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“With Low Crude Oil Production, Nigeria Is Now Facing Double Jeopardy” – Fawibe

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“With Low Crude Oil Production, Nigeria Is Now Facing Double Jeopardy” – Fawibe

…As FG Sets Aside PIA, To Pay N4.6tr On Fuel Subsidy

Olushola Okunlade Writes

With all things considered, the Federal Government on Monday, soft-pedalled on its initial plan to remove subsidy on petrol, setting aside its much-trumpeted Petroleum Industry Act (PIA) to continue paying about N4.6 trillion provided crude oil price hovers around $85 per barrel.

Journalists had earlier reported last week that petrol may sell for N403 per litre, representing the current landing cost of the product, as against its current price of N165 from July 1, this year.

The Nigerian National Petroleum Corporation (NNPC) Limited had revealed that Nigeria consumes about 19.535 billion litres of petrol yearly, averaging 1.6 billion litres monthly. With about N241 now paid on every litre as subsidy, this brings yearly subsidy to about N4.6 trillion.

But in a reversal that may unsettle the petroleum industry, the Federal Government suspended indefinitely its planned fuel subsidy removal and will now amend the 2022 Appropriation Act to accommodate the new change to provide for subsidy payments from July 1, saying it is clear to even the blind and audible to the deaf that the situation of the country does not allow for that at the moment.

This was announced, yesterday, by the Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, in a meeting with lawmakers at the National Assembly. She explained that due to ongoing consultations, it was agreed that the planned removal of fuel subsidy should be shelved till further notice.

This action followed the pressure mounted by the Nigeria Labour Congress (NLC), which threatened to embark on a nationwide protest from January 27.

In the 2022 budget signed into law by President Muhammadu Buhari last month, the provision of petrol subsidy was till June 30, but NLC said fuel subsidy removal at this period of high inflation would be resisted.

In seeking a soft landing based on outcry from Nigerians, Ahmed, the Minister of State for Petroleum Resources, Timipre Sylva, and the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, met with the National Assembly leadership to amend the law to provide for an extension of subsidy provision beyond June 2022.

The Finance Minister said the government had initially planned to remove subsidies on petroleum products from July, a reasonable provision was made in the 2022 national budget for subsidy payment till June.

She said: “Sequel to the passage of the PIA, which indicated that all petroleum products would be deregulated, we amended the fiscal framework to incorporate subsidy removal.

“However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.

“President Muhammadu Buhari does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

“One of these measures include the roll-out of refining capacities of existing refineries and the new ones, which would reduce the number of products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for a subsidy from July to whatever period that we agreed was suitable for the commencement of the total removal,” she said.

Sylva said: “As far as I am concerned, at this point, it is a legislative duty. The law has been passed but there is no law that is cast in stone.

“It is clear to everyone that operationalising the law is not possible within six months framework that has been provided for and if that time frame provided for in the law is not feasible, then it is a legislative responsibility now to see what can be done in extending that time frame for it to be in the purview of the law.

“It is very clear to the blind and audible to the deaf that it is not feasible at this time to remove subsidy. I know that some naysayers or political pundits want to bring politics into it but it is not within the contemplation of this administration now to remove subsidy.”

Senate President, Ahmad Lawan, therefore, urged the organised labour unions in the country to shelve their proposed nationwide protests, as it was no longer necessary.

“There is need at one point to do away with subsidy but the President genuinely feel for Nigerians, particularly the most vulnerable. Significant arrangement for absorbing the shock that will come with the removal should be done and the timing is such that the impacts and consequences will not add to the hardship.”

He said the sympathy for Nigerians is not about NLC. “We are talking about every Nigerian. NLC is just an organised part of the system. Our concern is beyond NLC.

“I am taking this opportunity to speak to TUC and NLC to shelve this their plan to go on strike or demonstration. It is totally unnecessary. There is not going to be the removal of subsidy, so, let us not create unnecessary tension where there should be none. Please forget about the January 27 deadline.”

