NSE Market Indices
Record 0.26% Growth
The market
indices of the Nigerian Stock Exchange (NSE) on Monday recorded marginal
growth, appreciating by 0.26 per cent due to marginal gains posted by some blue
chips. The News Agency of Nigeria (NAN) reports that the market capitalisation
grew by N23 billion or 0.26 per cent to close at N9.381 trillion against N9.358
trillion achieved on Friday. Also, the All-Share Index which opened at
27,246.88, increased by 69.64 points or 0.26 per cent to close at 27,316.52.
NAN reports that Nestle recorded the highest price gain to lead the gainers’
table, growing by N5.02 to close at N825.02 per share. It was followed by
Dangote Cement with a gain of N2.99 to close at N183, while Nigerian Breweries
appreciated by N2.42 to close at N132.92 per share. Unilever gained N1.75 to
close at N36.75, while Lafarge Africa increased by N1.72 to close at N55 per
share. Conversely, Forte oil topped the losers’ chart, dropping by N8.26 to
close at N161.30 per share. Seplat trailed with a loss of N2 to close at N240
and Guinness dipped N1.50 to close at N93.50 per share. CAP shed N1.40 to close
at N27.30, while Conoil declined by N1.19 to close at N22.77 per share. Also,
the volume of shares traded improved by 12.04 per cent as investors staked
N2.05 billion on 213.64 million shares transacted in 2,978 deals. This was in
contrast with a total of 190.68 million shares valued at N1.33 billion traded
in 2,978 deals on Friday. Zenith Bank was the toast of investors, accounting
for 45.79 million shares worth N696.85 million.
Inflation May Hit
17.4% As Costs Increase
Having risen
to a six- year high of 16.5 per cent in June, analysts said they expected
inflation rate for the month of July to rise further to 17.4 per cent
which would be the highest in 11 years as low foreign exchange supply and
energy shortage push costs higher. Inflation had risen for the fifth consecutive
time in June reflecting higher costs of goods and services that was triggered
by a weaker naira and higher fuel prices. Since the commencement of the
flexible foreign exchange policy of the Central Bank of Nigeria(CBN), the value
of the naira had fallen to N350 from N197 which it had been pegged for 16
months. The naira depreciated significantly in all the forex market segments,
as the anticipated level of forex inflow from international investors has not
been forth coming. With the shortfall in supply, the market priced in the new
uncertainty driving the parallel market rate to a low of N400 before
stabilising at N395. The average exchange rate in the interbank market
depreciated by 28 per cent in July from June’s average of N232.85 to the
dollar. This had affected the prices of goods and services in an import
dependent country which spiraled upwards. According to analysts at Financial
Derivatives Company Limited (FDC), factors driving inflation include the lower
than expected supply of forex, a weaker naira and sporadic supply shortages in
the energy market. Likewise, analysts at FSDH Merchant Bank who believed
inflation would rise to 17.35 per cent, said they “expect the increase to come
from the increase in the prices of food items and other non-food items as a
result of the depreciation in the value of the naira.”
Investors lose
N50.9bn as market capitalisation drops to N9.358trn
Investors in
the nation’s stock market lost N50.9 billion last week as market capitalisation
dropped to N9.358 trillion on Friday from N9.408 trillion it opened during the
week. In the same vein, another stock market gauge, the All Share Index
depreciated by 0.65 per cent to close the week under review at 27,246.88
points. Also, all other Indices on the NSE finished lower during the week under
review, with the exception of the NSE Industrial Goods Index that gained 0.66
per cent, while the NSE ASeM Index closed flat. A turnover of 1.361 billion
shares worth N10.711 billion in 16,070 deals were traded last week by investors
on the floor of the exchange in contrast to a total of 1.185 billion shares
valued at N13.033 billion that exchanged hands penultimate week in 18,548
deals. The Financial Services Industry (measured by volume) led the activity
chart with 1.237 billion shares valued at N7.913 billion traded in 9,544 deals;
thus contributing 90.87 per cent and 73.8 per cent to the total equity turnover
volume and value respectively. The Conglomerates Industry followed with 46.182
million shares worth N77.192 million in 637 deals. The third place was occupied
by the Consumer Goods Industry with a turnover of 38.102 million shares worth
N1.372 billion in 2,907 deals. Trading in the top three equities namely – Wapic
Insurance Plc, FBN Holdings Plc and Guaranty Trust Bank Plc (measured by
volume) accounted for 666.721 million shares worth N5.064 billion in 3,205
deals, contributing 48.99 per cent and 47.27 per cent to the total equity
turnover volume and value respectively.
