Business News
NNPC clears $833.57 million debt owed to Exxon Mobile’s subsidiary
@NNPCgroup has settled it long-standing debts owed via cash calls, by paying $833.57m owed to Mobil Producing Nigeria.
Barely two years after the Nigerian National Petroleum Corporation (NNPC) signed a cash-call Repayment Agreement with its Joint Venture (JV) partners to defray cash-call arrears within a period of five years, the corporation has paid $833.57 million owed to ExxonMobil’s local subsidiary, Mobil Producing Nigeria (MPN).
This development was made known in a statement by NNPC’s Spokesperson, Ndu Ughamadu, who quoted the corporation’s Group Managing Director, Dr. Maikanti Baru, to have made the disclosure at a commemorative close-out ceremony to mark the conclusion of NNPC/MPN Cash Call Repayment Agreement.
NNPC’s Group Managing Director, Dr. Maikanti Baru
[READ MORE: Oil Prices may rebound as China and U.S. agree to restart trade talks]
In the statement, the NNPC explained that the money settled long-standing debts owed via ‘cash calls’, or costs that it is obligated to pay to JV partners in oil and gas exploration and production.
As part of the cash-call debt, NNPC said it made up the payments of $3.95 billion to oil companies late last year (2018). Baru was quoted as saying the following;
“It is gratifying to note that within two years of this agreement, the NNPC/MPN JV significantly executed in incremental activities that generated adequate proceeds to liquidate the $833.57 million cash-call arrears, whilst ensuring that revenue flow from the JV to the Federation remained stable.”
[READ ALSO: Petrol price to increase as subsidies drain Government’s revenue]
The outgoing NNPC boss went further to explain that with the close-out of the repayment agreement, the entire incremental production which is over 45,000 barrels of oil per day (bopd) has been migrated to Federation’s equity and would invariably lead to an increase in revenue to the government.
Baru, however, noted that the payment did not in any way undercut remittances to the Federation Account, as it was achieved through revenue from incremental production.
[READ FURTHER: FBNQuest Trustees – Leading the Conversation on Islamic Estate Planning]
Financial Services
Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings
Moody’s explained why it might downgrade First Bank’s ratings.
Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.
Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’
In a quote, Moody’s said:
“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”
The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.
Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.
“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.
Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”
The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.
“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”
Will Moody’s downgrade First Bank?
The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.
“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”
Moody’s, however, poured water on any optimism around a rating upgrade.
Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.
Why is rating important?
Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.
Spotlight Stories
Tip Jar, Twitter’s new giveaway feature that lets users send money to you
Twitter has introduced a new feature called Tip Jar that allows you send money to your favourite tweeters.
Twitter has introduced a new feature called Tip Jar that allows you send money to your favourite tweeters.
According to the blog post, “Tip Jar is an easy way to support the incredible voices that make up the conversation on Twitter. This is a first step in our work to create new ways for people to receive and show support on Twitter – with money.”
The new feature utilizes different payment platforms like PayPal, Venmo, Patreon, CashApp, and others.
Users can link their Twitter accounts with Tip Jar to any of these payment providers. Twitter takes no cut.
READ: Facebook is creating an audio chat product similar to Clubhouse
You’ll know an account’s Tip Jar is enabled if you see a Tip Jar icon next to the Follow button on their profile page. Tap the icon, and you’ll see a list of payment services or platforms that the account has enabled. Select whichever payment service or platform you prefer and you’ll be taken off Twitter to the selected app where you can show your support in the amount you choose.
Twitter has released series of features this year as part of its efforts to grow Twitter’s user base to 315 million daily active users by the end of 2023.
The company also launched Twitter crop where images don’t get crop again on Twitter for Android or iOS. Standard aspect ratio images (16:9 and 4:3) will now display in full without any cropping and images will look just like they did when you shot them.
READ: Does YouTube stand a chance against TikTok?
Lauren Alexander, a Twitter spokesperson said, “Today’s launch is a direct result of the feedback people shared with us last year that the way our algorithm cropped images wasn’t equitable, The new way of presenting images decreases the platform’s reliance on automatic, machine learning-based image cropping.”
Twitter has tested several features and more will be rolled out soon.
