International Energy Insurance Plc says it is set for repositioning as shareholders have given the interim board the approval to recapitalise the company for growth and competitiveness.
A statement from the firm said the expected new capital when injected would enhance the firm’s working capital, improve IT infrastructure, meet solvency requirement and provide new investment opportunities.
“Rising from the company’s 42nd annual general meeting held in Kano, the shareholders approved that the directors in conjunction with the technical committee should further recapitalise the company by raising additional N9bn, which when added to initial recapitalisation approval of N4bn given at its 41st annual general meeting amounts to a total approval of N13bn,” the company stated.
The firm also said the money could be raised from the capital markets, local, or foreign investors whether by way of private placement, public or rights offer and/or issuing ordinary and/or preference shares of the company for such equity, whether by bonds, convertible loans or other debt instruments, with or without the option of converting such bonds, loans or other debt instruments to ordinary and or preference shares of the company, or by debt equity conversion upon such terms and conditions as the directors might deem fit, subject to all relevant approvals.
Besides that, the IEI said the directors were also authorised to constitute a technical committee of the board and shareholders to renegotiate and restructure the company’s indebtedness to Daewoo Securities (Europe) Limited.
The Interim chairman of the board, Mohammad Ahmad, who was appointed on May 18, 2015 following regulatory intervention by the National Insurance Commission, said the board had taken necessary actions to stabilise and ensure sound management and growth of the company.
The House of Representatives investigating the huge debts owed to the Pipelines and Products Marketing Company (PPMC) by oil marketers has heard that the subsidiary of Nigerian National Petroleum Corporation (NNPC) is being owed about N7.6 billion by Oando Plc, and Conoil. The committee at the resumption of sitting frowned on the development, attributing it to a lack of clearly spelt out penalties for those who default on payments.
The lawmakers lamented that many of the marketers were guilty of continuous and deliberate breach of the 15-day credit line for lifted products. The Hon. Mahmud Gaya – led committee therefore directed Oando with a debt of N4.5 billion to PPMC, to expediently honour its agreements, or risk being cut off oil supplies.
Similarly, Conoil, which owes N3.1billion to the PPMC, was directed to pay at least 50 percent, failing which, the oil firm would also be stopped from accessing oil products. Gaya also gave the assurance that the terms of accessing oil supplies from the PPMC by oil marketers would be reviewed to prevent the marketers from holding on to public funds.
“Because there is no well spelt terms on penalties for default, we found out that Conoil was last penalised for default in 2012, for instance. We discover that a revolving credit facilities given to Conoil allowed it to owe with credit line for two weeks but it has defaulted for over two months since the end of December 2017. Yet, it continues to lift products from PPMC,” the Chairman said.
“Is it fair to owe such a huge amount of Nigerian money? The country cannot move forward when this is happening. It is not impossible that they deliberately divert the money to other businesses since they know there is no penalty,” Gaya declared.
Meanwhile, Hon. Jarigbe Agom Jarigbe (Cross River PDP) who moved the motion that mandated the investigative hearing, appealed to the federal government to urgently clear the subsidy debts owed to the marketers. The marketers at last week’s hearing had claimed they were being owed about N300 billion in subsidy payments for 2014-2015 by the government. The Group Chief Executive Officer (GCEO) of Forte Oil Nigeria, Mr. Akin Akinfemiwa, at the hearing put the subsidy outstanding claims owed his company at N13.8 billion.
Jarigbe, speaking with THISDAY in an interview, said the committee set up by the government over the debts, should do its best to ensure that the debts are settled, to avoid a cascading effect on the economy. “Government should do everything to settle the debts so our economy does not get affected. The oil marketers also have to be encouraged, they are part of our society and economy” he added.
The lawmaker noted that while the committee cannot go beyond its mandate, which is to ensure oil marketers clear their debts to PPMC, the companies can petition or lobby relevant House committees to facilitate the payment of their subsidy claims.
Jarigbe however frowned at the practice where some of the oil marketers lift products from the PPMC under the 15 credit agreement, sell the products, and fail to pay for the products.
