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Kachikwu clears air on ₦1.4 trillion “under-recovery” payment

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DR. IBE KACHIKWU’S TWEETCHAT WITH NAIRAMETRICS

The Minister of State for Petroleum Resources, Ibe Kachikwu, has clarified comments credited to him over the ₦1.4 trillion under recovery fund spent by the Nigerian National Petroleum Corporation NNPC annually on fuel imports.

The Minister noted that the NNPC is in the best position to give the exact under-recovery figures.

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The government uses “under-recovery” figure to refer to the subsidy it pays on petrol imports.

The Minister had earlier said the country now spends about  ₦1.4 trillion annually on subsidy, a significantly higher figure than the  ₦774 million daily spending the NNPC have a month earlier.

In his words:

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“It is time for Nigeria to harness alternative fuel sources like Liquefied Petroleum Gas LPG as under-recovery from the importation and sale of petrol at the government regulated price of  ₦145 per liter has hit  ₦1.4 trillion.”

However, the Minister has come out to debunk making such claims noting that the  NNPC was in the best position to give the accurate figures of the amount of under-recovery involved because the body was importing most of the petrol retailed in Nigeria.

Recall that the national assembly has also called for an investigation into the under-recovery fund spent by the NNPC on fuel imports into the country noting that such funds were not provided for in the 2017 budget.

The Nigerian National Petroleum Corporation (NNPC) was established on April 1, 1977.

In addition to its exploration activities, the Corporation has powers and operational interests in refining, petrochemicals and products transportation as well as marketing.

 

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Patricia

Fikayo has a degree in computer science with economics from Obafemi Awolowo University. ITIL v3 in IT service management. An alumnus of Daystar Leadership Academy. Prior to joining Nairametrics had stinct in Project management, Telecommunications among others. Also training in Consulting and Investment banking from Edubridge Academy. He has very keen interest in Politics, Agri-business, private equity and global economics. He loves travelling and watching football. You can contact him via fikayo.owoeye@nairametrics.com

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Business News

Dangote, BUA Cement drag Nigerian Stock market down, investors lose N154.28 billion

Investors lost N154.28 billion in value, as market capitalization dropped to N13.04 trillion at the Nigerian Stock market.

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Dangote Cement Plc, stock market, NSE, Nigerian stock exchange

Nigeria’s stock market finished the week on a poor note, extending its previous day’s loss. The ASI declined by -1.17% to 25,016.00 index points. Consequently, the Year to Date loss dipped to -6.88%. Also, investors lost N154.28 billion in value, as market capitalization dropped to N13.04 trillion.

In terms of activity levels, market activity mirrored the broad index as total volumes and values declined by -20.61% and -52.51% to 214.49 million units and 2.51 billion respectively. ZENITH BANK was the most traded stock by volume at 22.2 million units, while NB topped by value at N666 million.

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READ ALSO: List of Dividends announced so far in 2020 (June)

Market sentiment, measured by market breadth, was however positive with 22 gainers led by BOCGAS (10.00%), against 18 losers topped by CABDURY (-9.47%).

Across the major indexes we cover, four out of five indexes closed negative. The Industrial goods (-3.91%) index was the worst performer, due to BUACEM (-5.44%) and DANGCEMENT (-2.04%) price decline. The Consumer Goods (-1.23%) and Energy (-0.96%) indices followed, owing to sell-offs in CADBURY (-9.47%); NB (-4.55%); GUINNESS (-3.68%) and OANDO (-2.22%).

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Also, the Banking (-0.28%) index lost points, as prices of GUARANTY (-2.45%) and FBNH(-1.82%) fell. The Insurance index was the lone gainer, up +0.06% on price appreciation in CHIPLC, CUSTODIAN & AIICO Insurance.

READ MORE: GTBank, Zenith Bank, Nestle emerge Renaissance Capital’s top stock picks

Top gainers

BOCGAS up 10.00% to close at N4.4; SKYAVN up 9.64% to close at N2.73; NASCON up 1.77% to close at N11.5; CUSTODIAN up 3.42% to close at N6.05; and NEIMETH up 9.94% to close at N1.77.

Top losers

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CADBURY down 9.47% to close at N7.65; BUACEMENT down 5.44% to close at N40; NB down 4.55% to close at N42; GUINNESS down 3.68% to close at N18.3; and DANGCEM down 2.04% to close at N139.

