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MONDAY 6/12/2021 – FUEL SUBSIDY HITS N1.03TN, NNPC TO DEDUCT N199BN FROM FEDERATION ACCOUNT The Nigerian National Petroleum Company Limited has put the amount spent on subsidising Premium Motor Spirit, popularly called petrol, between January and October 2021, at N1.03tn. The NNPC also said it would deduct its October 2021 value shortfall of N199bn from its November 2021 proceeds meant for sharing at the December 2021 Federation Accounts Allocation Committee meeting. The oil firm disclosed this in its latest report containing the presentation made to the FAAC meeting in November 2021, which was obtained by our correspondent in Abuja on Sunday. The presentation was also for the NNPC’s September 2021 crude oil and gas sales and proceeds received in October 2021. In the report, the oil firm referred to its subsidy spending as under-recovery, as it had repeatedly stated that it had no authorisation by the National Assembly to pay subsidy. For about four years running, the NNPC has remained the sole importer of petrol into Nigeria. Other marketers stopped importing the commodity due to their inability to adequately access the United States dollar. A study of the latest report by the NNPC showed that while nothing was recorded as under-recovery of the PMS/value shortfall in January this year, the oil company spent N25.374bn, N60.396bn and N61.966bn in February, March and April respectively. In May, June and July, the NNPC recorded under-recoveries (petrol subsidies)/value shortfalls of N126.298bn, N164.337bn and N103.286bn respectively. The oil firm further posted petrol subsidy spending/value shortfalls of N173.132bn, N149.283bn and N163.709bn in August, September and October respectively. In its notes to the November 2021 FAAC, the national oil company stated that its overall crude oil lifting of 11.49 million barrels (export and domestic crude) in September 2021 recorded 98.5 per cent increase relative to the 5.79 barrels lifted in August 2021. “Nigeria recorded 1.417 million production in September 2021,” the firm stated in its latest report. On sales receipt, the NNPC stated that there was no crude oil export revenue for the month of September.   TUESDAY 7/12/2021 – Five banks’ interest income drops to N376bn, experts blame CBN cash reserve policy The combined net interest income of five publicly-quoted commercial banks has declined by N48.69bn in the last one year, according to the financial statements of the lenders analysed by our correspondent. Specifically, the five banks’ net interest income fell by 11.45 per cent from N425bn in September 2020 to N376bn in the same period of 2021. The revenue of commercial banks consists of net interest income and non-interest income. The net-interest income is the spread earned after interest-bearing liabilities are deducted from the revenue generated from a bank’s interest-bearing assets. Meanwhile, 11 banks reported their earnings for the nine-month period between January and September on the issuers’ portal of the Nigerian Exchange Limited. The 11 lenders generated N1.2tn in earnings in September this year, compared to N1.11tn made in the corresponding period of last year. This represents a 7.98 per cent increase Year-on-Year. However, six of the banks recorded increase in their net interest income, while the remaining five witnessed reduction in the net interest income. According to the financial reports, the lenders which recorded increases are: Access Bank Plc, United Bank for Africa Plc, Unity Bank Plc, Sterling Bank, Wema Bank and Zenith Bank Plc. The reduction in net interest income was recorded by Guaranty Trust Holding Company Plc, First City Monument Bank, Fidelity Bank Plc, Union Bank Plc and Stanbic Bank. Financial analysts, who spoke with The PUNCH on Saturday, attributed the development to regulatory headwinds among others reasons. Access Bank Plc’s net interest income rose to N267.73bn in the third quarter of this year from N196.27bn recorded in the corresponding period of last year.   WEDNESDAY 8/12/2021 – LOCAL PRODUCTION MUST BE ENCOURAGED TO STABILISE NAIRA A Professor of Financial Economics at the University of Uyo, Prof Leo Ukpong, in an interview with AMARACHI ORJIUDE, examines the dangers of The Central Bank of Nigeria defending the naira against major currencies and the effects on the country’s economy The World Bank has criticised the CBN’s continued use of the External Reserves to defend the naira, saying it could bring further challenges to the economy. Do you support this view and why? I agree with the World Bank because external reserves are like savings in a personal account, which are meant for uncertainty; savings for future consumption. So when we have an external reserve, it serves to ensure that in future if we need something, especially from outside the country, we have the money to finance it. It also has a psychological importance, in terms of how the world looks at you. It is like someone who spends all his salary and every month and  he waits to be paid salary before he can buy anything, but someone who has a savings account is viewed as a stable person, banks can give him loans. So World Bank is right, we need external reserves for tomorrow’s expected consumption. We also need to it to caution borrowing, if we consume all our external reserve the cost of borrowing will rise, the exchange rate that we are trying to defend will depreciate more because of lack of confidence and the ability to pay back our foreign debt – we need foreign currency to pay back foreign debt. What are the other key dangers to the economy if the CBN continues to defend the naira from the reserves? Let me allude to a historical event; the country that has the highest deposit of dollars in this world is the United States. In the 1970s when the US decided to adopt a flexible exchange rate where they will let the market determine it, they tried to defend the dollar. They couldn’t do it for one week. They didn’t have enough money to defend the dollar against the demand for dollar from outside. Now for us to defend naira, we don’t have enough dollars to even last us for five days, if our creditors were to ask us to pay them what we owe in dollars, we won’t have enough. So clearly, this is a bad policy, trying to shore up the value of naira by subsidising the exchange rate is bad for the economy.   THURSDAY 9/12/2021 – FINANCE BILL MAKES TIN MANDATORY FOR BANKS’ ACCOUNT HOLDERS The bill read in part, “The bill makes provision for the Accelerate International Taxation Reforms to enhance the taxation of non-resident individuals and companies that nevertheless derive profits from Nigeria.” Abdullahi also said the bill made electronic mails as the only channel that tax authorities would accept as a formal means of correspondence with taxpayers; He added that proposed bill prescribes penalty for failure to deduct tax, noting that this would also apply to agents appointed for tax deduction. Abdullahi said, “This penalty is 10 per cent of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria. The conditions attached to tax exemption on gratuities have been removed.  Therefore, gratuities are unconditionally tax exempt. “The duties currently performed by the Joint Tax Board as relates to administering the Personal Income Tax Act, will now be performed by the Federal Inland Revenue Service. “This seems to be an error in the process of amendments to replace the word “Board” as it appears in Federal Board of Inland Revenue.” He said the penalty for Value Added Tax late filing of returns increased to N50, 000 for the first month and N25, 000 for subsequent months of failure;   FRIDAY 10/12/2021 – CAPITAL INFLOW DROPS BY 29% AS COVID-19 CASES RISE – CBN Capital inflow into the country fell from $620m in July to $440m in August over the resurgence of the COVID-19 pandemic. The Central Bank of Nigeria stated this in its monthly economic report for August titled, ‘Foreign capital inflow moderated in August 2021 due to weakening risk sentiments that followed the COVID-19 resurgence’. It stated that, “Foreign capital inflow moderated in August 2021 due to weakening risk sentiments that followed the COVID-19 resurgence. “New capital imported into the domestic economy decreased by 29.0 per cent to $0.44bn, compared with the $0.62bn recorded in July. “A disaggregation of capital imported by type of investment indicated that foreign portfolio investment inflow (mainly money market instruments), at $0.24bn, accounted for 53.8 per cent of the total. “The inflow of other investments, mainly loans, was $0.16bn, constituting 36.9 per cent of the total.  “Foreign direct investment, at $0.04bn, constituted the balance of 9.3 per cent.”