Q3 energy prices, FG’s N204bn electricity subsidy… 7 business stories to track this week

Here are the seven top business stories you need to track this week — December 18 to December 22.

NBS REPORT

The Nigerian Bureau of Statistics (NBS) will release a report on the prices of liquefied petroleum gas (cooking gas), premium motor spirit (petrol), kerosene, and transport fare for November 2023.

Also, the bureau intends to release a report on terms of trade for the third quarter (Q3) of 2023.

‘OIL REVENUE, INFLATION WILL DECLINE IN 2024’

Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), says inflation will decline in 2024.

The governor said there will also be less revenue from oil in the coming year owing to the production limit of 1.78 million barrels per day.

Cardoso said his assumptions are based on the outlook for the country’s economy in 2024 which “is very positive”, adding that inflation and the foreign exchange market will stabilise.

Meanwhile, Nigeria’s consumer price index (CPI), which measures the rate of change in prices of goods and services, rose to 28.2 percent in October 2023 — up from 27.33 percent in the previous month.

‘AIRLINES TO PAY PASSENGERS FROM JANUARY 2024’

Last week, Festus Keyamo, minister of aviation and aerospace, said airlines will begin to compensate passengers for delayed or cancelled flights from January 2024.

According to Keyamo, aviation regulators will start forcing airlines that delay or cancel flights to return customers’ funds.

The minister said he would also ensure that a weekly list of offenders is published in the media as part of the new compensation scheme.

WORLD BANK HINTS AT ‘PARTIAL RETURN’ OF SUBSIDY IN NIGERIA

The World Bank says Nigeria’s petrol should be priced at N750 per litre at the pumps.

Alex Sienaert, the bank’s lead economist for Nigeria, spoke during the unveiling of the Nigeria development update report, the December 2023 edition.

The report, titled, ‘Turning The Corner (From Reforms and Renewed Hope to Results)’, was presented on Wednesday in Abuja.

Speaking during the presentation, Sienaert said the product should sell for around N750 per litre and not the N650 currently paid by Nigerians based on the current official foreign exchange (FX).

‘FG PAID N204BN IN Q3 FOR ELECTRICITY SUBSIDY’

In its 2023 third quarter (Q3) report, the Nigerian Electricity Regulatory Commission (NERC) said the federal government incurred a subsidy obligation of N204.59 billion.

The NERC said the subsidy expenses were incurred due to the lack of cost-reflective tariffs across all electricity distribution companies (DisCos).

“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N204.59 billion in 2023/Q3 (average of N68.20 billion per month), which is an increase of N69.37 billion (+51.30%) compared to the 135.23 billion (average of ₦45.08 billion per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonise change rates,” the report said.

‘FG WILL RESTRUCTURE TCN INTO TWO ENTITIES’

Also in the electricity sector, Adebayo Adelabu, minister of power, said the federal government plans to restructure the Transmission Company of Nigeria (TCN) to align with the Electricity Act of 2023 and the industry demands.

According to Adelabu, the TCN will be restructured into two entities: “the Independent System Operator (ISO) and the Transmission Service Provider (TSP)”.

The minister said for the country to increase its gross domestic product (GDP) to $1 trillion by 2030 as projected by President Bola Tinubu, it must massively increase investments in electricity.

MORE BUSINESSES CLOSE OPERATIONS IN NIGERIA

Jumia, a pan-African e-commerce platform, said it would shut down its food delivery business, Jumia Food, in five countries including Nigeria by the end of December 2023.

The firm said the decision was necessary after a thorough review revealed that the current market conditions and economic climate in its operating countries make the food delivery business unsustainable.

The firm said employees under Jumia Food will transition to support the thriving physical goods operations in the affected countries.

Meanwhile, last month, Bolt Food also ceased operations in Nigeria, citing the need to streamline its resources and maximise overall efficiency.

In a related development, Shoprite intends to close its Kano branch in January 2024.