16th
August 2016
NSE market
capitalisation improves further by N25bn
Trading
activities on the Nigerian Stock Exchange on Tuesday sustained a positive trend
with the market capitalisation improving by N25 billion. The market
capitalisation which opened at N9.381 trillion rose by N25 billion or 0.27 per
cent to close at N9.406 trillion. In the same vein, the All-Share Index rose by
72.50 points or 0.27 per cent to close at 27,389.02 in contrast with N9.381
trillion achieved on Monday. Total led the gainers’ table, growing by N8 to
close at N248 per share. Nigerian Breweries came second having chalked N1.48 to
close at N134.40, while Guaranty Trust Bank appreciated by 43k to close at
N24.59 per share. Zenith Bank increased by 25k to close at N15.25 and Okomu Oil
also grew by 25k to close at N36.25 per share. On the other hand, Presco topped
the losers’ chart, shedding N1.86 to close at N36.96 per share. Conoil trailed
with a loss of N1.12 to close at N21.65 and Nestle dipped N1.02 to close at
N824 per share. Ecobank Transnational Incorporated dropped by 26k to close at
N10.56, while Champion Breweries dropped by 25k to close at N2.85 per share.
Zenith Bank emerged the most traded equity, accounting for 67.05 million shares
worth N1.02 billion. It was followed by Access Bank with an exchange of 46.72
million shares valued at N259.26 million and UBA sold 15.65 million shares
worth N67.62 million. Investors bought and sold 12.94 million shares of FBN
Holdings valued at N40.39 million, while Sterling Bank exchanged 12.07 million
shares worth N12.29 million. In all, a total of 235.89 million shares valued at
N2.23 billion were exchanged by investors in 3,512 deals.
Naira records
slight gain, closes at 393/dollar
The naira
recorded marginal gain at the parallel market on Monday and closed at 393
against the United States dollar, up from 397 on Friday. The local currency,
which had fallen to 400/dollar last Friday, traded lower last week. The naira
closed at N505 and N435 against pound sterling and euro respectively at the
parallel market on Monday, the News Agency of Nigeria reported. At the Bureau
De Change segment of the foreign exchange market, the naira closed at N385,
N505 and N420 against the dollar, pound sterling and euro, respectively. The
naira appreciated at the official interbank market to close at N317.34, from N320.25
posted on Friday. Traders at the market said that the demand for the greenback
was still on the high side. NAN reported that the market was eagerly awaiting
the sale of forex by banks to the BDCs during the week. Meanwhile, the
interbank overnight lending rate had jumped to 23 per cent on Friday from 10
per cent recorded in the previous week. This came after the Central Bank of
Nigeria sold Treasury bills at higher yields to lure foreign investors. The CBN
has been offering Treasury bills at high rates to attract offshore flows into
the country. The country has been hit by the fall in oil prices, a development
that has prompted foreign players to flee bond and equities markets. The CBN
has been selling hard currency almost on daily basis. The country is in the
middle of its worst crisis in decades as a slump in oil revenues hammers public
finances, causing chronic dollar shortages and triggering a contraction in the
economy.
17th August 2016
BDCs: CBN increases
dollar sale to $50,000
The Central
Bank of Nigeria has approved an increase in the maximum amount that could be
sold to the Bureau De Change operators from $30,000 to $50,000 per week. The
decision was taken at the Bankers’ Committee meeting, which was held at the
headquarters of the CBN on Tuesday in Abuja. The move is part of the measures
aimed at making more foreign exchange available to the BDCs as well as assist
in bringing down the huge margin between the naira and the dollar. The
Director, Banking Supervision Department, CBN, Mrs. Tokunbo Martins, addressed
journalists shortly after the meeting. She was accompanied during the briefing
by the Managing Director, United Bank for Africa, Mr. Kennedy Uzoka; MD,
Zenith Bank Plc,Mr Peter Amangbo; MD, Jaiz Bank Plc, Mr Hassan Usman, and the
CBN acting Director, Corporate Communications, Mr. Isaac Okoroafor. Some of the
issues discussed at the 328th bankers committee meeting were the state of the
economy, financial inclusion and financial literacy, savings mobilisation, and
foreign exchange management. Uzoka, who spoke on the decision taken by the
committee on the sale of dollar to the BDCs, said the move was informed by the
fact that the country was in a stage where a lot of dollar would be needed to
meet financial obligations of overseas students. Apart from this, he said it
was imperative to also increase the weekly sale of dollars to BDCs in order to
meet the rising demand of those traveling abroad for business trips.
