04 May

Daily Watch – Budget still in limbo, Subsidy payments still on

  • The committees set up by the National Assembly and the Presidency to rework the 2016 budget has been unable to work out answers to the issues that made President Buhari reject the budget in the first place. To get over the issues, key ministers in the administration have joined a select group of lawmakers to try to resolve all the knotty issues surrounding the budget. The two parties held series of meetings in the Office of the Budget and National Planning Minister, Udoma Udoma and later moved to the Guest House of the Speaker of the House of Representatives, Yakubu Dogara, all in a bid to sort out the areas that have prevented the President from assenting to the appropriation bill thus far. However, a common position on all the issues tabled for consideration has yet to be reached.
  • The CBN has released the Purchasing Managers Index for April, which indicated further decline in economic activities across the country during the month. The report showed that both the manufacturing and non-manufacturing sectors of the economy suffered a decline in the level of activities during the month. According to the report, production levels, new orders, employment and raw materials inventory declined in the manufacturing sector, while business activities, new orders and employment declined in the non-manufacturing sector. The Manufacturing PMI dropped to 43.7 percent in April 2016, compared to 45.9 percent in March. This implies that the manufacturing sector declined at a faster rate during the review period. Of the sixteen manufacturing sub-sectors, twelve recorded decline in the review month in the following order: furniture & related products; paper products; primary metal; electrical equipment; computer & electronic products; printing & related support activities; fabricated metal products; plastics & rubber products; textile, apparel, leather & footwear; petroleum & coal products; chemical & pharmaceutical products and food, beverage & tobacco products. The remaining four sub-sectors however recorded expansion in the following order: appliances & components; cement; non-metallic mineral products and transportation equipment. The composite PMI for the non-manufacturing sector recorded a decline for the fourth consecutive month. The index dropped to 44.3 percent from the 45.4 points registered in March. Of the eighteen non-manufacturing sub-sectors, sixteen declined in April in the following order: accommodation & food services; agriculture; arts, entertainment & recreation; construction; educational services; electricity, gas, steam and air conditioning supply; finance & insurance; health care & social assistance; information & communication; management of companies; professional, scientific, & technical services; public administration; real estate rental & leasing; repair, maintenance/washing of motor vehicles and transportation & warehousing; utilities. The remaining two sub-sectors recorded growth in April in the order: wholesale/retail trade and water supply, sewage & waste management.
  • Nigeria will pay a subsidy on petrol from the recoveries made in the first quarter of 2016. The latest PPPRA template showed that between January and March, the country was able to save about N10 billion as a result of selling petrol above the expected open market price. According to the new template, the expected open market price of petrol has risen to N99.38 per litre for independent and major oil marketers and N98.62 per litre for NNPC retail outlets. It added that the expected open market price was the actual price of the product without subsidy and was based on the current exchange rate of N197 to a dollar. At the current price of N86 per litre at NNPC retail outlets, the FG was paying N12.62 per litre as subsidy on petrol and N12.88 per litre as subsidy for other oil marketers’ price of N86.50. A breakdown of the template revealed that for NNPC retail outlets and independent and major oil marketers, the Landing Cost of petrol imported into the country was N84.32 and N85.08 per litre respectively. the distribution margin, which include retailers, transportation, bridging fund and dealers margin, among others, stood at N14.30 for both the NNPC and other marketers.