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Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit - Politics - Nairaland

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Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by BeeBeeOoh(m): 2:07pm On Feb 28, 2022
The current crisis between Russia and Ukraine is set to have a debilitating effect on the nation’s oil and gas industry with analysts predicting that should the tension not doused, oil price could hit $150 per barrel.

The implication of rising oil prices, according to industry observers, will lead to an increase in the already N3 trillion budget of fuel subsidy in 2022 while many oil and gas projects that depend largely on iron and steel imports from Ukraine and Russia may suffer delay.

Measures forcing Russia to supply less crude or natural gas would have “substantial implications” on oil prices and Nigeria’s economy, said Sue Trinh of Manulife Investment Management.

Already, the invasion of Ukraine by Russia has distorted global financial and energy markets causing oil prices to soar above $100 per barrel, the highest since 2014.

Nigeria’s receipt from oil accounts for about 90 per cent of its earnings, hence a distortion in the global oil market affects the country.

Last week, amid heightened tensions between the two countries, the international oil benchmark, Brent crude, rose to $103.43 per barrel

Brent crude, against which Nigeria’s oil is priced, hit a fresh eight-year high of $103.43 per barrel as of 4:39pm Nigerian time, last Thursday as Russian forces made their way into Ukraine in a show of force not seen in Europe since World War II in a multi-pronged attack.

The $103.43 per barrel oil price, traded above $40, a figure which is higher than the Federal Government’s oil benchmark price of $62 per barrel for the 2022 budget and oil production of 1.88 million barrels per day.

Regrettably, most of the gains recorded during a higher oil price regime are frittered away through refined fuel importation as Nigeria imports 100 per cent of its petroleum products needs due to the dysfunctional state of its four refineries located in Port Harcourt, Warri and Kaduna. Crude oil prices were on the rise on Thursday morning as Russia engaged in a “special military operation” in Ukraine. The price of Brent crude oil is now well over $105 per barrel for the first time since July 2014.

According to the United Nations COMTRADE, Nigeria imports from Ukraine was $156 million in 2020 as Ukraine’s major exports to Nigeria were iron and steel at $125million, sugars and sugar confectionery at $8.1million and pharmaceutical products at $7.6million.

On the other hand, mutual diplomatic relations have been in existence between Russia and Nigeria since the 1960s. In September 2021, the Russian government said its trade volume with Nigeria stood at $600million because Russia is also an oil producing nation.

Following the battle between both countries, a publication by MMS Plus said there are reports of merchant shipping vessels in the region damaged by shelling and projectiles. At least, three vessels have been affected by gunfire in the Black Sea area off the coast of Odessa and Yuzhny. Commercial vessels have been asked not to enter the Sea of Azov as access is denied by Russian military forces. Two Russian commercial cargo ships were hit by Ukranian missiles in the Sea of Azov.

Multiple international container lines such as MSC, Maersk and CMA CGM have released operational updates announcing suspensions of vessel calls to Ukraine until further notice.

The Republic of Marshall Islands (RMI) has issued a Ship Security Advisory admonishing commercial vessels to avoid any transit or operation within the EEZ of Ukraine or Russia within the Black Sea.

“Access to the Sea of Azov through the Kerch Strait is currently blocked by Russian forces. All Ukrainian ports have been closed by the Ukrainian military. If a vessel is located at a Ukrainian port, plans to depart should be arranged as soon as safely possible. Access to the northwest Black Sea, north of 45° 21′ is restricted by the Russian Navy.”

“Vessels must ensure the automatic identification system (AIS) is always transmitting (except when the master believes that continuing to operate AIS might compromise the safety or security of the ship or when a security incident is imminent), consistent with provisions of the International Convention for the Safety of Life at Sea (SOLAS) and monitor VHF Channel 16. Any vessels challenged by Russian military vessels should comply fully with instructions. Armed security personnel are not to be embarked while operating in the Black Sea,” it said.

It further included a report of a Marshall Islands registered bulk carrier suffering significant damage to the deck and bridge area whilst drifting approximately 50 nautical miles (nm) South of Odessa. Pending further investigation, the damage is initially thought to be caused by a projectile.