President Muhammadu Buhari had last year signed the PIA into law with provisions that deregulated the downstream sector. With the current development, the government may be altering its own law.

This is coming as the Federal Government, yesterday, engaged petrol marketers in Abuja, insisting conversion of cars to run on gas remained a viable alternative to subsidy removal.

Sylva noted that the government was doing everything possible to provide funding and enable an infrastructure that would fast-track the auto-gas policy.

Sylva said the country would convert one million public transport vehicles and install 1,000 refuelling centres within 36 months.

An energy expert, Michael Faniran, insisted that the reversal in the plan to remove fuel subsidy remained a step in the wrong direction.

Faniran, who noted that the national economy is suffering under the burden of fuel subsidy, said corruption opportunities under the fuel subsidy regime has been established by the government itself.

“Policy summersault by government always erodes investors confidence in any economy. Some investors would have been planning to take advantage of deregulation as provided in the PIA.

“Reversing this now means the provisions of the PIA would not be trusted by investors since the government could wake up any day to reverse any of the provisions,” he said.

Faniran noted that upcoming elections played a crucial role in the reversal of the subsidy, stressing that until the government can summon the political will, the country will continue to run around in circles on the subsidy regime.

An oil and gas lawyer, Emeka Okwuosa, noted that there is no best time to take the decision to remove the subsidy, adding that the country has only succeeded in postponing the evil day.

He also believed that the government halted the plan to buy the favour of Nigerians ahead of the upcoming elections.

“The postponement might be political. On one hand, we need complete deregulation for a seamless take-off of the PIA. We cannot keep the subsidy and expect a holistic impact on the positive effects of PIA. The government must have the political will to remove the subsidy,” he said, adding that the Dangote refinery coming on stream could provide succour.

Chairman/Chief Executive Officer, International Energy Services Limited (IESL), Diran Fawibe, said labour unions must be convinced and take the right decision instead of always fighting the removal of subsidies.

According to Fawibe, the government shares part of the blame on subsidy for not being able to fix refineries for over 20 years.

With low crude oil production, Fawibe noted that Nigeria is now facing double jeopardy, adding that the high crude oil price will return smuggling of products, as perpetrators are expected to smile to the bank.

He said: “If the government that has signed the PIA into law fails to implement it, who will take the government to court for violation? Let’s hope that the situation gets better and the government revert to full implementation of PIA in the downstream sector.”

The ruling party, All Progressives Congress (APC) has applauded the decision to suspend the planned removal of subsidies on petroleum products. APC, in a statement by its secretary caretaker committee, Senator John Akpanudoedehe, stated that the decision was in the best interest of Nigerians.

The party explained that the Federal Government took into consideration the fact that the removal of subsidy at this time would heighten inflation and cause undue hardship on the citizenry.

It noted: “Programmes and policies of government are meant to benefit the people. So, if the timing of the planned subsidy removal would cause hardship on citizens, then a review was necessary.”

The party commended President Buhari for always putting the welfare and wellbeing of Nigerians on the front burner through the implementation of programmes and policies.

The APC also commended the cordial relationship between the executive and the National Assembly, which has ensured good governance.

“Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed and the Senate President, Ahmad Lawan on the suspension of the planned subsidy removal,” it noted.

THE Nigerian Bar Association (NBA) has said the APC-led Federal Government suspended the planned petrol subsidy removal because of the forthcoming 2023 elections. NBA President, Olumide Akpata, made this known yesterday while speaking as a guest on Channels Television’s ‘Politics Today’ programme.

He said: “I would have loved to think that the decision to suspend subsidy is because the government cares so much about the people and it is a government that is listening to the cries of the people.

“However, something tells me that this has more to do with what is in the offing; an election is coming up and they (government) must probably have sat down and thought about it and told themselves that it would be suicidal at this point to take out subsidy going into an election which is around the corner.”

The NLC has, however, said there is no going back on the January 27 nationwide protest against the proposed fuel price increase. The NLC, in a post on its Twitter handle, said: “The January 27 nationwide protest against the increase of petrol pump price is sacrosanct, no retreat, no surrender… Aluta continua.

