12 Mar

Nigeria State Oil Company Hasn’t Explained Missing Billions

An agency tasked with cleaning up Nigeria’s murky oil industry says even though financial accountability has improved the state oil company still hasn’t explained billions of dollars of missing revenue.

While energy producers have cooperated and complied with requirements to publish payments, the Nigeria Extractive Industries Transparency Initiative has struggled with the state-owned Nigerian National Petroleum Corp., Waziri Adio, executive secretary of the agency known as Neiti, said in a March 7 interview in Abuja, the capital.

The state oil company hasn’t explained what it did with at least $22.7 billion earned from the sale of oil licenses and in dividends from its stake in Nigeria LNG Ltd. over a 15-year period, he said.

“The sector is no longer the black hole that it once was, but we can still use more transparency,” Adio said. “Things are opening up. There could be more in the area of contracts, ownership and expenditure transparency, but definitely there is some progress.”

Ndu Ughamadu, NNPC spokesman, didn’t answer three calls on his mobile phone and two text messages seeking comment. The company has said in the past it has the authority of the government in its actions.

Royal Dutch Shell Plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA operate joint ventures with the state oil company that account for about 90 percent of the output of Nigeria, Africa’s top producer.

Neiti was set up in 2004 after Nigeria acceded to the Extractive Industries Transparency Initiative, which requires international energy companies and governments involved in mining to publish all their payments.

Nigeria LNG is owned 49 percent by NNPC, 25.6 percent by Shell, 15 percent by Total and 10.4 percent by Eni. President Muhammadu Buhari, who pledged during his 2015 election campaign to fight widespread graft in the oil and gas industry, appointed Adio, 49, in February 2016 to head Neiti.

For all its work in auditing oil industry payments, critics say the agency remains toothless, lacking the power to compel companies to disclose payments or penalize erring producers.

To read the full article, click here.

06 Mar

Buhari Grapples With Widening Crises as Nigerian Vote Looms

Islamist militant attacks, gasoline shortages, worsening violence over grazing land, simmering unrest in the southeast — the crises keep mounting for Nigerian President Muhammadu Buhari less than a year before general elections.

The most recent setback came on March 1 when suspected Boko Haram Islamist militants killed three United Nations aid workers and eight soldiers in an attack in the northeastern town of Rann, about two weeks after they kidnapped more than 100 schoolgirls aged 11-19 in the same region. The actions have undermined the government’s claim to have “technically defeated” the group.

“There will be consequences politically; it’s a huge blow to soldier morale,” said Cheta Nwanze, an analyst at Lagos-based SBM Intelligence risk advisory. “It just adds to Buhari’s woes.”

While Buhari, 75, hasn’t said whether he will run for re-election, his ruling All Progressives Congress has backed him to do so, and he remains popular in his political base in the mainly Muslim north.

Yet he spent more than five months in London last year being treated for an undisclosed illness, and the coalition that brought him to power shows signs of fraying.

On Monday, Buhari started a visit to five states that have been gripped by violence in recent months, including Yobe, where the girls were kidnapped, his office said in an emailed statement.

The government’s much-vaunted anti-graft war also suffered a blow when Berlin-based Transparency International’s latest global corruption-perception index released last month showed Nigeria had dropped 12 places under Buhari to 148 out of 172 countries.

In his plus column, the main opposition People’s Democratic Party hasn’t recovered from its loss in 2015 and is in disarray.

While gasoline shortages are causing havoc for motorists, the economy of Africa’s top oil producer is also looking brighter, with the Abuja-based National Bureau of Statistics saying it may expand 2.1 percent this year after growth of 0.8 percent last year and a contraction of 1.6 percent in 2016.

To read the full article, click here.

05 Mar

Nigeria’s Sticky Inflation Threatens to Frustrate Rate-Cut Hopes

Nigeria’s long-awaited interest rate-cutting cycle risks being short-lived if it starts at all.

Governor Godwin Emefiele said last month the Central Bank of Nigeria may reduce its benchmark from a record-high 14 percent before July if inflation drops closer to single digits.

But with fuel costs surging and government spending swelling before next year’s election, he may struggle to reach that threshold at a time when the pace of price growth is still just over 15 percent.

“With inflation remaining sticky, it is unlikely that the CBN would want to cut rates so soon,” Gaimin Nonyane, London-based economic-research head at Ecobank Transnational Inc., said by email.

