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All the major economic news from Nigeria in 5 minutes-21/8/2017

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Summary of the top business, economic and political news in Nigeria today.

  1. The Federal Government is considering a bouquet of new measures to check the increasing rate of illegal recruitment among the ministries, departments and agencies of government. The measures to be rolled out soon, it was learnt, would put to an end the practice by the agencies of government of conducting recruitment without recourse to the laid down procedures. Many government parastatals including the Central Bank of Nigeria, the Nigerian National Petroleum Corporation, the Federal Inland Revenue Service, and the Nigerian Prisons Service, among others have been rocked by recruitment scandals. Link
  2. The three tiers of government – federal, states and local governments – shared N2.788 trillion between January and June this year, Nigeria Extractive Industries Transparency Initiative (NEITI) said yesterday. According to a statement by NEITI Director of Communications, Dr. Orji Ogbonnaya Orji, the allocation shows a 38 per cent increase on the N2.019 trillion shared in the first half of 2016. Link
  3. More than 700 Bureaux De Change (BDC) operators are inactive in the Central Bank of Nigeria’s (CBN’s) Forex Window as forex end users embrace commercial banks. Link
  4. The Economic and Financial Crimes Commission (EFCC) has recovered N329.150billion from 10 marketers from 2016 to date. The marketers defaulted in payment for products supplied to them by the Nigerian National Petroleum Corporation (NNPC) through its subsidiary, the Petroleum Products and Marketing Company (PPMC). About N20, 604, 109, 123.90 is yet to be recovered. Link
  5. The National Bureau of Statistics (NBS) has disclosed that commercial banks reduced their lending to the economy by N292 billion in the second quarter (Q2) of 2017.  The bureau in its report titled: “Selected Banking Sector Data” also disclosed that Electronic Payment Channels in the Nigeria Banking Sector hits N19.78 trillion in Q2 of 2017. According to NBS report, Commercial banks’ lending to 17 sectors of the economy fell to N15.7 trillion in Q2  of 2017 from N16 trillion in first quarter (Q1)  2017, indicating a drop of N292 billion or 1.8 per cent. The 17 sectors according to NBS include Agriculture, Mining and Quarrying, Manufacturing, Oil and Gas, and Power and Energy, among others. Link
  6. The Minister of Transport, Rt. Hon. Rotimi Amaechi has directed that every prospective train passenger must present identity cards before obtaining tickets at ticket sales points. He said that the each passenger on presentation of ID card will be issued a ticket with his or her name boldly written to forestall the possibility of transferring tickets to the highest bidders which was the practice in recent times. Link
  7. The fixed income and currency markets operated by FMDQ OTC Securities Exchange have recorded transactions worth N78.90 trillion between January and July.  Trading statistics showed a decline of 8.6 per cent in the month of July. Investors traded N11.53 trillion in July, down from N12.62 trillion recorded in June.  But in all, the market has facilitated N78.90 trillion investments in seven months. Link
  8. Nigeria’s interbank overnight lending rate fell sharply on Friday to an average of 12 per cent from around 60 percent a week ago after the central bank repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars. Link
  9. Although Nigeria and many of the African countries are admired for being commodity markets, a study of importation in the country shows that Nigeria has spent as much as N19.5tn on the importation of primary raw materials into the country in the past seven years. Statistics obtained from the Raw Materials Research and Development Council showed that between 2010 and 2015, Nigeria spent N13.6tn on the importation of raw materials that could be replaced with other materials from local sources if some more rigorous work could be put into the country’s import substitution strategy. Link
  10. South Energyx Nigeria Limited, developers of Eko Atlantic City and real estate investment firm, Fine and Country, as well as other stakeholders are partnering to woo investors to Nigeria’s real estate market. The Vice-Chairman of South Energyx Nigeria Limited, Mr. Ronald Chagoury Jr, said the Refined Investors Series 2017 scheduled to take place in London, United Kingdom on October 6th and 7th, would be a leading premium real estate forum, targeting Nigerians in the Diaspora and other international investors. Link
  11. The Ondo State Governor, Mr. Rotimi Akeredolu, has called on the Federal Government to assist the state in the area of provision of potable water for the people of the state. Link
  12. Traders under the aegis of Henshaw Town Beach Market Traders’ Union on Saturday shut down the popular Marina Beach Market in Calabar, Cross River State over an alleged imposition of high levies by government agents. The aggrieved traders, protesting against the introduction of waterfront regulatory economic levies which ranged from N200 to N15,000, also vowed not to open the market until the government reversed the new charges and levies. Link
  13. Insurance companies have jerked up premium rates for flood insurance by 50 per cent, in response to increased flooding incidences across the country. Link
  14. As the federal government continues to grapple with means of settling its huge pension deficit, an additional N20 billion liability would be added to the stack upon passage of the bill for the exemption of the Police and other paramilitary agencies from the Contributory Pension Scheme, CPS. LInk
  15. Tin Can Island Comptroller, Yusuf Bashar, at the weekend, disclosed that his command generates an average of N1.2 billion, daily to the Federal Government coffers. Link
