The Federation Account Allocation Committee (FAAC) disbursed the sum of N619.86bn to the three tiers of government in March 2019.
This is revealed in the latest FAAC report released by the National Bureau of Statistics (NBS).
The latest FAAC report shows that Nigeria’s revenue allocation dropped by 4% in March 2019. Specifically, the sum of N649.19 was disbursed in February 2019, compared to N619.86 disbursed in March 2019.
- The amount disbursed comprised of N474.42bn from the Statutory Account, N96.39bn from Valued Added Tax (VAT), N4.02bn as excess charges recovered, N44.17bn distributed as FOREX Equalisation Fund, and N858.46m exchange gain differences.
- Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), and Department of Petroleum Resources (DPR) received N3.91bn, N6.49bn, and N3.19bn respectively as the cost of revenue collections.
- Federal Government received a total of N257.68bn from the N619.85bn. States received a total of N169.93bn, while N127.72bn was allocated to Local Governments.
- The sum of N50.95bn was shared among the oil-producing states as 13% derivation fund.
- Delta, Akwa Ibom, and Rivers received the highest gross allocation for the month
- Ekiti, Ebonyi, and Kwara States received the lowest gross allocation for the month
Federal Government received highest 41.5% allocation among the three tiers
The NBS report shows that the Federal Government received a total of N257.68bn from the N619.85bn in March. All States across the federation received a total of N169.92bn and Local Governments received N127.72bn. The sum of N50.94bn was shared among the oil-producing states as 13% derivation fund.
Further breakdown of revenue allocation distribution to the Federal Government of Nigeria (FGN) revealed that the sum of N203.04bn was disbursed to the FGN consolidated revenue account; N4.63bn shared as share of derivation and ecology; N2.31bn as stabilization fund; N7.77bn for the development of natural resources; and N5.52bn to the Federal Capital Territory (FCT) Abuja.
Delta State tops highest allocation recipient
Delta State received N20.3bn allocation received in March 2019. This means that Delta state maintained its top spot among the list of states with the highest gross revenue allocation.
Meanwhile, Akwa Ibom also maintained the second position with N16.3bn and Rivers moved to the third highest recipient with N14.1bn. Lastly, Lagos state moved down and ranked 4th with N13.2bn allocation for the review period.
However, Bayelsa and Kano ranked 5th and 6th highest recipient with N13.18bn and N6bn respectively.
Kwara State received the lowest revenue allocation yet again
The Bureau’s report shows that Kwara State once again received the lowest revenue allocation with N3.8bn for the month of March. This shows a fall in allocation to the State when compared to N4.06 billion received in February.
Lagos State received the highest VAT allocation
As expected, Lagos State received N8.8bn in March 2019 from VAT, up from N8.5 billion received for February. This implies that Lagos State recorded a 3% rise in its VAT allocation for the month of March 2019.
Kano, Oyo, and Rivers ranked 2nd, 3rd and 4th as states that received the highest VAT with N1.7bn, N1.5bn and N1.5bn respectively.
Still on VAT allocation, Taraba, Nassarawa and Bayelsa received the lowest VAT allocation with N875.7 million, N836.1 million and N822.5 million respectively.
Why it matters?
All things being equal, the drop in FAAC for the month of March implies that economic activities may slightly slow down in states that witnessed a sharp drop in allocations received.
The drop in FAAC disbursement in affected states and local governments, mean fewer funds to use for various recurrent and capital expenditures. This is expected to have its spiral effect on key sectors of the economy.
London Stock Exchange welcomes Ecobank Nigeria’s US$300million Senior Bond Issuance
Ecobank Nigeria opened the market at London Stock Exchange to mark the listing of its 5-year fixed-rate senior unsecured US$300 million bond.
Ecobank Nigeria on Thursday opened the market at London Stock Exchange via a virtual ceremony to mark the listing of its five-year fixed rate senior unsecured US$300 million bond.
Ecobank Nigeria, a subsidiary of Ecobank Transnational Incorporated, the parent company of the Ecobank Group, provides the full suite of banking products, services and solutions through multiple channels to retail, commercial, corporate and public sector customers.
The bond carries a coupon rate of 7.125%, significantly below its Initial Price Thoughts of 7.75%. The successful launch was three times oversubscribed and is the lowest coupon/yield by a Nigerian financial institution for a benchmark bond transaction since 2013. It has an Issuer Rating of B- from Fitch Rating Agency and S & P. Citi, Mashreq, Renaissance Capital and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners.
The proceeds will provide medium-term funding and help to enhance the capacity of the Bank to support international trade and service across Africa.
Patrick Akinwuntan, Managing Director, Ecobank Nigeria, said, “The strong demand for our bond shows the international appetite for the Ecobank franchise in Nigeria, its unique positioning for facilitating pan-Africa trade and the attractive opportunity for the many investors seeking to back world-class Nigerian corporates.”
SEPLAT shows its resilience in FY 2020 despite challenging year
SEPLAT continues to honour commitment to shareholders despite seeing lowest oil prices in its 10-year history.
Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), a leading Nigerian independent energy company listed on both the Nigerian Stock Exchange and the London Stock Exchange on Monday, March 1 announced its audited results for the financial year ended 31 December 2020.
Working-interest production within guidance at 51,183 boepd, despite demand fall and OPEC+ quotas; Liquids production of 33,714 bopd, gas production of 101 MMscfd; Eland OML40/Ubima assets produced 8,855 bopd, 26.3% of Group liquid volumes ; Low unit cost of production at $8.90/boe, with cost-cutting initiatives ongoing, particularly at OML40/Ubima; Drilled/completed nine wells and brought eight onstream in 2020; and ANOH project now budgeted under original $700 million FID estimate, but COVID-19 related delays to H1 2022.
Final dividend of $0.05 per share recommended ($0.10/share for full year); Earnings before interest, taxes, depreciation and amortization
(EBITDA) of $265.8 million, operating profit of $121 million (before non-cash impairments and unrealised fair value losses); Strong cash position of $259 million after $100 million RCF repayment, $58 million dividends paid in the year, and $150 million capex; net debt at $440 million with most maturities after 2021; and IAS 36 COVID-19 impact assessment and IFRS 9 non-cash impairment provision of $144.3 million, majority booked in Q2 2020. Worthy to note that SEPLATs volume production is about 40percent ahead of 2019 but the benefit was offfset by lower crude prices in 2020.
In compliance with prudent accounting standards on the treatment of COVID-19 pandemic impact on Oil and Gas businesses, Seplat had to revalue downwards its oil and gas assets by $114.4million to reflect the lower crude oil prices of 2020 and this reversed the operating profit of US$82.7million to a loss for the year of US$85.3million. When crude oil prices improve, these same oil and gas assets will be revalued upwards.
Creation of New Energy unit to manage gas processing and future low carbon to zero carbon initiatives; AGPC financing signed in February 2021, $260 million raised, with commitments for $450 million; Advanced stage to extend maturities for existing Eland RBL, raise additional funding via offtaker financing for Elcrest capex; $5million funding of share purchase programme, by Trustee, for Seplat LTIP, starting immediately; and Board directive to eliminate Related-Party Transactions by end of 2021.
Outlook for 2021
Full-year production guidance of 48-55 kboepd, subject to market conditions; and Full-year capex expected to be around $150 million with a focus on gas projects and an exploration well to meet reserves replacement targets.
Roger Brown, Chief Executive Officer, said: “2020 was a challenging year for the Company but Seplat has once again shown its resilience and ability to overcome challenges and deliver production in line with guidance, operating with minimal incidences of COVID-19 cases.
“From the $330 million of cash generated from operations, we have increased our capital investment, invested in ANOH and voluntarily paid down $100 million of debt, further deleveraging the balance sheet. Despite seeing the lowest oil prices in our 10-year history, we have continued to honour our commitment to shareholders of a regular income stream on their investment, by maintaining a total dividend of $0.10 per share for the year.”
“Gas is the lower-carbon feedstock for affordable electricity for Nigeria’s young and rapidly-growing population. Seplat is leading Nigeria’s transition away from spending scarce foreign currency on imported, expensive, high-emission diesel-generated electricity and we believe this will provide the necessary baseload for a functioning electricity grid that will allow renewable energy to take its place, as we see in the developed world, which in large parts is still fuelled by coal. The energy transition in Nigeria must balance both the environmental and the social agenda.
“Our flagship ANOH project, with the Nigerian Gas Company, is now fully funded and we have made excellent progress in difficult times, with major gas processing units expected to arrive in Nigeria in Q3 2021, installation to commence before the end of the year, mechanical completion and pre-commissioning in Q1 2022 and first gas flowing to customers before the end of H1 2022, at a lower expected cost of up to $650 million.
“We remain committed to providing shared value for all of our stakeholders. During the year, with our Government partners, we provided medical beds and other palliatives to our communities and have started construction on a 200-bed infectious diseases hospital. Seplat continues to focus on employment opportunities for communities, education, healthcare and knowledge transfer and local capacity development.”
Summary of performance
Revenue in FY 2020 was $530.5million (N190.9bn) as against $697.8million (N214.2bn) in 2019, down 24 percent. Gross profit was $124.6million (N44.8billion) in 2020 from $395.7million (N121.5billion) in 2019, down 68.5 percent. Cash flow from operations was $329.4million (N118.6bn) in 2020, down 3.6 percent from $341.6million (N104.7bn) in 2019.
Outlook for 2021
For 2021 the SEPLAT expects to produce an average of 48,000 – 55,000 boepd, taking into account the impact of OPEC+ quotas. We continue to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices.
“We have significant cash resources and will continue to manage our finances prudently in 2021, expecting to invest $150 million of capital expenditure across the full year. We remain confident that our ongoing cost-cutting initiatives and prudent management of cash will enable further reductions in debt, whilst supporting dividend payments and investment for growth.
“Following its successful funding, the completion of the ANOH project remains a major priority. Although we expect some COVID-19 related delays to push completion into early 2022, following a cost optimisation programme we now expect the project to cost no more than $650 million, substantially below the $700 million budget previously stated at Final Investment Decision (FID).”
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