NAICOM bars
insurers from selling products through banks
The National
Insurance Commission has barred all underwriting companies from selling their
products through the banks and other financial institutions. The Commissioner
for Insurance, Mr. Mohammed Kari, said this during the investiture ceremony of
the Managing Director, Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha,
as the 22nd chairman of the Nigerian Insurers Association in Lagos on Tuesday.
Kari said that the commission had been in discussion with the apex bank on the
bancassurance (selling insurance products through bank networks) distribution
channel for some time now. “However, in a letter received last week, the CBN
asserted that NAICOM was not in a position to license banks and thus we could
not go ahead with the arrangement for now,” he said. The commissioner said that
NAICOM would continue to engage the CBN until all the grey areas were resolved.
Kari added , “The second, however, is that from today, all relationships the
commission had hitherto accommodated where insurance companies paid
commission/fees to banks for insurance transactions, referral or introduction
in any guise are no more valid. “Insurance companies utilising or intending to
utilise any institution including banks, airlines, online or web-based
aggregators shall ensure that those institutions have been licensed by the
commission as we have resolved to ensure strict compliance and impose
appropriate sanctions on erring insurance institutions. You are warned
accordingly.” The commissioner said that the NIA made a right choice of
leadership by choosing Efekoha to lead the association in its efforts to take
the industry to greater heights.
NUT Microfinance
bank records N154m profit in 5 yrs
The Endwell
Microfinance Bank, belonging to the Niger State Branch of the Nigeria Union of
Teachers (NUT), has recorded N154, 192,698.00 profits within a period of five
years. The bank’s total audited profit as at December 2015, the Daily Trust
learnt, was N88, 5000,000.00 while between January and July 2016 it netted N66,
107,599.00 in profit. The President, Niger State Teachers Multipurpose
Cooperative Union (CNSTEMCU), Comrade Labaran Garba, who disclosed this,
yesterday in Minna, said that the feat made the bank the best microfinance bank
in the state.
18th
August 2016
FG borrows N110bn
via bonds
The Federal
Government on Wednesday at an auction raised N110bn worth of bonds maturing in
2021, 2026 and 2036, the Debt Management Office said. According to DMO’s
auction result obtained from its website on Wednesday, it sold N40bn of 2021
paper at 14.50 per cent. It also sold N30bn of 2026 paper at 12.50 per cent and
N40bn of 2036 paper at 12.40 per cent, the News Agency of Nigeria reported. The
summary stated that an additional N109.5bn of the 14.50 per cent July 2021
bonds was allotted on non-competitive basis. Subscriptions from investors for
the July 2021 bond, which was reopened, stood at N74.37bn, while that of
January 2026, which was also reopened, stood at N71.06bn. Subscriptions for the
March 2036 bond which was also reopened stood at N64.86bn. The DMO issues
sovereign bonds monthly to support the local bond market, create a benchmark
for corporate issuance and fund its budget deficit. The Federal Government said
it would borrow about N900bn locally to finance part of the N2.2tn
deficits in its 2016 budget. Meanwhile, the Federal Government imported $227m
of sugar in the first seven months of this year, the Central Bank of Nigeria
said, Bloomberg reported.