  16. Despite the excitement that trailed the launch of Federal Government of Nigeria (FGN) Savings Bond, investors’ participation in it has not been too impressive even with its high coupon rate. This is because the amount allotted has dropped consistently from N2.07 billion in March 2017 to N400.57 million in July 2017. According to data from FSDH Research, total number of investors in the FGN Savings Bond also dropped from 2,575 in March 2017 to 779 in July 2017. Link
  17. The Insurers Committee has differed on how to carry out its much-publicised N300 million insurance industry rebranding project. The group with umbrella bodies, Nigeria Insurers Association (NIA), Nigeria Council of Registered Insurance Brokers (NCRIB) and Institute of Loss Adjusters of Nigeria (ILAN) as members, disagreed over the sharing formula of the project expenses and which operator will be most favoured from it. The committee comprises the National Insurance Commission (NAICOM),  chief executive officers(CEOs) of 58 insurance firms, over 400 broking firms and loss adjusters. Link
  18. The Food and Agricultural Organisation (FAO) in collaboration with Africa Rice Nigeria has distributed 51 bags of improved rice seeds to 50 farmers in Anambra to boost production. Mr Andrew Ikhadeunu, FAO National Project Coordinator, Rice Value Chain, told newsmen in Awka on Monday that the beneficiaries were earlier selected and trained in February. “They were given demonstration plots for planting. Now they have harvested, we are following it up with the improved seeds of 51 bags of rice for them,’’ he said. Link
  19. The illegal occupation of Belema Flow Station and Gas Plant in Rivers State has safety implications both for the people at the facilities and nearby communities, the Shell Petroleum Development Company of Nigeria Limited (SPDC) has warned. Link
  20. Semic International Limited has said it is not in partnership with Konga and Jumia to boost The Billion Coin (TBC) or digital currency acceptance in the country. In a statement, Semic International Limited, said contrary to reports that the company was in a partnership with Jumia or Konga for the acceptance of Crypto currency in the country, it only signed up with both firms as independent sales agents. Link
  21. Caverton Offshore Support Group Plc has secured a five year logistics support contract from Chevron Nigeria Limited, the operator of NNPC/CNL Joint Venture, for the provision of aviation services. The contract, awarded to one of the company’s subsidiaries, Caverton Helicopters, is with a 2-year renewable option. Link
  22. The Board of Director of Nigerian Aviation Handling Company has announced the appointment of Mrs. Folashade Ode as Acting Managing Director/ CEO with effect from August 7th 2017. Her appointment follows the resignation of Norbert Bielderman with effect from August 31st 2017. Link
  23. Africa’s conglomerate and indigenous investor, Dangote Group, has signed a Memoranda of Understanding (MoU) with Kano state Government, for a proposed multi-million dollars 100MW Dangote-Black Rhino Solar Power Project. Link
  24. Mr Nicolas Terraz, the Managing Director and Chief Executive, Total Upstream Companies in Nigeria, said the companies invested over 10 billion dollars in the country oil and gas sector.  According to him, with expertise and strong position in the onshore, offshore and deep offshore, its Egina field development nearly completed, was expected to add 200,000 barrel per day to Nigeria’s output on stream in 2018. Link
  25. Global Utilities Management Company (GUMCO), a subsidiary of Vigeo Group, has signed a long-term partnership agreement with Genus Power Infrastructures Limited for the manufacturing, assembling and development of power metering solutions for Nigeria and other countries in the West African sub-region. Link
  26. As the House of Representatives Committee on Public Accounts awaits details of disbursements of loans to its customers by the Bank of Industry (BoI), it emerged at the weekend that as much as N13billion was advanced to small and medium enterprises (SMEs) by the bank as at April this year. Link
  27. The Jaiz Takaful Insurance Plc has commenced operations in Nigeria with the promise that all policy holders would be paid at the end of every fiscal year either through claims or profit sharing. Mr. Momodou Musa Joof, Managing Director, Jaiz Takaful Insurance Plc, stated this while speaking at a press briefing in Abuja. Link
  28. FBN General Insurance Limited has announced the appointment of Babatunde Mimiko as its Executive Director. The company said in a statement that Mimiko brings on board a sterling 18-year career across the financial services industry including a short stint in banking. Link
  29. The Managing Director, AfriGlobal Insurance Brokers Limited, Mr. Casmir Azubuike, has said that the company plans to expand its operations beyond the shores of Nigeria and become a major international broker. Link
  30. Staco Insurance Plc said the group paid N2.08bn claims to its clients in 2016 financial period. Link
  31. The Coordinator of natnudO Foods’ broiler out-grower scheme tagged, “natnuPreneur”, Mr. Gbolade Adewole, has said that farmers registered under the six-seven week broiler production scheme, have consistently enjoyed between 7.5 per cent and 15 per cent profit on investment per cycle. With a potential to conclude five cycles per year, efficient farmers stand to make between 37.5 per cent and 75 per cent profit per annum, making natnuPreneur “broiler out-grower” the most profitable poultry scheme in the country. Link
  32. The Oyo State Governor Abiola Ajimobi on Saturday announced the introduction of the Electronic Certificate of Occupancy, thereby ditching the use the paper-based Certificate of Occupancy. Link

