The Central Bank of Nigeria has sold about $1bn on the forward market to clear a backlog of dollar obligations in selected sectors, according to foreign exchange traders.
The traders said on Thursday that the dollar sale was made last week. They described it as the largest special auction by the CBN since the naira peg was removed in June.
Outstanding dollar demand was about $4bn before June, when the 16-month-old peg was removed. Efforts to cut dollar demand have been largely unsuccessful due to low oil prices.
Crude sales account for about 90 per cent of Nigeria’s foreign exchange earnings.
Traders said the CBN told banks to prioritise airlines, manufacturing firms, petroleum products importers and agriculture sectors, the sectors worst hit by the dollar shortage, in the auction.
“The central bank sold $1bn at last week’s special forex auction and directed banks to issue fresh letters of credit to reflect the amount sold in favour of the affected sectors,” a senior currency trader told Reuters.
Traders said the CBN sold 30-day and 60-day forwards at the auction.
On December 19, the CBN instructed commercial lenders to submit their backlog of dollar demand from fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals for the special forex intervention.
Stanbic IBTC Holdings PLC and the Financial Reporting Council of Nigeria (FRC) have amicably resolved the dispute over Stanbic IBTC’s financial statements for 2015, allowing the financial institution to issue its financial statements.
Accordingly, the FRC has lifted the suspension of the FRC numbers of the Chairman of Stanbic IBTC, Mr. Atedo Peterside and Chief Executive, Mrs. Sola David-Borha, enabling them to sign, where applicable, audited financial statements.
In a statement to the Nigerian Stock Exchange (NSE) dated 21 December 2016 and signed by the Company Secretary, Chidi Okezie, Stanbic IBTC said following the resolution of the issue, FRC has authorized its external auditors, Messrs. KPMG Professional Services to sign the 2015 audited financial statements.
The statement, which was made available on the NSE website, reads: “We are pleased to announce the release of the Audited Financial Statements of Stanbic IBTC Holdings PLC for the year ended 31 December 2015. This release follows our reaching an acceptable settlement with the Financial Reporting Council (“FRC”), pursuant to which the FRC has authorized our external auditors, Messrs. KPMG Professional Services to sign our 2015 Audited Financial Statements.
In the light of the foregoing and having received all required regulatory approvals, we would be presenting the 2015 Audited Financial Statements to The NSE through the Issuer Portal for onward transmission to the market, as well as subsequent publication as required by law.
bbIn addition to the above, we also confirm that the FRC has lifted the suspension of the FRC Numbers of the following individuals and further authorizes them where applicable, to sign our Audited Financial Statements: · Mr. Atedo N.A. Peterside CON(Chairman) · Mrs. Sola David Borha (Chief Executive) · Dr. Daru Owei (Chairman, Audit Committee) · Mr. Arthur Oginga (our erstwhile Chief Financial Officer) We thank The NSE and other stakeholders for their support and Stanbic IBTC will continue to abide by all extant Statutes; Rules and Regulations.”
The chief executives of the Nigerian National Petroleum Corporation (NNPC), Total and ENI are scheduled to meet early next month to decide the fate of the $15 billion Brass Liquefied Natural Gas (LNG) project located on Brass Island, Bayelsa State, THISDAY has learnt.
This is coming as uncertainty continues to loom over the fate of the $547 million already plunked into the Olokola LNG project situated on the border town between Ogun and Ondo States, following the withdrawal of the project’s shareholders and the recent decision by the NNPC to relocate its staff seconded to the project to Abuja.
THISDAY gathered that the shareholders of Brass LNG who have invested about $1 billion on early works, without signing a Final Investment Decision (FID), will meet in London between January 10 and 12, 2017 to take a decision on the multi-billion dollar project, whose FID has been kept in abeyance for a decade.
An official of one of the shareholders, who spoke to THISDAY on the condition of anonymity, maintained that the Brass LNG project remained on course and blamed the delay in signing the FID to the absence of political will on the part of the Goodluck Jonathan administration and what he called the protracted withdrawal of ConocoPhillips from the project.