Further complicating the picture is the Senate’s refusal to approve President Muhammadu Buhari’s nominees to the Monetary Policy Committee, which means the panel lacks a quorum to hold meetings to formally set rates, further delaying any hope of cuts. The MPC didn’t sit in January, and it’s not clear if the March 20 decision will be made.

The inflation rate in Africa’s most-populous nation rose to 15.1 percent in January from a year earlier and has exceeded the target range of 6 percent to 9 percent for 2 1/2 years. The statistics agency is due to release data for February on March 14.

Africa’s largest oil producer imports almost all its refined-fuel requirements because local capacity can’t match demand.

While higher crude prices have increased Nigeria’s revenue, they have also raised the cost of processed products, with the average gasoline price surging 27 percent in January from a year earlier.

The resultant fuel shortages prompted retailers to boost pump prices above the official cap of 145 naira ($0.40) a liter, adding to inflationary pressures.

“Unless fuel pricing is resolved, bouts of fuel shortages could keep prices sticky, feeding into other items,” said Razia Khan, head of macroeconomic research at Standard Chartered Bank Plc in London.

To read the full article, click here.

02 Mar

Nigerian Bank Profits Set to Get Boost From Economy’s Comeback

The spring in the step of Nigeria’s economy is likely to show up in the results of the country’s banks when they start reporting 2017 earnings from this month.

An improvement in unpaid loans, higher interest income from holding government debt and a rise in profit will have helped lenders bolster their capital buffers, according to Renaissance Capital analysts including Olamipo Ogunsanya and Ilan Stermer.

The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.

An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.

Here’s a closer look at some of the major drivers and points of interest that investors will keep an eye on as they assess the outlook for banks.

Record high-interest rates of 14 percent since July 2016 means there is no shortage of yield for banks, many of which parked their funds to profit from the safety of Treasury bills and other fixed-income securities rather than lending, where there is more risk.

A drop in those yields from a record highs in August means that 2018 will be more challenging for lenders, despite the positive macro backdrop, according to Ogunsanya and Stermer.

Volatility in foreign-exchange related gains, limited scope for cost efficiencies and rising political risks before elections in early 2019 also cloud the outlook for this year, the RenCap analysts said.

Banks will be able to close the revenue gap created by declining interest rates by lending more into a strengthening economy, according to Stanbic IBTC Holdings Plc analyst Muyiwa Oni.

Some banks may boost loan growth to 15 percent this year compared with 10 percent in 2017, he said.

To read the full article, click here.

22 Feb

Nigeria Takes Steps to Avoid Repeat of Etisalat Collapse

Nigeria’s telecommunications regulator said tougher financial-health checks on the country’s biggest mobile-phone companies could prevent a repeat of last year’s collapse of debt-laden Etisalat and help stabilize the industry.

The Nigerian Communications Commission has compiled reports on the financial well-being of the local units of Johannesburg-based MTN Group Ltd., the market leader with 52.3 million customers, Bharti Airtel Ltd. and Lagos-based Globacom Ltd., NCC Executive Vice-Chairman Umar Garba Danbatta said in an interview.

The regulator has identified some areas of concern and these “issues that can be addressed,” he said.

Etisalat Nigeria, which has been renamed 9mobile and is for sale, plunged into crisis almost a year ago. A consortium of banks seized control of a 45 percent stake from Abu Dhabi’s Emirates Telecommunications Corp. after it defaulted on a $1.2 billion loan.

The Central Bank of Nigeria and the NCC stepped in to avoid the collapse of the company, which employs 4,000 people and has about 17 million subscribers, down from 19.6 million at the end of March.

While the central bank will do a financial check of the winner of the 9mobile auction, the NCC will be focused on the buyer’s ability to provide a quality service, Danbatta said in a hotel in Kano, a city in northern Nigeria.

“These are all measures we’re putting in place to ensure the survival of 9mobile and prevent a repeat of what happened,” he said.

Two companies are vying to take over the embattled operator in a process that the NCC hopes will be concluded by the end of March.

Lagos-based ThisDay newspaper reported that Teleology Holdings Ltd. and Johannesburg-based data provider Smile Communications are the remaining bidders, without saying where it got the information. Both companies declined to comment.

Barclays Africa was appointedas sale adviser, the NCC said in November.

To read the full article, click here.

08 Feb

In Nigerian ‘Cash-and-Carry’ Politics, Ambition Is Only Constant

At recent rallies of Nigeria’s ruling All Progressives Congress for next year’s general elections, the list of speakers is often dominated by former members of the opposition People’s Democratic Party who switched sides.

