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Price of Cooking Gas Rises by 20% As Naira Weakens

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The price of Liquefied Petroleum Gas, popularly known as cooking gas, sold to marketers in the country has risen by over 20 per cent in the past one month, with consumers paying more for the product.

The naira plunged on November 30 to 500 per dollar at the parallel market, its lowest level in more than three years, from around N462/$1 at the start of the month. It traded at 476 against the greenback on Tuesday.

Our correspondent gathered that terminal operators and importers increased the price of 20 metric tonnes of LPG to N5.3m on Monday from an average of N4.4m a month ago.

A gas plant in Lagos visited by our correspondent refilled a 12.5kg cylinder for LPG for N4,000 on Tuesday, up from N3,200 in November. Our correspondent gathered that the plant had refilled a 12.5kg cylinder for N3,500 on Monday.

Some of the retail shops visited by our correspondent put the price for refilling a 12.5kg cylinder at between N4,000 and N4,500 on Tuesday.

Marketers said the price of cooking gas had continued to increase in recent months as the depreciation of the naira against the dollar and increased global demand pushed up the cost of importing the product into the country amid inadequate local supply.

Nigeria, which is home to the largest natural gas reserves in Africa and the ninth largest in the world, imports a chunk of the cooking gas being consumed in the country.

Terminal operators sold 20 tonnes of LPG at between N5.2m and N5.3m on Tuesday, up from N4.9 to N5m at the start of December and N4.25m to N4.45m on November 20, according to LPG in Nigeria, an advocacy organisation championing the use of LPG in the country.

“International prices continue to go up, which is a major factor in our local LPG pricing. LPG price just hit $400 per MT for the first time since February 2019. We expect that prices will ride the winter demand, then begin a steep fall,” it said.

The Executive Secretary/Chief Executive Officer, Nigerian Association of LPG Marketers, Mr Bassey Essien, told our correspondent that the association had noticed the gradual increase in cooking gas price in recent months.

According to Essien, about 35 per cent of the LPG consumed in the country is from domestic supply while 65 per cent is imported.

He said many privately-owed terminals had to depend on importation because they could not get supply from the Nigeria LNG Limited.

“In the process of importing LPG, the CBN does not have any particular foreign exchange window for LPG importers like it has for other sectors. So, they find their own forex whatever way they can. At a point, the naira was 500 per dollar,” he said.

Essien said another factor responsible for the price hike was the increased global demand for gas during winter.

“Since a greater chunk of what we consume is imported, we have to face the problem of foreign exchange dynamics. It is not something we are happy about,” he added.

The NLNG said in September that its board of directors had approved an increase in its dedicated volume of LPG supplied to the domestic market from 350,000 metric tonnes per annum to 450,000 mtpa.

The Punch

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Business

London Stock Exchange Welcomes Ecobank Nigeria’s Senior Bond Issuance

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Ecobank Nigeria on Thursday opened the market at London Stock Exchange via a virtual ceremony to mark the listing of its five-year fixed rate senior unsecured US$300 million bond.

Ecobank Nigeria, a subsidiary  of Ecobank Transnational Incorporated, the parent company of the  Ecobank Group, provides the full suite of banking products, services and solutions through multiple channels to retail, commercial, corporate and public sector customers.

The bond carries a coupon rate of 7.125%, significantly below its Initial Price Thoughts of 7.75%. The successful launch was three times oversubscribed and is the lowest  coupon/yield by a Nigerian financial institution for a benchmark bond transaction since 2013. It has an Issuer Rating of B- from Fitch Rating Agency and S & P. Citi, Mashreq, Renaissance Capital and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners.

The proceeds will  provide medium term funding and help to enhance the capacity of the Bank to support international trade and service across Africa.

Patrick Akinwuntan, Managing Director, Ecobank Nigeria: “The strong demand for our bond shows the international appetite for the Ecobank franchise in Nigeria, its unique positioning for facilitating pan-Africa trade and  the attractive opportunity for the many investors seeking to back world-class Nigerian corporates.”

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Nigeria Unexpectedly Exits Recession

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Nigeria’s economy unexpectedly came out of a recession in the fourth quarter as growth in agriculture and telecommunications offset a sharp drop in oil production.