“Some do not honour the throughput agreements. The government stores products in their tank farms, they sell the products, and then refuse to pay. Some take loans at MPR rates, but fail to repay the loans,” he observed.
The stock market recorded a turnover of 12.07 billion shares worth N44.39 billion in the first two months of 2017, showing the weak investor demand for equities. An analysis of the performance showed that January accounted for the highest turnover as investors traded 7.68 billion shares valued at N47.33 billion. The month of February accounted for 4.39 billion shares worth N37.06 billion, showing a decline compared to the month of January.
The month of February also recorded a decline in market value as the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) depreciated by 2.72 per cent. Apart from the NSE ASI, all the sectoral indices declined in February 2017 compared with January 2017, except the NSE Banking Index which remained flat. The NSE Consumer Goods Index recorded the highest depreciation of 11.03 per cent. The NSE Industrial Index recorded a decline of 8.59 per cent, while the NSE Oil/Gas Index fell by 3.7 per cent. The NSE Insurance Index declined by 1.5 per cent. However, analysts at FSHD Merchant Bank Research are bullish on the month of March, saying that the market would record positive performance.
They hinged their optimism on the trend in the past five years. According to them, the performance of the equity market in the last five years showed that the market recorded positive performances between February and March.
For instance, in 2012 the market rose by 3.07 per cent between February and March 2012, 1.39 per cent in 2013, declined by 2.05 per cent in 2014. It appreciated by 5.4 per cent in 2015 and 2.9 per cent in 2016. “The equity market may follow historical trend as the economic outlook becomes increasingly positive,” the analysts said.
In their outlook for the month of March FSDH said they expect to see some improvements in investor appetite for investment in 2017.
“The following factors may drive performance: improved supply of foreign exchange at the foreign exchange market; improved confidence on the outlook of the Nigerian economy, the increase in oil prices and production and expected gradual return of foreign investors into the (equity) market,” they said. Commenting on the strategies to adopt by investors going forward, the analysts recommended that investors should maintain a medium-to-long term position in the equity market.
“We maintain that long-term investors should take long positions in the stocks that have strong fundamentals. Building materials, food and beverages, agro-allied processing and banking stocks,” they said.
The federal government has stated that it is working towards increased foreign direct investments ( FDIs) in flow in the country, noting that with the current state of the economy, all hands are on deck to seek areas where Nigeria can attract the much needed foreign exchange to carry out developmental projects for economic prosperity and sustainability.
The Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, during a business seminar organised by Japan External Trade Organisation (JETRO), assured investors of a safe and business friendly environment for their investments, noting that the federal government was doing all it can to improve the ease of doing business in the country.
The minister, who was represented by the Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Ms. Yewande Sadiku, stated that there are more investment opportunities Nigeria and Japan can explore considering the size of Japan, while adding that Nigeria is seeking increased trade and investment inflows from Japan.
According to him: ”There is a lot more that both countries can do together. The federal government is doing all it can to improve the ease of doing business in the country, it is as a result of this, the federal government inaugurated the Presidential Enabling Business Environment Council (PEBEC) chaired by the Vice President. This council has been focused on making life more convenient for businesses in the country.”
Also speaking at the event, the Director General, JETRO Paris, Mr. Susumu Kataoka, added that at the Tokyo International Conference on Africa Development, the Prime Minster of Japan, announced its commitment to invest about $30 billion in Africa for the sustainable development in Africa especially in infrastructure, human resources development, technology, improvement of living conditions and regional stability.
He said the international conference had since started to create certain dynamism among the Japanese companies, saying that more Japanese companies are getting more interested in doing new businesses in Nigeria or expanding their activities in other African countries.
“This is why I am here with the delegation of Japanese companies who are not yet fully based in this country, but are showing their interest in investing in this country. The Japanese private sector is now motivated in doing businesses here in Nigeria with a huge potential especially in terms of your population and the volume of the economy. The purpose of our visit here is to know the business environment and this seminar is step to further deepen the existing relationship between both countries.