According to him, the shareholders – NNPC, ENI, Total and ConocoPhillips – were at the point of signing the FID before the American oil major pulled out of Nigeria.
“It took them a very long time from the period they made the announcement to the period they finally pulled out, because they were looking for investors who will buy their oilfields in Nigeria and their 17 per cent stake in Brass LNG. When they found Oando, the company could only buy their oilfields
immediately. So, their withdrawal was very protracted and this affected the Brass project,” he explained “Again, we were to use ConocoPhillip’s cascade technology to build the plant. When they pulled out, they dragged their feet before they agreed to give us the licence to use the technology. Even when they agreed, they said that they would not be held responsible if anything happens to the plant in the course of using their technology,” he added.
The official, however, said the Brass LNG project remained on course, adding that LNG projects were viable. “You will recall that Nigeria LNG bailed out the federal government. “The Brass project is viable but the past administration lacked the political will to pursue the FID. We are hopeful that Brass will go forward.
“The Minister of State for Petroleum, Dr. Ibe Kachikwu secured $80 billion funding from the Chinese and Indians and we are hopeful that Brass will benefit from this funding. “We have done a lot of optimisation in Brass. We have reconstituted our team and changed ConocoPhillip’s model and we are now using the Nigeria LNG model.
“Our technology now is APCI technology used in building Nigeria LNG. The Managing Director is now from ENI. We have scaled down the cost from the initial $15 billion; it is now affordable to the shareholders.
“We wanted to start with two trains but we have reduced it to one. The shareholders have also warehoused ConocoPhillip’s shares. And there is a political will on the part of the present administration. So, after the meeting next month, the shareholders will make a statement,” he added. THISDAY, however, gathered that 58 of the 70 personnel of NNPC, who were seconded to Brass LNG, were recently recalled to Abuja, leaving only 12.
Similarly, NNPC has relocated its staff seconded to Olokola LNG to Abuja, following the withdrawal of all the shareholders from the project.
THISDAY learnt that since the withdrawal of Chevron (14.25 per cent); Shell (19.5 per cent) and BG (14.25 per cent) due to what the shareholders called “varying constraints”, NNPC, which holds 46.75 per cent of the project, has continued to sustain Olokola LNG by funding minimal activities.
A source at NNPC, who confirmed the relocation of its OKLNG staff to Abuja, told THISDAY that the project expenses since inception amounted to about $547 million. “This includes $4.5 million proposed for the 2016 work programme and budget, which is 100 per cent funded by the NNPC,” he said.
“OKLNG proposed a budget of $12.5 million for 2016 but with the relocation of OKLNG staff to Abuja, the budget was revised downwards to $4.5 million to reflect minimal activities while operating from Abuja,” he added.
According to him, with the withdrawal of the shareholders and the relocation of staff, there is uncertainty over the fate of the $547 million spent on site preparation and early works. Brass LNG and OKLNG were conceived by the administration of former President Olusegun Obasanjo in 2005 to boost gas supply to both domestic and export markets.
Trading at the stock market resumed on a positive note yesterday after the two days holiday declared by the federal government to mark the celebration of Christmas. The Nigerian Stock Exchange (NSE) All-Share Index rose by 0.76 per cent to close higher at 26, 688.25, just as the market capitalisation of equities appreciated by same margin to be at N9.11 trillion.
The market has remained bearish for most part of the year and is heading for a third consecutive yearly decline. However, the 0.76 per cent recorded yesterday has reduced the year-to-date decline to 6.82 per cent. The appreciation recorded in the share prices of Union Bank, Transcorp, Access Bank, Stanbic IBTC and Nigerian Breweries were mainly responsible for the gain recorded in the NSE ASI yesterday. Investors staked N1.25 billion on 131.74 million shares, down by 12.92 per cent from N1.43 billion invested the previous trading day. The three most actively traded stocks were: International Breweries (16.2 million shares), Transcorp (12.42 million shares) and FCMB Group (11.65 million shares), while the most traded sectors were: Financial Services (78.42 million shares), Consumer Goods (19.29 million shares) and Conglomerates (12.92 million shares). In terms of sectoral performance, all sector indices closed in the green except the NSE Industrial Goods Index which declined by 0.02 per cent owing to price drop by Lafarge Africa Plc.
