22 Jun

Daily Watch – Oil earnings plummet 34% in Q1, Fashola assures on 2NB

  • The naira has attained apparent stability at the interbank market, trading at ₦283 for most of yesterday. The naira opened at ₦253 to the American dollar on the new official market on Monday, but closed its first trading day of the new regime at ₦281.85 after hitting a daily-high of ₦283. CBN sold $4.02 billion worth of forex to 21 banks in order to clear the backlog of existing demands. After the CBN sales, the naira took a downward swing from ₦280/$1 to ₦283, with some appreciation at the parallel market. The currency appreciated to ₦475 against the pound sterling, while the rate against the euro moved slightly from ₦388 to ₦387.
  • Nigeria’s earnings from crude oil and gas, Petroleum Profit Tax, and royalties declined by 34.1 percent, to ₦205.05 billion in the first quarter of 2016. Data from the CBN’s Economic Report for the First Quarter of 2016 indicated that the country earned ₦396.47 billion from the sale of crude oil and gas, PPT and Royalties, as against ₦601.52 billion recorded in the fourth quarter of 2015. The decline in oil revenue relative to the budget estimate was attributed to the persistent fall in receipts from crude oil and gas export, due to the continuous drop in the price of crude oil in the international market as well as series of shut-ins and shut-downs at some NNPC terminals owing to pipeline vandalism and repairs during the review quarter. The CBN also noted that Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.82 million barrels per day or 165.62 million barrels for the first quarter of 2016. However, crude oil export was estimated at 1.37 mbd or 124.67 million barrels, while deliveries to the refineries for domestic consumption remained at 0.45 mbd or 40.95 million barrels during the quarter.
  • Having reduced its average monthly loss from ₦40 billion to ₦3 billion as a result of its corporate restructuring, the NNPC will target profitability before the end of 2016. If that happens, it will be the NNPC’s first profit in 20 years. However, Minister of State for Petroleum, Ibe Kachikwu, while saying this, admitted that the entire spectrum of Nigeria’s petroleum industry required strategic intervention. But he harped on the need to see the challenges as opportunities to transform the sub-sectors into income earners for the country. Kachikwu also unveiled plans to carry out infrastructural re-graphing of Nigeria’s petroleum sector, and added that there are plans to review Nigeria’s aging pipelines, depots and gas infrastructure and begin the process of replacing them. Speaking on the issue of gas flaring, Kachikwu said that the new thinking was to move away from a penalty-based gas regulation, which had largely failed over the years to a zero tolerance gas flaring regulation with year 2020 as the new target deadline.
  • Lafarge Africa has concluded its Series I and II ₦60 billion bond issuance, comprising ₦26.39 billion three-year bond at 14.25 percent, which is due in 2019, and a ₦33.61 billion five-year bond 14.75 percent due in 2021. The proceeds of the bond issuance would be used to part refinance the debt of its wholly-owned subsidiary, United Cement Company of Nigeria. A signing ceremony in respect of the Series I and Series II bonds was held last week following SEC’s approval, and the bonds would be listed on the FMDQ OTC.
  • Minister of Works, Power and Housing, Babatunde Fashola, has visited Anambra State to to assess the state of work done on the Second Niger Bridge project, ato seek assurances from all the stakeholders of no hostilities and to convey the commitment of the FG to its completion. Fashola said that the project would not only bring improvement but will accelerate economic prosperity and give relief to the first Niger Bridge. The contractor handling the project maintained that non-release of funds was a major setback in the completion of the 1.5km bridge and 10km road project.