It appears Nigerians are in for good times in the new year, as the latest Household Survey conducted by Nairametrics Research Team showed that the prices of some food items witnessed a significant drop.
The Survey revealed that while the prices of tomatoes and pepper crashed significantly, the prices of local rice, yam and other items also witnessed a drop but not as low as their vegetable counterpart.
For instance, a big basket of round shaped tomatoes currently sells for an average of N5,000 compared to N8,000 recorded in December, which represents a 37.5% decrease.
Also, the price of a bag of pepper dropped again to N8,000 from N10,000 indicating a 20% decrease. Similarly, the price of locally made rice continues to ease off as it sells for an average of N20,750 from an initial average of N21,000 in December. Meanwhile, the price of imported rice rose slightly.
The survey covers major items that increased in price, items that witnessed reductions in prices, items that maintained initial prices, special items and market insight.
Items that witnessed reductions in prices
- The price of a big basket of tomatoes that was sold for an average of N8,000 in December, now sells within the range of N4,000 and N5,000, while medium-sized baskets of round shaped tomatoes now cost an average of N3,500, a 30% reduction from N5,000 recorded in December.
- A large bag of pepper dropped to N8,000 from N10,000, while a small bag costs N6,000 compared to N8,000 reported in December.
- Locally made rice brands (Mama’s Pride and Mama Gold) sell for an average of N20,750 from an initial average of N21,000 in December.
- Also, the price of a big sized tuber of yam reduced significantly to an average of N813, a 5.8% decrease compared to N863 recorded in December.
- A small sized tuber of yam also sells for an average of N600, a 2.04% reduction from an initial average of N613.
- A 50kg bag of white Garri now sells for an average of N6,125 from N6,200 recorded two weeks ago.
- A crate of eggs that was initially sold for an average of N1,000 now sells for an average of N975, representing a 2.5% reduction within two weeks.
Items that increased in price
- The price of a 50kg bag of Caprice rose to an average of N26,167 from N25,750 recorded in December, representing 1.19% increase.
- A 5-litre gallon of local vegetable oil costs an average of N2,325 compared to N2,250 being sold two weeks ago.
- Refilling of a 12.5kg cylinder of gas increased to an average of N4,000 from an initial average of N3,975, indicating 0.63% increase.
- Also, refilling a 5kg gas cylinder now costs an average of N1,725 from N1,688 recorded a fortnight ago.
Items that maintained initial prices
- A 50kg bag of Royal Stallion rice still costs an average of N27,000.
- The prices of all brands of beans remain unchanged as a big bag of brown beans still costs an average of N23,500; a 50kg bag of white beans costs N21,250, and Oloyin costs an average of N13,000.
- Big baskets of Irish Potatoes sell for an average of N22,000, while sweet potatoes of the same size cost N4,500.
- The price of locally made palm oil still remains on the high since it nosedived in December at N2,125 (5 litres) and N11,125 (25 litres).
The prices of frozen foods dropped after the hike recorded following the closure of the country’s land border. Slates of chicken lap and Orobo chicken now cost an average of N12,000 compared to N14,000 recorded in December. Also, a carton of full Chicken reduced to N13,000 from N14,000, while turkey now costs an average of N14,000.
Mile 12 market recorded a massive influx of onions. Despite this, the price of a big bag of new onions increased to N26,000 from N24,000 recorded in December, while a bag of dry onions maintains an average of N28,000.
The price of a bag of yellow maize remains unchanged at an average of N14,000 at Mile 12 and Mushin markets. Also, a bag of white maize varied across the markets as it costs an average of N16,000 at Mile 12 market and N15,000 at Mushin market.
The significant drop witnessed in the price of round shaped tomatoes was attributed to massive harvest recorded in the farms due to the harmattan period in December. This was according to a major tomato seller interviewed at Mile 12 market.
Jubril said, “Harmattan weather is actually favourable to the harvest of tomatoes, as we now witness an increase in the supply of tomatoes, hereby driving the price down in January.”