However, the NSE Consumer Goods Index (+1.5 per cent) led sector gainers, driven by the significant appreciation in Nigerian Breweries Plc (+3.3%), Cadbury Nigeria (+8.0 per cent) and Honeywell Flour Mills Plc (+4.9 per cent). Nigerian Breweries Plc recently got commendation from the Chief Executive Officer of the NSE, Mr. Oscar Onyema its commitment to corporate governance standards. The NSE boss also congratulated the company on its 70th anniversary and for winning the Most Compliant Listed Company award for the year. He disclosed that Nigerian Breweries was qualified to join the exchange’s Premium Board, the listing segment for the elite group of issuers that meet the exchange’s most stringent corporate governance and listing standards. Chairman of Nigerian Breweries Plc, Chief Kola Jamodu had explained that Nigerian Breweries had grown from its humble beginnings as a company that started 70 years ago with one brewery to 11 breweries spread across the country. He disclosed that the company has over 4000 workers in its direct employment and is also one of the highest dividend paying entities with 120,000 shareholders.
• Abuja Disco begins $150m consumer metering scheme Chineme Okafor in Abuja To respond adequately to the current challenges threatening Nigeria’s electricity sector, the federal government would in consultation with the World Bank, launch a power sector recovery plan soon, THISDAY has learnt.
Though no precise date or financial size of the recovery plan has been disclosed, THISDAY however gathered yesterday in Abuja that the decision to launch an electricity sector recovery plan was shared with stakeholders during a recent exclusive meeting the government organised.
Parts of the far-reaching decisions at the meeting were shared with THISDAY by sources who were in attendance. The meeting was in collaboration with the World Bank to discuss the challenges of the country’s electricity sector.
Its recovery plan would among other objectives, seek to improve the technical and commercial performance of the privatised power industry, and restore its business viability based on the recommendations of a diagnostic exercise.
Reportedly performing poorly, Nigeria’s electricity market is currently going through tough financial challenges which analysts said could result in a total market failure if not addressed.
Based on this, the sources told THISDAY that the recovery plan was originated to turnaround the sector by helping improve its governance, reduce electricity losses both technical and commercial, and guarantee efficient sector investments.
According to the sources, the government and World Bank agreed at the meeting that there were causes and dimensions to the challenges of the sector, and that it needed to urgently restore its financial tolerance to attract significant private investments. The World Bank, it was learnt, would in this regard, galvanise private and public investments through its various groups.
“The government and World Bank agreed on the need to prioritise actions that will strengthen the sector’s governance including the appointment of Commissioners in the NERC, restore investors’ confidence, attract public and private investment in generation, transmission, and distribution for enhanced service quality, protect sector revenues with improved metering and collection.
“The government will in consultation with the World Bank further develop its power sector recovery plan, and as a committed partner, the World Bank, including the IFC (International Finance Corporation), and MIGA (Multilateral Investment Guarantee Agency), will bring their expertise in developing financing solution,” one of the sources said.
Meanwhile, Abuja Electricity Distribution Company (Abuja Disco) has launched an ambitious plan to provide prepaid electricity meters to 500,000 consumers currently without meters in its network.
Speaking at the launch of the mass metering scheme which was inaugurated by the Minister of the Federal Capital Territory (FCT), Muhammed Bello, at the Abuja Investment Company Limited (AICL) Estate Apo, the Managing Director of Abuja Disco, Mr. Ernest Mupwaya, explained that the scheme would cost the company $150 million to execute within three years.
Mupwaya noted that the Disco was currently undertaking a customers’ enumeration exercise, and that the meter deployment would be done simultaneously, including in other parts of its network areas. He said a pilot scheme of 5000 was successfully done in Niger State.
