, these key drivers would have to be addressed. All forms of taxes and levies on the importation of petroleum products should be suspended to give a respite on the spiking energy cost. There should also be deeper stakeholder engagements across sectors to develop an enduring strategy on the way forward.”