 

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Mudeerat Olawunmi is a graduate of Business Administration with over 5 years experience in online data gathering and analysis. Wunmi is a data analysts at Nairametrics and helps ensure that our readers get some of the most important macro and micro economic data required to help make investing decisions.

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Business News

Oil & Gas: DPR announces 2020 marginal field licensing round

While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties.

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DPR

The Department of Petroleum Resources (DPR) on Monday announced the commencement of the 2020 marginal field bid round. This bid round is coming 18 years after the last bid round in 2002 and is open to indigenous oil & gas companies and investors interested in participating in the exploration and production business in Nigeria. Marginal fields are known oil or gas discoveries on an IOC-owned block and where there has been no activity in at least the last 10 years. With the agreement of the IOC, the DPR carves-out a piece of land surrounding the discovery and this becomes a Marginal field. On this occasion, there are 57 marginal fields available for bidding, including 11 fields revoked by the DPR.

The exercise would be conducted electronically and would include expression of interest/registration, pre-qualification, technical and commercial bid submission, and bid evaluation. The process is expected to be completed in six months. The first bid round that was formally organised by the FGN began in 2001 and was concluded in 2003. At the end of the bid round, 24 licenses were awarded to 31 indigenous companies. Another bid round was proposed in 2013 with a lot of preparation and guidelines released. Unfortunately, it never held.

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Flagging off this bid round under the current economic situation points to the government’s urgent need for funds. According to the DPR guidelines, interested bidders will be required to pay a total of US$115,000 and N5m in non-refundable statutory fees comprising an application fee of N2 million per field, Bid Processing Fee of N3million per field, Data Prying fee of $15,000 per field, Data Leasing fee of $25,000 per field, Competent Persons Report of $50,000 and $25,000 for Fields Specific Report.

While we see the need for these asset sales to generate much-needed revenue for the Federal Government, we are concerned that a bidding process under the current environment will be fraught with difficulties. Firstly, the current fluctuations in oil prices may mean that intending investors may base their valuations on pricing models that can become unrealistic in the near term and then are unable to develop such fields acquired. Many local companies have been hard hit by the effects of covid -19 and the ensuing significant decline in oil prices, hence they may not have sufficient cash flows nor be able to raise needed funds from both local and international banks.

In addition, we see regulatory difficulties hampering interest in the fields. For example, the lack of passage of the long awaited Petroleum Industry Bill (PIB) remains a significant deter. Furthermore, the recently passed Deep Offshore and Inland Basis Production Sharing Contracts (Amendment) Act (DOA) has made investments in Nigeria oil & gas assets less attractive. These negative regulatory sentiments has led to many IOCs decreasing investments in the Nigerian oil & gas industry. Overall, we think this may result in many of the fields ending up in the hands of individuals with cash but with no industry expertise. Again, with the current economic crunch, many of the fields may be sold significantly below their fair value.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly-owned subsidiary of FCMB Group Plc and is regulated by the Securities
and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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May Output Cut: OPEC+ records 86% compliance as Nigeria beats expectation

Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.

