Oil Production Hits 1.6mbpd, Petrol Consumption Falls by 30%

*Edun: Tinubu administration will incentivise funds in domiciliary accounts to rejuvenate economy

Ndubuisi Francis in Abuja

The Group Managing Director (GMD) of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, happily announced to the nation yesterday that oil production had ramped up to 1.6 million barrels per day by last Wednesday, from a very poor position of less than one million bpd some months ago.
Kyari, who disclosed this at a media briefing by the Minister of Finance and Co-ordinating Minister of the Economy, Olawale Edun, in Abuja yesterday, also added that petrol consumption had declined by 30 per cent following the removal of subsidy by President Bola Tinubu.
At the briefing, Edu announced that the Tinubu administration is aiming to attract Nigerians’ funds held in domiciliary accounts in the country and those held abroad to rejuvenate the economy.

According to Kyari, the reduction in fuel demand from about 66.7 million litres daily before the removal of subsidy to about 46 million currently also meant a 30 percent reduction in NNPCL’s demand for foreign exchange to import fuel.
The NNPCL GMD also explained that the $3 billion deal with the African Export-Import Bank (AFREXIM) was not a loan but a forward sale arrangement, and has not collapsed.

Earlier, Edun said Nigerians have huge funds at home and abroad which could be deployed to rejuvenate the economy, and so, the Tinubu administration is aiming to attract such funds owned by Nigerians in domiciliary accounts in the country and abroad.
With such huge forex potential in Nigeria and abroad, Edun noted that the administration could leverage on deploying such into the revitalisation of the economy, adding that the government was working towards providing the needed environment to attract such funds into the Nigerian economy.
He said: “What we can see is that really, there are quite substantial sources of foreign exchange in Nigeria. There is a lot of cash outside the system, which if brought into the system, increases the money supply of dollars, increases reserves and so forth.
“There are funds in domiciliary accounts, which if you give people the incentives, they will utilise those for investment in Nigeria. Nigerians in Nigeria have huge holdings of foreign currency in banks abroad, in financial institutions abroad.
“We need to provide the environment that brings those funds home for investment in the Nigerian economy rather than foreign economies, which is what they are doing right now.

“Nigerians living and working abroad, who of course, have their families here and who are interested in keeping a presence here; we have to encourage them to be willing to save in Nigeria, perhaps by improving payment mechanisms and so on and so forth; so, we have to do a lot to aim at them.”
On palliatives, Edun said the federal government had released only N2 billion from the N5 billion grant/loan it offered to each state as a palliative to cushion the impact of the petrol subsidy removal.
In August, the federal government announced a N5 billion palliative package for each state of the federation, including the federal capital territory (FCT), to cushion the impact of the removal of the petrol subsidy.
Edun said the government is aware of the potential negative consequences of releasing all of the palliative funds at once, “so it decided to release them gradually.

The minister said: “And of course, although the sum of N5 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 goods being sold going up and it will affect the exchange rate.”
Edun acknowledged the hardship faced by Nigerians occasioned by the fiscal reforms undertaken by the current administration, assuring that the tough times would be temporary but necessary steps to guarantee a better tomorrow.
According to him, “Until benefits of removal of subsidy feed through, and until the NNPCL’s revenue from oil production goes up, there is a challenge to balance the books, particularly in terms of foreign exchange.”
Giving further insight into the direction President Tinubu is headed, Edun said that the present administration would eliminate borrowing to finance recurrent expenditure, noting that any borrowing to be undertaken would be to finance capital projects.
He said: “We are coping with a lot and we are doing the best we can under very difficult circumstances. But to have to cope with credit rating agencies working as if nothing has changed, not realising the kind of shocks we are suffering, and assessing us and downgrading us for factors external to us, even when we are putting our best efforts, we think it is a situation we realise we can’t change.
“We are not where we should be; the economy is barely growing above the rate of population growth. But it was not always so and I think in trying to see the way forward, if we look back, if we now have a situation of slow growth, double digit inflation, weak depreciating exchange rate, as well as security concerns that is resulting in an economy that is not growing; that is not lifting our Nigerians out of poverty.”
The minister said the current administration intends to increase revenue.
In achieving this, he said tax revenues will improve, leakages will be avoided, as well as the effective management of debt so that borrowings can be properly serviced.
The minister said: “The key is to increase revenues so that the government has enough funding to carry out its obligations and to stabilise the economy as a whole.
“On one hand, it is by increasing tax revenue, not by increasing taxes necessarily, but by bringing greater efficiency.
“We have with us the chairman of the tax reform committee and it aims to bring greater efficiency to cut leakages and maximise the legitimate revenue that should come to the government.
“Likewise, in order to gain and build public trust, there will be an emphasis on efficiency in government expenditure, and similarly, effective debt management, so that borrowing is linked to it, the return on investment. You borrow and you will see the cash flow that will repay that borrowing.
“Overall, I would say Mr. President is going to deliver a better life to Nigerians by encouraging investment that increases productivity, that brews the economy and thereby creates jobs and reduces poverty.
“The key priorities are to improve the lives of Nigerians by providing food security by ending poverty.
“Utilising our human resources – our vast, capable human resources – by focusing on inclusivity (women, youth) and making all have the opportunity to contribute to prosperity and likewise focusing on security, rule of law, and corruption. He (Tinubu) intends to create a fairer, safer playing field for all.”