In her capacity as Executive Secretary, Sadiku said Africa is yet to get its fair share of investment in flow, pointing out that the continent share is miniscule when compared to many developed economies of the world. She said although Nigeria accounts for 11 per cent of FDIs into Africa, but stressed that the amount is a far cry when compared to the potential of Africa.
Nigeria LNG Limited (NLNG) has put the immediate loss of foreign investment due to the delay in the takeoff of its Train 7 plant at $25 billion (N10 trillion).
According to the company, another impact will be the potential loss of about 18,000 jobs required for the construction activities of Train 7. Speaking at the on-going 2017 Nigeria Oil and Gas Strategic Conference and International Exhibition in Abuja titled: “Nigeria’s Gas Sector – The Catalyst for Economic and Industrial Growth,” the Managing Director of NLNG, Tony Attah, said the Federal Government should focus on how to grow the Nigeria oil and gas sector.
Attah emphasised the need to focus on NLNG model and get moving on the Natural Gas Policy, implement fiscal reforms in joint ventures, production sharing contracts and service contracts as well as embed adequate institutional reforms while ensuring that the Petroleum Industry Bill (PIB) is passed into law without delay.
But the Minister of State for Petroleum, Ibe Kachikwu, said that the Federal Government has initiated gas policy interventions that would move the economy from oil to gas. He disclosed that the country will diversify the gas supply options within Nigeria, to ensure security of supply; extend gas penetration in the domestic market in order to facilitate the growth of the electric power, agricultural, and industrial sectors; gain a presence for Nigerian gas in international markets; and operate a gas industry with a clear division of roles between private and public sectors
Also, the Group Managing Director Nigeria National Petroleum Corporation (NNPC), Dr. Maikanti Kacalla Baru, said about $51 billion investment opportunities exist today in the midstream and downstream gas sector to achieve the growth phase in the Industry in Nigeria.
Baru posited that about $35.4 billion investment will be required in the gas exploration and production activities, power plants projects, fertilizer plants, virtual pipelines and flare gas commercialization initiatives.
The GMD added that $16 billion investment will also be needed in the Free Trade Zones (FTZ) infrastructure development and concessioning, port infrastructure, central gas processing facilities, gas transmission, LPG plants, real estate development, pipe milling and local fabrication yards among others.
Speaking further, Attah said that hopes for economic and industrial growth will be dashed if inhibitors such as the removal of legislative frameworks like the NLNG fiscal incentives, Guarantees and Assurances Act, are permitted in the Nigerian gas industry
Attah stated: “It is time for gas. We need deliberate decisions and policies to decouple oil from gas and attract investment. We need to do that now. Investments in the gas and LNG industry are declining. It is already difficult as things stand. To find Foreign Direct Investment (FDI) and growth in the gas industry has been cautious after the recent down-beat global crude oil price. In addition to this, Nigeria is ranked 167 of 189 countries in the ease of doing business index.” “Yet, experts maintain that there is the strong likelihood of increased gas demand in future and that is where the silver lining is. However, if we continue with the self-inflicted barriers in our gas industry, we might miss the opportunity to make this country a major player in the global energy mix,” he said.
“The industry has benefited the economy, diversifying the revenue and export base as well as channelling FDI into the country, creating jobs and contributing significantly to the local manufacturing capacity in the country, but all that would be laid waste if we continue shift policies and renege on international agreements that put some framework into the business and generated investor confidence. We need to be creative with incentives that will attract investments and preserve the sanctity of contracts and agreements for all of this to come together in our national interest.
“Take Nigeria LNG for instance. Only recently, the House of Representatives began moves to amend the NLNG Fiscal Incentives, Guarantees and Assurances Act, a key enabler responsible for the success of the company. NLNG is a successful Nigerian company, with an asset base of $11 billion as well as the fourth largest LNG plant in the world. It has generated $90 billion in revenues as at 2015, paid $5.7 billion in taxes as well as committed more than $200 million to corporate social responsibility projects especially in the areas of capacity building and infrastructure development. All these were achieved with a management staff entirely made up of Nigerians, with 95 per cent of the total workforce made up of Nigerians.