“Three days to go, a nationwide protest against the increase in petrol pump price. One day, the poor will have nothing else to eat but the rich. Fuel price on international rate, pay minimum wage on the international rate.”

Also, sources within the NLC told The Guardian in Abuja last night that labour does not buy into the suspension gimmick.

This comes as the NLC has written to the 36 states governors intimating them on why it is embarking on the one-day protest.

NLC stated that the protest is geared at alerting the government on the sufferings that Nigerians are going through and the additional trauma that Nigerians would be subjected to if the government goes ahead with the hike in the price of refined petroleum products.

NLC maintained that the proposed hike if it goes through, would induce and impose an unprecedented degree of hardship on Nigerian workers, their families and the generality of the populace.

It stated that the net and multiplier effects of such socio-economic dislocation especially with regards to a decent standard of living, productivity and national security are better imagined than experienced.

Meanwhile, the Trade Union Congress (TUC) has said its decision not to be part of the NLC protests is not a disagreement but choosing a different approach.

Secretary-General of TUC, Musa-Lawal Ozigi, told The Guardian that it chose to put its state councils on standby and that modalities have been put in place to ensure TUC members proceed on mass protests and strike as soon as the subsidy is removed. Additionally, he expressed support for the full implementation of the deregulation policy.

His words: “The NEC of NLC met and decided on the nationwide protest. The TUC was not part of the meeting. We are not an affiliate of the NLC. We are a trade centre on our own. The decisions of the NLC are not binding on us. NLC and TUC are allies and we remain one.

“We have chosen to put our affiliates on standby. On our part, we have said consistently since 2020 that we support deregulation that is backed with domestic refining capacity. That is our position. We believe that domestic refining capacity will provide jobs on a sustainable basis, revive the manufacturing sector and grow the economy.

“Also, the government must provide palliatives that are enduring and not the N5,000 transport allowance to 40 million unnamed poor Nigerians. Whatever palliatives the government wants to implement, it must carry labour on board.”

Professor Benjamin Osisoma, President of the Association of National Accountants of Nigeria (ANAN) told The Guardian that it is a good thing the government has listened to the voice of people because the condemnation of the policy has been unanimous.

“The people can only take as much as they can and you know that the burden of everyday living has not been easy on the average Nigerian. All we have seen is an increase in excise duty, an increase in VAT, an increase in this tax and that tax and now you want to increase the price of fuel. There’s no way these things can work.

“What I would the government rather do is to find a way we can generate an upswing in production by the private sector and ensure that every naira spent on subsidy adds value to the system.”

On his part, the Chairman, Online Hackney Practitioners Association of Nigeria, Mr Emeka Emerole, said the government has taken the right step. According to him, “before removing fuel subsidy, the government is supposed to give a long notice for the people to prepare their minds and come to terms with the new reality.”

THE pan-Yoruba socio-political organisation, Afenifere, also yesterday, faulted the action of the Federal Government to suspend the removal of fuel subsidy. The National Publicity Secretary of Afenifere, Mr. Jare Ajayi, said: “It is unfortunate that we can still be talking of fuel subsidy six years into the administration of President Buhari.”

According to Afenifere spokesman, Buhari and his political party told Nigerians when campaigning to be voted into power that fuel subsidy was a scam.

“They promised to do away with it if voted into power. Beyond that, the party and its candidates promised to revamp the then comatose petroleum refineries.

“Over six years after the party came to power, the amount being brandied for the subsidy has gone up considerably while none of the four refineries in the country is working,” Afenifere lamented.

The body maintained that Nigerians are not impressed by the government’s decision to postpone the subsidy removal till further notice.

“It did so not necessarily because it loves Nigerians, but because of the undisguised resolve of the people to resist such unhelpful step,” Ajayi said, submitting that “what President Buhari can do as far as petroleum in the country is concerned, is to get the refineries working. It should also bring the prices of kerosene, petrol, diesel and gas down considerably.”