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OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation

As OPEC+ pushes for an extension of the current output cut of 9.7 million barrels beyond June, a new report suggests that the alliance may have achieved a fairly impressive level of compliance in May, the first month of the biggest global effort to curtail oil production.

Energy Intelligence estimates that the alliance achieved an 86% compliance rate (in May) with the production cut of 9.7 million barrels per day that was agreed for both May and June. This contradicts the 74% compliance rate that was earlier reported by a Reuters survey.

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The massive output cut is intended to counter the dramatic slump in global oil prices which was triggered by the coronavirus pandemic and supply glut. The output cut has since helped to move up prices well above the April lows.

Meanwhile, some West African OPEC members fell short of their pledged output cuts, with Angola and Congo recording compliance rates of 54% and 20%, respectively. Gabon’s May output actually exceeded its volumes in October 2018, which was chosen as the baseline month against which the cuts are measured.

(READ MORE: Oil prices hit 2-months high as Bonny light rises to $33.9/barrel over vaccine test optimism)

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However, the compliance by Nigeria for the month of May was better than the expected 83% after its output fell by around 260,000 barrels per day between April and May. This is, however, at variance with 52% compliance that was disclosed by Nigeria’s Minister of State for Petroleum, Timipre Sylva.

Worry for Nigeria as forecast shows OPEC countries will face a challenging 2020 , Why OPEC may not change output cut soon, Weaker oil demand overshadows proposed OPEC output cuts, as oil price dips , Nigeria tops compliance list, as OPEC’s December crude output drops, OPEC, Russia planning biggest oil cut ever, OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation

Some of the non-OPEC member countries recorded less than impressive compliance rates. Kazakhstan, Brunei, and South Sudan recorded 47%, 22%, and 13% compliance respectively.

The OPEC+ alliance’s overall compliance rate was lifted by the performances from four of its top five producers, which were close to 100%. Among these heavyweights, only Iraq lagged well behind with a compliance level of less than 50%.

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Russia failed to live up to its obligations under previous OPEC+ deal. But after removing condensate, which is not counted as part of its current quota, its oil output is 8.6 million barrels per day in the month of May; indicating an impressive 96% compliance rate.

Patricia

Compliance is expected to improve in the month of June.

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COVID-19 palliative: Sanwo-Olu concludes Homegrown School Feeding Programme

The homegrown school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3

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Sanwo-Olu, COVID-19: Lagos ramps up measure to smash disease as it begins fumigation, Covid-19: Total lockdowm imminent as Lagos fears confirmed cases could hit 39,000, Hotels to remain shut in Lagos, as manufacturing and construction companies get conditional waivers, COVID-19 palliative: Sanwo-Olu concludes Homegrown School Feeding Programme

The modified homegrown school feeding programme, launched on May 21, as part of palliatives offered by the Lagos state government to cushion the economic impact of the COVID-19 pandemic, has been concluded.

The programme, which basically modified the already existing school feeding programme, was targeted at providing food packages for 37,589 households of pupils in Public Primary Schools years 1-3.

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According to an official tweet from the Lagos state government, the programme was concluded on Tuesday, June 2, 2020.

The Executive Chairman of Lagos State Universal Basic Education Board, LASUBEB, Mr. Wahab Alawiye-King, noted that the distribution of the packages to the beneficiary households took off on May 21, and was spread across 202 centres across the 20 Local Government Education Authorities in the State.

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(READ MORE:COVID-19: Lagos receives N200 Million, 5 ambulances from BUA Foundation)

Items contained in the Take-home rations:

Each beneficiary of the packages received a take-home ration made up of “5kg Bag of Rice; 5kg Bag of Beans; 500 ml Vegetable Oil; 750ml Palm Oil; 500mg Salt; 15 pieces of eggs and 140gm Tomato Paste,” which is expected to assist the parents and guardians feed the children as they remain at home during the prolonged holiday.

What you should know:

The Federal government also introduced a modified homegrown school feeding programme on May 15 to be coordinated by the Honourable Minister of Humanitarian Affairs, Disaster Management and Social Development, Sadiya Umar Farouq.

Farouq noted during one of the Presidential Task Force media briefings that the distribution of Take-Home Rations (THR) to the households of the children on the programme as a feasible method, after exploring several options of reaching children in vulnerable households.

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Each Take-Home Ration is said to be worth N4,200, although the Minister has not released full details of the programme.

Patricia

According to the World Food programme, there are 17 countries currently distributing Take-Home rations to school children. In Liberia, Take Home Rations have been distributed since 2019.

 

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