Gross domestic product grew 0.11% in the three months through December from a year earlier, compared with a decline of 3.6% in the third quarter, the Abuja-based National Bureau of Statistics said on its website on Thursday. The median estimate of five economists in a Bloomberg survey was for a quarterly decline of 1.86%. The economy contracted 1.92% for the full year, the most since at least 1991, according to International Monetary Fund data.

Nigeria's economy returned to growth after two quarters of contraction

The surprise rebound means Africa’s largest economy may recover faster than expected as the oil price and output increase this year. It could also point to the growing importance of the non-crude sector.

Oil production fell to 1.56 million barrels a day in the fourth quarter from 1.67 million barrels in the previous three months. While crude contributes less than 10% to the country’s GDP, it accounts for nearly all foreign-exchange earnings and half of government revenue in the continent’s biggest producer of the commodity.

The non-oil economy expanded by 1.7% from a year earlier, the strongest rate in four quarters, with agriculture growing 3.4% and telecommunications increasing 17.6%.

A stronger recovery could ease pressure on the central bank to stoke activity, paving the way for a renewed focus on its price stability mandate. That means the monetary policy committee could start raising interest rates again to fight inflation that’s been above the target band of 6% to 9% for more than five years. The panel eased by 200 basis points in 2020.

The government’s forecast for growth of 3% this year is double that of the IMF. The lender has warned a slow roll-out of Covid-19 vaccines could threaten the economy’s recovery.

“The fact that we have seen a recovery in non-oil GDP growth is positive,” said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Bank. “However, the headwinds associated with the second wave of Covid-19 may still be considerable.”

Source: Bloomberg

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Marketers Raise Petrol Price to N170, Blames Supply Shortage

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Fuel marketers have started adjusting their petrol pump prices amid the supply shortage facing private depots in Apapa.

The Punch observed that some filling stations in Lagos and Ogun states increased the pump price of petrol to N170 per litre on Tuesday from N162 per litre.

Some of the stations were Capital Oil and Gas, Fatgbems and Amo Oil, all along the Lagos-Ibadan Expressway. Another station, Enyo Retail, adjusted its pump price to N165 per litre from N162.

The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, told our correspondent that members of his association had to increase the pump price because they bought the product at N160-N161 from depot owners.

IPMAN members had disrupted loading of petroleum products at private depots in Apapa last Wednesday as well as Ibadan, Ejigbo and Mosimi depots belonging to the Nigerian National Petroleum Corporation.

They picketed the facilities to protest their inability to get products due to a new payment method introduced by the Petroleum Products Marketing Company, a subsidiary of the NNPC.

“My members buying from DAPPMAN members are buying at N160-N161, and they will have to add their transportation costs to it. So, at what price do you want them to sell? Even that N170 is still very cheap,” Osatuyi said on Tuesday.

He said the PPMC had told marketers to register under the new payment method, called ‘PPMC Customer Express’, before they could buy products from it.

“Right now, PPMC has said that the era of ATP (Authority to Pay) has gone. It means that payment has to be made online. So, my members are now in the process of doing that, and without doing it, we cannot lift products,” he added.

The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by depots and marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

The Punch also gathered that many private depots in Apapa, Lagos, from where many marketers get petroleum products for distribution to other states, were running dry of petrol due to supply shortage.

When contacted, the Group General Manager, Group Public Affairs Division of the Corporation, Dr Kennie Obateru, denied the shortage of petrol supply from the NNPC.

He said, “We have 1.7 billion litres of product as at today, which will give us about 40 days’ sufficiency. Even some more vessels are on the programme.

“And we have not increased our ex-depot price; even though we know some of them (marketers) are sort of slowing down because they are expecting that we will react to the crude oil price increase. But for now, we haven’t done that.”

One of the major private depots told marketers to stop payment for the petrol because of the supply shortage and the uncertainty over when it would get the product.

A top official of a Lagos-based oil marketing company told our correspondent on condition of anonymity that there had been erratic supply of petrol to private depots in Apapa since last week.

The Punch

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