Lastly, several brands of locally-made rice continue to compete for market dominance, as Nairametrics Research Team discovered new brands of locally made rice across the various markets in Lagos state. Some new brands cited by the team include Solar rice, Moringa, Tiamin rice, BML rice, Confluence rice, Royal Naija and Rose classic rice.
|Items||Brand||Unit||MUSHIN (09/01/2020)||DALEKO (09/01/2020)||OYINGBO (09/01/2020)||MILE 12 (09/01/2020)||Average||MUSHIN (19/12/2019)||DALEKO (19/12/2019)||OYINGBO (19/12/2019)||MILE 12 (19/12/2019)||Average|
|Bag of Rice||Basmati||5kg||NA||NA||NA||NA||NA||NA||NA||NA||NA||NA|
|Bag of Rice||Mama Gold||10kg||NA||4000||NA||NA||4000||NA||NA||NA||NA||NA|
|Bag of Rice||Royal Stallion||50Kg||27000||NA||27000||NA||27000||27000||NA||27000||NA||27000|
|Bag of Rice||Rice Master||10kg||NA||4000||NA||4500||4250||NA||NA||NA||NA||NA|
|Bag of Rice||Mama Gold||50kg||21000||20000||21000||21000||20750||21500||20500||21000||21000||21000|
|Bag of Rice||Caprice||50kg||26500||27000||NA||25000||26166.666666667||26500||NA||NA||25000||25750|
|Bag of Rice||Mama's Pride||50kg||21000||20000||21000||21000||20750||21500||20500||21000||21000||21000|
|Bag of Rice||Falcon||25kg||NA||NA||NA||NA||NA||NA||NA||NA||NA||NA|
|Bag of Beans||Oloyin||50kg||13000||12000||13000||14000||13000||13000||12000||13000||14000||13000|
|Bag of Beans||White||50kg||22000||20000||22000||21000||21250||22000||20000||22000||21000||21250|
|Bag of Beans||Brown||>50kg||24000||22000||24000||24000||23500||24000||22000||24000||24000||23500|
|Tuber of Yam||Abuja||1 Big Size Tuber||850||800||800||800||812.5||900||800||900||850||862.5|
|Tuber of Yam||Abuja||1 Medium Size Tuber||650||550||600||600||600||650||550||650||600||612.5|
|Carton of Noodles||Indomie||305g (Belle full)||2900||2900||2900||2900||2900||2900||2900||2900||2900||2900|
|Carton of Noodles||Indomie||200g (Hungry man)||3200||3200||3200||3200||3200||3200||3200||3200||3200||3200|
|Carton of Noodles||Chikki||100g||2000||2200||2100||2100||2100||2000||2200||2100||2100||2100|
|Carton of Noodles||Minimie||70g||1500||1500||1500||1500||1500||1500||1500||1500||1500||1500|
|Carton of Noodles||Golden Penny||70g||1400||1400||1400||1400||1400||1400||1400||1400||1400||1400|
|Bag of Garri||Ijebu||80kg||6000||6800||7000||7000||6700||6000||6800||7000||7000||6700|
|Bag of Garri||White||50kg||6000||6000||6500||6000||6125||6000||6000||6500||6300||6200|
|Bag of Garri||Yellow||50kg||6000||6500||6500||7000||6500||6000||6500||6500||7000||6500|
|Basket of Potato||Sweet||Big Basket||4500||4500||4500||4500|
|Basket of Potato||Sweet||Small Basket||700||700||700||700|
|Basket of Potato||sweet||Smallest Basket||200||200||200||200|
|Basket of Potato||Irish||Biggest Basket||22000||22000||22000||22000|
|Basket of Potato||Irish||Medium Basket||2000||2000||2000||2000|
|Basket of Potato||Irish||Small Basket||1500||1500||1500||1500|
|Packet of Pasta||Golden Penny||500g||4300||4400||4300||4200||4300||4300||4400||4300||4200||4300|
|Packet of Pasta||Dangote||500g||4000||4000||4000||4100||4025||4000||4000||4000||4100||4025|
|Packet of Pasta||Power (1 pc)||500g||220||220||220||200||215||220||220||220||200||215|
|Packet of Pasta||Bonita (1 pc)||500g||220||200||200||210||207.5||220||200||200||210||207.5|
|Gallon of Palm Oil||Local||5 Litres||2200||2000||2300||2000||2125||2200||2000||2300||2000||2125|