EARLIER before the announcement by the Federal Government, Femi Falana, a Senior Advocate of Nigeria
(SAN), had warned the administration of President Buhari to drop the plan to remove subsidies on petroleum products.

Falana, who is the Interim Chair, Alliance on Surviving COVID-19 and Beyond, described the planned subsidy removal as anti-people, warning that the Buhari administration should jettison the plan in the public interest or be prepared for a popular uprising.

The senior lawyer made this known in a statement titled, ‘Why Nigerians should join the anti-poverty rallies’.

Falana said it is very disappointing that the Buhari regime has concluded plans to remove subsidies on petroleum products after failing to hasten the implementation of the autogas project.

The statement partly read: “Having failed to fast-track the implementation of the autogas project, the Buhari administration has concluded plans to increase the price of PMS notwithstanding its reverberating effect on the cost of goods and services in the country.

“Another justification for increase is that it will curb the smuggling of fuel from Nigeria to neighbouring countries. The implication is that the people of Nigeria are being punished for the criminal activities of smugglers.

“Since the actions of the Federal Government cannot be justified we are therefore compelled to call on the economically marginalised Nigerian people to participate in the rallies scheduled to hold throughout the country on January 27 and February 1, 2022, at the instance of the NLC as well as the progressive extraction of Civil Society Organisations (CSOs).

“The victims of the neoliberal economic policies of the Federal Government have nothing to lose but their chains.

“Since the rallies are designed to warn the Federal Government to stop further provoking the Nigerian people, it is hoped that all anti people’s economic policies will be jettisoned in the public interest. Otherwise, the regime should be prepared for a popular uprising if it goes ahead to remove the so-called full subsidy or under-recovery in June 2022, or thereafter.”

Energy

NNPC Board Chairman Commends Nigeria’s Participation At OTC 2022

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‘There’s Sufficient Petrol’, Don’t Panic To Buy, Says NNPC

Olushola Okunlade Writes

Senator Margery Chuba-Okadigbo, Chairman of the Board of the Nigerian National Petroleum Company (NNPC) Ltd., on Monday commended the Nigerian delegation at the 2022 Offshore Technology Conference (OTC), in Houston, Texas, United States.

Chuba-Okadigbo gave the commendation while declaring open the OTC Nigerian exhibition pavilion at the conference.

She expressed her excitement toward declaring the pavilion open, saying that it was a thing of joy and pride that Nigeria is well represented at the conference.

Reports have it that the theme of the Nigerian exhibition pavilion is: “Energy Transition and the Future of Africa”, organized by the Petroleum Technology Association of Nigeria (PETAN).

The OTC is a platform where energy professionals across the globe meet to exchange ideas and opinions to advance scientific and technical knowledge for offshore resources.

“I am delighted to declare this exhibition open. Again, it’s a thing of joy and pride to see you Nigerians well represented in foreign countries,” she said.

Earlier in his opening remarks, the Chairman of PETAN, Mr. Nicolas Odinuwe, said that the theme was carefully chosen to “reflect the current realities in African oil and gas.”

Odinuwe called on Nigerian oil and gas industry leaders to continue to echo PETAN’s calls to deepen Nigerian content as always and implored the NNPC Ltd. board and others to indulge the association.

“OTC means different things to different people. But thanks to PETAN’s focused participation.

“PETAN and Nigeria have built capacities, capabilities, and visibility. PETAN has been the host of the Nigerian Pavilion for over 15 years.

“And we have been fully supported by the NNPC (now NNPC Limited) who are in transition.

We are here to continue to propagate, advocate and advance technology that has led to Nigeria being the only country in Sub-Saharan Africa with a robust exploration and production service industry,” he said.

According to the chairman, OTC gives attendees access to leading-edge technical information.

He said: “The benefits of the OTC 2022 event include showcasing companies’ capabilities to over 1,000 delegates and over 250 companies in the oil and gas industry.

“Also to give exhibitors the chance to promote their products and services to operators and contractors in the local region.

“Other benefits include gaining access by organizations to the latest industry news, a presence at one of the world’s largest oil and gas events and access to networking opportunities with professional contacts from across the world.

