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Business News

Seplat has been accused of violating local content policy

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Seplat Petroleum and NNPC gas project, Nigerian National Petroleum Corporation, Seplat Petroleum Development Company Plc, Economic diversification in Nigeria, Crude oil in Nigeria, OPEC

The Nigerian Content Development and Monitoring Board (NCDMB) has ordered Seplat Petroleum Development Company Plc to suspend work on its ANOH Gas Plant project in Oil Mining Lease (OML) 53.

In a letter with reference number NCDMB/MED/UP/18/049, NCDMB’s Director of Project Monitoring and Evaluation, Mr. Tunde Adelana, accused Seplat of commencing engineering and fabrication of ANOH Gas Plant for OML 53 through Global Process Systems of UAE.

This the agency noted is in violation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 by using a UAE firm for the engineering and fabrication as well as tenders for other integration and construction work without the approval of the agency.

Dr. Chioma Nwachuku, Seplat Petroleum’s spokesperson, however debunked claims that the company violated the Nigerian Content law in the ANOH Gas project, noting that the partners have not signed the Final Investment Decision (FID) for the gas project, which is a joint venture with the Nigerian National Petroleum Corporation (NNPC) and could not have violated the Nigerian content law in a project that has not been awarded.

In her words:

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“We have not taken the FID. How can we award contracts without funding? Where will the money come from? Seplat and partners have not taken the FID. There is no contract that has been awarded at this stage. We don’t know where they (NCDMB) are getting the report from.”

Seplat in its 2018 guidance, listed some of the projects to be undertaken during the year part of which include the drilling of two oil production wells in Ohaji South in OML 53 and one oil production well workover at Jisike and flow line installation to enhance productivity and also plans to upgrade its Sapele gas plant during the year.

The company also noted a progress towards FID for the large-scale ANOH gas and condensate development at OML 53 in 2018.

Likely effect on the company bottom line

Seplat incorporated a new subsidiary, ANOH Gas Processing Company Limited in 2017, the major activity of the subsidiary is the processing of gas from its OML 53. It is described as one of the largest greenfield gas condensate development projects in Nigeria.

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In its Q1 2018 report for the period ended 31st March 2018, the company recorded improved earnings from the gas revenue. Net working interest gas production of 158 MMscfd which translates into gas revenues of US$40 million, a new quarterly high.

A total stoppage on the new ANOH Gas Plant project may impact negatively on the company’s revenue from gas business.

Also, in its recently released Q1 2018 results show a strong quarterly performance with US$181 million in revenue and gross profit US$93 million (51% gross profit margin); EBITDA of US$116 million which was driven by higher total production and higher oil price realization of US$65.78/bbl; average gas price US$2.79/Mscf. While Profit Before Tax for the period stood at US$59 million and Net profit stood at US$21 million.

Recall that Seplat recently successfully refinanced its existing US$300 million revolving credit facility due December 2018 with a new four year US$300 million revolving credit facility due June 2022 the proceeds will be used to repay and cancel existing indebtedness.

Seplat Petroleum Development Company Plc was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014.

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The company is listed on both the Nigerian Stock Exchange and London Stock Exchange. Its shares are currently trading at ₦734.70 on the floor of the Nigerian Stock Exchange, with a 104.83% one-year return.

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The Nigerian Content Development and Monitoring Board (NCDMB) was established by the Nigerian Oil and Gas Industry Content Development Act (NOGICD) of 2010.

 

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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 [email protected]

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Companies

Nigeria’s border reopening will not impact profitability in 2021 – Flour Mills GMD

Flour Mills Nigeria Plc has stated that the recent reopening of the nation’s land borders will not affect the profitability of the company.

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Mr. Omoboyede Olusanya, the Group Managing Director of Flour Mills Nigeria Plc has disclosed that the recent reopening of the nation’s land borders will not adversely impact the performance and profitability of the company in 2021 and beyond.

He added that FMN will continue to leverage brand loyalty, product standardization and innovation, as well as improved cost efficiency to increase profitability in 2021.

This statement was made by the Olusanya during the company’s 9M’20/21 Investor Webinar which held virtually on January 26, 2020.

According to the statement made by Mr. Olusanya at the virtual meeting, the reopening of the nation’s land border will not affect the company’s sales and revenue, as Flour Mills Nigeria is focused on increasing operational efficiency with accelerated plans for cost optimizations across the group to ensure competitive product offerings and profitability in the new operating environment, occasioned by the border reopening.

He revealed that the company will continue to invest in local content development, production capacity and aggregation to strengthen product innovation and product standardization in a bid to foster brand loyalty.

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In line with this, Flour Mills Nigeria has invested heavily to upscale its Regional Distribution Centers (RDCs), in order to gain direct access to consumer market segments across the country, and expand consumer reach with the road to market initiatives and product offerings across the group, especially in the B2C segment.