|Gallon of Palm Oil||Local||25 Litres||11500||11000||11500||10500||11125||11500||11000||11500||10500||11125|
|Gallon of Vegetable Oil||Local||5 Litres||2300||2300||2400||2300||2325||2300||2100||2400||2200||2250|
|Gallon of Vegetable Oil||Local||25 Litres||14000||12500||13500||12500||13125||14000||12500||13500||12500||13125|
|Gallon of Vegetable Oil||Kings||5 Litres||3000||3000||3000||3000||3000||3000||3000||3000||3000||3000|
|Gallon of Vegetable Oil||Wesson||5 Litres||3900||3900||3900||3900||3900||3900||3900||3900||3900||3900|
|Gallon of Vegetable Oil||Mamador||3.8 Litres||2500||2450||2500||2400||2462.5||2500||2450||2500||2400||2462.5|
|Gallon of Vegetable Oil||Power||3 Litres||1800||1800||1800||1800||1800||1800||1800||1800||1800||1800|
|Bunch of Plaintain||Plaintain||1 Big Bunch||400||400||350||400||387.5||400||400||350||400||387.5|
|Bag of Flour||Dangote||50kg||11200||11200||11200||11500||11275||11200||11200||11200||11500||11275|
|Bag of Flour||Honey well||50Kg||11500||11200||11200||11200||11275||11500||11200||11200||11200||11275|
|Bag of Flour||Mama Gold||50kg||11500||11300||11000||11300||11275||11500||11300||11000||11300||11275|
|Bag of Sugar||Dangote||50kg||3500||3200||3400||3200||3325||3500||3200||3400||3200||3325|
|Milk||Peak Powdered (Tin)||400g||1250||1200||1200||1200||1212.5||1250||1200||1200||1200||1212.5|
|Milk||Peak milk (Refill)||500g||1050||1000||1000||1000||1012.5||1050||1000||1000||1000||1012.5|
|Milk||Dano Powdered (Tin)||500g||1000||1000||1000||1000||1000||1000||1000||1000||1000||1000|
|Milk||Loya Powdered (Tin)||400g||1000||1000||1000||1050||1012.5||1000||1000||1000||1050||1012.5|
|Cocoa Beverages||Milo (Tin)||500g||1000||1100||1050||1000||1037.5||1000||1100||1050||1000||1037.5|
|Cocoa Beverages||Milo (Tin)||900g||2000||2100||2100||2100||2075||2000||2100||2100||2100||2075|
|Cocoa Beverages||Milo Refill||500g||900||900||900||900||900||900||900||900||900||900|
|Cocoa Beverages||Bournvita Refill||500g||950||900||950||900||925||950||900||950||900||925|
|Cocoa Beverages||Bournvita (Plastic)||900g||2000||2000||2000||2000||2000||2000||2000||2000||2000||2000|
|Cocoa Beverages||Ovaltine Refill||500g||800||800||850||850||825||800||800||850||850||825|
|Tea||Lipton Yellow label||52g||310||290||300||300||300||310||290||300||300||300|
|Sugar||St' Loius Sugar(Cube)||500g||400||380||400||450||407.5||400||380||400||450||407.5|
|Sugar||Golden Penny Sugar (cube)||500g||350||300||350||300||325||350||300||350||300||325|
|Bottled Water (Refill)||Cway||Refill||600||600||650||600||612.5||600||600||650||600||612.5|
|Juice||5 Alive||1 litre||600||550||550||600||575||600||550||550||600||575|
|Tomatoes||Big Basket||round shaped||5000||5000||8000||8000|
|Medium Basket||round shaped||3500||3500||5000||5000|
|Small Basket||round shaped||2500||2500||3500||3500|
|Big Basket||Oval Shaped||NA||NA||NA||NA|
|Small Basket||Oval Shaped||NA||NA||NA||NA|
|Fish||Kote (Horse Mackerel)||1 kg||500||450||470||490||477.5||500||450||470||490||477.5|
|Fish||Titus (Mackerel)||1 kg||500||450||500||490||485||500||450||500||490||485|
About Nairametrics Food Price Survey
The Nairametrics Food Price Watch is a bi-weekly household market survey that covers the prices of major food items, with emphasis on five major markets in Lagos – Mushin Market, Daleko Market, Oyingbo Market, Idi-Oro Market and Mile 12.
