05 Oct

Daily Watch – Nigeria sues Shell for $407 million, IMF says recession will end next year

  • The Nigerian government is demanding a minimum of $406.75 million from Shell over alleged crude oil theft. The amount, according to court papers filed in Lagos, represents the shortfall of the money paid by the multinational oil firm in the account of the Nigerian government with the CBN, for crude oil lifted in 2013 and 2014. Government lawyer, Professor Fabian Ajogwu accused the Anglo-Dutch company of not declaring or under-declaring crude oil shipments during the period, following forensic analysis of bills of lading and shipping documents, Ajogwu, armed with  sworn affidavits of  three US based professionals, claimed that Shell cheated Nigeria of the revenue. Nigeria has also sued Chevron, Total and Agip asking for a total of $12.7 billion over alleged non-declaration of some 57 million barrels of crude shipped  to the United States between 2011 and 2014. The oil firms are among up to 15 oil majors  targeted by the Nigerian government for the recovery of $17 billion in deprived revenue. The presiding judge, Mojisola Olatoregun Isola has adjourned the case till the 20th of October.
  • FirstRand, Africa’s biggest bank by value, said it’s considering acquisitions in African countries like Nigeria because prices have eased in the wake of plummeting commodity prices and weakening currencies. “Asset prices in jurisdictions such as Nigeria have recently become much more realistic,” Chairman Laurie Dippenaar said in the Johannesburg-based company’s annual report, published on FirstRand’s website on Tuesday. “We feel more comfortable to look for opportunities to deploy shareholder capital for acquisitions to assist us in scaling up our operations. FirstRand remains committed to growing outside of South Africa on the back of a strategy that is both organic and acquisitive.” FirstRand walked away from buying control of Lagos-based Sterling Bank in 2011 after it was unwilling to meet the sellers’ price demands. The lender’s investment-banking unit is already operating in Nigeria and in 2012, FirstRand said it was looking for an acquisition to help fund Rand Merchant Bank’s operations in the West African nation.
  • The FG at the weekend said it officially made a case for the lifting of the suspension on Nigerian cocoa exports to the United States. Speaking during the Labour and Trade Ministerial Roundtable of the Africa Growth and Opportunity Act (AGOA) forum at the State Department, Washington DC, Labour and Employment minister, Chris Ngige said the suspension was a primary contributor to the trade imbalance between the two countries. According to Ngige, “I was upset that through discussions on agriculture, Ghana and Cote d’Ivoire became instant toasts in the West and pride of other West African countries delegates. I was peeved and therefore made a strong case for technical assistance towards the production of cocoa that meets the standard of export into the US and European market. It was also an opportunity for me to also dispel a negative report making the rounds at the international forum that Nigerian laws are labour-restrictive.”
  • The IMF has projected that Nigeria’s economy will be out of recession next year, growing by 0.6 percent. According to the IMF World Economic Outlook released on Tuesday in Washington, the fund projects that the current economic recession will outlast 2016, with a GDP contraction of 1.7 percent. “Sub-Saharan Africa’s largest economies continue to struggle with lower commodity revenues, weighing on growth in the region,” IMF said. “Nigeria’s economy is forecast to shrink 1.7 percent in 2016, and South Africa’s will barely expand. By contrast, several of the region’s non resource exporters, including Côte d’Ivoire, Ethiopia, Kenya, and Senegal, are expected to continue to grow at a robust pace of more than 5 percent this year.”
  • PZ Cussons Nigeria Plc has released its Q1 unaudited financial statements for the quarter ended August 31. The results show that the company recorded ₦2.43 billion group loss within the period as against ₦546.8 million in the comparable period a year ago. Quarterly group revenue marginally increased to ₦16.75 billion versus ₦14.95 billion a year ago. According to results from the family care products manufacturer, the quarter’s loss was preceded by a ₦4.7 billion loss in foreign exchange, a 31,507 percent fall from a gain of ₦15 million earned from foreign exchange in the prior year. Net profit margin was down to 3 percent from 4 percent in 2016 and projected to fall to -9 percent by 2017 while shareholder earnings per share fell to 11 kobo from 16 kobo and projected to fall to a loss of 40 kobo by Q1 2017.
  • GlaxoSmithKline says it has completed the divestment of its drinks and distribution business to Suntory Beverage & Food, following approvals by its shareholders and the SEC. The transfer became effective October 1st, 2016. The new GSK Consumer Healthcare Company will now consist of the Healthcare Wellness, Oral Healthcare and Nutrition categories as well as the pharmaceuticals business, with a portfolio of leading healthcare brands including Sensodyne, Macleans, Panadol, Horlicks, Andrews Liver Salts, Voltaren, Otrivin and CAC 1000. GSK Nigeria will remain listed on the NSE.
  • The SEC has cautioned investors in Nigeria against transacting business with Converged Dynamic International which is allegedly engaging in an illegal practice. The regulator said the company is an unregistered firm dealing in a product tagged “Resources Investment Account” offering interest rates in short and medium terms so as to lure the unsuspecting members of the public. The statement in part, “notifies the investing public that the operation of this investment scheme is not registered by the Commission and has no tangible business model, hence it’s a Ponzi scheme.”