Former ministers, two-term governors and other senior officials who served with the PDP during its 16-year rule take turns to denounce the “corruption and waste” of their erstwhile party while touting the virtues of President Muhammadu Buhari’s ruling APC.

It’s an illustration of the state of Nigerian politics, where parties are merely a means to power and wealth, with actors propelled neither by ideology nor principle.

Known locally as “cash-and-carry politics,” success is often measured by gaining access to the treasury and dispensing patronage. Fueled by the country’s oil wealth over the past 50 years, the presidency is the supreme prize.

“It’s a capture of state power for personal use rather than service to the people,” said Clement Nwankwo, executive director of Abuja-based Policy and Legal Advocacy Centre, who has monitored all Nigerian elections since the end of military rule in 1999.

“When a chosen party is not delivering on those objectives, the average politician will look for what else could be the platform to achieve that.”

Election Victory

Buhari, a former general who overthrew an elected government in 1983, stood as a presidential candidate for three different political parties in elections from 2003 to 2011. It was fourth-time lucky three years ago when his was the first opposition victory since Nigeria gained independence from the U.K. in 1960.

A likely contender in next year’s vote is former Vice President Atiku Abubakar, 71. He defected to the PDP from the APC in December, the second time he returned to the party in a decade after pursuing his presidential ambition elsewhere. Abubakar even has an insurance policy.

If he doesn’t win the PDP nomination this time, his loyalists have already lined up a new party for him — the People’s Democratic Movement.

To read the full article, click here. 

30 Jan

Nigeria to Start Building $5.8 Billion Power Plant in 2018

Nigeria plans to start building a $5.8 billion hydro-power plant in the eastern Mambila region this year after it agrees on loan terms with China’s Export-Import Bank.

“We hope to break ground this year if we can conclude the financing,” Power, Works and Housing Minister Babatunde Fashola said in a Jan. 23 interviews in the capital, Abuja. “Contracts are in place. We are good to go.”

Fashola told reporters in August that the Chinese lender would finance 85 percent of the cost, and the Nigerian government the rest. China Civil Engineering Corp. will build the 3,050-megawatt power plant over five years, and the facility will include four dams measuring 50 meters (164 feet) to 150 meters high, and 700 kilometers (435 miles) of transmission lines, he said.

Nigeria, a country of 180 million people living with daily power cuts, is seeking to expand electricity generation to drive growth after the economy contracted in 2016 for the first time in 25 years. Fashola, a former governor of Lagos State, the nation’s bustling commercial hub, was appointed in 2015 by President Muhammadu Buhari to take charge of the troubled power sector.

The government expects power-production capacity to increase to 8,600 megawatts in a year from 7,000 megawatts currently, Fashola said in the interview. In comparison, South Africa, with a third of Nigeria’s population, has an electricity-generating capacity of more than 40,000 megawatts.

Distribution Capacity

Nigeria also plans to improve distribution capacity, currently at about 5,000 megawatts. Since the country is able to produce more electricity than it can distribute, some production capacity will remain idle until the government expands the network.

The government is looking to partner with private companies to invest in mini-grid projects and generate an additional 3,000 megawatts of electricity over five years, Fashola said. Investors are showing interest, he said, without further details.

A number of planned solar power projects have failed to secure funding and should be reassessed, according to the minister.

To read the full article, click here.

29 Jan

Gas Flaring Law Error Cost Nigeria Billions of Dollars

Africa’s top oil producer plans to make gas flaring more costly for companies that have escaped the payment of billions of dollars despite being fined, Nigerian Finance Minister Kemi Adeosun said.

In the “legal framework for the gas-flaring penalty, it was drafted as a charge. A charge is tax deductible,” Adeosun said in a Jan. 23 interview. “So, what do the international oil companies do? They flare, they pay the charge on which they get tax relief. That’s just bad drafting.”

The government is approaching lawmakers to amend the law and have the word ‘penalty’ replace ‘charge,’ the minister said in her office in the capital, Abuja. “Just that one word has potentially cost us billions of dollars.”

Oil companies flare natural gas that is produced along with crude instead of harnessing it because that can be costly or difficult for security reasons. Nigeria has sought to limit the practice over the years as it pollutes the environment and contributes to global warming.

Seeking Revenue

The West African nation is recovering from a contraction of its economy in 2016, the first in 25 years, and is seeking revenue sources to plug a $25 billion infrastructure gap and fund a record 2018 budget presented in December by President Muhammadu Buhari.