How Access Bank got Japaul to pay up N37 billion loan that had gone bad
Brute force, Courts, quid quo pro are hallmarks of Access Bank’s debt recovery schemes.
In 2018 when Access Bank took over Diamond Bank, in what is the largest merger in Nigeria’s banking history, they knew it was not a match made in heaven like their PR agencies will make you believe.
In merging with Diamond Bank and taking over their juicy assets, they had also taken over the lemons that had for years bedeviled the bank who had pioneered mobile banking applications well ahead of its time.
When Access Bank merged with Diamond Bank, the latter had total loans and advances of N787.8 billion out of which N219.9 billion in loans were impaired. Oil and gas-related loans made up a significant chunk of the loans and were estimated at about N302.6 billion, most of them distressed.
Included in the oil and gas loans was a $66.4 million in loans owed to the bank by Japaul Oil and Maritime, as they were referred to at the time. The loans had gone bad accumulating unpaid interest of about $11.2 million. By the time Access Bank took over the loans, Japaul agreed to a restructuring rolling over both the principal and interest.
This is typical of most Nigerian companies burdened with debts they cannot pay. To avoid being run over by the bank, the debtors will negotiate a restructuring, extending the loans by one to three years and if lucky, reducing the interest rates. In return, the bank books new fees (which are often paid in advance of the restructuring) and then gets to avoid huge provisioning mandated by the central bank.
It is often a ‘win-win’ situation that essentially kicks the can down the road until, like in the case of Diamond Bank, the chicken comes home to roost. But Access Bank is not new to slugging it out with debtors, particularly those who do not pay up. Upon takeover in 2019, Herbert Wigwe, the CEO of Access Bank announced that his bank was going to go after Diamond Bank debtors. In an interview in 2019 he maintained that “we recovered N2.2 billion bad debt in the year under review. Access Bank will intensify effort to ensure that it recovers the debt owed to Diamond Bank. We will go out for Diamond Bank’ debtors and if they are not ready to redeem their debt we will publish their names in the newspapers.”
In 2019, Access Bank swooped on Japaul Plc seeking repayment of their Diamond Bank loans which was now about N37 billion. The bank took over Japaul’s trading assets and integral to the going concern status of the company. Before now, Japaul made money rendering marine services, dredging, mining and construction mostly for the oil and gas companies.
But business has been bad for years now leading the company into net accumulated losses of over N50 billion as of 2018. For the 5 years leading to 2018, the company posted back to back losses with revenues going from N5.3 billion in 2015 to about N85.8 million in 2019. External loans had also ballooned from about N18.8 billion to about N38.8 billion. Its share price had also fallen to about 20 kobo per share by the end of 2019. It was nearing bankruptcy and something had to give.
They began a court battle with Access Bank over the loans and the threat of a liquidation eventually settling for a deal. Sources inform Nairametrics that Access Bank is one of the most aggressive banks in the business when it comes to playing dirty with debtors. Unlike Diamond Bank, Access Bank is ready to battle in the courts and is ready to deploy any legal means necessary to recover their loans even if their actions are viewed as uncanny.
Recently, the bank obtained a Mareva injunction sealing the offices and taking over the assets of Seplat due to a related party loan owed by the latter’s Chairman, ABC Orjiakor. Just like Japaul, the loans owed by ABC Orjiakor were also obtained from Diamond Bank. According to sources, when Access Bank swoops in for their loan recoveries, they deploy all tactics in the books to ensure all or most parts of the loans are recovered from chronic debtors.
Eventually, Access Bank and Japaul agreed to settle the matter outside the court. In exchange for repaying the N38 billion loan, Access Bank settled for a repayment of N30.9 billion. The deal involves Access Bank taking over two of Japaul’ s Dredgers (12& 13) for N5 billion and a Barge (Beau Geste) for N25.9 billion. Japaul also gave up its land in exchange for working capital of N1.5 billion from the bank.