Naira down by 0.16%
at interbank market
The naira
depreciated by 0.16 per cent today at the spot foreign exchange (FX)
market to close at N314.14 in contrast to yesterday’ appreciation of 1.16
per cent when N313.65 was exchanged for one dollar according to trading
information from the Financial Market Dealers Quote (FMDQ). At the parallel
market, naira was bought from market operators at N388 and sold at N394
compared to previous day’s rates of N390 and N394 respectively, the Euro was
bought at N425 and sold at N430 also in contrast to previous day’s rates of
N423 and N437 while the naira slumped to the Pound Sterling having been bought
at the rate of N497 and sold at N505 compared to Tuesday’s rates of N495 and
N500. The Central Bank of Nigeria’s rates as obtained from its website showed
that the US Dollar was bought at the rate of N308 and sold at N309, compared to
previous rates of N308.8 and N309.8, while the Pounds Sterling was bought at
the rate of N400.6 and sold at N401.9, also in contrast to Tuesday’s rates of
N400.7 and N402 respectively. The Euro was bought at N347.2 and sold at N347.8
compared to previous day’s rates of N348.5 and N349.8 respectively. At the end
of the Bankers’ Committee meeting in Abuja on Tuesday, the Managing Director of
UBA, Kennedy Uzoka, told journalists that the CBN decided to increase the limit
to drive down the price of getting FOREX.
Firms Lose N51bn In
2016 To Rising Overhead Cost
An
industrialist, Mr Adeyemi Bello, has disclosed that four major blue-chip
Nigerian companies lost as much as N51.86 billion in the first half of 2016 as
a result of increasing cost of doing business. Industrialists have consistently
complained of the cost of generating their own power and high interest
rate among others, noting that the hope of the manufacturing sector was getting
bleaker by the day as their earnings dim. He stated that the firms were
grappling with input cost pressure and weak consumer purchasing power while
hope for improved earnings in the second half of 2016 were fading away. Nestlé
Nigeria Plc, Nigerian Breweries Plc and Lafarge Africa all suffered combined
profit losses to the tune of N51.86 billion in the first half of the year. “In
the period under review, the companies struggled between balancing rising input
cost pressures and passing the inflationary pressures on already constrained
consumers by raising the prices of some products during the period. Some of the
input cost pressures being encountered by many manufacturers border on foreign
exchange losses on dollar loans, the inability to access foreign exchange, the
high cost of production as well as poor electricity supply and tariff hike.
“Others are prolonged gas supply shortages across Nigeria, which forced
companies to rely on the more expensive backup, low pour fuel oil (LPFO),
monetary policies and constrained consumer purchasing power,” he said.
Stock Market Gains
0.18%
Bullish
sentiments persisted in the domestic equities market, following sustained
interest in large cap stocks. On Wednesday, the All- Share- Index gained 48.23
absolute points or 0.18 per cent to close at 27,437.25 points. Similarly, the
market capitalisation gained N17 billion to close at N9.423trillion. The
performance further cut the year-to-date losses to 4.38 per cent.
Analysts said that the rally seen could be attributed to Guaranty Trust
Bank half year, 2016 results with interim dividend pronouncement of 25 kobo per
share. According to them, GTBank result pronouncement and some positive
outlook on some large cap stocks helped sustain the market through a third-day
uptrend in a row. They also noted that with the high volume and market breadth,
the market for today may continue with its uptrend. Market breadth was
positive, with 22 gainers versus 17 losers. ETI recorded the highest price gain
of 8.71 per cent, to close at N11.48 per share. Eterna and NPF
Microfinance Bank gained 4.17 per cent each to close at N2.50 and N1 per share,
respectively. Airservice went up by 3.29 per cent to close at N2.20, while
Continental Reinsurance appreciated by 3 per cent to close at N1.03 per
share. On the other hand, CCNN led the losers’ chart by 8.94 per cent, to close
at N6.01 per share. International Breweries and Ikeja Hotel shed 5 per cent
each to close at N19 and N1.71 per share, respectively.
GTBank Records 45%
Profit Growth, Declares 25k Interim Dividend
Guaranty
Trust Bank Plc has declared a growth of 45 per cent in its profit- before- tax
and an interim dividend of 25 kobo per share to its shareholders for the
half year result ended June 30, 2016. A review of the half year performance
released on the Nigerian Stock Exchnage (NSE), yesterday in Lagos showed that
the bank recorded positive growth across all key financial metrics, a testament
to the cutting edge strategy of the bank. The bank’s gross earnings for the
period grew by 37 per cent to N209.9 billion from N153 billion reported in the
June 2015; driven primarily by growth in fee & commission income as well as
foreign exchange income. Profit- before- tax stood at N91.38 billion,
representing a growth of 45 per cent over N63.11 billion recorded in the
corresponding period of June 2015. The bank’s loan book grew by 14 per cent
from N1.37trillion recorded as at December 2015, to N1.56 trillion in June 2016
with corresponding growth in total deposits which increased by 23 per cent to
N2.01 trillion from N1.64 trillion in December 2015. Further analysis revealed
that the bank closed the half year ended June 2016 with total assets and
contingents of N3.42 trillion and shareholders’ funds of N45 billion. The
bank’s non-performing loans remained low and within regulatory threshold at
4.39 per cent with adequate coverage of 170.1 per cent.