Commenting on the development, Partner, Bloomfield Law Practice, Dr. Ayodele Oni, said global oil prices could rise as high as $150 a barrel if the tension between Russia and Ukraine worsens, and this will have huge economic implications for Nigeria, Africa’s biggest oil-producing country as we should generate much more income from our oil than the benchmark in the budget

‘‘We are already surpassing the budgetary figures. The problem is whether the importation of finished products could erode the additional profitability as cost of bringing in finished products like PMS too would rise.

With the likely increase in the prices of refined petroleum products, subsidy and cost of subsidy may also increase- a negative implication for Nigeria,’’.

Oni pointed out that the crisis could equally signal delay cost overruns for the Nigerian Liquefied Natural Gas(NLNG) Train 7 as the country imports most of its iron and steel from Ukraine.

Former Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr.Muda Yusuf, observed that a lot of Nigeria’s steel products come from Ukraine and Russia, saying the war is going to affect our trade with these nations.

‘‘More importantly, this crisis has led to an increase in crude oil price. Nigeria should be smiling at this increase but the nation isn’t refining locally, so our import bill on petroleum imports will increase. The nation’s bill for fuel subsidy will also increase. If this war prolongs, the problems will lead to fiscal deficits and eventually lead to more borrowing as the debt profile will increase. We can also expect inflation because the increase in energy price, aviation fuel, diesel and Premium Motor Spirit (PMS) will be higher.”

Nigeria can always buy oil and steel from other nations but Russia is a major oil producer in the world. Oil is a global commodity and any disruption affects the world,’’.

https://www.sunnewsonline.com/russia-ukraine-crisis-nigeria-to-pay-more-for-fuel-subsidy-as-capital-projects-may-take-a-hit/

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by KingEverest: 2:07pm On Feb 28, 2022
embarassed if only we had a working refinery we could have make huge profit from this situation, but an oil producing nation don't have a single working refinery that can refine PMS this country is cursed

63 Likes 4 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Lindodo20: 2:19pm On Feb 28, 2022
BeeBeeOoh:


https://www.sunnewsonline.com/russia-ukraine-crisis-nigeria-to-pay-more-for-fuel-subsidy-as-capital-projects-may-take-a-hit/

Shebi 'Pastor' Osibanjo went on record to lie that non-oil earnings has grown to 70% under this regime

14 Likes 1 Share

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Naijanascam: 2:26pm On Feb 28, 2022
And Nijeeria will be suffering more than Ukraine.........who really did this to us as nothing in this world is to the advantage of the ordinary citizens recently....

21 Likes 2 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by janedonez(m): 3:41pm On Feb 28, 2022
This is terrible, when will global happenings favour Nigerians

4 Likes

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by xeratek: 3:41pm On Feb 28, 2022
How does the chaos affect fuel price

1 Like

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by KingZaddy(m): 3:41pm On Feb 28, 2022
...


I have no comments... shouldn't have taken this space sef...

There is just hardly something good in my mouth to say now...





Please check out our short video... take a chill from worries...



https://www.youtube.com/watch?v=qOcASCc8qh8&t=16s

1 Like

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by MAGG0T(m): 3:41pm On Feb 28, 2022
shocked

this is the opportunity they've been looking for

Foooolss!!

18 Likes 3 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by ecolime(m): 3:41pm On Feb 28, 2022
Government of excuses and failures.

Oil was below $100, they complained.

It's above $100, they are still complaining.

Worst admistration in the history of this country.

83 Likes 11 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by affable4(m): 3:42pm On Feb 28, 2022
Nonsense. During GEJ era, crude above $100 was a blessing you all referenced at one point or the other.

But during your tenure now, it's a curse.

GEJ NO PAY SUBSIDY?


MAD MEN.

34 Likes 4 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Maxymilliano(m): 3:42pm On Feb 28, 2022
More troubled days ahead

1 Like

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Olamila: 3:42pm On Feb 28, 2022
Must everything negative connect Nigeria

5 Likes 1 Share

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by OGBEREIJEBU: 3:42pm On Feb 28, 2022
The excess crude money will take care of that and have more for infrastructure development

3 Likes

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by MangekyoAlt: 3:42pm On Feb 28, 2022
undecided
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by christejames(m): 3:42pm On Feb 28, 2022
Just see a country that lacks true leader; Nigeria.