The government is also updating the tax law and going after defaulters, with the intention to boost collection and raise the country’s tax-to-GDP ratio, currently at 6 percent and among the lowest in the world.

Nigeria in the past never focused much on tax revenue because of its reliance on oil income that funds most of the government spending, Adeosun said. The OPEC member produced 1.8 million barrels per day in December, according to data compiled by Bloomberg.

Source: https://www.bloomberg.com/news/articles/2018-01-29/gas-flaring-law-error-cost-nigeria-billions-of-dollars

26 Jan

Central Bank in Africa’s Top Bitcoin Market Warns of ‘Gamble’

The central-bank governor of Nigeria, where bitcoin trading grew the most in Africa last year, said investing in the cryptocurrency is a “gamble” and hinted it may have to be regulated.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Central Bank of Nigeria Governor Godwin Emefiele said in an interview on Wednesday at his office in the capital, Abuja. “We cannot as a central bank give support to situations” where people risk savings to “gamble,” he said.

Emefiele is the latest among regulators globally to express concern about bitcoin, one of the most popular cryptocurrencies, because of high volatility and a perception that it facilitates crime.

In January 2017, the central bank released a circular to lenders asking them not to use, hold, or trade virtual currencies pending “substantive regulation and or decision by the CBN.”

Still, demand for the digital currency is surging in West Africa’s biggest economy, with peer-to-peer transactions rising almost 1,500 percent this year, second only to China, according to data from LocalBitcoins.

A bitcoin wipe-out would generate the biggest losses in Russia, followed by New Zealand and Nigeria, according to a report published by Citigroup Inc. in December.

Bitcoin was little changed at $11,254 by 7:12 a.m in London compared with an intraday high of $19,511 on December 18, according to a composite of prices compiled by Bloomberg.

U.K. Prime Minister Theresa May on Thursday promised to consider clamping down on the cryptocurrency. Central banks in China and Russia have stopped local-exchange trading of bitcoin.

“I have asked my colleagues in the research and monetary-policy department to study the market and get to know what the issues are,” Emefiele said. The central bank may in future “make some very concrete pronouncements as to the direction,” he said, without giving details.

24 Jan

Ex-Nigerian President Asks Buhari Not to Seek Re-Election

Former Nigerian leader Olusegun Obasanjo asked President Muhammadu Buhari not to seek re-election next year, saying he has failed in his management of Africa’s most populous country.

“I only appeal to brother Buhari to consider a deserved rest at this point in time,” Obasanjo said on Tuesday in an emailed statement.

“President Buhari does not necessarily need to heed my advice. But whether or not he heeds it, Nigeria needs to move on and move forward.”

Obasanjo, who served two terms as an elected president from 1999 to 2007, backed Buhari in his 2015 election and defeat of then President Goodluck Jonathan by the All Progressives Congress to effect the first democratic transfer of power in the country of more than 180 million people.

“The situation that made Nigerians to vote massively to get my brother Jonathan off the horse is playing itself out again,” Obasanjo said.

Africa’s top oil producer is scheduled to hold presidential elections in February next year as well as vote for lawmakers and state governors.

While Buhari hasn’t said if he’ll run, his potential candidature remains a subject of much interest after he spent a total of more than five months in London last year receiving treatment for an undisclosed ailment.

‘Changed Irrevocably’

“The character of the 2019 election has changed irrevocably, it’s going to be extremely difficult for Buhari now,” Jideofor Adibe, a professor of political science at Nasarawa State University, Keffi, near the capital, Abuja, said by phone.

“This will embolden a number of people to challenge Buhari and it could also set him thinking whether seeking re-election is really worth it.”

After three failed attempts to win the presidency from 2003 to 2011, Buhari mustered a coalition of opposition parties that merged to become the ruling APC party.

That coalition is now in tatters, with many members accusing the president of adopting a non-inclusive style and appointing cronies instead of competent people to key positions.

Former Vice President Atiku Abubakar, who was Obasanjo’s number two and backed Buhari in 2015, left the APC last month and rejoined the People’s Democratic Party, accusing Buhari of ignoring senior party members and relying on a core of personal aides to govern. Abubakar is widely seen as a potential presidential candidate in the coming vote.

Source: https://www.bloomberg.com/news/articles/2018-01-23/ex-nigerian-leader-obasanjo-asks-buhari-not-to-seek-re-election