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Federal government to sanction operators that breached NNPC $6 billion swap agreement

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Minister of State for Petroleum Ibe Kachikwu has disclosed that the Federal Government will reappraise the Nigerian National Petroleum Corporation (NNPCs) $ 6 billion crude oil swap agreement. Nigeria was last month thrown into a severe fuel scarcity, which President Muhammadu Buhari blamed on saboteurs. The President also vowed to get to the root of the matter, and prevent a reoccurrence.

What is the crude oil swap agreement about ?

Under the agreement, the NNPC provides monthly crude oil lifting in return for the delivery and supply of Nigerian standard specification of petroleum products equivalent in value to the Crude Oil received from NNPC subject to general terms and conditions as would be advised in the term sheet. The DSDP agreement replaces the previous subsidy regime which was marred by fraud and irregularities.

Why  the swap agreement failed

Kachikwu also revealed that the agreement failed due to the inability of some operators to deliver petrol and bringing in diesel instead.

 A lot of people who took the DSDP programme to deliver products failed in their deadlines – some for profiteering reasons, some for just sheer lack of capacity.

The long term solutions according to him, were for the NNPC and other marketers to bring their products, and Nigeria’s refining capacity to be improved. In addition, Kachikwu also suggested that he would consider tax relief options for some of the importers.

A price increase may inevitable

As admirable as the solutions suggested by Kachikwu are, they do not address the core of the issue. The government has to deregulate the petroleum sector and allow importers to bring in products, and sell at a profitable price. The much hoped on refineries may not focus on supplying the domestic market if pump prices are still being regulated. The NNPC also has its fair share of blame. Why would it award contracts to operators without the required capacity ?

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

Corporate Press Releases

Meristem presents Outlook for 2021 titled ‘Bracing for a different future’

Meristem for the past 16 years has been consistent in value creation and innovation within the capital market space.

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Meristem Securities Limited, a leading capital market conglomerate has recently launched its economic outlook report for the year 2021. The outlook report titled ‘Bracing for a Different Future’ highlighted in depth a wide range of issues relevant to an evolving future. With a global economy that has been scarred by the impact of the COVID-19 pandemic, the domestic economy was not left out, as the Nigeria economy slipped back into a recession, amplifying the structural weakness of the domestic economy in the form of weakening exchange rates, rising inflation, among others.

In Meristem’s H2:2020 Outlook: “Unmasking Value in a Scourge”, Meristem had warned that the threat of a second wave of new infections was very much a possibility. As a result, the recovery of economic activities would remain fragile until a vaccine is developed. Hence, much would depend on strict compliance with social distancing and healthcare measures as economies gradually re-opened. The Deputy Managing Director of Meristem, Sulaiman Adedokun, stated that while the rising number of daily infections pose a threat to economic activities, we expect a rebound of the domestic economy”.

Launching the outlook “Bracing the future” during a webinar attended by institutional investors, corporate clients, retail investors amongst other industry professionals, Sulaiman also commented on the equities market highlighting that “The equities market recovered from deep selloffs to finish as the best performing equities market last year, citing unattractive yields in the fixed income market, excess liquidity and a resilient corporate performance in the middle of a pandemic as major factors which drove the market.” “We expect these factors to persist thereby sustaining the positive momentum of the market through the better part of the year; in the first half of the year, we expect the financial market to be dominated by attractive dividend yields and the low yield in the fixed income market,” Sulaiman added.

The face of work has changed and many corporate organizations and their employees are rapidly adopting cutting-edge technology to meet the future of work in a COVID-19 era. While fielding questions from journalists about how the organization has deployed its business continuity plan, Sulaiman expressed that “The pandemic has influenced changes amongst people globally and we have enabled this change in our organization by utilizing the power of technology, we have also adopted a work from home culture that enables team collaboration through technology, we intend to maintain this even beyond the pandemic.”