19th
August 2016
Naira sinks to
all-time low of 365.25/dollar
The naira
traded at an all-time low of 365.25 to the dollar on Thursday in a single
interbank market trade of $1m, Thomson Reuters data showed. Interbank trading
started two hours after the market opened and offered the currency sharply
lower against the dollar. A total of $13m had been traded by 1235 GMT. The
naira plunged to a record low and forwards rose, suggesting traders expect
further depreciation, as the economy struggles amid a dearth of dollars.
Three-month non-deliverable forward contracts climbed by 4.1 per cent to 364.5
against the greenback, Bloomberg reported. Contracts maturing in a year rose by
3.5 per cent to 403, also a record. The local currency has slumped by 38 per
cent since the Central Bank of Nigeria ended a 16-month peg of 197-199 per
dollar on June 20. The capital controls needed to defend the fix sent foreign
investors fleeing and took the economy to the brink of recession. The
International Monetary Fund forecasts a 1.8 per cent contraction of the economy
this year. “There’s still a lot of demand for dollars,” Craig Thompson of Nyon,
Switzerland-based brokerage Continental Capital Partners SA, said in a
telephone interview. “The central bank has been supplying them. They sold some
at 309 on Wednesday to keep the rate down. They’ve been selling dollars most
days to keep it going above 320 and have done their best to try and keep it
closing around 310. Managing the exchange rate is difficult because there’s
pent-up demand,” he added.
Stock Market Drops
Marginally By 0.06%
The Nigerian
stock market declined marginally by 0.06 per cent at the end of yesterday
trading activities after being on rally for three consecutive days. The All
Share Index shed 16.26 absolute points or 0.06 per cent to close at 27,420.99
points. Similarly, the market capitalization shed N5 billion to close at N9.418
trillion. Market breadth was negative, with 16 gainers versus 18 losers. NEM
Insurance recorded the highest price gain of 5 per cent, to close at 84 kobo
per share. Eterna gained 4.80 per cent to close at N2.62, while Livestock
appreciated by 4.40 per cent to close at 95 kobo per share. Honeywell
Flour went up by 3.79 per cent to close at N1.37, while Diamond Bank
appreciated by 3.70 per cent to close at N1.12 per share. On the other
hand, UAC-Property led the losers’ chart by 4.87 per cent, to close at N3.71
per share. Union Bank shed 4.82 per cent to close at N3.95, while Skye Bank and
Transcorp declined by 4.55 per cent each to close at 63 kobo and N1.05
per share, respectively. While Wema Bank depreciated by 4.48 per cent to
close at 64 kobo. Total volume traded went down by 5.31 per cent to 313.276
million shares, valued at N3.60 billion, and traded in 2,883 deals.
Transactions in the shares of UBA topped the activity chart with 120.73 million
shares valued at N507.7 million. Diamond Bank followed with 36.84 million
shares
Oyo Seals Firms
over Alleged Tax Default
The Oyo State
Inter-ministerial Tax enforcement team on Wednesday and Thursday sealed about
39 firms including banks, private hospitals, companies, filling stations within
Ibadan metropolis for defaulting in paying their taxes to government coffer.
Among the firms sealed were Shoprite Dugbe, Unity Hospital Orogun, Ojulowo Eye
Clinic, Victory Medical Centre, Grath Nigeria limited, Jericho Idi-Ishin,
Ibadan; Dabil Global Ventures, Apata, Ibadan; Funbel Diagnostic Centre,
Challenge; Bubble Plus Recreation Centre, Ring Road, Eco Groove, Challenge and
some commercial banks. The action of the government was sequel to the
announcement made by the government to embark on an enforcement of payment of
taxes, levies duties and other rates by corporate organisations and
individuals. The state government had embarked on the sensitisation and
engagement program for citizens, traders, artisans and business owners in the
state on the need to pay their taxes in order to improve the Internally
Generated Revenue (IGR) of the state. The Special Adviser to the Governor Board
of Internal Revenue, Mr. Biyi Oloko said this became necessary because many of
the companies failed to pay government’s rates, taxes, development levy and
renewal of business premises registration fees despite all the notices served
on them, noting that, this contravenes the provision of Section 8 of the State
business/professional premises law of 1996.