Olusanya revealed that the group has successfully opened new regional distribution centers (RDCs) in Kano, Magboro and Abuja targeting the new fast-growing B2C product categories (fats, sugar and garri).

He added that the FMN Group among other strategic investments made, has invested in trucks to support the RDCs, animal feeds and starch value chains; as well as sales force automation platforms to ensure high-quality processes and services.

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He concluded that the activities of the company will be complemented by the efforts of the nation’s border security, as these agents would ensure that the borders do not become porous, and would help to curtail markets from being proliferated by imported items.

What you should know

  • Recall that Nairametrics reported that Flour Mills Nigeria Plc declared a profit of N5.65 billion in the third quarter ended, 31st December 2020.
  • The report revealed that the profit which Flour Mills made in the third quarter of its accounting year 2020/2021 rose by a whopping 150.36% when compared to the profit it made in the corresponding period of 2019.
  • It is important to note that the impressive performance of the company was driven by the agro-allied segment. The Agro-Allied segment benefited immensely from the August 2019 border closure, as the profit from this segment improved by 15,268%.

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Coronavirus

South African President appeals to wealthy countries not to hoard COVID-19 vaccines

South African President, Cyril Ramaphosa has called on the world’s wealthiest countries to stop “hoarding” vaccines.

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South Africa High commission in Nigeria shuts its offices, South Africa announces 21-day lockdown following spike in Coronavirus cases

The South African President, Cyril Ramaphosa has urged the world’s wealthiest countries to stop “hoarding” vaccines and called for an end to “vaccine nationalism.”

He made this call at the World Economic Forum’s virtual Davos Agenda event, where he clearly cautioned that some countries had ordered more supplies of vaccines than they needed, and that this was counterproductive to the global recovery effort.

According to him,

  • “Ending the pandemic worldwide will require greater collaboration on the rollout of vaccines, ensuring that no country is left behind in this effort”
  • “The rich countries of the world went out and acquired large doses of vaccines from the developers and manufacturers of these vaccines, and some countries have even gone beyond and acquired up to four times what their populations need”
  • “That was aimed at hoarding these vaccines and now this is being done to the exclusion of other countries in the world that most need this”

What they are saying

According to Africa CDC Director, John Nkengasong, the African continent is quite facing a “very aggressive second wave” of the pandemic, with mortality increasing on average 18% across the 55 African member states last week.

“We as a continent must recognize that vaccines will not be here when we want them, but as such we need to really focus on the public health measures that we know work”

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He however praised the progress of the African Vaccine Acquisition Task (AVAT) Team, which he said was created when AU nations realized “how the world’s richest countries are behaving.”

What you should know

  • South Africa is the country, worst hit by Covid-19 on the continent.
  • As at date, the country had recorded more than 1.4 million cases with 41,117 deaths.
  • The African Vaccine Acquisition Task (AVAT) Team has secured a provisional 270 million doses for AU member states directly, in addition to the 600 million expected from the World Health Organization’s COVAX initiative.

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Coronavirus

IMF optimistic about global economy but warns new Covid variants could affect recovery

IMF is quite optimistic about the fortune of the global economy but expressed fear that the new Covid variant could derail economic recovery.

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IMF

The International Monetary Fund (IMF) has expressed optimism about the global economy but warns that the new COVID 19 variant could affect the global economic growth, according to its latest World Economic Outlook.

According to the report, “the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022”.

According to its Chief Economist, Gita Gopinath:

  • “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens.
  • “There remains tremendous uncertainty and prospects vary greatly across countries.
  • China returned to its pre-pandemic projected level in the fourth quarter of 2020, ahead of all large economies. The United States is projected to surpass its pre-Covid levels this year, well ahead of the euro area.
  • “Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives of raising potential output, ensuring participatory growth that benefits all, and accelerating the transition to lower carbon dependence.”

What you should know

  • There has been a surge in the number of reported cases of the new variant Covid-19 infections and deaths over the past few months.
  • The new variant has been described as being more infectious and potentially deadlier than the original strain.
  • The IMF had cut its GDP forecasts for the euro zone this year by 1%.
  • It is being projected that the 19-member region, which has been severely hit by the pandemic, would grow by 4.2% this year.
  • Germany, France, Italy and Spain — the four largest economies in the euro zone — also saw their growth expectations cut for 2021.
  • Economic activity in the region slowed in the final quarter of 2020 and this is expected to continue into the first part of 2021. The IMF does not expect the euro area economy to return to end-of-2019 levels before the end of 2022.
  • IMF revised its GDP forecast upward by 2% points on the back of a strong momentum in the second part of 2020 and additional fiscal support, with GDP expected to grow to 5.1% this year.

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