“Networking with the upstream, midstream, and downstream organizations as well as high profiled government officials and key decision-makers in the industry.

” The conference will give participants the opportunity to build and establish new leads as well as entrench a global presence in the industry.

“It will enable them to get familiar with competitors’ capabilities to stay ahead in the industry.”

Odinuwe said that PETAN had been responsible for leading and hosting the Nigerian government agencies, stakeholders, oil and gas companies, and investors at the OTC yearly.

He said that among the reasons for OTC was to deliver a unique experience for exhibitors and delegates to interact with global professionals as they share their insights on technological advances, energy transition, safety, environmentally focused solutions, and economic and regulatory impacts of the offshore energy sector.

“Organisations’ attendance will create a chance to develop business relationships and tap into emerging regions that are vital to offshore development as well as obtaining recognition necessary for growth and visibility to thousands across the globe,” he added.

He recalled that at the OTC 2019, Nigeria had the fifth-largest representation of over 60 participating countries.

“The value of participating organizations’ presence cannot be overestimated as they stand a chance to project their activities to investors and stakeholders spanning different countries.

The event will feature, among others, the formal opening of the Nigerian exhibition pavilion in the NRG Park; the luncheon and panel sessions on the Nigerian energy and supportive industries; the Nigerian Industry Awards Dinner and Cocktail; sideshows of Nigerian culture displays and entertainment; technical sessions and networking golf event,” he said.

PETAN is an association of indigenous Technical Oilfield Service Companies.

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Nigeria Oil Firms Spill 1,545 Barrels Of Crude Oil In First Quarter 2022

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Nigeria Boosts Oil Production By 200,000b/d

Oil and gas companies operating in the Niger Delta spilled 1,545 barrels of crude oil, an equivalent of 246, 000 liters, in three months, from January to March 2022, according to data obtained from the National Oil Spill Detection Response Agency, NOSDRA.

Although this indicates 52.6 percent less than the 3,262 barrels of crude oil spilled in the corresponding period of 2021, the development reflects the severe impact of environmental pollution on the nation’s economy due to crude oil exploration.

On a company by company basis, the report revealed that Heritage Energy Operational Service Limited recorded the highest spills, with 404.3 barrels of crude oil spilled in 31 incidents; followed by Shell Petroleum Development Company, SPDC, with 404.3 barrels of crude oil spilled in 31 incidents.

Others on the list include Empire energy, 314.47 barrels of crude oil spilled in one incident; Eroton Exploration and Production Limited spilled 69.57 barrels of crude oil in one incident; Nigerian Agip Oil Company, NAOC, spilled 49.7 barrels of crude oil in 16 incidents; while Enageed Resource Limited spilled 15 barrels in two incidents.

While the value of the crude oil spilled might not be huge, the damage to the environment, the disruption to the livelihoods of individuals within the impacted communities, and the manpower and financial resources required to clean up the spill and return the environment to its original state, run into billions of dollars.

Reacting to the development, the former Chairman, Petroleum Association of Nigeria, Bank-Anthony Okoroafor, said, “It cost millions of dollars to clean a barrel of a crude oil spill.

The cost of managing oil spillage is very huge, it cannot be quantified because the cost to human life is more. Environmental degradation caused by the spillage affects human life. A lot of people in the next 10 years or more will suffer from serious lungs problems and cancer among others.

According to Duke Energy Distinguished Professor of Environmental Engineering and Science, Hilary Inyang, who has completed a scientific study of the areas, “A deep analysis should show that it would cost more than $50 billion to clean up more than 2,500 sites in the entire Niger Delta, even with the recognition that there have been more spills than spill sites.

Speaking further, he said, “It would also take more than 50 years, even if that money was available. My back-of-the-envelope estimate is that for Ogoniland sites alone, about $6 billion are needed but risks can be reduced to tolerable levels with $3 billion.”