Oil and Gas/Power Sector
16th
August 2016
Oil rises to $48
ahead of OPEC meeting
Global oil
benchmark, Brent crude, rose on Monday to its highest level in a month on
rising speculation that major producers may work out ways to support prices in
an oversupplied market. Brent, against which half of the world’s oil is priced,
rose by 2.6 per cent to $48.20 per barrel as of 6:05pm Nigerian time. This came
as indication emerged that the Organisation of Petroleum Exporting
Countries could revive talks on freezing oil output levels when it meets
non-OPEC nations next month. Nigeria’s output hit its lowest in over two
decades this year due to attacks on oil sites, and Libya is pumping a fraction
of the pre-conflict level – raising the question of what level they should
limit supplies at. While Nigeria supported April’s freeze initiative, Libya declined
to join the talks. OPEC members will meet on the sidelines of the International
Energy Forum, which groups producers and consumers, in Algeria on September
26-28. Top exporter, Saudi Arabia, appears to favour higher prices, although
Iran, Iraq and Russia present obstacles to a deal, according to Reuters. Saudi
Arabia sharply raised expectations for a global production deal, with its
Energy Minister, Khalid al-Falih, saying the country would work with OPEC and
non-OPEC members to help stabilise oil markets. “The comments by the Saudi
energy minister give a positive indication that they are willing to go for a
freeze deal but the question remains: on what level?” said an OPEC source from
a key Middle Eastern producer. “Will the freeze be at January levels? And what
about Iran? And then there is Nigeria, which has lost a lot of production since
January,” the source added.
17th
August 2016
Chevron spends $3.6
billion on local content
Chevron
Nigeria spent $3.6 billion on Nigeria content in 2015 as part of its commitment
to local capacity building in boosting local economies and creating job opportunities.
The company said in its 2015 Corporate Responsibility Report that it
consistently reserves significant portions of job scopes to benefit indigenous
companies and community contractors from areas close to its operations.
According to the report, Chevron established the first and only simulation
training facility for operations and maintenance training in Nigeria, which is
operated by a local contractor. It said that the company also supported the
upgrade of existing local plants and facilities to drive in-country
fabrication. The company stated: “50 young Nigerians were trained in Offshore
Facility, an in-country marine training school which Chevron is supporting with
a $1 million scholarship to Nigerian Seamen over a period of five years.
Speaking at the global level, Chevron’s Chairman of the Board and Chief
Executive Officer, John S. Watson, disclosed that over the past 10 years, the
company has made approximately $1.9 billion in social investments in local
communities. Watson said that in 2015, the company advanced its strategic
programs and partnerships with more than $233 million in global social
investments. We focused these investments in three core areas—health, education
and economic development, to develop skilled workers, improve access to health
care, and boost local and regional economies.
18th
August 2016
FG Approves Four
Oil Wells, 13% Derivation for Lagos
The federal
government has said that four of the five oil wells discovered in Badagry
legitimately belong to Lagos State, for which the state would be entitled to 13
per cent derivation from the Federation Account. However, it disclosed that Aje
3 oil well falls beyond the 200-mile isobaths and therefore cannot be
legitimately attributed to the state. The Chairman of the Indices and
Disbursement Committee, Revenue Mobilisation Allocation and Fiscal Commission
(RMAFC), Alhaji Aliyu Mohammed, disclosed this during a working visit to the
state governor, Mr. Akinwunmi Ambode, at the State House, Alausa, wednesday.
Mohammed visited the governor alongside other members of the committee
comprising Mr. Ken Kayama, Ambassador Polycap Azige, Alhaji Bello Usman
Maitambari, Dr. Rafiq Ogunbambi and Mrs. Martina Odom. Mohammed said the
revenue allocation commission set up an Inter-Agency Technical Committee which
comprised the commission pursuant to its constitutional mandate. He explained
that the main purpose of the working visit was to verify crude oil and gas
production from the Aje oil wells for the purpose of disbursement of 13 per
cent derivation to the state in line with the constitution. The chairman
explained that the commission and members of the technical committee had “to
embark on this working visit to conclude its assignment”. He added that the
technical committee comprised representatives from the Department of Petroleum
Resources (DPR), Office of the Surveyor General of the Federation and the
National Boundary Commission (NBC) to determine the location of the Aje oil
wells off the Badagry coast.
