Economic review

Govt rolls out $130b five-year investment plan for oil – Nation

The Federal Government has announced plan to invest $130 billion in the country’s oil and gas industry in the next five years. A chunk of the fund will go into the development of gas-utilising projects under the gas industrialisation programme, which include the construction of world class petrochemical plant at Koko in Delta State, fertiliser manufacturing plants and three Greenfield refineries in Lagos, Bayelsa and Kogi states. Another major project slated to consume a major part of the money is the construction of a 2000-kilometre oil and gas pipeline across the country to link up thermal power generation plants for easy supply of gas to ensure stable electricity supply.

Subsidy removal divides Senate – Nation

SENATORS got yesterday a taste of what may happen when the planned fuel subsidy removal comes up for debate. The hint came as the upper legislative chamber began debate on the 2012-2015 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). Senators were sharply divided on fuel subsidy removal. Senate President David Mark was worried about “obviously overbloated federal bureaucracy and the fact that the capital increase is just N170 billion from 2011 to 2012”. The MTEF and FSP are statutory documents which articulate the government’s revenue and spending plan as well as its fiscal policy objectives over a period to time.  A major component of the policy of fiscal consolidation, according to the MTEF and FSP, is the “government’s intent to phase out the fuel subsidy, beginning from 2012 fiscal year”.  It said that the measure will free up about N1.2 trillion in savings, part of which can be deployed into providing safety nets for the poor to ameliorate the effects of the subsidy removal.  It added that the accrual to the Sovereign Wealth Fund (SWF) as a result of the withdrawal of the fuel subsidy will also augment funds for critical infrastructure through the infrastructure window of the SWF.

62.31% of banks' deposits maturing in a month .

An average of 62.31 per cent of all deposits in Nigerian banks have a maturity term of one month. This shows that most bank customers prefer to keep short term deposits with their banks, preferring to give themselves the option to renew if need be. The extremely short maturity profile of Nigerian bank deposits is contained in the latest edition of the Nigerian Banks Financial Transparency Report, a joint publication of BusinessDay and Source Capital Research. The report shows that 78.48 per cent of all bank loans actually mature within a period of three months, with 83.31 per cent maturing within six months. The analysis further shows that 87.73 per cent of all bank loans mature within one year, with only about 12.26 per cent having a maturity profile of between one and five years, and less than one per cent going above five years.

FG issues 20 independent power project licences – Punch

The Federal Government on Tuesday in Abuja issued 20 new licences to independent power producers to boost electricity generation in the country. The 20 power producers are expected to add 6,258 megawatts of electricity to the national grid over the next 36 months. A distribution licence was also issued to Aba Power Limited in Aba, Imo State. The biggest beneficiary of the licence issuance is Zuma Energy Nigeria Limited, which is expected to generate 1,200MW from coal deposits in Itobe, Kogi State. Some of the other companies that got licences to generate electricity were Akute Power; Zuma Power; Cet Power, and Ilupeju Power. The Minister of Power, Prof. Bart Nnaji, said at the presentation ceremony, "From the budget of the Ministry of Power, we are giving N20bn to the bulk trader so they will have money to pay for power from the power producers. We are also giving N20bn to NELMCO to assist in buying over most of the liabilities of the government power operators in preparation for their privatisation.

Reps halt Union Bank’s recapitalization – Tribune

THE House of Representatives, on Tuesday, asked the Director-General of the Securities and Exchange Commission (SEC), Ms Arunma Oteh, to stop further approvals to the Union Bank of Nigeria on its Rights Issue and its recapitalisation process until the bank responds to issues raised in a petition before the House. Union Bank Plc wants to merge with core investor, African Capital Alliance Consortium (ACA Consortium). The House, through its chairman, Committee on Capital Market and Institutions, Honourable Herman Hembe, had, in a letter to the Director-General of SEC, with reference number NASS/7HR/CT.16/06/057 and entitled “Interactive Meeting in Respect of Union Bank of Nigeria Plc recapitalisation,” said the order of the House became imperative as “to safeguard the interests of the shareholders and to ensure that due process is followed in the exercise.” Honourable Hembe further explained that the decision of the committee was  “part of the process that we have started to look into merger of banks. We asked them pertinent questions on the recapitalisation process, particularly as regards the rights issue that Union Bank undertook and we found out that they were not prepared to give us the necessary answers that we asked.”