“We are doing our customer enumeration now and estimate that once we are done, we will install meters in the region of 500,000 and they are of various sizes. The whole metering project and other ancillary services will cost us about $150 million,” said Mupwaya. He further explained: “It will take us about three years because it is a huge exercise and there is no cost implications because the meters are being given free of charge to consumers.”
Similarly, the board chair of the Disco, Shehu Malami, stated that with the meter installations, the Disco’s Aggregate Technical Commercial and Collection (ATC&C) losses would reduce by about 17 per cent, while energy audit and accountability would be fostered.
The equities market appreciated slightly on Thursday by N16bn as the Nigerian Stock Exchange market capitalisation closed at N9.105tn from N9.089tn.
The NSE All-Share Index also rose to 26,464.82 basis points from 26,418.11 basis points as a total of 188.684 million shares worth N1.387bn exchanged hands in 3,161 deals.
The Nigerian bourse clung to a slim gain, halting a three-day downtrend largely on the back of a rally in the oil and gas sector.
The oil and gas sector snapped a five session losing streak to lead the pack in Thursday’s session, buoyed by firm gains in Forte Oil Plc, Conoil Plc and Oando Plc by 10.24 per cent, 10.20 per cent and 4.29 per cent, respectively.
Also, the industrial goods sector traded higher buoyed by advances in Beta Glass Plc and Cement Company of Northern Nigeria Plc by 10.21 per cent and 4.75 per cent, respectively.
The consumer goods sector closed relatively flat amid mixed performances across Guinness Nigeria Plc, Honeywell Flour Mill Plc and International Breweries Plc by 1.41 per cent, 4.65 per cent and 3.67 per cent, respectively.
The financial services sector slid further albeit marginally as declines in United Bank of Africa Plc and Guaranty Trust Bank Plc by 1.09 per cent and 0.56 per cent, accordingly, were watered down by gains in FBN Holdings Plc, FCMB Group Plc and Access Bank Plc.
Market breadth turned positive with 18 advances and 15 declines.
Meanwhile, the sixth OTC forex futures contract (NGUS Dec 21 2016), with notional amount of $477.45m, matured and was settled on December 21, 2016 on FMDQ OTC Securities Exchange.
This brings the total value of contracts so far matured on the OTC Exchange to circa $1.53bn, and about $5.02bn worth of OTC forex futures contracts traded so far.
The contract, which stopped trading on December 13, 2016, was valued against the Nigerian inter-bank foreign exchange fixing spot rate as published by FMDQ on December 21, 2016, with the associated clearing/settlement effected by the Nigeria Inter-Bank Settlement System Plc, in line with the FMDQ OTC forex futures market operational standards.
Consistent with its treatment for the previous five maturities (July – November 2016), the Central Bank of Nigeria introduced a new contract, NGUS DEC 27 2017, for $1.00bn at $/274.00 to replace the matured contract and refreshed its quotes on the existing 1 to 11-month contracts.
Market participants are hopeful that the efforts of the CBN, towards resuscitating the vibrancy of the nation’s forex market would, in the coming year, yield the desired results and invariably allow for the potential of the OTC forex futures market to be fully maximised by businesses, investors, governments, among others, with forex exposures.
The Nigerian capital market has finally achieved full dematerialisation of share certificates, 10 years after the move was initiated.
Dematerialisation is the conversion of physical share certificates of investors in the capital market to electronic forms to aid seamless trading.
“We are now 100 per cent dematerialised, and this was achievable following the initiative by the Securities and Exchange Commission, as well as efforts of the of market community,” the General Manager, Operations, Central Securities Clearing System Plc, Joe Mekiliuwa, said in an interview with our correspondent.
The dematerialisation journey, which started 10 years ago, he noted, was targeted at boosting liquidity in the capital market.
Mekiliuwa said currently, about 8.5 million accounts had been dematerialised in addition to the 7.5 million that had been done much earlier, adding that all share certificates existing in the country’s capital market system had been converted to electronic forms.
Mekiliuwa added, “Even accounts that are yet to be activated by investors are covered in this arrangement. This means that investors without accounts in stockbroking firms now have the share certificates with them dematerialised, though they are holding physical certificates.