Power: Price of gas
rises by 60%
Following the
free fall of the naira against the United States dollar, the cost being
incurred for the purchase of gas for power generation has risen by about 60 per
cent, our correspondent has learnt. Gas for power generation is denominated in
the US dollar but power generation firms pay the naira equivalent. The Federal
Government had, through the Nigerian Electricity Regulatory Commission, in 2014
approved a new gas-to-power pricing benchmark of $2.50 per thousand cubic feet
from $1.5 per mcf, taking effect from January 1, 2015. Until June 20,
2016, the official exchange rate of the naira to the dollar was pegged at
N197-N199/$. But following the liberalisation of the foreign exchange market,
the naira has plunged to record lows in recent days. The naira closed at
314.14 to the dollar on Wednesday at the interbank market. The Chief Executive
Officer, Eko Electricity Distribution Company, Mr. Oladele Amoda, said, “Gas
cost for power generation is denominated in dollars. “It is paid for in naira
at the prevailing exchange rate. This creates more liquidity gap in the power
value chain. Discos’ revenue shortfall is about N800bn and if the volatile
exchange rate and low level grid power are considered, there will be a further
dip by N400bn, making a total of about N1tn. Amoda said the situation would
slow down further investment in the sector, and network improvement and
metering, adding, “Discos need upward review of tariff now.”
19th
August 2016
Oil price hits $50,
highest in eight weeks
Global oil
benchmark, Brent crude, hit an eight-week high on Thursday as the world’s
biggest producers prepared to discuss a possible freeze in production levels.
Brent, against which half of the world’s oil is priced, rose by $0.84 to $50.69
per barrel as of 7:58pm Nigerian time. The benchmark has risen more than 20 per
cent from a low in early August on news that the Organisation of Petroleum
Exporting Countries and other key exporters may revive talks on freezing output
levels when they meet in Algeria next month. The rally has also been driven by
short covering, as speculators including hedge funds and other money managers
have amassed record short positions. Many OPEC members, including Nigeria, have
been hurt badly by a collapse in oil prices over the last two years. While some
Gulf oil exporters have very low output costs, other producers such as Iran and
Venezuela need oil prices above $100 to balance their budgets. “With the lack
of investment from outside oil companies, the sovereigns will be the best hope
to raise production next year in a situation where it is likely that demand
will exceed global output and that in and of itself is a reason that a
production freeze at current levels still matters,” a senior energy analyst at
Price Futures Group, Phil Flynn, was quoted by the CNBC as saying. OPEC members
will meet on the sidelines of the International Energy Forum, which groups
producers and consumers, in Algeria on September 26-28. Brent crude had on June
8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last
October.
US backs Geometric
Power project with $213m
A former
Minister of Power and Chief Executive Officer, Geometric Power Limited, Prof.
Bart Nnaji, has said the firm concluded plans to build a 500-megawatt power
plant, in collaboration with the General Electric, at a cost of over $900m. He
said the Unted States government’s Overseas Private Investment Corporation
would invest about $213m in the project. He spoke in Lagos on Thursday at the
11th Annual Project Management Lecture organised by the Department of Building,
University of Lagos, on ‘Sustainable Development of the Power Sector: The role
of project management.’ Nnaji said, “We are in the development phase. We
started work on the project in January 2013 and by the end of this year, we
will reach financial close, when all the agreements will have been close and
banks agree to put down money for the commencement of construction.” He said it
would cost about $1.5bn to build a 1,000-megawatt power plant in Nigeria.
According to him, it costs about $1.3m to build a megawatt of electricity in
Nigeria, compared to $500,000 in countries such as the United States. According
to the former power minister, gas supply agreement, gas transportation
agreement and power purchase agreement, among others are very critical in the
development phase of a power project. He stressed the need for sustainable
development of the power sector, which he described as being able to have a
robust way to produce, transmit and distribute electricity. “We need to
diversify the sources of power, and renewable energy is one way, but it has
limits. We have not touched coal; we have a lot of coal.”
