29 Feb

Daily Watch – Fears over banks’ year end reports, 2.55GW to be added to grid

  • There are indications that as the global macro shocks continue to expose the structural imbalances in Nigeria, poor outings will be the order of the day when banks release their year end reports starting this week. In a report by BusinessDay, the disappointing results will be occasioned by foreign exchange related financial losses, which some analysts say constitute a major snag to their corporate earnings. Exposures to the oil and gas sector, which some analysts say is responsible for over 40 percent in some banks, has impacted negatively on their earnings, particularly with the decline in the price of oil in the international market. The implementation of the Treasury Single Account (TSA) is said to have also drained idle funds that banks could turn to and also stopped cheap and easy profits. While some banks have commenced downsizing exercises, others are planning to prune down their staff in a bid to cut overheads. Already, profit depression warnings have been announced by two major banks, with First Bank of Nigeria declaring last week that there would be a decline in its earnings in the financial results being finalised for public presentation any moment from now.
  • The alleged failure of the Federal Government to make provision for 42 month pension arrears for its retirees in the 2016 Appropriation Bill has drawn the ire of National Union of Pensioners. The pensioners, which described this as an act of negligence, had vowed to fight this until the issue was fully addressed. According to the Deputy President of the NUP, Musa Ayuba, the union has resolved to elicit the support of the Nigeria Labour Congress and the Trade Union Congress to fight the alleged injustice.
  • Nigeria is working to bring another 2,550 megawatts of power to the national grid in the course of this year. This could take total power generated from the current 5,000MW to more than 7,000MW by year end. At the Geregu plant where only two of the six 115MW capacity turbines are working, the plan is to bring the other four turbines on stream. This will raise generation by about 460MW. The government is also working on bringing to life the entire 700MW capacity at the Olorunsungo plant which has remained idle because of gas supply issues. There is also another 300MW of idle capacity at the Aba Power plant which is expected to be unencumbered and made to work.