The National Assembly, on Thursday, scored the Federal Government low on the performance of the capital expenditure in the 2016 budget.
The Federal Government, however, blamed the low performance on revenue shortfall, adding that while the total revenue target was N1.506tn, only N398bn was generated in the 2016 fiscal year, with a revenue shortfall of about N1.15tn.
The government also said it had achieved 55 per cent performance on the N870bn capital expenditure.
These were made known at a forum jointly organised by the Senate and House of Representatives Committees on Appropriations.
The Chairman of the Senate Committee, Senator Danjuma Goje, had asked the Federal Government officials how much had been released and cash-backed, the percentage of releases and percentage of cash backs out of the total budget.
In her presentation, the Minister of State for Budget, Mrs. Zainab Ahmed, recalled that the 2016 budget was predicated on an oil benchmark price of $38 per barrel, with an average oil output of 2.2 million barrels per day, and official exchange rate of N197 to a United States dollar.
She added that based on the aggregate revenue of N3.86tn, the size of the 2016 budget was N6.06tn, with a deficit of N2.2tn or 2.14 per cent of the Gross Domestic Product, which was supposed to be financed with local and foreign borrowings as well as recoveries.
Ahmed said, “We had last year prepared a Strategic Implementation Plan for the 2016 budget and this plan was principally prepared to guide the implementation of the budget. To this end, we identified 34 key priority areas and with very clear and verifiable targets.
“However, challenges in the economy have undermined the full realisation of the objectives set out in the SIP. Notwithstanding, for most of 2016, crude oil prices exceeded the benchmark of $38 per barrel. There had been a significant shortfall of projected revenue, which was caused largely by the disruption of crude oil production by militant activities.”
Others factors that affected the 2016 revenue target, she said, were fuel supply shortages, significant challenges with power supply and foreign exchange supply scarcity.
The minister stated, “The shortfall in the level of crude oil exports resulted in significant reduction in government revenues and foreign exchange shortages, which caused the economy to slip into recession. Since 95 per cent of our foreign exchange earnings come from the petroleum sector, this has impacted adversely on the level of non-oil revenues as well. The non-oil revenues were significantly impacted, as a lot of activities, even in the non-oil sector, depend largely on foreign exchange.
“On the expenditure side of the budget, the personnel costs were met completely; debt service obligations were fully met, but capital expenditure was behind targeted estimates. It is, however, important for us to note that by the close of the year, about N834bn was already released as capital expenditure. Let me also say that this is the highest release in the history of our country for a very long time. In fact, it exceeds the aggregate capital expenditure of the 2015 budget.”
The Accountant General of the Federation, Ahmed Idris, in his presentation, stated that one critical aspect of budget implementation that concerned his office was that of funds release “as appropriated and as approved.”
According to Idris, the total capital payment or releases for 2016 as of Thursday was N870,055,792,283.
He put the amount of Internally Generated Revenue at N398,335,850,749.45, adding, “There was also receipt or approval from FAAC of N4.058tn during the year.”
He said, “In doing that, we have invited the Minister of Finance (Kemi Adeosun) and other officials of the ministry; Minister of Budget (Senator Udo Udoma); Minister of State for Budget (Zainab Ahmed); Director General, Budget Office (Ben Akabueze); the Accountant General of the Federation (Ahmed Idris); Director General, Debt Management Office (Abraham Nwankwo); and the Governor of Central Bank of Nigeria (Godwin Emefiele).
The session started on a dramatic note when a member of the committee, Senator Jibrin Barau, called the attention of the lawmakers to the absence of some officials from the meeting.
“Chairman, I can see that the Minister of Finance is not here and this is a very important session that the minister needs to be here. I don’t know why she is not here,” he said.
Adeosun later joined the session.
Goje also announced the absence of the Governor of the Central Bank of Nigeria, Godwin Emefiele, and asked to know his representative.
