06 Aug

Daily Watch – Concerns over health of banks, Azura Thermal Plant gets green light

  • There is growing concern over the rise in banks’ non-performing loans. Nine lenders (Diamond, FBN Holdings, FCMB, Fidelity, Skye, Stanbic IBTC, Unity, Union and Wema) that have released half year 2015 results reported a N30.1 billion jump in provisioning for soured credit. This is the biggest surge in bad loans since at least 2011, and it is due to the deteriorating macro-environment. The fall in the price of oil has made some projects unviable in the oil and gas space, some municipal governments have been unable to repay loans, and many businesses have gone moribund.
  • The new GMD of NNPC dismissed senior managers after a government directive, the company said on Wednesday, barely a day after President Muhammadu Buhari appointed him as managing director. A source said the names of the new senior managers would be published later in the day and that the number of executive director positions would be reduced to four
  • Construction work on the 500 MW Azura thermal power plant in Edo state is expected to commence next month, after the intervention of President Muhammadu Buhari in what analysts say shows the new leader will have a central place for the private sector investment in pushing his economic agenda. Work on the site stalled when former president Goodluck Jonathan failed to accede to a request by institutions funding the project, including the World Bank, for the waiver of Nigeria’s sovereign immunity to further de-risk the project. But following reviews, President Buhari directed the vice president and the solicitor-general to sign the needed papers.
  • Nigeria’s health sector is currently being threatened by a disagreement within the pharmaceutical industry over the possible imposition of a 20 percent tariff on imported drugs. The conflict arises from the ongoing Common External Tariff (CET) which places zero tariff on imported finished drugs but imposes between five and 20 percent duty on imported raw and packaging materials. Local manufacturers say the five to 20 percent duty on raw and packaging materials is already threatening to destroy 150 local drug makers and an estimated N300 billion investment made so far, in the domestic sector, calling for a review of a the CET to include imposition of 20 percent tariff on imported finished drugs.