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Adulterated Fuel: Reps Clear Oando, MRS, Others, Ask SON To Test For Methanol

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Adulterated Fuel:

By Moninuola Sulaiman

The House of Representatives has exonerated the oil marketers accused of importing adulterated fuel into the country

The lower chamber cleared Duke Oil, MRS Oil and Gas, Oando Oil and Emadeb, Energy/Hyde/AY Maikifi/Britannia-U Consortium, noting that they did not commit any offence.

The House had earlier asked the NNPC Limited to suspend the four oil companies from the importation of PMS and other products pending the outcome of the investigation.

The decision to exonerate the oil marketers followed the consideration of the report of the Committee on Petroleum (Downstream) by the Committee of the Whole.

The committee recommended that the marketers did not commit any crime because they were exonerated by the NNPC Limited.

Two weeks ago, the lower chamber rejected this same report because it did not address the fate of those that imported the adulterated fuel into the country. Therefore, the House ruled that the committee should rework the report.

Background To Adulterated Fuel

In February, the government had detected a high quantity of methanol in a batch of PMS imported into the country. The attempt to recall the products led to fuel scarcity across the country.

NNPC Limited, which coordinates the government’s direct sale and direct purchase fuel policy, listed the four oil marketers for the importation of the adulterated fuel. However, MRS dismissed the claim by NNPC Limited, stating that NNPC Limited is the sole importer of PMS.

In another twist, Emadeb, Energy/Hyde/AY Maikifi Consortium also accused Britannia-U of importing the fuel on behalf of NNPC Limited.

It was expected that the intervention of the House would end the accusation and counter-accusation trailing the importation of the contaminated products.

When the Group Managing Director of NNPC Limited, Mele Kyari, appeared before the investigative panel, he said the marketers had refused to bear the liability for importing the methanol contaminated fuel.

Mr Kyari said the marketers claimed they imported the specification requested by the country. He added that Nigeria does not test for methanol.

New Recommendations

The Committee made seven recommendations to the House. It asked the Standard Organisation of Nigeria to include the test for methanol for future imports.

NNPC Limited was also asked to ensure a local supply of 90 million litres of PMS for local consumption.

The others are: “That the Hon. Minister of Petroleum Resources should expedite action for completion of the rehabilitation work and ensure upgrading of the major refineries at Warri, Port Harcourt and Kaduna to meet AFRI5 Specification to boost local refining and reduce over-dependence on imported PMS into Nigeria to avert reoccurrence.

“Minister of State, Petroleum Resources should initiate the adoption of the 2017 PMS Standard (NIS 116:2017) as approved by the Standards Organization of Nigeria (SON) which include testing for Methanol for future importation of the product into the country to mitigate reoccurrence.

“The Federal Government should position the Standards Organisation of Nigeria (SON) to implement its mandate to the latter by subjecting all imported white Petroleum and other products to the Offshore conformity assessment and also resume routine quality control of them and other products imported into the country at our various Seaports, Airports and Borders throughout Nigeria as shrined in the Standards Organisation of Nigeria enabling Act of 2015. This will finally address the reoccurrence of the importation of off-specification PMS and other substandard goods into Nigeria;

“Based on the Nigerian National Petroleum Company Limited exoneration, the Four(4) Oil Marketers/Importers (Duke Oil, MRS Oil and Gas, Oando Oil and Emadeb, Energy/Hyde/AY Maikifi/Britannia-U Consortium) did not commit any offence, therefore not recommended for suspension;

‘The Federal Government is to note that the Standards Organisation of Nigeria (SON) mandate is also specifically enshrined in item 62 (d) of Part I of the Second Schedule (Exclusive Legislative List), to the 1999 Constitution;

“The Regulatory Authority in this case Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) should ensure proper housekeeping by working with Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Major Oil Marketers Association of Nigeria (MOMAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) in ensuring water is drained regularly out of the tanks in the Tank Farms, Tankers (trucks) and underground tanks at the service stations;

“The Nigerian National Petroleum Corporation (NNPC) Limited shall maintain local supply and distribution of 90 Million litres daily across the country until normalcy is restored.

The recommendations were adopted without any objection by the members of the House.

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