03 Aug

Daily Watch – Gloomy 2017 looms as oil majors underperform, DisCos hit for bad customer service

  • A CBN Treasury Bill calendar indicates that Nigeria plans to raise ₦245.18 billion ($773.44 million) worth of T-Bills with maturities ranging between three months and a year, today. The CBN plans to issue ₦45.18 billion in 3-month debt, ₦80 billion of 6-month paper and ₦120 billion of 1-year bills in a Dutch auction. Indicative rates for the auction are 16 percent for 3-months, 18 percent for 6-months and 18.5 percent for 1-year bills. The auction’s results will be published tomorrow. Yields on fixed income securities have been rising in recent months with the central bank mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil.
  • The dip in profits reported by oil majors in their Q2 2016 outlook released last week may put a further strain on Nigeria’s depleting oil revenue and 2017 budget projections, as taxes and royalties from their operations in the country plateau. Shell paid $4.9 billion to the Federal Government last year while ExxonMobil’s 2014 Energy Outlook series states that it contributes about $6 billion yearly to the government from its operations. Chevron reported a loss of $1.5 billion for Q2, compared with earnings of $571 million in the same period last year, while Exxon’s profit fell 59 percent to $1.7 billion in comparison to the same period.
  • The World Bank and the Sokoto State Government will collaborate on projects in ten local governments, costing ₦8.8 billion, which will be executed under the Nigeria Erosion and Watershed Management Project. Under the arrangement, Sokoto will provide 12.9 percent or ₦1.33 billion as counterpart funding for projects which will tackle environmental issues, water management and land reclamation in the target local governments.
  • Flour Mills has registered plans with regulators to raise up to ₦40 billion ($128 million) in equity over the next three years. Jacque Vauthier, the company’s CFO, said the company’s directors had decided that the most appropriate way to raise the funds was via a shelf programme, enabling Flour Mills to sell shares in several tranches over a three-year period. Flour Mills, which has interests in food manufacturing and agri-business, won shareholders’ approval for the issue last year but weak capital markets delayed its launch.
  • NERC has penalised four power distribution companies as a result of their failure to treat various customer complaints levelled against them as well as their inability to submit statutory quarterly reports. It said the firms breached their licensing terms and the provisions of the EPSR Act, 2005 and its regulations. The affected firms are the Ikeja, Ibadan, Enugu and Port Harcourt Electricity Distribution Companies and they are to pay a total of ₦24.56 million in fines. The commission, in a statement, said the affected companies are to pay the fines within two weeks from July 25.