“The physical share certificates are now useless, because the electronic records of the certificates with the registrars have been turned into the CSCS account.
“Investors without accounts at all should go to brokers and fill a form for full dematerialisation. Such records will be sent to the registrars, who will then inform us to move the shares to the accounts created.”
He said owing to the fact that the share certificates now had electronic presence, they were now in the system and trading on them could be done swiftly.
SEC had given capital market stakeholders a mandate to achieve 100 per cent dematerialisation, and the stakeholders led by the CSCS had earlier moved to achieve 100 per cent dematerialisation of the share certificates by the end of the third quarter of this year.
At the beginning of the third quarter, over 98.4 per cent of the shares certificates of quoted companies on the Nigerian Stock Exchange had been dematerialised and in the CSCS depository.
In order to address the various problems associated with share certificates such as delay in issuance, verification, loss, theft, and forgeries, among others, SEC, in partnership with other stakeholders, opted for the full dematerialisation of the certificates.
SEC had said major benefits that full dematerialisation would bring to the market were immediate availability of the shares for trading as soon as mandate was given to brokers; enhancement of price discovery and deepening of the market; and possibility for securities lending and borrowing by shareholders for more income.
Stanbic IBTC Holdings Plc yesterday announced its audited results for the year ended December 31, 2015. The financial institution also declared its results for the nine months ended September 30, 2016. The results were delayed due to a dispute with the Financial Reporting Council of Nigeria.
Details of the results show that Stanbic IBTC Holdings ended 2015 financial year with gross earnings of N140.027 billion, up by 7.2 per cent from N130.654 billion in 2014.
Net interest income fell by 6.0 per cent from N46.658 billion to N43.86 billion in 2015, while non-interest income stood at N56.788 billion in 2015, compared with N57.987 billion in 2014.Credit impairment charges soared by 364 per cent to N14.931 billion in 2015 from N3.217 billion in 2014. Operating expenses rose by 7.2 per cent to N62 billion to N57.9 billion in 2014.
Consequently, profit before tax (PBT) fell by 45.7 per cent to N23.65 billion, from N43.52 billion, while profit after tax (PAT) declined by 45.2 per cent to N18.891 billion, from N34.46 billion in 2014. Despite the decline in profit, the directors have recommended a dividend of five kobo per share.
Meanwhile, shareholders should expect a better deal at the end of this year as the company has reported improved nine months results. Stanbic IBTC Holdings Plc reported an increase in top and bottom lines.
The financial institution posted gross earnings of N114.622 billion in 2016, up from N104.418 billion in the corresponding period of 2015. Net interest income improved from N32.92 billion in 2015 to N39 billion in 2016. Total interest income grew from N74.2 billion to N91 billion. Credit impairment charges increased from N12.48 billion to N15.3 billion.
PBT increased by 65 per cent, jumping from N5.567 billion to N25.688 billion, while PAT stood at N20.2 billion in 2016, up from N13.56 billion. Commenting on the 2015 fourth quarter performance, analysts at FBN Quest said the results were in line with their expectations.
“Although PBT and PAT of N8.3 billion and N4.4 billion were ahead of our forecasts by 54 per cent and 22 per cent respectively, the results were boosted by lower-than-expected loan loss provisions. Profit before provisions of N26.4 billion was in line with our forecast,” they said.
The level of investment inflow into the country recorded a huge decline of $4.51bn from the $8.08bn in the first nine months of 2015 to $3.57bn in the same period of 2016, an analysis of the capital importation report obtained from the National Bureau of Statistics revealed.
The report, which was obtained by our correspondent in Abuja on Wednesday, showed that the decline of 55.2 per cent was as result of the harsh economic climate.
A breakdown of the inflow revealed that $710m investment was indicated in the first quarter of this year, while the second and third quarters had $1.04bn and $1.82bn, respectively.
These are against the $2.67bn, $2.66bn and $2.74bn recorded in the corresponding periods of the 2015 fiscal year.