In return, Japaul gets to clean up its balance sheet erasing what is left of its debt, booking a profit of about N40 billion and wiping off its negative equity of N35.5 billion. However, in one fell swoop. From negative equity of N35.5 billion, the company’s net assets are now N4.69 billion. A win-win for everyone.
We are not exactly sure what Access Bank plans to do with dredgers and barges it took over from Japaul. Interestingly, in the deal, Japaul also gets to lease back the two dredgers for a period of 6 years from Access Bank for a sum of N1 billion paid annually from 2021 – 2026. Japaul got a one-year moratorium on repayment expiring in December 2020.
Japaul has since changed its name to Japaul Gold and Ventures citing the dwindling oil and gas sector for its reasons. The company believes gold mining and technology are the future and is seeking to raise N25 billion in equity to pursue this course. Its share price has ostensibly risen by 150% since the turn of the new year, the best performing on the stock exchange.
For Access Bank, aggressively going after bad loans have paid off immensely. In 2019 the bank recovered N38.9 billion in bad loans barely a year after taking over Diamond Bank. In the first 9 months of 2019, a total of N24.7 billion was captured in bad debts recovered. It is a strategy that is working and there is no betting against Access Bank doubling down on aggressive recovery this year.
Champion Breweries, Raysun deal highlights disclosure shortcomings
Is Heineken taking over Champions Brewery?
Champion Breweries Plc informed the Nigerian Stock Exchange, last week, via a press release that an insider, Raysun, had purchased about 1.9 billion shares at a price of N2.6 per share.
The disclosure was part of the stock exchange’s requirement that listed companies must reveal deals made by insiders of the company for the benefit of shareholders and the investor community.
That’s about how far the press release went. It did not reveal why Raysun was purchasing? Who they purchased the shares from and why the deal is being consummated? In terms of corporate disclosure, this was a dud.
Raysun is the largest shareholder and majority owner of Champions Breweries. Raysun is also an entity owned by Heineken, the majority shareholder in Nigeria Breweries Plc – the largest brewer in the country. Thus, Heineken is an indirect shareholder of Champions Breweries.
These relationships give this deal enough scrutiny to warrant a better disclosure starting from the actual purchase of shares revealed in the press release.
Here are some contexts;
Champion Breweries shares breakdown
- Champions Breweries has a total of 7.82 million shares outstanding at the time of this purchase
- Raysun held about 60.4% shares in Champions Breweries according to disclosure in its 2019 annual report.
- Asset Management Nominees and Akwa Ibom Investment Corporation own 12.3% and 10% respectively. The rest of its shareholders own about 17.3% or 1,351,954 units.
- At the current share price of N1.12, Champion Breweries is valued at N10.57 billion by the market.
- However, Raysun’s purchase of 1.9 billion shares at N2.6 per share (valued at N4.9 billion, almost half of the current market capitalization), now values the company at about N20.3 billion.
Where did the shares come from? This is a vital question and here is why.
Going by the number of shares they bought last week (24% of equity), they only could have been able to purchase that many shares by buying up all the shares owned by the Asset Nominees (12.3%), all the shares owned by Akwa Ibom Investment Corporation (10%) and another 3% from other regular shareholders.
It could also be that either or both Asset Nominees and Akwa Ibom IC sold part of their shares and then they made up the rest by purchasing some from the market. Why is Heineken, through Raysun, acquiring so many shares? Is there a takeover deal in the offing? Do they plan to merge Champions Breweries with Nigeria Breweries or still keep it as a standalone company? Will Champions Brewery cease to exist if there is a merger or will they delist following this massive acquisition of the shares of their subsidiary?
The speculation is palpable.
This is what happens when listed companies refuse to properly disclose transactions involving mega share purchases of this nature. How does a majority shareholder go from 60.4% of shares to 84% and an announcement is not made explaining or clarifying who sold and if this is a takeover bid.
But investors seem not to mind at the moment, if the momentum of the share price is anything to go by. A 57% year to date gain is a testament to this. It appears investors expect a mandatory takeover announcement to be made anytime soon and are scrambling for the shares ahead of any announcement.
