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Economic week ahead: Another bumper FAAC in the offing?

FG mulls ban on exportation of LPG to crash prices

Tuesday, December 19

Liquified Petroleum Gas (Cooking gas price watch for November)

The NBS will publish the average price paid by Nigerians for cooking gas in the month of November on Tuesday, December 19 and the data is likely to show that prices barely budged according to analysts.

The average retail cost for refilling a 12.5kg cylinder of Liquefied Petroleum Gas (Cooking Gas) saw a month-on-month rise of 14.04%, rising from N9,247.40 in September 2023 to N10,545.87 in October 2023.

That’s according to the last report published by the NBS for October 2023.

When compared with the corresponding period of last year, the cost of cooking gas increased by 4.93 percent from N10,050.53 in October 2022.

Furthermore, the average retail price for 5kg gas in Nigeria increased by 8.89% from N4,189.96 recorded in September to N4,562.51 in October.

According to the NBS, the price of 5kg cooking gas rose by 1.76% from the N4,483 for October 2022.

Cooking gas prices are increasing due to low production of associated gas- which has been hampered by rampant crude oil theft- and fading investment in natural gas exploration across the country.

Premium motor spirit price watch for November

The average retail price paid by consumers for Premium Motor Spirit (Petrol) for the month of October 2023 was N630.63, indicating a 222.92% increase when compared to the value recorded in October 2022 (N195.29).

The jump can be attributed to the petrol subsidy removal by Nigeria’s new president, Bola Tinubu, in June.

Petrol prices were however stable in November and that has influenced forecasts by analysts that the price was fairly stable when compared to the previous month.

The average price increased by less than 1 percent on a monthly basis in October.

On a year-on-year basis however the price will record another surge given the relatively lower price of petrol last month compared to November 2022.

Zamfara State paid the highest price for petrol in October at N659.38, Gombe and Borno States were next, with N658.33 and N657.27, respectively. On the other side, Lagos, Oyo and Delta States had the lowest average retail prices for Premium Motor Spirit (Petrol), at N590.95, N592.19 and N599.38 respectively.

The fuel subsidy removal saved Nigeria over a trillion naira this year but it has worsened a cost of living crisis in Africa’s most populous nation. Inflation is now on course to hit the highest on record by December after numbers last week showed the rate climbed faster than analysts’ expectation to print 28.2 percent.

Read also: Cooking gas gets cheaper as FG waives VAT, customs duty on LPG imports

Thursday, December 21

November FAAC

The federation account allocation committee (FAAC) shared N906.955 billion with the three tiers of government in October 2023, an increase of N3.48 billion compared to the September disbursement of N903.48 billion.

The depreciation of the naira has boosted the government’s foreign exchange earnings every month since June and is likely to have given yet another boost to cash earned in November.

The exchange rate depreciation added N202.887 billion to total revenue in October.

Read also: FAAC disburses N903.48 Billion in September, exceeds August allocation

Q3, 2023 terms of trade

Nigeria has been recording a trade surplus this year and the third quarter is tipped to be no different.

In the second quarter, the country notched a trade surplus of N1.29 trillion after exports of N7.02 trillion exceeded imports of N5.73 trillion.

Nigeria may be recording trade surpluses but the challenge with oil exports owing to lower production must give the government concern especially as exports have become cheaper with the devaluation of the naira.