GDP Q2,22: CPPE urges FG to review fight against crude oil theft, decentralise grid system, others

Oredola Adeola

The Centre for the Promotion of Private Enterprise, CPPE, has urged the Federal Government to address the challenges of the massive crude oil theft and to improve efficiency, decentralise and attract more investment into the electricity sector to grow the country’s economy.

Muda Yusuf, Founder/CEO, CPPE made this known in a statement while reacting to the recent data released by the National Bureau of Statistics(NBS), which showed that Nigeria’s Gross Domestic Product grew by 3.54 percent in the second quarter of 2022 on a year-on-year basis.

EnergyDay gathered that the country’s GDP in the NBS’s data for Q2, 2022, showed that in nominal terms, aggregate GDP stood at N45 trillion in the second quarter of 2022.

Q2,2022 performance is higher when compared to Q2,2021, which recorded N39.12 trillion, indicating a year-on-year nominal growth rate of 15.03 percent.

Dr. Yusuf in his statement said that the GDP growth in the second quarter of 2022 marked the seventh consecutive quarterly GDP growth since the exit from recession in the fourth quarter of 2020.

He further urged the FG to review its policies framework in critical sectors including crude oil and liquefied natural gas production output, decentralisation of the electricity supply market, and fiscal incentives among other sectors.

The CPPE Boss said, “This report reflects the resilience of the Nigerian economy amid extreme macroeconomic challenges, galloping inflation, currency depreciation, foreign exchange illiquidity, high energy cost, heightened insecurity, weakening purchasing power, structural bottlenecks and trade facilitation issues,” the statement said.

OIL AND GAS SECTOR

The Oil sector contributed 6.33% to the total real GDP in Q2 2022, down from the figures recorded in the corresponding period of 2021 and the preceding quarter, where it contributed 7.42% and 6.63% respectively.

According to Dr. Muda, Nigeria needs to address the challenges of the massive oil theft which is affecting the oil output.

He noted that the safety of the oil installations across the country is also a key factor that could improve the performance of the hydrocarbon industry in the GDP.

He said that the implementation of the Petroleum Industry Act would equally boost investment in the sector.

eELECTRICITY : The Nigeria Electricity Supply Industry(NESI)

Speaking on the Nigerian Electricity Supply Industry(NESI), Dr. Muda noted that the power sector reforms need a review to improve efficiency and productivity in the sector.

He said, “The challenges in the electricity supply chain need to be urgently addressed – gas to power, transmission, distribution, energy pricing, metering, and the capacity of the distribution companies.

“All of these are needed to improve performance and attract more investment into the sector.”

He further called for the urgent decentralisation of the Transmission Company of Nigeria(TCN) which controls and manages the national grid system. This according to him would ease coordination and efficiency within the NESI.

He further suggested a deliberate policy framework to attract private funding and participation in the grid management system.

RENEWABLE ENERGY

Speaking on the global push for energy transition with the adoption of renewable and cleaner energy sources, the CPPE Director said that fiscal incentives needed to be initiated in the renewable energy space to boost investment in the sector.

This incentive according to him,  could be in the form of tax incentives and waivers of import duty on renewable energy equipment, it added.

RAIL SYSTEM

“The rail system needs adequate security to rebound. Government needs to accelerate the security cover for the rail lines and the railway transportation system across the country.

MARITIME

He said the maritime sector of the economy is very important in the international trade process,

Dr. Muda noted that the maritime sector, which plays a very critical role in our import and export trade, is gross under-reported by the National Bureau of Statistics.

He said, “For instance, in the Q2 GDP report, the maritime sector [water transport] was said to have contributed a mere 2.4 billion Naira to the GDP out of N45.5 trillion GDP for the quarter. This is a contribution of a mere 0.01%.

“In the first quarter of 2022, the NBS recorded 0% contribution of the sector to GDP. In the GDP numbers, water transport is the only proxy closest to maritime. But maritime sector activities are beyond water transportation.

“We, therefore, appeal to the National Bureau of Statistics to engage with stakeholders in the maritime sector to ensure a proper capturing of the activities of the sector and the contributions of the sector to the national economy.”

He emphasised that the GDP data for the maritime sector has, over the years, been grossly underreported, adding that the contribution from that sector can improve the country’s GDP.