Meristem offers a wide a range of services that cater to all classes of investors regardless of the stage in their financial journey, services like stockbroking, wealth management and financial advisory help clients to access various opportunities within the capital market. Via Meritrade, an online stockbroking platform, investors can trade stocks from anywhere around the world as well as better manage their shares and enjoy access to the most exclusive market research.

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Meristem for the past 16 years has been consistent in value creation and innovation within the capital market space. In 2018, the Nigerian Stock Exchange awarded Meristem as the Best Digital Broker of the Year. In the same year, Meristem also became the first Nigerian asset management firm to attain compliance with the Global Investment Performance Standards (GIPS) by the CFA Institute. Still, in 2018, Meristem received two nominations from Business Day, for the best Money market Fund and Equity Fund.

The firm has remained a leading player in Nigeria’s competitive investment market with a solid reputation as a highly professional and client-centric firm, helping to take their clients farther.

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Market Views

Netflix gains 17% after beating investors expectation

Netflix for the first time ever passed the 200 million subscriber mark and had an impressive reserve of  $8.2 billion in cash.

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Netflix supporting education by offering some free shows

Netflix’s share price bounced about 17% higher after it beat market expectation, powering the video streaming stock to close high after adding more customers than expected and revealed it no longer needs debt in building its entertainment empire.

The positive upbeat guidance on free cash prompted bullish remarks from Wall Street analysts, though some questioned how much of the subscriber growth was pulled forward.

Stock traders increased their buying pressure on Netflix stock because of the surprisingly strong growth, as well as news that Netflix balance sheets are solid enough for Netflix considering share buybacks. Shares jumped 17% percent to $586.34 in recent trading Wednesday.

Netflix for the first time ever passed the 200 million subscriber mark and had an impressive reserve of $8.2 billion in cash.

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COVID-19 pandemic has aided Netflix’s business, forcing people in spending more time indoors coupled with curbing other traditional entertainment options like movie theaters and concerts.

Netflix added 25.9 million customers in H1, 2020, and ended up adding 36.6 million customers in all – a record.

“Investors come out of the fourth quarter incrementally more bullish on the potential of a powerful developing shareholder return story for Netflix in the coming years,” Evercore ISI analyst, Lee Horowitz wrote in a note to Bloomberg News.

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Analysts at J.P. Morgan Securities said the company is likely to begin share buybacks in the second half of the year.

Quick fact: Netflix is an American streaming company that allows subscribers to watch movies, documentaries, different popular TV shows, and many more through internet-connected hardwires.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics also spoke on the impressive gains sighted in the $259 Billion valued company;

“Earnings reports also underpinned equity sentiment. Netflix rose 16% after noting its subscriber numbers increased by a record 37 million in 2020. Serenely, it seems lockdowns and TV go hand in hand.

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“A testament to the maximum policy overdrive, investors wasted little time getting their feet wet after Janet Yellen espoused by the Biden “go big” policy approach to repair the economic damage caused by the pandemic, which also highlights the importance of helping small businesses and the unemployed.”

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What to expect: The Stock market is seeing through longer lockdowns on the premise that COVID vaccinations will lead us out of the pandemic quickly and had helped triggered significant buying pressure on stocks like Netflix taking advantage of reduced social mobility in play

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Business Half Hour

Commercial Banks are still a major competition to Mortgage Banks in Nigeria

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BHH, Podcast, WAVE, entrepreneurs, business, Nigerian, concept, business, ethics, Goal, Setting, Actualization, Greymate Care, Chika Madubuko,, business ethics Femi Adeyemo, BHH Podcast, Fundall, Swift Medispark, Ugo Nwokoro, technology in healthcare, EazyHire, Data Science, Yvonne Alozie, Gitgirl, Verifi, CAMA and taxes for SMEs, Tayo Lekan-Agbaje, Dclutterng, Business half hour, BHH Podcast, Oluyomi Ojo, Taiwo Obasan, Nigerian shoes business

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