Investors of Seplat Energy Plc recorded a loss of about N70.56 billion from trading in the shares of the company in the last five days following sustained sell pressure witnessed on shares of some blue-chip firms quoted on the Nigerian Exchange (NGX).
The sell-offs are on the back of cautious trading ahead of the 2023 general elections and global investment constraints following the Russian-Ukraine crisis, as well as insecurity challenges that continue to hamper food and crude oil production in Nigeria.
Checks by Nairametrics showed that the oil firm’s stock lost by 8.44% to date to N1,300.00 per share from N1,419.90 it opened for trading on August 23rd.
Further analysis showed that Seplat Energy opened the period under review at N1,419.90 per share and N835.532 billion in market capitalisation on the NGX as against N1,300 per share and N764.977 billion in market capitalisation at the close of trading on 26th August, hence suffered a loss of N70.555 billion or 8.44 %.
Seplat Petroleum Development began the year with a share price of N650.00 and has since gained 100% on that price valuation, ranking it eighth on the NGX in terms of year-to-date performance. It is however recommended by market watchers that investors should take caution of the company’s recent bad performance, having lost 8.44% of its value in the last five trading days.
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The NBS recent report identified the following sectors as having experienced contraction in the second quarter of this year: The highest contraction was in oil refining which was 42%, rail transportation 38%, crude oil and gas 11.8%, metal ores 25.5%, electricity vehicle assemblies 7.8%, electricity and air-conditioning 7%; motion pictures and music 6%, textiles 2.8%.
- Centre for the Promotion of Private Enterprise (CPPE) listed the key constraints to include the continued inactivity of the country’s major refineries, all of which have been posting losses in recent years, the cloud of insecurity hovering over the railway system which has caused the suspension of railway services.
- Crude oil theft and vandalization of oil facilities in the oil-producing areas, by NNPC estimates, the country loses two billion dollars monthly on account of oil theft. Loses are also suffered on account of vandalization of oil facilities, pipelines and the activities of illegal refineries.
- Productivity and competitiveness issues continue to impact negatively on the performance across sectors of the economy. The general operating environment continues to be very challenging for most investors. The SMEs were particularly more vulnerable to prevailing macroeconomic shocks, resulting in high mortality rate of small businesses.
Policy options to be considered
Dr. Muda Yusuf Founder/CEO, CPPE also listed policy options to be considered including addressing the challenges of the massive oil theft which is affecting the oil output.
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- “The safety of the oil facilities is also very paramount to reverse the underperformance of the oil and gas sector.
- The implementation of the Petroleum industry Act would boost investment in the sector as well.
- The electricity sector reforms need a review to improve efficiency and productivity in the sector. The challenges in the electricity supply chain need to be urgently addressed – gas to power, transmission, distribution, energy pricing, metering, and the capacity of the distribution companies. All of these are needed to improve performance and attract more investment into the sector.
- Need to put fiscal incentives in place to boost investment in renewable energy in line with the energy mix objective of government. Such incentives could be in the areas of tax incentives and the waivers of import duty on renewable energy equipment.
- There is an urgent need to decentralize the national grid for ease of management and efficiency. There should also be a deliberate policy to attract private investment in the electricity grid,” he said.