An Acting Director of the CBN, Mr. Mohammed el-Yakubu, indicated that he was representing Emefiele and expressed the “sincere apologies” of the governor to the lawmakers.
But the announcement angered the lawmakers.
Members of the committee asked that Emefiele’s representative to leave the meeting, insisting that the CBN governor or one of his deputies should be at the meeting.
The Nigerian Stock Exchange (NSE) has announced the listing of $1 billion Federal Government (FGN) Eurobond which will be issued under the country’s newly established Global Medium Term Note programme on the floor of the Exchange today.
The 15-year domestic Sovereign Eurobond priced at par and at a coupon of 7.875 per cent per annum is the first foreign currency denominated security to be listed and traded in the Nigerian capital market.
The Director General, Debt Management Office (DMO), Abraham Nwankwo said the listing of domestic Sovereign Eurobond reinforces FGN’s commitment to deepen and grow the Nigerian capital market. Developing the domestic market can help bridge the infrastructure deficit constraining the nation’s economic growth.
Foreign Exchange (FX) denominated bonds are unsecured and include bonds denominated in Euros with annual coupons ranging from 7.25 per cent to 8.375 per cent and maturity dates ranging from 2013 to 2033. Bonds denominated in British pounds with annual coupons ranging from 8.375 per cent to 8.875 per cent and maturity dates ranging from 2015 to 2023 are also included within foreign currency denominated bonds.
Nwankwo noted that the Eurobond, which was over-subscribed by 780 per cent, is part of FGN’s funding strategy for its 2016 capital expenditure and will be spent on key infrastructure projects, in line with its economic plan.
“This huge over-subscription rate underscores a buoyant investors’ appetite for building exposure to Nigeria and demonstrates international confidence in the economy’s long term prospects”.
The Executive Director, Market Operations and Technology, NSE, Ade Bajomo commended the DMO for listing the Eurobond in the nation’s bourse. He noted that the domestic listing would diversify its investors’ base by giving Nigerian institutional investors access to the bond.
Bajomo said the listing of the dollar denominated bond on the exchange would boost price discovery and liquidity in the local market as well as help attract reliable long term foreign currency denominated funds into the financial market.
“It will also set the foundation for raising and listing more foreign denominated securities in Nigeria which will open up additional capital raising options for issuers and portfolio diversification opportunities to investors”.
To enhance seamless trading and settlement of the Eurobond, Bajomo said the exchange, in collaboration with the Central Securities Clearing System (CSCS) developed and presented a framework depicting onshore and cross border trade and settlement process to issuers and transaction parties, in line with its robust market practices strategy.
Standard Chartered Plc (Group), the parent company of Standard Chartered Bank of Nigeria, has posted a profit before tax of $1.1 billion, in 2016 financial year.
The result represents an increase of $300 million from $800 million in 2015, while the group’s operating expenses at $10 billion, showed a five per cent reduction from 2015 record and lower for the second year running.
However, the group’s Operating income of $13.8 billion showed an 11 per cent decline from 2015 record, but stable through each quarter of 2016, while cost efficiencies of over $1.2 billion created capacity to increase investment in the second half.
Despite loan impairment provision in the ongoing business of $2.4 billion, the bank also restructured charges worth $855 million related primarily to the liquidation portfolio and redundancy costs. The Group Chief Executive Officer, Bill Winters, said: “We made good progress in 2016, cleaning up our balance sheet and fortifying our capital position. We are attacking our cost base, reinvesting significantly to strengthen our competitive advantages and continuing to enhance our financial crime controls.
“Our financial returns are not yet where they need to be and do not reflect the Group’s earnings potential. Having worked hard to secure our foundations we are now focused on realising that potential.”
He said the underlying basic earnings was per share of 3.4 cents, against negative 6.6 cents in 2015, while returns on Ordinary shareholders’ equity is 0.3 per cent against negative 0.4 per cent in 2015.
According to him, the bank strengthened capital and improved liquidity position, such that Common Equity Tier 1 ratio of 13.6 per cent went up 100bps mainly due to reduced risk-weighted assets; $2 billion additional Tier 1 capital issued in August 2016; and a further $1 billion in January 2017.