Unfortunately, this is not how markets should work anywhere, and the sooner it stops the better. The Nigerian Stock Exchange has made massive progress with compliance to disclosure requirements and we believe strongly that they will at some point bring Champion Breweries to order and have them disclose all the requisite information about this transaction. Better late than never.
Downstream players suffer revenue declines due to Covid-19, forex, fuel subsidy
2020 has no doubt been one of the most challenging years for players in the oil and gas downstream sector, having to deal with several issues.
Nigeria’s downstream oil and gas players are in the midst of one of the lowest revenue declines in their history of operations. In an industry used to the highs and lows of economic and commodity price cycles, 2020 poses one of the greatest challenges to oil and gas companies.
Total Plc, 11 Plc, MRS, Ardova and Conoil are some of the major downstream players (all quoted) that have suffered revenue declines and margin drops in one of the worst years in modern history.
- Conoil Plc, one of the major downstream players reported its 2020 9 months results revealing revenue declined 21.84% YoY t0 N88.1 billion.
- 11Plc, another major player in the sector, also saw its topline revenues plummet from N141.5 billion in the first 9 months of 2019 to N114.7 billion in the corresponding period in 2020.
- Total Nigeria Plc, one of the largest players in the downstream sector also recorded declining revenues. In 2019 it reported total sales of N181.6 billion compared to N117.3 billion in 2019. The 35% drop was the largest of the lot.
- The only outlier of the lot was Ardova Petroleum which somehow managed to record revenue growth with 2020 9 months revenue rising to N116 billion compared to N110.7 billion same period the year before.
In general, revenues for the major oil and gas downstream players in the country fell by a whopping 21% from N646.8 billion in 2019 (9M) to N514.2 billion in the corresponding period in 2020. What is to blame for these declines? Covid-19!
The Covid-19 pandemic triggered a nationwide lockdown for most of 2020 that has negatively impacted demand for petroleum products across the country. The lockdown has grossly affected volumes for downstream oil and gas companies hitting their margins and profitability.
Businesses across the country such as manufacturers, airlines, restaurants, schools, the transportation sector and motor vehicle owners have all reduced their demand for fossil fuel.
The downstream sector has also struggled to take advantage of the drop in oil prices as they still need to deal with the multiple devaluation of the naira and being able to gain access to foreign exchange. Their inability to access the forex market leaves them with little choice but to continue to rely on NNPC, the sole importer of petroleum products for their inventories.
In a recent comment, the Chairman of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Mrs. Winifred Akpani, lamented that “the inability to source FOREX from the official CBN FOREX window by independent marketers is continually hindering the effectiveness of the principles of DEMAND and SUPPLY market forces to correct the current inefficiencies in the pricing mechanisms adopted in the deregulation process.”
Mrs. Akpani also explained that inability of marketers to source FOREX creates a situation which can be described as “pseudo subsidy” in the market, suggesting that being forced to sell petroleum products at fixed prices means they cannot recover their importation cost, most of which is paid for in US dollars.
This is further exacerbated by the fact that the federal government regulates pricing irrespective of the unique operating costs of these private oil companies. Also, being the sole importer of petroleum products means the NNPC will likely pass on inefficiencies in managing cost to petroleum marketers, eliminating any chances of efficient pricing that can be obtained from increased competition. The effects of these are low profit margins and ‘never-shifting’ revenue positions, except for exceptional cases.
Last December, the Federal Government revealed it was ending its subsidy programme, increasing fuel to reflect its market cost. However, it balked after pressure from the labour unions, reducing prices without recourse to sector players.
Despite these challenges, the sector will likely eke out some profits largely due to cost cutting initiatives and income from ancillary businesses. However, dividend payment might be a challenge as it will be advisable for these companies to set aside cash for what could be a pivotal year.
The Petroleum Industry Bill (PIB) will likely be signed into law this year and will produce new investment opportunities for the downstream sector if things go as planned. The government will likely relinquish its hold on the sector and fully deregulate the downstream before the end of the year.
When it does, those with a strong balance sheet will be winners.