Oil price increase should be a blessing to our economy, but because the govt left all our refinaries moribund, it has now become a curse...

8 Likes 1 Share

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by bigdammyj: 3:42pm On Feb 28, 2022
Okay
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Dukeolumidemans(m): 3:42pm On Feb 28, 2022
U can imagine the effects on an already damaged economy with daft leaders and wild spread selfish mentality...the result is simply catastrophic!!

I come in peace!!!

5 Likes 1 Share

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Adesina18111(m): 3:43pm On Feb 28, 2022
One thing I still don't understand is WHY Nigerian Government refuses and fails to build refineries...even the money we pay to import fuel in a year is enough to build one refinery...I agreed Jonathan failed us but Buhari is worst...He promised to revive all the dead refineries and even build new ones...but all na lie...they are just wasting our money...I have been buying black market at the rate of #1800 per 5 litres since this fuel shit started...and NEPA no gree give us light for almost 2 weeks now...foods are expensive and even transportation fares are now increased... I need UKRAINE VISA abeg embarassed embarassed

5 Likes

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Benjaniblinks(m): 3:43pm On Feb 28, 2022
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by NaughtyBrainiac: 3:44pm On Feb 28, 2022
This story is long for nothing.

It did not even explain how the current situation could lead to inflation in Nigeria.

I am not an expert but I have common sense.

Budget was prepared using 62 dollars as oil price.
After paying for imported refined oil, we still made profit.
Oil price is now almost becoming 2 times the price we used in preparing budget. ( please note that the increase in price doesn't have any significant increase in cost of exploring crude oil in Nigeria. The price increase here is Awuf)

How then will this lead to inflation? No matter how expensive it is to import refined oil, the significant increase in price of the crude one would take care of all costs and leave us with surplus gain.

Now to Subsidy. Subsidy in this case is just calling figures that don't practically exist. Just stupid theory.

They want Nigerians to pay for the price of oil based on the international price? And they misappropriate the mammoth surplus or what? There will never be any significant improvements in the lives of Nigerians because we won't feel the impact of the surplus. Things would only be worse because increase in pump rate as a way of catapulting inflation in Nigeria.

These people should stop telling us that increasing oil price is not good for us. They should please keep quiet.

11 Likes 1 Share

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by NeoWanZaeed(m): 3:44pm On Feb 28, 2022
Someone should summarize this for me..I don't understand o
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by orohbiro(f): 3:44pm On Feb 28, 2022
A
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by linearity: 3:45pm On Feb 28, 2022
Vg
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Nobody: 3:45pm On Feb 28, 2022
Somehow one man called Dangote is Building a Refinery. One man Oooh. During Good luck Jonathan Regime one of the poorest country on planet earth Niger Republic built a Refinery. Poor Ivory coast have a Refinery. Nigerians are not ready yet. When we are ready we will hit the street and demand for what's our right. The people profiting from Subsidy and Importation of Fuel will never let Nigeria Own a Functional Refinery. Who dey deceive who?


KingEverest:
embarassed if only we had a working refinery we could have make huge profit from this situation, but an oil producing nation don't have a single working refinery that can refine PMS this country is cursed

10 Likes 2 Shares

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by MissionaryArchi(m): 3:47pm On Feb 28, 2022
Smh
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by benuejosh: 3:48pm On Feb 28, 2022
We must diversify and find alternative means of Energy.
Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by lexy2014: 3:50pm On Feb 28, 2022
Wonkii87:
Another problem

theres no problem anywhere. just some lame excuses why the govt would continue on the path of failure, disappointment and negligence

2 Likes

Re: Russia-Ukraine: Nigeria To Pay More For Fuel Subsidy, Capital Projects Takes Hit by Youngzedd(m): 3:50pm On Feb 28, 2022
Buhari is a failure.

Tinubu is Buhari Pro Max.

9 Likes

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