There was also a loan-to-deposit ratio of 67.6 per cent, which also reflects a high level of funding from customer deposits, while no Ordinary Share dividend was declared for 2016 period.
The Regional Chief Executive Officer, Africa and Middle East, Sunil Kaushal, said: “Our results demonstrate the progress made in the execution of our strategy. We will continue to make investments through the cycle in controls, people and infrastructure to grow safely and capture the medium-term opportunity within the AME region.
“The environment remains challenging but we are getting on with our plan to improve our performance by putting our clients’ needs back at the heart of everything we do.”
He noted that the bank’s conscious decision to invest in sub-Saharan Africa, while continuing to consolidate and build on its differentiated position in the Middle East has made an important contribution to the overall performance.
Despite good growth in Africa impacted by foreign exchange fluctuations, Standard Chartered’s Africa and Middle East business recorded underlying profit before taxation of $431 million in 2016, compared to $188 million in 2015, due to lower impairments and reduced expenses.
The Transnational Corporation of Nigeria Plc has posted a loss before tax of N5.93bn for the financial year ended December 31, 2016.
This is against the N3.32bn profit reported a year ago.
Its group revenue stood at N59.42bn as against N40.75bn posted in 2015.
These were contained in the firm’s report filed with the Nigerian Stock Exchange on Wednesday.
On the other hand, Cutix Plc, for the nine months ended January 31, 2017, declared a profit before tax of N409.5m compared to N206.5m reported a year ago.
Its revenue for the period stood at N2.76bn, as against N2.10bn reported a year ago.
Transcorp Plc posted a gross revenue of N7.6bn for the second quarter of 2016.
Then, the company’s cost of sales went up a little to N1.8bn compared to N1.6bn recorded in 2014. Gross profit for the quarter rose by 3.2 per cent to N5.7bn compared to N5.5bn.
Its net income had risen to N1.8bn compared to N1.7bn reported in 2014. This was a growth of 7.4 per cent.
The Federal Government on Wednesday approved N701bn payment assurance guarantee for any energy produced by the electricity generation companies through the Central Bank of Nigeria in order to strengthen the Nigerian Bulk Electricity Trading Plc, has also
It also approved a short-term financing option for two ongoing projects, the Lagos-Ibadan Expressway and the Second Niger Bridge.
These were some of the decisions taken at the Federal Executive Council meeting presided over by the Acting President, Prof. Yemi Osinbajo, at the Presidential Villa, Abuja.
The Minister of Information and Culture, Alhaji Lai Mohammed; Minister of Power, Works and Housing, Mr. Babatunde Fashola; and Minister of Agriculture, Chief Audu Ogbeh, briefed journalists at the end of the meeting.
Fashola recalled that the council had a few weeks ago announced the approval for early works for the second Niger Bridge, which is a Public-Private Partnership initiative.
He added that some private agreements had been signed to build the Lagos-Ibadan Expressway.
The minister said he briefed the council on the PPP status of the projects and presented options to the government.
He said the essence was that where those PPPs were having problems, the government must lead and finance the infrastructure, while continuing to engage the private sector.
Fashola said, “Government remains committed to having private participation in infrastructure renewal. But government as a matter of strategy thinks that it can continue until financial closures, agreements and all of that are put in place when PPPs become ready and viable to help deliver.
“So, it was a strategy memorandum. The conclusion essentially is that government is committed to doing short financing as much as possible and encouraging PPP as much as possible.”
He said the decision to approve payment guarantee for the NBET was meant to solve some of the liquidity problems, especially as they related to the government firm that buys power from the generation companies.
The minister said the liquidity problems that had characterised the market had affected the NBET’s ability to deliver on its PPP obligations through the generation companies.
Fashola stated, “In order to strengthen the NBET, the CBN is approving a payment assurance guarantee for any energy produced by any generation company so that they can pay their gas suppliers when they get paid in order for the hydro plants to continue to operate.
“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money.”