Patricia

Outlook

Market dropped close to the N13 trillion market capitalization support level, as heavy selling was observed among blue-chip stocks. Nairametrics recommends caution as price swing momentum strengthens.

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Business News

Buhari reappoints Danbatta as NCC Vice Chairman/CEO

With the reappointment, Danbatta will continue serving in the capacity of NCC Vice Chairman and CEO for another 5 years.

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Buhari reappoints Danbatta as NCC Vice Chairman/CEO

President Muhammadu Buhari has approved the reappointment of of Prof. Umar Garba Danbatta as Executive Vice Chairman, and Chief Executive Officer of the Nigerian Communications Commission (NCC).

This means that Danbatta will continue serving in the capacity of NCC Vice Chairman and CEO for another 5 years.

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Personal assistant on New Media to President Muhammadu Buhari, Bashir Ahmad announced this via his twitter handle on Friday evening.

READ MORE: Nigerian economy going into recession, might contract by -8.9% – Finance Minister

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This reappointment was based on the recommendations of the Honourable Minister of Communications and Digital Economy, Dr Ali Ibrahim Pantami, and contained in a Press statement from the ministry.

https://twitter.com/FMoCDENigeria/status/1268927885726924808/photo/1

READ ALSO: Construction of ICT Parks nudges Nigeria into digital transformation

While wishing him well in his second tenure, Pantami urged Professor Danbatta to consolidate on gains and achievements of his first term.

“The honourable minister directed him to significantly improve on the overall performance of the commission as well as ensure that adequate mechanisms are put in place to facilitate the implementation of all policies of the Federal Government through the ministry” the statement read.

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Patricia

The professor of Telecommunications engineering had lectured for about three decades before his previous appointments. At different times, he also served as a member of the Implementation Committee of the Northwest University Kano, as well as served as the Acting Vice-Chancellor of the Kano University of Science & Technology, Wudil.

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CBN debits banks another N459.7 billion for failure to meet CRR target

Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures.

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CBN

The Central Bank of Nigeria (CBN) has debited twenty-six banks, including merchant banks, to the tune of N459.7 billion for failure to meet their CRR (Cash Reserve Ratio) obligations. The fresh debit, which Nairametrics reliably gathered occurred yesterday, has left many stakeholders in the banking sector very upset.

The details: Among the banks that were most affected are United Bank for Africa Plc (N82.3 billion), First Bank of Nigeria Ltd (N59.3), Zenith Bank Plc (N50 billion), First City Monument Bank (FCMB) Limited (N45 billion), and Guaranty Trust Bank Plc (N40 billion). The rest of the affected banks can be seen in the table below.

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Note that the latest CRR debits are coming barely one month after a lot of banks were collectively debited to the tune of N1.4 trillion for the same reason in April. Between then and now, a lot of other minor CRR debits have occurred. Nairametrics understands that the apex bank now debits banks on a weekly basis.

Some backstory: During the CBN’s Monetary Policy Committee (MPC) meeting that was held last month, committee members voted to retain CRR rate at 27.5%. The rate was increased in January this year from 5% to its current level after the apex bank cited inflationary pressure concerns. What this means, therefore, is that Nigerian banks are required to keep 27.5% of their deposits as CRR with the Central Bank of Nigeria.

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But banks are silently upset: Sadly, this move, in addition to similar policies by the CBN, has left many banks cash-strapped and unable to pursue various profitable ventures. While reacting to the latest development, a banker who refused to be identified, said:

“What we’ve seen in recent times is that the CBN just indiscriminately debits banks, usually towards the stale-end of every week. They will look at your bank account and if your liquidity is plenty, they will debit you.

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“You know the central bank also does what we call retail FX intervention, that is when they sell FX to corporates. Now, because they don’t want banks coming with huge demands, what they do is that a day before the FX sales, they debit the banks so that the naira you have available is small and you cannot put them under pressure because of your FX demands. That has really been the driver.

READ ALSO: Central banks digital currencies pose a threat against the U.S dollar

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“We understand that the central bank had set up a special CRR team that is supposed to monitor banks’ CRR once a month. But now, the team monitors banks’ CRR on a weekly basis. This is why the central bank is effectively debiting banks on a weekly basis. Some weeks ago, they debited some banks about N1.4 trillion. That was one of many. Between that time and now, there have been more debits that have happened. But the debits that are huge/significant are what is troubling the banks. There was a N300 billion that happened about two weeks ago. and then yesterday that was this N459.7 billion that was also debited.

Patricia

“These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%. So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”

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