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Seplat transforms to full-fledged holding company, transfers oil assets to subsidiary

The new arrangement is expected to result in a simplified management framework for the Group.

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Seplat Petroleum

Seplat Petroleum Development Company Plc, a leading Nigerian indigenous oil and gas firm, which is listed on both the Nigerian Stock Exchange (NSE) and the London Stock Exchange (LSE), has transformed into a full-fledged holding company with all its assets managed by its wholly-owned subsidiaries.

The indigenous oil giant has announced the completion of the transfer of the business activities, and assets of OMLs 4, 38 and 41 from the holding company to its wholly-owned subsidiary, Seplat West Limited, following regulatory and partner approvals with effect from January 1, 2020.

READ MORE: NNPC, partners to invest 53% of COVID-19 N21 billion intervention

This was disclosed in a notification that was sent to the Nigerian Stock Exchange by the oil firm and signed by its Company Secretary/Chief Governance Compliance Officer, Mrs. Edith Onwuchekwa.

According to the notification, the Intra-Group transfer had been planned for some time, so it will not result in any change to the current business strategy for any of the assets, nor will it affect the way that the Seplat Group commercially operates. Therefore, the operatorship of these assets still remains with Seplat under the Joint Operating Agreement (‘JOA’), as the transfer to an affiliate of Seplat under the terms of the JOA is permitted.

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READ ALSO: Chipper Cash just raised $13.8 million Series A funding

The transfer of OMLs 4, 38 and 41 from Seplat Plc to Seplat West results in the creation of 7 wholly-owned subsidiaries namely: Newton Energy Limited, Seplat Petroleum Development Company UK Limited, Seplat East Onshore Limited, Seplat East Swamp Company Limited, Seplat Gas Company Limited, Eland Oil and Gas Limited and Seplat West Limited, with no operating oil and gas assets directly held in the holding company.

The company explains this new structure is consistent with its efforts to simplify its structure and designed towards segregating the businesses of the Group in a more efficient manner, thereby reducing risk, cost, and complexity. It is also expected to result in simplified management and reporting framework for the Group.

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It is also stressed in the notification that the outcome of the transfer will not, in any way, result in loss of tax revenue to the Government or extinguishment of liabilities. Similarly, it will not diminish shareholder value in (and returns from) Seplat as a listed company.

The transfer is not expected to impact the ratings of the Group, according to credit rating agencies, following the company’s discussions with them.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Energy

Nigerian firm set to raise $1.2 billion to purchase electricity meters

MAPCo plans to raise N480 billion to purchase electricity meters and to help the DISCOs plug revenue gaps in their operations.

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The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

A Nigerian firm, Meter Assets Finance and Management Company (MAPCo), has concluded plans to raise N480 billion ($1.2 billion) over the next 3 years, to purchase electricity meters and help the electricity distribution companies (DISCOs) plug revenue gaps in their operations.

This is also in line with the Federal Government’s initiative to ensure that all electricity consumers are metered, which will put an end to estimated billing by the DISCOs.

According to a report from PricewaterhouseCoopers, less than one-tenth of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty. As a result, distribution companies have to estimate bills, resulting in constant conflict with the consumers that delay payments.

The Chief Executive Officer of New Hampshire Capital, Onion Omonforma, said the Meter Assets Finance and Management Co. hopes to end the practice of estimated billings by raising funds to purchase and supply meters to consumers.

New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture, known as MAPCo, for investors to either buy equity or inject debt into the company.

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What they are saying

Omonformaa said, “The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the metering gap. MAPCo will collect the cost of the meters from consumers at a premium over the next 10 years. The meters will be handed over to the power-distribution companies once paid off.’’

While disclosing that MAPCo plans to issue a N100 billion bond in the next year, Omonforma also pointed out that roadshows have been planned for the U.S. and Europe, and will include local institutional investors.

He said, “We envisage that a lot of people who are looking for a long-term instrument will key into it,”

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It can be recalled that apart from repealing the estimated billing methodology in determining tariffs for electricity consumers; the Federal Government had insisted that all consumers must be metered, as part of the condition for a tariff increase.

Also, as part of the agreement reached with the organized labor in respect of the tariff increase; the Federal Government disclosed that the National Mass Metering Programme will be accelerated, with the distribution of 6 million meters to Nigerians for free.

What this means

A huge number of electricity consumers across the 36 states and the FCT are still unmetered by their respective DISCOs. This initiative by MAPCo will help bridge the existing gap, with more electricity consumers acquiring a prepaid meter and doing away with the controversial estimated billing.

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Energy

N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners

The auditors of NNPC have raised doubts over the inability of the Corporation to continue as a going concern following rising and humongous losses.

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NNPC

According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.

READ: U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy

In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.

READ: NNPC reveals survival strategies to cope with oil sector downturn and new normal

What you should know

  • In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
  • NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
  • In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
  • The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.

READ: NNPC explodes, denies custody of $3.5 billion subsidy fund

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What to expect

  • The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
  • To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
  • The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
  • The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.

READ: Nigerian Stock market records sixth consecutive losses, investors lose N15.55 billion

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READ: NNPC to end oil-for-fuel swap system

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Energy

FG to inject over N198 billion on capital projects in power sector in 2021

The Federal Government plans to inject N198.27 billion on various capital projects in the power sector across Nigeria in 2021.

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FG Power storage and distribution

The Federal Government plans to inject N198.27billion on various capital projects in the power sector across Nigeria in 2021.

This was disclosed in the 2021 Appropriation Bill, which President Muhammadu Buhari presented to the National Assembly recently.

READ: Buhari presents N13 trillion 2021 Budget to National Assembly

Breakdown:

* National rural electrification, managed by the Rural Electrification Agency, will invest a total of N17.86billion on power infrastructure development in rural communities.

READ: CBN to sanction exporters who default on export proceed number

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* The Nigerian Electricity Regulatory Commission plans to invest N294.1million on capital projects, while capital projects to be handled by the Nigerian Electricity Management Services Agency will gulp N441.1million.

* The allocation for capital projects to be handled by the Transmission Company of Nigeria, as contained in the proposed budget, is N4.69billion.

READ: Buhari earmarks N420 billion for N-Power, GEEP and others under NSIP in 2021 budget

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* The capital outlay projected for 2021 by the Nigeria Electricity Liability Management Limited is N914.87million, while the National Power Training Institute targets to invest N294.1million.

* The total overhead for the entire ministry and its agencies was N1.16billion.

* The amount budgeted for personnel in the power ministry and its agencies is N4.9billion.

READ: Update: Buhari seeks power to freeze accounts, clamp down on money launderers

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