The report attributed the huge decline in capital importation to what it described as the symptoms of the challenging period that the Nigerian economy was going through following the fall in crude oil prices.
It stated that while there were a number of reasons why the amount of capital imported in recent years had been higher than usual, the drop between last year and this year suggested that there were further reasons why Nigeria had attracted less foreign investments in recent quarters.
The report stated, “Investors may be concerned about whether or not they will be able to repatriate the earnings from their investments, given the current controls on the exchange rate.
“In addition, as growth has slowed in recent quarters, there may be concerns about the profitability of such investments.”
In terms of the composition of the investment inflow, the report revealed that the largest component of capital importation in the nine-month period was portfolio investment, attracting a total sum of $1.52bn.
This was followed by “other investments, with $1.35bn, and foreign direct investment, with $699.39m.”
A breakdown of the $1.52bn portfolio investment showed that equity accounted for $682.6m; bonds, $370.5m; and money market instruments, $475.55m.
The report added, “The relatively strong growth in portfolio investment meant it regained its position as the largest investment type, and it accounted for 50.51 per cent in the third quarter, compared to 18.69 per cent and 30.80 per cent for other investments and the FDI, respectively.
“Year-on-year growth rates remained negative; the FDI, portfolio and other investments declined by 52.54 per cent, 8.80 per cent and 45.05 per cent, respectively compared to the third quarter of 2015.
“In the case of the FDI and other investments, however, this was partly the result of a base effect, as there was a spike in the value of the FDI equity in the third quarter of 2015.
“Nevertheless, it is also possible that the weaker growth in the economy in the first half of 2016 has had an impact on the value of capital importation.”
Flour Mills of Nigeria Plc, the country’s biggest miller by market value, has said a shortage of dollars in Africa’s most populous nation is boosting sales as buyers starved of the United States currency buy more food products locally.
“Everyone is trying to see how to source locally and that is good’’ for Nigerian farmers and processors, Managing Director Paul Gbededo, told Bloomberg in an interview. “We have almost tripled production in refinery of palm oil, palm kernel and soya bean,’’ he said.
Prices have risen alongside demand, Gbededo said. “Fifteen months ago, one ton of corn was sold for 60,000 naira ($190). Today it is N125,000,’’ he said.
The Central Bank of Nigeria had banned importers of 41 items, including palm-oil and rice, from accessing official foreign-exchange markets in June 2015. Although authorities allowed the naira to float in June in a bid to attract inflows, the U.S. currency remains scarce as most foreign investors that exited the country are yet to return. The economy shrunk in the first three quarters this year and is forecast by the International Monetary Fund to contract by 1.7 percent in 2016. Inflation accelerated to 18.5 percent in November, the highest rate in 11 years, according to the statistics agency.
Flour Mills’ sales jumped 44 percent to N255 billion for the six months through September, according to an October 31 filing to the Nigerian Stock Exchange. Profit after tax dropped to N6.5 billion from N24 billion due to foreign exchange losses, it said. The shares have declined 11 percent this year, compared with a 7.3 percent fall on the Nigerian Stock Exchange Main-Board Index. That values the company at N49 billion.
The company, which has a milling capacity of 12,000 tons per day, also faces challenges from the lack of dollars as it imports about 1.7 million tons of wheat a year, which is processed into flour and sold to makers of bread, cookies, pasta, noodles and confectionery, according to Gbededo. Flour Mills plans to mitigate against that by growing more of the crop locally and starting a sorghum plant next year that will mill 75,000 tons of sorghum flour annually, Gbededo said.
“Our goal is to depend less on the import of food into the country,” he said. “I want imports to end today, but it will take time.’’
Flour Mills is expanding in the cultivation and processing of “six key crops” including sugarcane, cassava and maize to sell locally and export to markets in Africa and Europe, according to Gbededo. It has invested 40 billion naira in a sugar mill plant in the country’s Niger State and is developing 5,000 hectares of cassava farm and 10,000 hectares of maize farm, he said.
“We are talking with equity and technical partners for expansion in those crops,’’ he said, without disclosing the partners.